From Master Plan to No Plan: The Slow Death of Public Higher Education From Master Plan to No Plan: The Slow Death of Public Higher Education When Mitt Romney urges Americans to “get as much education as they can afford,” or when university administrators call the police as their first response to student protest, it’s Ronald Reagan’s playbook they’re working from. Photo taken at UC Berkeley in February, by jankyHellface

The California student movement has a slogan that goes, “Behind every fee hike, a line of riot cops.” And no one embodies that connection more than the Ronald Reagan of the 1960s. Elected governor of California in 1966 after running a scorched-earth campaign against the University of California, Reagan vowed to “clean up that mess in Berkeley,” warned audiences of “sexual orgies so vile that I cannot describe them to you,” complained that outside agitators were bringing left-wing subversion into the university, and railed against spoiled children of privilege skipping their classes to go to protests. He also ran on an anti-tax platform and promised to put the state’s finances in order by “throw[ing] the bums off welfare.” But it was the University of California at Berkeley that provided the most useful political foil, crystallizing all of his ideological themes into a single figure for disorder, a subversive menace of sexual, social, generational, and even communist deviance.

When Reagan assumed office, he immediately set about doing exactly what he had promised. He cut state funding for higher education, laid the foundations for a shift to a tuition-based funding model, and called in the National Guard to crush student protest, which it did with unprecedented severity. But he was only able to do this because he had already successfully shifted the political debate over the meaning and purpose of public higher education in America. The first “bums” he threw off welfare were California university students. Instead of seeing the education of the state’s youth as a patriotic duty and a vital weapon in the Cold War, he cast universities as a problem in and of themselves—both an expensive welfare program and dangerously close to socialism. He even argued for the importance of tuition-based funding by suggesting that if students had to pay, they’d value their education too much to protest.

It’s important to remember this chapter in California history because it may, in retrospect, have signaled the beginning of the end of public higher education in the United States as we’d known it. It’s true that when the Great Recession began in 2008, state budgets crumbled under a crippling new fiscal reality and tuition and debt levels began to skyrocket. It was also in the context of the California student movement that the slogan “Occupy Everything, Demand Nothing” first emerged, in 2009, when students occupied campus buildings in protest against budget cuts, tuition hikes, and staff cutbacks, and were crushed by the same kind of overwhelming police force that was later mobilized against Occupy encampments across the country. But while university administrators have blamed budgetary problems on state legislatures—and scapegoated individual police officers, like the now-notorious (and former) UC-Davis “pepper spray cop,” for “overreactions”—these scenarios are déjà vu all over again for those with long memories. When Mitt Romney urges Americans to “get as much education as they can afford,” or when university administrators call the police as their first response to student protest, it’s Ronald Reagan’s playbook they’re working from.

When Mitt Romney urges Americans to “get as much education as they can afford,” or when university administrators call the police as their first response to student protest, it’s Ronald Reagan’s playbook they’re working from.

Books such as Christopher Newfield’s Unmaking the Public University connect the dots between the post-’64 cultural politics of neoconservative backlash and the rise of Reagan as its standard bearer, but advocates of public education have been playing defense for so long that the vision animating the first century of American public education can be difficult to recall, much less recover or put forward persuasively. Thanks to the Reagan revolution, in short, we’ve forgotten that the United States was building public schools and universities for a lot longer than it has been letting them crumble. If we want to tell a different story than the decline of public education—and especially if we want to see it rise again—it behooves us to move past Reagan and the backlash, and to think more clearly about what they destroyed, and what we’ve lost.

For the first half of the twentieth century, the University of California was a nearly sacred institution in the Golden State. Before ever-rising tuition and apocalyptic budget cuts had become a regular feature of the state’s legislative season—now an annual ritual heralding the end of summer—the UC’s public mission was as close to a bipartisan consensus as you could find. In the 1950s, it would have been completely uncontroversial to credit the university with playing a critical role in building California into the Golden State: the UC was where nuclear energy and weapons were first invented and developed, where the foundations of California’s aerospace industry were laid, where the Cold War was being won (and where federal research grants were being soaked up and spent). Research done in its labs would make it possible for California wine to compete on the global market and to develop the Central Valley into a regional breadbasket. It was where the establishment sent its children out of choice, and where the rising middle class sent its children to be educated for free.

