Wealthy UVa Deserves Bailout?
How does that make sense?
By Steven Roy Goodman
Charlottesville Daily Progress
When I first saw the request for economic stimulus funds for wealthy higher education institutions, I thought there had to be a mistake. One of the signatories, the University of Virginia, owns $600 million in liquid securities, $1.8 billion in hedge funds and $1.6 billion in private funds. Nonetheless, UVa is part of a coordinated effort to convince Congress to "bail out" public colleges and universities with a $40 million federal gift.
Let's put this in some perspective. The University of Virginia's endowment, which is supposed to enable the university to invest in educational initiatives and weather financial hardships, is larger than the Gross Domestic Product of Barbados and Grenada combined. Instead of dipping into the enormous pools of money that it already owns, UVa has decided to seek additional outside revenue to fund its own construction and renovation projects.
This is a little like the Queen of England asking factory workers to help underwrite silk curtains in Buckingham Palace. Few question that the Queen should live in comfort. But who should be paying for that comfort?
Back here in the United States, our universities continue to charge students up to $200,000 for a four-year education - and still somehow need more money. Consider higher education financing in one of the other former colonies. The 263 colleges and universities in Pennsylvania collect more than $4 billion in tuition each year, but Penn State says that it also needs emergency funds.
I am an educational consultant who helps students find and apply to the best schools for them. My students and families tend to look at education positively, but are increasingly interested in financial aspects of the university world. Parents regularly ask me why universities don't reach into their own bank accounts if they need more money. (Answer: they don't need to if someone else will pay their bills.)
If policymakers decide to move forward, they should ask for some transparency in return - just like they have asked the auto industry and the securities industry. In the education sector, there are two long-standing disclosure suggestions that have never made their way into federal law. In exchange for increased funding, Congress can:
- Require universities to report to the general public the number of administrative positions on campus each year and the cost to fund these positions. This would allow taxpayers to see where their money is going and to clearly track the rate of growth in campus bureaucracies. To be sure, some universities like the University of California Davis have already studied the issue, but it would be helpful for others to see the results of such research.
- Require universities to report annually on the salaries of the top 100 employees and the largest 100 expenditures made to outside contractors. Universities already are required to file Form 990s, but these only shed light on the five highest-paid employees and contractors.
Both proposals would go a long way in convincing families and the general public that universities were doing their fair share to contain costs and earn additional taxpayer money.
Congress already mandates that universities comply with the Americans with Disabilities Act, various non-discrimination laws, and ethics guidelines for scientific research. Would it be so terrible to ask colleges and universities to clean up their rooms before getting an extra allowance?
Educational consultant Steven Roy Goodman is co-author of "College Admissions Together: It Takes a Family."