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This phenomenon may be particularly true for potential
graduate and professional students, including those who
might otherwise embark on Ph.D. programs. One effect of
both the drop in state support and falling endowment levels
has been a sharp reduction in the number of new tenure-
track positions being filled this year. Adding to the costs of
college and university budgets will also be a likely reduction
in retirements, as many academics have experienced a
40 percent drop or more in the value of their defined
contribution retirement plans. Rather than retire and open up
positions for new Ph.D.s at lower salary costs, many relatively
highly paid academics will now stay on into their 70s.
Both public and private universities have emphasized
private fundraising and the building of sizable endowments
in recent years as a way to diversify revenues. Numerous
universities have reported endowment losses of 25 percent or
more in 2008, as virtually all asset classes have fallen in value.
The logic of limiting spending from endowments to roughly
five percent annually means that drawing from this source
must decline, or spending will increase to unsustainable long-
term levels. It is also unclear whether major donors will be
able or willing to continue to provide substantial new gifts at
previous rates in the current climate.
Much depends on what happens in 2009, and whether
the fiscal stimulus developed by the Obama administration
will recharge the economy. It may also be the case, however,
that a prolonged recession and slow recovery will provide the
context in which institutions will re-examine their policies
and practices and bring an end to some of the extravagances
that critics of higher education have railed against for years.
Many outlays have been driven by competition for status and
prestige, as well as to provide students with accommodations,
services and facilities approaching a luxury level in some
schools. If families are forced to scale back in their spending
and expectations (or do so of their own volition), this pressure
will surely be brought
to bear on the colleges
and universities
where their children
enroll. Just as cultural
change is bringing
pressure to bear for
“green” campuses and
worksites, so might
pressure for a leaner,
more austere academic
experience, at a lesser
charge to students,
come to pass.
Institutional
leaders, board
members and government educational officials face the
following challenge: There is no evidence that the needs
for a highly skilled and well-educated work force are going
to diminish, given the technologically driven, competitive
global economy, whatever course the economy takes toward
recovery. At the same time, the conditions that provide access
and opportunity to complete various forms of postsecondary
education and training are languishing in this country, with
performance over the past quarter century in improving
degree output per capita essentially flat.
Furthermore, other developed countries are surpassing
the United States now in the percentage of the younger
population with degrees and certificates, so the benefits of our
first-mover status toward mass higher education have been
eroded. Finding the will and the way to use the educational
resources we have most effectively is now both a moral and an
economic obligation.
u
DavidW. Breneman is University Professor and Newton
and Rita Meyers Professor in Economics of Education at the
University of Virginia.
Numerous
universities have
reported endowment
losses of 25 percent
or more in 2008, as
virtually all asset
classes have fallen
in value.