This consensus had everything to do with the fact the UC was built by a kind of Republican that doesn’t really exist anymore: the moderate. Progressive Republicans like Governor Hiram Johnson (1911–1917) laid the university’s modern foundations, while New Deal Republicans like Governor Earl Warren (1943–1953) made the university central to the state’s recovery from the Great Depression. After Republican president Dwight D. Eisenhower signed the National Defense Education Act into law, many millions of dollars in federal research money flowed into universities, and the GI Bill made reintegrating demobilized servicemen a patriotic duty. At the same time, every important political constituency demanded more universities: regional Chambers of Commerce complained of shortages of educated workers, while voters demanded more classrooms, more teachers, more dollars, more students. Politicians of all stripes were only too glad to comply. For three decades leading up to 1958, the president of the UC was Robert Gordon Sproul, a politically connected Republican with a legendary ability to marshal alumni support at the merest hint of funding cuts. As a 1947 Time magazine article jovially described,

a pack of onetime Berkeley campus big shots come out of hibernation whenever Golden Bear Sproul cries for help. In less than 24 hours as many as 70 bank presidents, manufacturers, brokers, lawyers, and physicians have assembled on call. Once briefed on the crisis, the Bears go back to their plush-carpeted lairs, pick up their telephones and growl at their senators and assemblymen.

The high-water mark for public education in California was the 1960 Donahoe Act, better known as the Master Plan for Higher Education. In its details, the “Master Plan” was a complex and unwieldy piece of legislation, an interlocking set of legislative benchmarks, expectations, funding commitments, and philosophical principles. But at its heart, it was actually quite simple and intuitive: the Master Plan was nothing more than a blanket commitment from the state to educate all the California students who wanted an education and, in doing so, to facilitate the kind of class mobility that has placed public education at the center of American civic life. The Plan was masterminded by UC president Clark Kerr and signed into California law by Governor Pat Brown, Democrats who brought to completion much of the work of their Republican predecessors. It was politically contentious, but was far from being a revolutionary document. Years later, Kerr would recall the early 1960s as an essentially conservative period, in which the development and momentum of the preceding decades were consolidated, systematized, and rationalized.

The Master Plan was meant to sort all college-bound high school graduates into three streams, and to make it possible for a student to move from the bottom tier to the top. The doors of the University of California were thrown open, tuition-free, for the top 12.5 percent of high school graduates. The top 33.3 percent could find a place in one of the California State Universities, which were also tuition-free. Everyone else, if they so chose, could go to one of the many California Community Colleges, which were open not only to high school graduates but also to qualifying non-traditional students. Perhaps most important, community college graduates had the opportunity to transfer to one of the UCs or CSUs to finish their bachelor’s degree, if their grades were above a certain point. In theory and to a significant extent in practice, anyone from anywhere in California could, if they worked hard enough, get a bachelor’s degree from one of the best universities in the country (and, therefore, in the world), almost free of charge. The pronounced social and economic mobility of the postwar period would have been unthinkable without institutions of mass higher education, like this one, provided at public expense.

The first thing to change was the price tag. Within living memory, all public universities in California were nominally free (fees were assessed, but were comparatively quite low). Today, California colleges and universities are comparably priced to their private competitors. Reagan began the process of privatization in 1969, convincing the state to relax its restrictions on the level of fees that could be assessed. By 2011, when UC officially switched from a system of fees to an explicitly tuition-centric model, it was simply admitting what had long been obvious; so-called “fees” were already high enough to constitute a tuition system. And as UC Faculty Association president Bob Meister pointed out in a widely circulated 2009 online open letter, “They Pledged Your Tuition,” the UC finances its many construction bonds by pledging the revenues it collects and plans to collect from tuition as collateral, effectively using its power to raise tuition indefinitely as a surety for its debts (of which it has many), and thereby ensuring that it will.

