State funding cuts spur universities to ponder privatization

July 9, 2011


It’s probably a safe bet to say most state-aided universities in the country are facing severe fiscal challenges. Likewise, a high percentage of private colleges and universities are having to figure out how to carry out their missions with fewer dollars.

Kansas University officials have made cuts in various programs as the percentage of the school’s operating budget covered by state funding continues to dwindle.

Tuition, private philanthropic giving and federal grants make up the bulk of funds to help pay the bills. How much higher can tuition and fees be raised before many students and their families are priced out of the ability to attend KU? Will potential private contributors become sufficiently disappointed in the operation of the university that they will decide to cut back or even eliminate their usual giving to KU? And, with the federal budget in such bad shape, how long will it be before there are sizable reductions in federal grants to a research school such as KU?

In the face of likely cutbacks, universities are studying ways to maintain or elevate their excellence within their own complex. Officials at the University of Minnesota, one of the nation’s largest and most respected state-aided universities, currently are giving serious study to the possibility of depending on private money rather than unreliable state funds to support several of their schools.

Due to shrinking state funding, Minnesota’s School of Law and the Carlson School of Management are looking at the possibility of operating without state funds, relying on private support. Those in favor of the plan claim being self-reliant would give the schools more control over how they operate and offer more incentive to improve and increase their private giving.

The new University of Minnesota president, Eric Kaler, who has been on the job for less than a month, will make the final decision, but he is faced with huge budget cuts and pressures to hold back on tuition increases.

Minnesota operates on a $3.7 billion budget. Former President Robert Bruininks said he lamented the privatization trend but considers it inevitable that a few of the university’s schools will break from state funding.

Bruininks said, “By having some state funding in each of our colleges, it encourages all of us to be more self-conscious about our public missions, our public responsibilities, our public commitments. When you get in a strictly revenue-driven model, there could be a temptation to think of yourself as something separate from the whole of the university.”

According to a news report, deans of the law school and school of management said they had not sought this change but that, if it came about, they would not opt out of their financial obligations to the university.

In 2006-07, state money totaled about 17.6 percent of the school of management’s operating budget. Under a budget approved last month, it will account for just 3.6 percent. The law school’s share will drop from 22 percent in 2008-09 to single digits next year.

Minnesota is not alone in splitting away from state funding. The University of Virginia School of Law gained financial freedom from the state in 2005 and now operates with slight state and university control. The university’s business school also has become self-supporting, as has the University of Michigan’s business school. According to a Minneapolis news report, the UCLA school of management also is considering the option of operating without state money.

The University of Minnesota’s chief financial officer noted that as state funding approaches zero, “What does it mean for a college to be out of state money?

“They are not going to give up the instruction. That’s their bread and butter. But does research then become too expensive? Or does the public service mission suffer? Or not? We just don’t know.”

With state support dropping for Kansas universities, what are the chances that KU’s School of Law or School of Business might consider operating without state funding? Apparently, a growing number of deans, chancellors and presidents across the country are thinking about it.

Two new dynamic deans are taking leadership roles on Mount Oread: Stephen Mazza at the School of Law and Neeli Bendapudi at the School of Business. What do they think needs to be done to find the funding necessary to energize and elevate the academic and research excellence of their respective schools? Their energy and vision is likely to infect other deans and administrators who have become somewhat resigned to or accepting of lower levels of state funding. The university has a short supply of energy, vision, new ideas and enthusiasm.

KU Provost Jeff Vitter has been leading a broad examination and study of the university’s academic structure and how to make it more efficient and relevant. However, a number of senior educators say they are likely to be dead or have accepted positions at other schools before any findings from the study are put into practice.

There’s also the question of whether the Kansas Board of Regents and state legislators would approve major changes, particularly if KU officials try to engineer a plan that would try to elevate the school to a higher or special level compared with other state universities. What would they say about significantly higher tuition charges that would make it far more costly and difficult for many students to obtain a degree from KU? Or is this what some KU officials want, an elite school for perhaps fewer Kansans but more out-of-state students?

How does private funding for particular schools within the university fit into KU’s future?


kansasplains 6 years, 9 months ago

Funding does not necessarily affect creativity.

The problem is that many university professors would never reduce their salaries. They have to be part of it too! In fact, professors would probably be better off if they had less in the way of salaries, and were expected to be far more creative.

