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The governor's shotgun solution to New York's workforce challenge

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By KENT GARDNER
Policy Wonk
Rochester Business Journal
January 20, 2017

Gov. Andrew Cuomo, channeling the presidential campaign positions of Bernie Sanders and Hillary Clinton, has proposed eliminating college tuition for all families with income below $125,000. I was a tenured SUNY college professor in a former life—shouldn’t I be cheering the governor’s call for free tuition for the children of nearly three-quarters of New York’s families?

But I’m not. Let me try to explain.

First, is “college for all” the right solution to our employment challenge? That jobs for unskilled and semi-skilled workers are shrinking and paying less is indisputable. If this were largely because most jobs require four years of post-secondary education, then college for all would be the right solution. But much of the gap is driven by mechanization and global competition for unskilled and semi-skilled labor, not simply due to the increasing demands of the modern job. I’ll leave a deeper discussion of this problem to another column.

With more workers available, more and more employers require a four-year degree—whether the job requires it or not. Why? Because they can. And they assume that this requirement gives them a stronger pool of candidates. Unquestionably, New York should be spending more on post-secondary education. Supporting the cost of tuition for higher education could be part of the plan. 

My time in a college classroom convinced me that much of what students, parents and taxpayers spend on college is wasted. Many college students are simply putting off life’s hard decisions—they do only what they must to avoid flunking out. This is quixotic, I know, but higher education would be more valuable if a mandatory year of public service or employment became a college prerequisite.

Second, this proposal challenges us to ask what distinguishes public and private higher education. New York is different from Illinois or Texas or California in the state’s longstanding reliance on private colleges and universities. Of the state’s nearly 200 schools offering a four-year degree or higher, 130 are private. Nearly half of all undergrads at four-year schools attend private institutions and two-thirds of all graduate students attend a school outside SUNY or CUNY. This is a different conversation at the K-12 level where the vast majority of students attend public schools.

Yes, those figures include students coming to New York for college from other states—but that’s a good thing. Higher education is one of New York’s biggest “export” industries, attracting dollars to the state from outside the state economy.

The governor’s proposed Excelsior Scholarships will surely weaken New York’s vast and successful private college network. And if history is any guide, SUNY and CUNY will still be run like New York State departments—an increase in “sales” (i.e. enrollment) is no guarantee of more money for faculty or facility (tuition goes into the general fund and may not change the local budget). Many public college presidents know growth to be a troubling phenomenon as budgets don’t expand to adjust. The scholarships could push many vulnerable private schools over the edge while creating a management nightmare on the public side.

There is no “public college” approach to teaching microeconomics or general biology. The dominance of tenure in higher education allows faculty wide latitude over what they teach. For that reason alone, it is impossible to argue that the content of the degree is different in the public and private systems. Nor does “public” status confer higher quality. Our reflex is to assume that the quality is higher on the private side, although there are many counter-examples. If education quality is higher on the private side, is this a state asset we should threaten?

Third, if taxpayer-supported higher education is about access across the income spectrum, then we should do a better job of targeting the funds provided. Taxpayers provided $3.1 billion to SUNY in 2015. The benefit of this funding is reduced tuition for all state residents, regardless of income. That’s a pretty blunt instrument if the goal is to promote access. The Excelsior Scholarship exacerbates the problem by cutting tuition altogether for families earning $125,000 or less. That’s about three-quarters of all families in the state. This may be good politics, but it is a very crude policy tool.

Tuition is only part of the cost of college. The largest expense is the cost of not working. Our neediest cannot afford to keep a productive member of the family out of the labor force for yet another four years after high school.

The student must also be housed and fed. Room and board isn’t free at home and is vastly more expensive at a residential college.

Fourth, New York already has a competitiveness problem that high taxes reinforce. Spending more on post-secondary education is a good thing—but what can we afford? These Excelsior Scholarships are proposed as an entitlement with an “expected” price tag of $163 million. The problem with entitlements is that the cost is very hard to forecast. If state taxpayers support spending an additional $163 million on post-secondary education, then let’s create a program that allocates these funds according to need. Perhaps the state’s Budget Division is right—maybe that’s enough money to support free tuition for three-quarters of all families in the state. Frankly, I doubt it.

Let me go back to tilting at windmills: A more effective approach to helping our young people prepare for a productive work life would put all the money on the table and convert our higher education support to a voucher system. Let’s put our public colleges and universities on an intentional path to privatization while providing the tax support needed to guarantee true access to post-secondary education and training for everyone, particularly those at the lowest income levels. Our best public colleges would thrive, as would our best private schools.

I would attach strings to the vouchers for both the colleges and the students. The colleges would have to accept limits on spending and the students would have to demonstrate effective progress to retain funding, perhaps committing to public service of some kind upon graduation. The Excelsior Scholarships are directionally correct but are deeply flawed in their current form.

Kent Gardner is chief economist and chief research officer for the Center for Governmental Research Inc.

1/20/2017 (c) 2017 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


What You're Saying 

erwin allmann at 12:36:51 PM on 1/24/2017
Kent. Your proposal is a breath of fresh air. I don't think you say it explicitly, but shouldn't vouchers apply to non-degree programs such as vocational training too? Is it even possible to publicly subsidize education and NOT inflate the cost?
Kent Gardner at 5:36:32 PM on 2/7/2017
I think that we've made a fetish of a bachelor's degree--our state policies should embrace all post-secondary education. And we do support voc-ed, but not, perhaps, as much as we should. As to your second question, subsidies inevitably distort prices. The STAR program has ef...  Read More >

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