When we talk about the decline of public higher education systems such as California’s, however, rising tuition is only part of the story, and maybe not the most important part. Along with pushing instructional costs onto students, for example, the state of California has made it easier for state universities to balance their budgets by accepting more out-of-state students (and thus, fewer and fewer Californian students). Out-of-state students pay much higher tuition rates, but under the Master Plan, state funding was contingent on enrolling a minimum number of in-state students. As the state has withdrawn its commitment to fully fund its universities, it has progressively detached what funding remains from these kinds of commitments. Governor Jerry Brown may have put the final nail in the coffin when, in June, he vetoed specific enrollment targets for the UC from the annual budget. Moreover, since 2007, the extra $20,000 in tuition money that out-of-state students pay has gone directly to the schools enrolling these students—rather than reverting to the UC as a whole—perversely incentivizing each campus to take on fewer California students.

This gradual retreat from enrollment quotas only adds to a problem that has plagued the California system since its inception: too many applicants and too little space. Over the last three decades, the state has given up on increasing the total institutional capacity—the classrooms, dorms, and new campuses—that a continuously growing university-age population requires. This shortfall is not as immediately visible as red lines in planning documents, as politically explosive as enrollment targets, or as sharply felt by stretched family budgets. But the fact that the state has stopped keeping up with the demand for more higher education points to a slow but fundamental structural change underway in higher education as a whole.

Public colleges and universities have historically absorbed the bulk of this country’s college-educated population—perhaps three-quarters of the total—but it was only a massive postwar expansion of affordable public education that made a bachelor’s degree so broadly attainable in the United States, such that a college degree could come to seem more or less a prerequisite for middle-class life. Private universities absorb a relatively small percentage of the total demand for higher education in the United States—a percentage that has remained steady over the course of decades, even centuries. It is only because and to the extent that they built new colleges and universities that states like California were able to outpace population growth and increase the percentage of their citizens with advanced degrees. In the decades after the Second World War, the state of California built new facilities, campuses, and even entire universities at precisely the speed judged necessary to keep pace with student demand.

Today, the University of California is an eleven-campus system, but as late as the 1950s it had two campuses, in Berkeley and Los Angeles. Only as the movement to rationalize and revamp the system gathered steam in the late fifties did the university reach something like its present size and shape, with the establishment of six more general campuses in a single period of furious growth. In 1958, Santa Barbara College was upgraded to full university status and chartered as the UC Santa Barbara. In 1959, the UC Citrus Experiment Station was expanded to form the new UC Riverside campus, and the Northern Branch of the College of Agriculture was converted into what is now the UC Davis general campus. In 1960 the Scripps Institute of Oceanography gave birth to the UC San Diego. And in 1965 the UC Irvine and the UC Santa Cruz were built out of nothing at all. Each of these universities was a world-class institution almost out of the gate, making it possible for one-eighth of California’s high school graduates to receive a world-class education. Something like the same expansion occurred in the California Community College and California State systems during this period. Between 1957 and 1965, California established eight new CSUs—out of an eventual twenty-four—while more than half its present complement of 112 community colleges was built in the period between 1957 and 1978.

California essentially stopped building new colleges and universities at that point, and shows little sign of starting again, even as the demand for higher education is becoming more and more acute. The United States is one of the few major economies with a growing college-age population, and employers will need a more educated workforce in the future. A recent report by McKinsey & Co. projected that, by 2020, the United States will need an additional million students a year to remain economically competitive. Yet since 1965, California has built only one new campus for the UC system (in Merced) and three new campuses for the CSU system. Much more tellingly, it built only two new community colleges in the years between 1978 and 2000. The CSU system—the largest single university system in the country, with more than 400,000 students—has frozen its fall admissions cycle until after the November elections and has cancelled its spring 2013 admissions altogether. Indeed, it’s easy to imagine a scenario where, rather than expanding to meet new demand, universities built to educate the public, at public expense, begin to go under.

Two specific developments in post-Reagan California help to explain why this is happening: in 1978 California passed the infamous Proposition 13, greatly restricting the state’s capacity to raise revenue through property taxes; and in the 1980s it began one of the great prison-building booms of our time, or what historian Ruth Wilson Gilmore calls the “Golden Gulag,” expanding the incarcerated population in California by 500 percent between 1982 and 2000. While Proposition 13 dramatically limited the total revenue in the state‘s coffers, the prison boom diminished the percentage of total funds available for higher education. The portion of the shrinking general fund that could go to expanding public institutional capacity has decreased from around 17 to 10 percent since the late 1970s. For every $1,000 of personal income in California, the state invested only $7.71 for higher education in 2008, about 40 percent below the $12.86 invested as late as 1980.

