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Liberal For You; Conservative for Me: Public Law School Financing

By Jeffrey Harrison

Those who study regulated industries know that regulatory bodies are less concerned with how much a utility spends than with how much is passed through to rate payers. This "above the line/below the line" idea applies in many, but not all, respects to higher education. State legislators are less interested in how much is spent by a University than they are about how much of that cost is passed through to taxpayers.

What this means is that one solution to budget cuts is simply to decrease class sizes (less demand for state funding) and raise tuition (to maintain the status quo). For a University unit, like a law school, that has the principal goal of maintaining the status quo or even expanding while so many others cut back, it works out fine. Of course there must be an agreement that the tuition raising unit gets to keep the tuition hike so, as one administration puts it, "dollars generated are returned to the benefit of the college whose students paid those dollars" -- to say nothing of the faculty and the programs they favor. This sounds a great deal like the idea that law schools should do what benefits those who pay the bills. Yes, the stakeholder/fiduciary duty model appears but only in a limited way -- very little mention is of made of taxpayers who still pay most of the tab.

This is a highly popular strategy for the faculty-beneficiaries but raises a number of questions. If that is the approach one takes to higher education, it means shutting down or downsizing departments whose students do not generate sufficient revenue. Good-bye humanities; hello giant classes. (Now, we don't want that do we? On the other hand, someone else should pay, right?)It's a very conservative view and completely at odds with the idea that some units of the system should cross-subsidize other units or even that tax payers should subsidize anything. Here again the public utility analogy comes into play. Most of those opposed to cross subsidizing others in the University probably think it is a great idea for taxpayers to pay their salaries and, in the case of utilities, for example, for some rate payers to pay more to subsidize life line rates for poorer rate payers. It is the "liberal when it comes to your pocket book and conservative when it comes to mine" philosophy of the elitists who control higher education.

Of course there is a possible extension of this new conservatism and that is privatization. The new approach is one that embraces privatization as long as it is beneficial to law teachers. In short, there is no principle involved, just the idea that a bit of conservatism is not so bad as long it means preserving the ends -- us.

Full post as published by Class Bias in Higher Education on January 27, 2009 (boomark / email).