Tapping ‘Undiscovered’ Resources for Higher Education

By Thomas Lindsay Ph.D

Nearly everyone knows that college tuitions have been skyrocketing. Over the past quarter-century, tuitions have jumped 440 percent, nearly twice the rate of health care and three times faster than inflation. This has spiked student loan debt, which at $1 trillion now exceeds total credit card debt or automobile loan debt.

These unsustainable increases owe to rising university expenses in two areas: administration and buildings and maintenance. “Forty years ago,” reports Benjamin Ginsberg in the Washington Monthly, “U.S. colleges employed more faculty than administrators. But today, teachers make up less than half of college employees.” Over the last 40 years, “the number of full-time professors increased slightly more than 50 percent, while the number of administrators and administrative staffers increased 85 percent and 240 percent, respectively…. Overall university spending increased 148 percent. Administrative spending, though, increased by a whopping 235 percent. Instructional spending, by contrast, increased… 20 points less than the overall rate of spending increase.”

Worse is the increase in the cost of buildings and maintenance, which have led the average university to incur increases in long-term debt cost near 12 percent, interest payments increases of 9 percent, and plant costs of 7 percent. All this compared to 5 percent increases on instructional costs.

Faced with these unsustainable cost increases, universities have had but two options: increasing tuition and/or creating new sources of funding. The results of this approach, as hard-pressed students and parents know, is a diminution in college access, an economy-dragging leap in student loan debt, and a greater reliance on debt by universities. A 2012 Bain study shows that universities are now so debt-plagued, overbuilt, and thinly stretched that one out of every three finds itself in a financially unsustainable position. Thus many universities have opted for cost-cutting measures that undermine their educational mission, such as limiting their classes offerings, reducing admissions, ending summer programs, and extending the time to graduation.

But even these mission-eroding measures will not save some schools from having to close their doors forever. Moreover, this brew of unaffordable or inaccessible higher education is poison to an economy dependent on skilled graduates. It hampers productivity, and, with it, our competitive position in global trade.

To address this crisis, are our only choices raising taxes or tuition further versus cutting back on quality and access? Happily, there is at least one proven alternative: Universities can cut non-teaching expenses and thereby help keep tuitions down and access up by increasing their renewable energy-production capacity.

Some K-12 schools have already begun to do this with the help of public-private partnerships. In an EnergyDigital.com article, Russell Freitas, Superintendent of Firebaugh-Las Deltas Unified School District, wrote that “Solar energy projects for public schools are essentially revenue enhancements for school districts which directly benefit the students and taxpayers. During these past ten years, school districts have experienced the most difficult financial times and because of the savings [the district’s] solar project has created, we are able to bring music instruction back to the District.”

Freitas’ Fresno County district is not alone in grasping that renewable energy generates additional, ongoing revenue for use by schools in fulfilling their core mission. According to the Solar Energy Industries Association, over 500 schools in 43 states have installed solar PV generation. “The only way to save money is by cutting utilities (e.g., electricity),” remarks David Peterson, Superintendent of the Scottsdale, Arizona, Unified School District.

The Los Angeles Community College District is partnering with Chevron Energy Solutions in an effort focusing on: (1) renewable energy; (2) more efficient HVAC systems; and (3) active energy-use monitoring. This promises to save $400 million over the partnership’s life. Also in California, the Contra Costa Community College District has partnered with Chevron on a solar-energy efficiency project to return $70-plus million in energy savings. Schools regard the returns from such conservation as “found money.”

The role of the private sector here is indispensable. It fulfills this role simply by doing what it is good at: finding or creating sources of capital and developing and deploying best practices and technologies. It is inefficient for public-sector institutions like schools to attempt these functions when ready private-sector alternatives are available. Capitalizing on the private sector’s financial resources, as well as its technical, technological, process, and management expertise, schools can count on revenue from renewable energy production, conservation, and active management (efficiency), revenue to reinvest in education.

Other benefits than savings accrue to energy conservation projects. Because the energy savings “stay local,” the local economy is bolstered by the multiplier effect, in the process, growing the tax base for schools. Moreover, the environment benefits through these programs’ reductions of carbon emissions. Finally, these projects provide hand-on ties to STEM skills at K-12 institutions as well as enhancing engineering, science, and math skills at the postsecondary level. In the course of its partnerships, Chevron, for example, works with hundreds of clients in K-12 and higher education developing curricula, materials, training, and activities to integrate the science, math and technology used in its engagements (e.g., solar installations) into existing educational programs.

In the midst of so much bad news about escalating education costs over the past quarter-century, it is encouraging to see that solutions exist and are beginning to be implemented. Cost-cutting need not diminish education quality. We can have both. More schools need to embrace these innovations. For the sake of our students, they need to do so quickly.

Thomas K. Lindsay, Ph.D., directs the Texas Public Policy Foundations Higher Education Center and is Editor of the higher-ed reform website, SeeThruEdu.com.

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