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Charter initiative would harm students, parents, employees

January 4, 2005 12:00 am

By JEFFREY J. ROSSMAN

CHARLOTTESVILLE—The “charter” initiative is a bid by the state’s flagship schools to gain autonomy from the state. If the charter enabling legislation is passed during the legislative session that begins later this month, a charter contract will be negotiated by each charter-seeking university and the governor.

Once these contracts are signed, the basic legal status of each chartered university would change. As a result, tuition-setting authority would shift from the Virginia General Assembly to each institution’s governing board; faculty and staff would lose their status as “state employees”; and the institutions would in one fell swoop liberate themselves from state oversight in areas such as procurement, capital construction, and personnel.

Proponents claim that an unprecedented restructuring of the relationship between the state and its flagship universities is justified by chronic state underfunding. Virginia doesn’t care about its state schools, goes the argument, so the flagships must be allowed to semiprivatize.

In short, control over revenue (tuition) and expenses (employee compensation) must be shifted away from Richmond so that each institution can operate like a private corporation, with minimal accountability to the state.

There are four problems with the charter initiative. First, the extreme anti-state rhetoric that has accompanied the charter campaign distorts the historical record and undermines public commitment to higher education.

Second, the legislation as currently written poses a risk to lower- and middle-income families, to employees at the institutions seeking chartered status, to the localities in which these institutions are situated, and to the whole public higher education system.

Third, the main argument in favor of the charter—that it provides state universities with a stable funding model—is based on faulty interpretation of the law.

Finally, much if not all of what the flagship schools seek can be achieved by less radical—hence less risky—means.

‘State-molested’

According to one university leader, Virginia’s flagships deserve autonomy because they are not “state-supported but state-molested.” This is rich coming from a state employee who earns more than half a million dollars a year and lives in a state-owned and -operated estate.

But is the point valid? Let’s look at the record. In constant dollars, general appropriations for higher education increased 20 percent from 1992 to 2003, and appropriations per student were greater in 2001 than in any year since 1990.

True, appropriations declined in absolute terms during the recessions of 1990–91 and 2001–02. But economic downturns hurt all institutions of higher education—public and private alike. To lambaste the state for reducing appropriations during a recession may feel good but displays a lack of sympathy for legislators who are constitutionally required to balance the budget.

These same legislators, meanwhile, reaffirmed their commitment to higher education in the 2004 legislative session. I will not mince words. To accuse Virginia of “molesting” its universities is to slander Democratic and Republican leaders who have created one of the nation’s most envied systems of public higher education and to provide ammunition to those who for ideological reasons would strip the state of its role of funding post-secondary education.

Although U.Va., which is the main driver of the charter movement and the main source of anti-state rhetoric, is no longer favored as it used to be, it continues to be reasonably well funded. A recent survey of 22 flagship state universities showed that U.Va. ranked 10th in the level of appropriations per in-state student. U.Va. is better funded on a per-student basis than other flagships such as Rutgers University, Indiana University, and the University of Texas.

The main problem in Virginia is not lack of commitment to higher education but rather the volatility of appropriations. From 1994 to 2002, “Virginia ranked fourth in largest increases in general-fund support to higher education nationally,” according to the State Council of Higher Education for Virginia.

By the same token, the reduction in appropriations in 2002–03 was greater in Virginia than in almost any other state.

Such volatility makes it difficult for university administrators to plan. A simple solution to this problem: Create a rainy-day fund for higher education.

According to the SCHEV, had state universities deposited 1 percent of tuition revenue in such a fund beginning in 1992, there would have been enough savings to cover the state budget cutbacks of 2002. In other words, prudent planning by the universities can smooth out the cyclical fluctuations in state support.

Funding problem? Of course.

Is there a funding problem at the flagships? Absolutely. Travel budgets are down by two-thirds, class sizes are increasing, and so on. But the sky is not falling. These institutions continue to be highly ranked nationally and within their respective peer groups. At U.Va.’s College of Arts and Sciences, faculty retention has not been a problem, and salaries remain competitive in most departments. There is no risk of a brain drain because these institutions already have the flexibility to compile competitive compensation packages.

At first glance, what is so appealing about the charter concept is that it promises a more stable funding model. Once the enabling legislation is passed, each university would sign a charter agreement that codifies each party’s rights and obligations.

Contrary to the claims of charter proponents, however, these agreements are not contracts because their terms are not enforceable. A governor has no authority to obligate the legislature to a specific level of funding. If the flagship universities believe otherwise, they are setting themselves up for disappointment.

Although the charter plan does not offer the flagships a more stable funding model, it poses a risk to students of modest means. Chartered universities would move rapidly to what experts call the “high tuition/high aid” model.

While appealing as a concept, this model has two shortcomings. First, aid almost always rises more slowly than tuition. Second, students of modest means tend to avoid applying to schools with high posted rates of tuition.

What would chartered universities do to assure residents that the proportion of lower- and middle-income students would not decline once they secure tuition-setting authority? This question has yet to be answered by charter proponents.

Employees face risks

Chartering also poses a risk to employees. The example of U.Va.’s Medical Center, which was granted charter-like status in 1996, is instructive. In almost every year since, a substantial number of that institution’s employees got raises that fell short of those offered by the state.

Staff at our universities are hardworking and underpaid. Why should they be expected to support a proposal that is likely to condemn many of them to a gradual decline in real wages?

The interests of state and local government also are put at risk with this proposal. If the flagships are spun off from the state, how will future state leaders remedy crises such as labor shortages in nursing or family medicine?

Fragmentation of the system of public higher education would make it more difficult for state leaders to achieve important public policy goals.

As for localities, they would face sovereign entities in their midst that operate for-profit businesses and engage in development that is subject to neither local nor state oversight. How would non-university businesses be protected from unfair competition? What would chartered universities do to compensate localities for the social costs of unrestricted building?

Most at risk is the system of public higher education as a whole. Common sense dictates that the interests of chartered universities would diverge over time from the interests of traditional state schools.

As the flagships relied increasingly on market-rate tuition and for-profit research parks to balance their budgets, they would spend less time in Richmond lobbying for resources. The impact on other post-secondary institutions such as the community colleges would probably be dire.

Thomas Jefferson spent four decades battling elites who hated the concept of public education even more than they hated taxes. In 1819, Jefferson succeeded in laying the roots of what today is one of our nation’s premier public university systems. The frustration at the flagship schools is understandable, but radical measures such as the charter initiative are likely to cause more harm than good.

More moderate measures such as limited deregulation, the creation of a rainy-day fund, and moderate tuition increases would give these universities the flexibility they need without compromising the interests of students, employees, or the commonwealth.

JEFFREY J. ROSSMAN is an assistant professor of history at the University of Virginia.



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