Callan, Patrick M., & Finney, Joni E. (Eds). (1997). Public
and Private Financing of Higher Education: Shaping
Public Policy for the Future. Phoenix: American
Council on Education and The Oryx Press
Pp. xvi + 246
ISBN 1-57356-116-9
Reviewed by Andreea M. Serban
Rockefeller Institute of Government
April 24, 1998
The early 1990s brought the worst state budgets for
higher education in four decades. According to Gold (1995,
p. 3) "the early 1990s were stressful years for state
governments. Several governors described the fiscal crisis
as the most severe since the Great Depression." As a result,
"many states raised taxes and announced cuts in spending and
employment, with some particularly dramatic reductions in
higher education and welfare programs." While the decline in
state support for higher education is clear, less is known
about its effects on the public policies guiding colleges
and universities and their operations.
The book edited by Callan and Finney provides a
comprehensive picture of the major trends in the financing
of higher education, both public and private, during the
first half of the 1990s. The structure of the volume covers
two sections. Part One identifies patterns in public
spending and the changes in revenue sources for higher
education. It discusses the implications of the devolution
of responsibilities from the federal government to the
states and the possible changes for higher education policy,
including a perspective on privatization. Part Two includes
case studies of higher education finance in five states:
California, Florida, Michigan, Minnesota, and New York.
The four articles in the first section set the stage
for the detailed discussion of the five states in Part Two.
The first article, "The Price of Passive Resistance in
Financing Higher Education," written by Brian Roherty,
discusses higher education finance within the broader
context of public finance and budgeting at the state and
federal levels. It identifies major political, economic, and
demographic variables that influence policy development, in
general, and higher education, in particular. While the
comparison between colleges and universities, on the one
hand, and businesses, on the other hand, is not new in the
higher education literature, Roherty summarizes in "the core
businesses analogy" (p. 14) the characteristics that seem to
pervade the higher education environment in the 1990s and
that play a critical role in the level of state support.
From a budgeting perspective, the four "core businesses" of
state governments include: K-12 education, health care,
higher education, and public assistance. Within each state,
each of these four areas competes for the attention of
governors and legislators. Roherty contends that those
working in higher education fail to recognize the existence
of this competition or "do not understand the nature of that
playing field" (p. 15). This position is further complicated
by three other shortcomings in the higher education
strategy: the belief that higher education should not be
subject to the same set of rules applicable to state
governments; governance is "an excuse for why something
cannot happen, rather than ... an affirmative
responsibility" (p. 16); and the increasing difficulty for
those outside the academy to understand its mission. The
author concludes that "state government has in many cases
adopted a policy of passive resistance in financing higher
education. Governors and legislators ... have allowed
natural forces to take their course." (p. 21).
These "natural forces" are further explored in the
second article, "The Changing Landscape: Higher Education
Finance in the 1990s," written by David Breneman and Joni
Finney. The authors focus their attention on financing at
the state level and related policy issues. They review the
major revenue sources supporting higher education and
summarize the findings of the five case studies presented in
the second section, pointing to the type of policy responses
state governments provided in an effort to cope with the
fiscal pressures of the 1990s. These findings echo themes
that pervade the current public debates on higher education:
the shift of responsibility for financing higher education
from public and governmental sources to students and
families; the decline of higher education's share of state
budgets; the increase in student aid programs and reliance
on student loans rather than grants; the growth of tuition
discounting in private colleges and universities; and the
erosion of state mechanisms to promote college choice. The
way states responded to the changes in the finance of higher
education in the 1990s appears to support Roherty's belief
in a passive resistance. Breneman and Finney conclude with a
list of proposed priorities for higher education and issues
to be addressed by policy makers.
In the third article, "Shaping the Future," Robert
Zemsky and Gregory Wegner change the focus of discussion
from what it is to what it will be. They propose a new set
of critical questions for the way higher education is
financed: "... the basic questions concerning the financing
of higher education - 'Who pays? Who benefits? Who should
pay?' - will need to be re-asked, in some cases as a means
of distinguishing between the different missions that higher
education fulfills: 'What should be subsidized? From what
sources? For what purpose?'" (p. 67). The responses to these
questions will need to consider policy issues such as: the
role of state and federal governments; access to
opportunity; tuition and student aid policy; privatization
and the public good; technology and market forces; better
performance outcomes; linking funding to performance; access
and institutional capacity to change; and the quality and
quantity of publicly funded research. Before responding,
however, policy makers will need to agree upon a set of
guiding principles. Zemsky and Wegner offer and discuss five
such principles.
"A Perspective on Privatization," written by Robert
Zemsky, Gregory Wegner, and Maria Iannozzi, concludes Part
One. The authors briefly analyze the causes for, meaning,
and implications of privatization of colleges and
universities. Their arguments reinforce some of the issues
tackled by the previous articles. They contend that: "If, as
some suggest, privatization is an idea whose time has come,
it is largely because state agencies lack the resources, the
will, and, frankly, the insight necessary to reoder their
systems of postsecondary education - to satisfy the rising
demand for postsecondary education in an era of budget
constraints and growing uncertainty as to what kinds of
education best prepare a productive citizenry" (p. 77). The
authors believe that the evolution of higher education will
be largely determined by "how the rift between the
aspirations and goals of institutions is bridged to the
concerns and needs of the public" (p. 77).
Part Two of the volume concentrates on detailed
analyses of higher education finance in the five states
mentioned at the outset. The case studies describe each
state's political environment, governance, demographics,
state funding, tuition and financial aid, and the policy
responses of state governments and, to a lesser extent, of
higher education institutions during the first half of the
1990s. The common framework of analysis for all case studies
serves well the consistency of this section and facilitates
comparability. The authors of these chapters also discuss
unique factors that affected the financing of higher
education in each of the five states. The narrative is well
supported and enhanced by tables and charts that summarize
relevant statistical information. Although the case studies
present a wealth of information, the chapters are well
organized and specific terminology is explained such that
the reading is accessible to non-experts in the field as
well.
As the editors of the volume point out in the Preface,
"There will never be a permanent or simple solution to the
issues of financial responsibility for higher education, but
the long-term stakes are too high to allow the issue to be
settled by short-term policy drift. These issues require
national debate and state-by-state resolution" (p. xii).
This book has the potential to serve as a starting point for
such debates. It is the most up-to-date volume describing
and analyzing developments and trends in higher education
finance and a must-read for scholars and practitioners of
higher education, in general, and finance, in particular.
References
Gold, S. D. (1995). Fiscal Crisis of the States. Lessons for
the Future. Washington: Georgetown University Press
About the Reviewer
Dr. Andreea M. Serban is a research associate at the
Rockefeller Institute of Government, Public Higher Education
Program. She is currently working on projects dealing with
performance funding for public higher education, performance
measurement and reporting, and state budgeting and its
effects on and implications for higher education.
E-mail: serbana@rockinst.org
http://rockinst.org/higheduc.htm
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