July 8, 2015

Michigan Cuts State's Share of University Student's Education Costs, then some Politicians Blame Universities for Tuition Increases.

So far, Wayne State University, Eastern Michigan University and now Oakland University are the first of Michigan's public universities to dare to increase tuition above the Michigan State Government's tuition cap. Breaking this cap results in a penalty through the loss of a portion of the State's funding support. However, these universities gain more funding through the tuition increases. Of course, sure enough, I hear sound-bites on the radio from State appropriation committee members suggesting that they add more teeth to penalize these universities further for raising tuition far more than the rate of inflation. Universities, in this State and around the country are accused of gouging students and wasting money. However, what these same politicians fail to mention is that they have also spent the last 20 years dramatically decreasing the State's percentage contribution to our student's education costs. As a matter of fact, in 2015, Michigan contributes a tiny 16% of an Oakland University student's education cost, compared to the early 1980s when Michigan contributed around 70% of a student's education cost. Your kid's and my kid's college tuition has increased more than the US inflation rate since 1980, but that is not a correct comparison. The education costs of a student at Oakland University has only increased the same as inflation since 1980. So why has the tuition component grown faster than inflation? Because, our State has dramatically decreased its contribution the education costs pie. If you want to see the numbers, and you like facts more than ideology, read on.

Lets use real numbers. Here at Oakland University in 1980, the in-state undergraduate upper tuition was $1,136 (US)*. In 2013, my Son began his first year of University and we saw that tuition was $1300 for just one four-credit course, for just one term. Take four courses each term and his tuition in 2013 was $10,400 US! Why almost 780% tuition inflation compared to 1980? Is my college professor salary driving the increase in our kid's tuition, as some politicians claim? If so, based on that 780% tuition inflation a professor making $29,000 in 1980 would now be making $255,000 by 2013. However, a quick check of public data confirms that most university professors in Michigan make less than $80,000. At Oakland University, the minimum allowable base salary for a new Professor is as low as $41,000/year. So, if the actual cost of a public university education, and Professor salaries, has only increased with inflation, then why has tuition ballooned larger than the inflation rate? Simple. What has changed is the percentage of a student's educational cost supported by our state governments. An easy comparison of these numbers in 1980 and 2013 makes it perfectly clear why our kids have to pay so much more tuition than we did in the 80's. None of these facts, with numbers, seem to be reported or explored by our regular news media outlets. So lets talk numbers. 

First, we can use an inflation calculator to find the answers we seek. I used one at the "US Inflation Calculator" website: 


Entering $1200 into the calculator for the year 1980, we find that inflation from 1980 to 2013 accumulated at a rate of 182.7%. Thus, $1200 in 1980 would become $3,393 in 2013. For my university (Oakland University), this means that the increase in tuition that is accounted for by inflation is only $2,193.

That still leaves a mysterious $7,007 of tuition increase to explain. If its not paying professors more money, where is it going? Simple, its going to replace the State's funding contribution towards a student's total education cost that has been gradually cut since 1980.
That is, the true cost of a University education. What was the real cost of this education in 1980? Wasn't it $1200 in 1980? No, TUITION was $1200 in 1980. The total cost a student's education in 1980 was about $4800. Our share of that cost was about 25%, or tuition ($1200). The other 75% came from State to the Colleges and Universities on a per student basis. That is, from our tax dollars that were invested in educating our workforce, needed to keep the economy and your businesses working as we compete in an advancing world economy. If we determine the cost of our education adjusted for inflation, that $4800 education cost from 1980 becomes $13,570 in 2013. 

In other words, the cost of a college education is completely accounted for by the US inflation rate and it has nothing to do with anyone getting rich at your expense. Universities, similar in size to Oakland University, can educate our kids for about $13,000 to $14,000 per year. THE REASON my son's full time tuition was $10,400 was because many States no longer invest 75% toward that education cost, as they did in 1980. Our elected officials in Lansing Michigan, for example, had reduced the State's contribution to about 25% in 2013, compared to 70-75% in early 80's. 

So now you have the scientific truth about your kid’s tuition. While the cost of education is indeed more than it was in 1980, this cost increase is accounted for by the accumulated US inflation rate across the entire economy. Education costs in 2013 are not more relatively expensive than other goods and services in other sectors of the US economy. In a public university, tuition is our share of the education cost that we split with our States. Our State governments have reduced their relative contribution to this education cost, and  increased the student's share of their education cost. That is the reason tuition in my State has increased by 780% since 1980. 

Inflation, by the way, affects everything in our economy. If our States were collecting taxes at the same rate in 2015 as they were in 1980, and transferring the same relative percentage of student funding to our Colleges, then your child's tuition could have been about $3,460 based on the accumulated US inflation rate of 188.6%.

Instead, what we have is a real divestment in our children's higher education in 2015 as compared to 1980. This is true for potential students in college skilled-trades programs or pre-medical students at Oakland University. While its just my opinion, I doubt this change will be good for our ability to compete in a world where most other countries are placing a higher priority on access to post-secondary education. If we are not willing to invest into our own future generations, then what is the point? Here is the real kicker though: we apparently vote for our governmental representatives, and we have apparently been letting them gradually cut our State's support of our children's college education. As many of our State legislators are about my age, or older, I suspect they too enjoyed $1200/year tuition when they went to college and could make their entire year's tuition working each summer. How soon they forget how they benefited from State support of their own education.

(( I must add a post-note regarding the fact that the new president of Oakland University (where I work as a professor) Dr George Hynd has become one of the first University presidents, (along with Wayne State and Eastern Michigan's) with the backbone to finally stand up in a public forum and refute the foolish game of governments divesting in Michigan student's education. I asked him about this very situation when he was one of our final candidates for OU President last year, and specifically wanted to find out if he would publicly dare to speak this truth. He seemed willing to do just that and while faculty votes were not binding to the board of trustees, it was a key reason I voted Dr Hynd as my personal preferred choice. Until now, University and College Presidents have been unwilling to rock the boat and attract the wrath of state appropriations committees by pointing out that the education cost had increased only with inflation and that tuition is too high because our politicians have legislated their support away. 

So, this week there are stories Michigan's media about state representatives suggesting there should be some more penalties for OU and EMU and other universities daring to break their suggested CAP on tuition. However, now that they have forced Michigan's state universities to evolve an operating budget that only gets 16% or less from the State, there is not much more for legislators to strip away from your kid's and grandkid's college education support. So, maybe more of Michigan's state university Presidents will start to speak up too. There is not much more to loose. 7/11/15  KPM)


First blogged in May 2013, updated July 2015

(*Tuition in 1980 from the Minutes of the Oakland University Board of Trustees, Dec 6, 1980).

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