A crisis persists across the nation.
Public higher education funding in Oregon, as well as in other states, remains low. Dismayed university presidents reacted to Gov. Kate Brown’s proposed 2017-19 budget for its flat fundingof the prior biennium’s $667.3 million.
In their January letter to the governor, the presidents warned that unless the Legislature improves her budget by an additional $100 million, students will face tuition hikes. They wrote: “To keep tuition increases below 5 percent at most universities, and also preserve current financial aid and student support services, state investment in the Public University Support Fund (PUSF) will need to increase by at least $100 million above the Governor’s Budget — in the 2017-19 biennium.”
The timing of their protest couldn’t be worse. The state faces a $1.7 billion budget deficit next biennium. A 2016 ballot measure to raise new revenues might have closed the gap, but corporate opposition to the gross receipts tax proposal ensured its defeat at the polls.
Political context notwithstanding, however, public universities in Oregon must still confront their budget prospects and the impacts on the students they serve.
As these leaders noted, the funding dilemma has caused college retention and graduation rates to remain either flat or decline. Soaring college tuition, combined with mounting college debt, has impacted college access and affordability, especially for first-generation and low-income college students. The presidents point out:
For two decades, universities have had to cut staffing and services for students and raise tuition to meet the challenges of funding losses and scarce budgets. The impacts of these large tuition increases and reduction in services have taken their toll on Oregonians. Retention rates, and at many universities graduation rates, are down or stagnant and many students can no longer piece together a financial aid package of grants, loans, and work sufficient to fund a college education. Too many Oregonians are at risk of taking on college debt but not earning a degree.
University presidents have good reason to be concerned. The State Higher Education Executive Officers Association (SHEEO) reports that between 2008 and 2014, the number of Oregonians attending college grew from 129,000 to 165,000 before dropping to 155,000 in 2015. Even at this lower threshold, 20 percent more of Oregon’s students are enrolled, as compared to rates that existed prior to the Great Recession.
During the same period, Oregon’s educational appropriations per full-time equivalent (FTE) — adjusted to 2015 dollars — plunged from $5,991 to $4,788 — a 20 percent decline before the recession.
State funding has declined at the same time as college tuition has skyrocketed. In 2008, net tuition revenue per FTE stood at $5,301. By 2015, however, it climbed to $7,693 — a 45 percent increase. Overall, Oregon has outpaced the national average by 28 percent.
The presidents’ letter also highlighted the fact that Oregon has shifted the obligation of fundingcollege education from the state to students and their families.
What Economic and Political Factors Have Contributed to Oregon’s Higher Education Financial Crisis?
David Harvey (2007) and LoïcWacquant (2010) are among a group of social theorists who argue that the loss of higher education funding is the result of the movement from the welfare state toward the neoliberal state.
Harvey (2007) describes the neoliberal state as the “prime agent of redistributive policies.” Its function is to reverse investments from publicly owned enterprises, retirement funds and state agencies to private businesses. The neoliberal state is able to achieve these measures through “privatization schemes” and rollback of state expenditures on social services, including public education, unemployment benefits, Social Security, Medicare and childcare.
Moreover, tax code changes favoring upper-middle-income households, corporate tax cuts and business incentives, and state-funded agribusiness subsidies are artifacts of the neoliberal state’s upward distribution of wealth and capital.
Complementing Harvey’s assertions, Wacquant (2010) notes that the neoliberal state operates on two levels. On the first level, it argues for “small government” as it relates to restrictions on the business world. By reducing regulations, such as those concerning the movement of capital in domestic and foreign markets, this “less is more” approach gives corporations freer reign. On the second level, it supports “big government” with respect to oversight and accountability. An example of this activity is the restriction of public service expenditures. Wacquant refers to this form of strict accountability as “authoritarian oversight,” which applies auditing tools and surveillance measures to monitor, regulate and reduce state program investments.
Natalier and Clarke (2015) claim that as the neoliberal state retracts its obligations to public services, it shifts the responsibility of public education funding to individuals, who as neoliberal subjects, are forced to obtain degrees and certificates as a form of investment to improve their future prospects.
In a similar vein, Huisman and Currie (2004) identify several causes for higher education fundinggaps, including the fact that the relationship between the neoliberal state and public universities has changed. The authors suggest that universities have adopted efficiency and value-added models from business in an effort to manage with less.
Finally, Davies (2005) explains that the neoliberal state has effectively eroded the financial obligations of the state to public institutions, including public higher education. He writes thateducation as a public good is being reconfigured as a private good. Davies explains that the neoliberal state has redefined college students as neoliberal subjects whose adaptability, mobility, and flexibility with respect to market demands has transformed them into consumer-citizens.
How Might Oregon Solve Its Higher Education Funding Woes?
It might look to corporations doing business in the state, who pay the lowest corporate income taxes in the country.
According to a report by the Council On State Taxation (COST), Oregon is among a group of states with the lowest total effective business tax rate (TEBTR), which represent the ratio of state and local business taxes to private sector gross state product (GSP) — the total value of a state’s annual production of goods and services by the private sector. Oregon’s 3.6 percent TEBTR is lower than the national average of 4.6 percent.
The Oregon Center for Public Policy notes that corporate income taxes constituted 18 percent of the Oregon’s General Fund revenues in the early 1970s. Through tax code changes, corporations were able to cut their share to just 7 percent today.
In addition to the low corporate excise tax rate in Oregon, another cause of the state’s low ranking is that it is one of five states with no sales tax. Nationally, by contrast, sales taxes constitute 21.3 percent of business taxes.
As the COST report notes: “If sales tax revenue is excluded from TEBTR on GSP calculation for all states, Oregon’s TEBTR stays at 3.6% but moves from the 6th-lowest TEBTR to the 26th-lowest rate.”
Clearly, raising corporate taxes is the best path to adequately funding Oregon’s higher education system. Despite the fact that corporations killed the most recent attempt to raise their fair share, they benefit from a well-educated populace. They cannot have it both ways. The question is whether politicians and voters will have the foresight and courage to try again in the future. Investing in Oregon takes all of us.
Davies, B. (2005). The (im)possibility of intellectual work in neoliberal regimes. Discourse, 26(1), 1-14.
Harvey, D. (2007). Neoliberalism as creative destruction. The ANNALS of the American Academy of Political and Social Science, No. 610, 22-42.
Huisman, J. & Currie, J. (2004). Accountability in higher education: Bridge over troubled water? Higher Education, 48(4), 529-551.
Nartalier, K. & Clarke, R. (2015). Online learning and the education encounter in a neo-Liberal university: A case study. Higher Education Studies, 5(2), 62-73.
Wacquant, L. (2010). Crafting the neoliberal state: Workforce, prisonfare, and social insecurity. Sociological Forum, 25(2), 197-220.