If the mathematics are simple, the policy implications are complex. What has succeeded the Master Plan is no plan; instead of committing to make room for all students, the state now educates only those it has room for. When supply of a good or service is capped, economists expect first to see price increases and then to see rationing. And although the skyrocketing price of higher education has been most widely felt, the rationing of classes that teach necessary skills may prove to be just as much of a challenge. As the New York Times’s Catherine Rampell has reported, state colleges and community colleges are cancelling or otherwise limiting enrollment in technical, engineering, health-care, and nursing programs that are relatively expensive to teach. A North Carolina community college has a waiting list to get on the waiting list for nursing classes at a time when there is a severe nursing shortage in the country. Half of California’s teachers are educated in the CSU system. What if there is no fall incoming class?

If not in the public sector, where will tomorrow’s college students be educated? Not at nonprofit private universities. Most are comfortable taking in more or less the same number of students they have historically educated, responding to rising demand by making admissions more selective and raising tuition. They’re neither capable of nor willing to absorb students left behind by a collapsing public college system. This was a crucial reason for the growth of the UC system in the first place; in 1899, the president of Stanford argued that “if the State makes no provision for higher education there is no other agency on which we can depend to supply it.”

Future students will instead be increasingly educated in the for-profit sector, whose enrollment grew by 235 percent between 2000 and 2010, from 3 to 9.1 percent of all enrolled students. From 2005 to 2010, over 75 percent of newly accredited colleges and universities were for-profits. Lavishly funded in global capital markets—even as state budgets remain tight—for-profits now make up over 25 percent of all post-secondary institutions in the United States, and they show no sign of slowing.

It is worth taking a minute to understand how abysmal the numbers on the for-profit college industry really are. They show what a poor substitute for-profit education is for traditional public higher education, especially community colleges. This isn’t surprising: in addition to leading to price increases and rationing, conventional economics would suggest that capping the supply of quality higher education results in a type of “fake supply” or in attempts to mimic the supply at a lower quality.

Studies find graduates of for-profits leave with worse employment prospects than their peers at community colleges, in large part because these companies spend less on instruction than they do in pursuit of profit margins. Recent investigations found that for-profits have ten recruiters for every career services staff member, and several of the leading for-profits have no career services at all. If their programs lack accreditation for a specific occupational field, they often acknowledge this in fine print or other obtuse disclosures.

For-profit schools are also more expensive than their peers, with bachelor degree programs roughly 20 percent more expensive than at a flagship public university, and associate degree and certificate programs roughly four times the cost of a comparable community college. It therefore isn’t surprising that graduates of for-profit schools have the highest student debt loads, averaging $33,050 in 2008, compared to $20,200 for public school graduates and $27,650 for private nonprofit grads. Even with high dropout rates, 96 percent of for-profit students take out a student loan.

Government spending still structures the higher education market, however; for-profit schools get most of their revenues from federal funds. They also receive a disproportionate amount of student aid: while only educating about 10 percent of post-secondary students, they receive around a quarter of all Pell Grants and student loans. A recent Senate study found that “the 15 publicly traded for-profit education companies received 86 percent of revenues from taxpayers.” This sector couldn’t exist if the federal government didn’t provide this funding, and couldn’t thrive without a shortfall in state revenue.

The for-profit industry that we understand today is much different from the small, local certification programs that used to compose the industry. As of 2009, more than 75 percent of students at a for-profit college are attending one owned by a private equity firm or a company traded on a major stock exchange. Modern concerns with for-profits’ potential abuses—both in duping students and exploiting federal programs—didn’t begin until the expansion of GI benefits for higher education in the period following the Second World War.

In the early 1990s, for-profits were subject to a series of Senate investigations. Georgia Democratic Senator Sam Nunn noted that students were “[v]ictimized by unscrupulous profiteers and their fraudulent schools” and “have received neither the training nor the skills they hoped to acquire, and instead, have been left burdened with debts they cannot repay.” Nunn said this after the committee learned about an Ohio repair school operating out of a fruit stand and recruiters who targeted welfare offices and housing projects for enrollees. Current recruitment practices are just as bad, if not worse. According to internal documents recently made available by a Senate investigation committee, recruiters at the for-profit college ITT were given diagrams of a “pain funnel,” with a series of questions designed to “poke the pain” of potential recruits. A Kaplan document told recruiters that their interactions with potential students should be “all about uncovering their pain and fears.”