Students and the taxpayers should not have to bear this burden without university professors taking their cut, as well. After all, in Lawrence many university professors have pretty good jobs and a pretty good living.

P Allen Macfarlane 6 years, 9 months ago

"...professors would probably be better off if they had less in the way of salaries, and were expected to be far more creative."

"After all, in Lawrence many university professors have pretty good jobs and a pretty good living."

How naive! I just love it when someone from outside a university proposes solutions to problems inside the university.

KU is a research university and that means that faculty are evaluated on their research first, their teaching second, and their service third. I'm not sure what the writer means by professors having "pretty good jobs", but I can tell you that keeping up with bringing in grant money (to earn their keep), doing the research needed to fulfill the requirements of the funding agency, and teaching classes involves putting in many long hours. I would be willing to bet that most work a 50-60 hour week. If anything, most professors are underpaid relative to their counterparts in the private sector.

What would help is a reduction in the number of top-level administrators at KU. Every time we turn around, KU is hiring more and more administrators and they cost more than the faculty.

Richard Heckler 6 years, 9 months ago

The impact of privatization could be how the donors or new owners want classes to be taught or in fact what should be taught.

Do we want very right wing Koch Industry money or Wal-Mart family money interfering with our educational institutions? This is a real concern. I VOTE NO!

Some other money that has been associated with the above two is Amway/DeVoss family money and Prinz family/Blackwater money.

Extreme right wing money could in fact be dangerous as they try to remove the middle class. AND keep reaching out for tax dollar free rides.

Do we want shareholder dividends and golden parchutes pulling money away from education spending?

notanota 6 years, 9 months ago

Rock and a hard place. Brownie will make sure political hacks and cronies get appointed to influential positions if it stays public.

LJD230 6 years, 9 months ago

Kansasi is supporitng too many four year schools and provide funding to the two schools with the potential and faculty to become true national universities.

Has anyone determined the number of KU applicants to Kansas who choose to attend school in other states? What percentage of Kansas high school graduates attend out of state universities?

Dollars to donuts KU and K-State have become the "safe" schools for Kansas kids with the greatest potential to pursue an undergraduate education.

notanota 6 years, 9 months ago

Sure, it's a safety school for a lot of kids, but it's not a bad choice. You can get a top notch education at KU that will get you interviews and get you into a good grad school. That can't be said of all the 4 years in the state.

I know plenty of people who had other offers but chose KU, simply because it was still affordable, and you could still distinguish yourself with things like the honors programs and schol halls. The more expensive the tuition, the less likely kids are going to make the cost/benefit analysis the same way. When it costs 20k a year to attend here, that 20k a year out of state school is a lot more appealing.

You want to get more in-state kids with potential? Raise admission standards and lower tuition (which means we actually fund the university, Brownie.) Or set up more scholarships for academic achievement in in-state students. It can be done.

Scott Drummond 6 years, 9 months ago

Can a school funded by private funds really be considered a State school?

Yet another shot in the right wingers' campaign to eliminate an educated populace from the voting ranks.

Scott Drummond 6 years, 9 months ago

Well, Liberty, are people more or less educated now after 30 years of the defunding of public education? Were they more or less educated during the 1950's and 1960's when public education was being generously funded?

Is the populace more obedient and easily kept in line now, or in the 1950's & 1960's?

Even if the intent was to keep people ignorant and obedient, fully funding does not appear to have had that effect. And that is the reason the right wingers so consistently and viciously attack public education.

true_patriot 6 years, 9 months ago

The whole point of public education in general is that there is education available to all, regardless of whether they can afford it or not, because it helps the state and nation flourish. Once something is privatized, the first duty is to the shareholders, not the public.

yourworstnightmare 6 years, 9 months ago

Agreed. The state has failed in its obligation to adequately support a university that is accessible to all.

yourworstnightmare 6 years, 9 months ago

Unfortunately, the state has failed to adequately support KU to make it accessible to all Kansans.

What option is left to KU? It is time to privatize. To raise tuition and admissions standards to attempt to recruit the best students from Kansas and surrounding states.

K State can carry what ever is left of the banner of state assisted education accessible to all Kansans.

You get what you pay for. There is no free ride. Time for Kansans and those in the legislature to learn simple economics.

