by Lowman S. Henry
Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal
Governor Tom Wolf’s address to a joint session of the General Assembly in early February marked the official beginning of the annual state budget process. Higher education, specifically the Pennsylvania State System of Higher Education (PASSHE), became a dominant issue.
Unfettered by economic reality, the costs of higher education have skyrocketed. The result is massive student debt and never-ending calls for more taxpayer dollars to subsidize our education institutions. This despite declining enrollment and an economy more in need of individuals trained for technical jobs or skilled in the trades.
Adding fuel to the fire, the governor proposed diverting more than $200 million from subsidies to the state’s horse racing industry to pay for scholarships or to help reduce the debt burden for students attending state-run colleges. Most of the money to pay for the scholarship program would be diverted from the Horse Racing Development Fund.
Revenue to supply that fund is generated by taxes from the slot machines that now dot the commonwealth’s landscape. That is ironic because casino gambling in the state began as a plan to place slots at race tracks in an effort to save the then floundering horse racing industry. What gaming has become is a subject for another day, but taking away that revenue stream resulted in predictable howls of protest from those in the equine community.
Governor Wolf’s solution to every problem is to spend more taxpayer money. He is especially fond of throwing more dollars at education, without ever demanding those dollars be spent prudently and with no means of measuring quality. Likewise, as predictable as Punxsutawney Phil emerging from his burrow, the reigning chancellor of PASSHE every February petitions the legislature for more money.
In so doing they have turned a blind eye to market forces. This is because most in the higher education community don’t view education as a product. While there is merit to valuing education for the sake of adding to the societal pool of knowledge or even for personal edification, the main reason for obtaining a higher education is to equip oneself to earn money – presumably at a higher level than one would have earned without a degree.
To that end, state system schools have become the retail equivalent of shopping malls – overbuilt behemoths with a rapidly declining customer base. According to the Allegheny Institute for Public Policy in Pittsburgh, enrollment at the 14-university system peaked in 2010 at 119,513 students. By the fall of 2019 enrollment had dropped by 20% to 95,494 students. Mansfield University saw an enrollment decline of 51%, while Cheney’s enrollment fell by 61%.
With a declining customer base, the schools have not only failed to contain costs but have actually increased both annual spending and debt. The schools’ combined financial liability has increased from $2.07 billion in 2010 to $5.46 billion in 2019. Pension liabilities are up 53%.
The decline in enrollment can be attributed to several factors. First, Pennsylvania’s high schools are graduating fewer students, thus the “customer base” is shrinking. Second, state-related universities such as Penn State and the nation’s private universities are doing a better job of attracting students.
And while all of the above have made adaptations to accommodate non-traditional students, adult continuing education, and on-line learning, they have failed to adequately respond to the fact the nation’s workforce has less and less need for classically educated individuals and a greater need for those with a technical education or ability to work in the building trades.
Yes, there will always be a need for those equipped with four-year college degrees and higher. But, the failure of the higher education community to contain costs and adapt to market forces has made such an education unaffordable for many potential students. This is especially true when high paying, family-sustaining jobs in manufacturing and the trades are readily available, and for significantly less cost for training.
In the age of Amazon, Governor Wolf and the higher education establishment are stuck in a brick and mortar world. They are over-built, inefficient, and fail to deliver a needed product. Cost containment, consolidation, and a realistic assessment of workforce needs are necessary steps. Simply giving them more taxpayer dollars will only make the problem worse.