The hearings in the 1990s led to a series of for-profit sector reforms and regulations. One key regulation required that at least 50 percent of students be enrolled at a physical campus in order for a program to be eligible for federal student aid. A 1998 pilot program allowed some schools to go below the 50 percent threshold and still receive federal aid, in order to study the effects, but it was the George W. Bush administration that sought to comprehensively remove regulations unfavorable to the industry. A former lobbyist for the (for-profit) University of Phoenix, Sally Stroup, became Bush’s assistant secretary for post-secondary education at the Department of Education and led a successful effort to remove restrictions on for-profit schools, including the 50 percent rule, and to grant them greater access to federal funding. The legislation was only several lines long, and was sneaked into a massive spending bill, but it opened the door to an expansion of the industry beyond what most people could have imagined at the time.

The standard political criticism of the for-profit industry is that it exists only to vacuum up government subsidies; that it is a problematic byproduct of government actions. This diagnosis is perfectly in line with the Reaganite complaint against government interference in the workings of the market. If we look at California, however, we see that this critique has it backward. For-profit education flooded the market only after the state began to abandon its responsibility to create sufficient institutional capacity in the public system. The problem is not government action, but inaction. As the government gave up its Master Plan responsibility to educate California students, the for-profit sector expanded to fill the demand.

As the government gave up its Master Plan responsibility to educate California students, the for-profit sector expanded to fill the demand.

Education expert (and UC Berkeley scholar) John Aubrey Douglass has found a similar pattern in countries such as Brazil, Korea, and Poland, which modernized too fast for the public sector to keep up with demand. The for-profit sector absorbs and even monopolizes the very subsidies that were intended to foster mass education, while providing poorer outcomes than the public sector. But whereas this problem, referred to as the “Brazilian Effect,” arises in developing countries as they seek to build a public higher education structure from scratch, the United States suffers instead from decay.

Under the neoliberal public policy regime of the past thirty years, the United States has moved from providing public goods directly toward providing coupons for the purchase of those goods in the private market. The private market encourages choice, competition, and innovation, its proponents say, especially compared to the gray, static, and inefficient public sector. Government grants, subsidized loans, and tax breaks would unleash market forces and use them to tackle the problems of higher education.

Such an approach would work only if high-quality private universities increased the amount of students they were willing to educate—if, in other words, the supply of good education were “elastic,” stretching to meet the demand of additional students. Instead, students are finding an inelastic market with collapsing public provision. They face skyrocketing prices and the rationing of quality education, with for-profits purveying counterfeit goods to make up the difference.

Sometimes policy failures are accidental. Sometimes there is a trail of breadcrumbs. In the case of California higher education, it is hard not to notice that policy failures have meant big business for the for-profit industry. And in some cases, that trail of breadcrumbs leads directly to the men and women who run the UC. UC Regent Richard Blum, for example, is not only the largest shareholder in two for-profit universities, Career Education Corporation and ITT Educational Services, but also, as Peter Byrne reported in a 2010 exposé, oversaw investments for the UC’s $63 billion portfolio at a time when the UC invested in the very same two for-profits. The problem isn’t anything as simple as pure corruption, but the decline of the public university is corporate capital’s gain, and investment firms like Blum Capital Partners know this quite well. The educational infrastructure of the future—and in many ways, of the present—is being built out of the very same crumbling public sector that men like Richard Blum have been entrusted with stewarding.

Ronald Reagan may not have seen this coming when he first set out to destroy what he saw as the creeping communism of master-planned and state-funded public education. His vision at the time was essentially negative, reactionary. But the conservative project he put in place in California in the 1960s remains with us today. Reagan was the trendsetter in making higher education into a problem to be solved with fee hikes and police. Other governors approached this problem in different ways, but the decision Reagan made to begin the destruction of the Master Plan hangs over all of them. Today, we can clearly see the results. Limiting the ability of the government to plan for the education of its citizens has left us with the worst of both worlds: students and families with too much debt and too few options.

Aaron Bady is a graduate student at the University of California, Berkeley, and a blogger for the New Inquiry. Mike Konczal is a fellow with the Roosevelt Institute and writer of the Rortybomb economics blog.