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Education Transformation
State Schools Go It Alone as Public Funding Declines

Faced with declining support from the state, public university programs are trying to go it alone. Now the business school at UCLA, one of California’s premier universities, is going private (though the school prefers the term “self-supporting”). The school hopes to rely on private contributions and higher tuition. Inside Higher Ed reports

[T]he change at the Los Angeles full-time M.B.A. program is believed to be first time an existing UC program has been converted to self-supporting. Graduate programs at top publics in other states, including the University of Virginia’s Darden School of Business, have already made a similar move, though. […]

Only about 18 percent of the business school’s funding came from the state in recent years. In the future, only 4 percent will, none of it for the M.B.A. program, according to the university. The deal requires the Anderson School to pay UCLA on prorated basis for overhead, including maintenance. […]

Even though California’s budget picture has improved, UCLA administrators are not optimistic about long-term trends that show a decline in state support as a percent of the campus budget.

They aren’t the only ones waxing pessimistic. As the Economist noted in its recent overview of the sea change in higher ed, public colleges and universities throughout the United States have seen state funding drop in recent years. Institutions have been hiking tuition in response and may soon rely more on fees than on public support. Meanwhile, the MOOC revolution is taking off, though it hasn’t yet caused a large-scale disruption. We think the Economist calls it:

Since the first wave of massive online courses launched in 2012, a backlash has focused on their failures and commercial uncertainties. Yet if critics think they are immune to the march of the MOOC, they are almost certainly wrong. Whereas online courses can quickly adjust their content and delivery mechanisms, universities are up against serious cost and efficiency problems, with little chance of taking more from the public purse.

We recommend you read the whole thing (though it’s paywalled). For the same magazine’s optimistic take on the future of higher education, with which we agree, go here.

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  • Fat_Man

    How come we never hear the words: “the State cut its support, so we cut costs”?

    Just asking.

    • Jonathan

      Because the market says there are still plenty of students who want what they offer.

      And because, believe it or not, the staff expects to get paid.

      • Fat_Man

        Jonathan: I think you missed the point. Cutting costs in a service business means laying off excess people and cutting the compensation of those who remain.

        Second, charging what the market will bear is not the reason we maintain publicly sponsored educational institutions.

        • Jonathan

          You used the words “charging what the market will bear” not I.

          Service businesses don’t generally lay off people and cut pay when demand for what they offer is increasing, as it generally has been in public higher education.

          You may think that you can just cut faculty salaries in response to, say, a 50% cut in state support (inflation adjusted, per student). But in the real world of the higher education market, that just doesn’t work.

        • Jonathan

          P.S. You might ask the author of this piece if he is advocating a pay cut in his chaired position at his expensive little college with its nearly $50K tuition.

          When he leads the way at Bard, I might be more open to cutting costs at the local public college, where the expenditure per student is a small fraction of what it is at Bard.

  • Andrew Allison

    Face with declining support from the state, public universities are in denial. It’s especially ironic, given the rapid depreciation in the value of an MBA, that UCLA is taking its Business School private. One wonders whether the administration consulted the department. If so, either the faculty is clearly incompetent or the advice was ignored,

    • Jonathan

      Maybe they know something about their business that you don’t?

      • Andrew Allison
        • Jonathan

          Privately funded business schools are not exactly a new thing — e.g. Stanford, Chicago, Harvard, Wharton …. and there already are some elite public business schools that have essentially gone private, see the link you posted.

          UCLA is a highly ranked program, I don’t see why they should not be able to make it as an essentially private operation.

          As I said, perhaps they know something about their business. Of course, that could be wrong. But I would not bet on it.

          • Andrew Allison

            Just how does your response address “But evidence suggests many students are misguided in their belief that an MBA will transform their prospects. Indeed, it appears many are being encouraged to take on student debt they might never be able to repay.”?

          • Jonathan

            My response addressed your original post, if you remember it. About the viability of UCLA’s path.

            Is an MBA not worth it? I won’t go by the word of a cynical Stanford business school (!) professor.

            It varies from person to person, I’m sure. If people don’t think UCLA is worth it, they should not attend. But I think UCLA will do just fine.

  • Jonathan

    It’s ironic that a professor at one of the spendiest little schools in the country is always celebrating the supposedly coming higher education “revolution.”

    • Andrew Allison

      Might I suggest that it’s an expression of intellectual integrity. Isn’t it rather exceptional for a member of the academy to promote its modernization?

      • Jonathan

        I’m more inclined to think it’s cynicism and a feeling of being above it all.

        Now if he quit his tenured professorship at Bard to demonstrate his “intellectual integrity” I might be impressed.

  • FriendlyGoat

    I don’t know if it will be Udacity, or Sal Kahn, or somebody else, but SOME entrepreneur is going to do a compete end run around the traditional college model—-including around that of the existing for-profits. It’s only a matter of time until someone cracks the “accreditation” egg and develops alternatives that employers will accept.

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