Kendall Simmons 6 years, 9 months ago

Did anyone else notice how Dolph effused over the "Two new dynamic deans...taking leadership roles...their energy and vision likely to infect other deans and administrators" and think to themselves, "I wonder just how long it will take Dolph to start railing against these two guys and start complaining that they, too, are possessed of his standard lack of vision?"

Perhaps KU should start a pool? It could be a great fundraiser :-)

PugnaciousJayhawk 6 years, 9 months ago

In this case, given how many times he’s met and talked with these two and given the accolades that he has heaped on them when talking to others, I think that he’ll be a longtime supporter of Bendapudi and Mazza. BGL, Vitter & all those other KU lackeys should probably start taking notes from these two new deans.

Phillbert 6 years, 9 months ago

You and your friend Dolph are so desperate to not give BGL and Vitter any credit that you act as if they weren't the ones who hired those deans - as if the deans just showed up at KU one day.

And Kendall is right that it won't be long before the new deans are in Dolph's line of fire. (Put me down for 6 months in your pool, KS)

Cait McKnelly 6 years, 9 months ago

KU should privatize and finance itself on the back of it's basketball team. How many millions was KU Athletics defrauded in the ticket scandal alone? The fact that sports dollars are kept separate from and have to be kept separate from, the school's operating budget is a bit of a crying shame. The university, in and of itself, would fall over in a faint to get half that money.

Bob Forer 6 years, 9 months ago

Some simple facts Dolph should consider before he floats another absurd trial balloon:

Overall National Ranking of the five public Universities specifically mentioned in Dolph’s editorial:

  1. UCLA (tie) 2 University of Virginia (tie)
    4 University of Michigan 23 Univesity of Minnesota

47 University of Kansas

Need I say more?

I don't think I need to, but I will anyway.

National Ranking of KU MBA program: 105 National Ranking of KU Law SChool: 79

Sorry Dolph, but what you suggest will never happen. Not in a million years. Not in a billion years. Not in a trillion years.

(Rankings per U.S. News and World Report)

yourworstnightmare 6 years, 9 months ago

Thanks for the ranking info, Syc. I am amazed to learn the KU Law ranks 79th and KU MBA ranks 107th. One would never know it by the way these schools are touted by KU. I guess a faculty with eight distinguished professors (Law) is not an assurance of quality. Or maybe the professors aren't really all that distinguished.

In any event, I don't see how a low ranking is necessarily prohibitive to becoming a private university.

Bob Forer 6 years, 9 months ago

Privatization simply means that the school or schools involved cease accepting public state funding. Assuming that increased efficiency would be de minimums, the only way the school could survive would be by some combination of increased tuition and private donations. Lets compare the KU business school with the University of Michigan School of Business, which has already become privatized.

The Michigan MBA program is the second best state MBA program in the country. Its graduates go on to fill top management positions at the world’s biggest corporations. While KU has had its share of super successful alumni, graduates are more like to find themselves in mid-career, for example, as a district manager at Payless Shoes. Accordingly, the number of wealthy alumni--the people whom typically are a school's biggest donors--is much larger at Michigan.

Also, the privatization of Michigan's business school entailed raising tuitition for its MBA program to $45,000 for in-state residents and $50,000 for out-of-state residents. As one of the top business schools in the country, they were able to implement such an increase and still attract a large pool of applicants. As a second tier business school, I doubt KU could survive with a dramatic increase in tuition. I doubt many people would pay $50,000 a year to attend a second rate school.

Bob Forer 6 years, 9 months ago

While KU Law has a very decent faculty, the quality of its professors is not the sole determinant of ranking. Equally as important is the quality of its student body. KU is a small state, and its top undergraduate students are more likely to enroll at a nationally known law school, leaving KU with less distinguished in-state and out-of-state applicants.

yourworstnightmare 6 years, 9 months ago

But faculty quality does affect whether or not good students attend the law school.

Your argument is getting dangerously close to the vacuous argument put forth by so many at KU: we are better than all objective measurements indicate.

yourworstnightmare 6 years, 9 months ago

42 professors in the KU law school, eight distinguished professors. 20% of law professors are distinguished professors, and yet the Law School ranks 79th.

Maybe if all 42 are made distinguished professors, then KU Law will crack the top 50.

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