| Faculty Salary/Student Tuition Debate | John F. Stewart Department of Economics University of North Carolina - Chapel Hill |
In the fall of 1999 this campus was engaged in a hot debate about the proposed tuition rate increase. At the basic (and base) level nobody (students) wants to pay more for anything they buy and everybody (professors) want to get paid more for what they do. Can you get beyond shouting "I want my way" and consider objectively and dispassionately identify the issues and evaluate the evidence? What do we really know, and what are we assuming? That is (should be) what we are all doing in a university What follows are some of my thoughts and some information. Work through the class presentation and come to your own conclusions.
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Last update October 28, 2000
Full text of letter sent to DTH 10/18/99 (as yet, unpublished)
To the editor,
Last Wednesday the Daily Tar Heel reported that the University of California system was able to raise faculty salaries without increasing tuition. What they failed to report is that a California resident pays roughly $4,000 per year to attend on of the flagship institutions compared to $2,300 paid by a North Carolina resident to attend UNC. The cost to nonresidents in California is $13,000, it's about $11,500 at UNC. We are running a half price sale for residents and about 25% off for out of state students compared to the other "Public Ivies." What is this "Public Ivies" thing?
There are just a few states with public universities that are mentioned on the same page (or at least in the same chapter) as the most prestigious research universities in the country. Chapel Hill has been traditionally included in this select group, though near the bottom. Though some may find the concept objectionable, education at this level is incredibly elitist. While you can get a fine education at countless colleges and universities in the country, a degree from one of the top schools matters. It matters on medical, law, graduate school, and job applications. It also matters to the faculty. It matters on grant applications and it matters crucially in faculty recruitment. A major, if not dominant, factor in job candidates' decisions as to which job to accept is the academic ranking of the university and department recruiting them. The top ranked school will get the top ranked candidate. Hiring and keeping the top candidates are what keeps the institution's name in the rankings, what puts the $300 million of funded research in the coffers, and what makes a UNC-CH diploma shine more than on from University of Idaho.
Public universities in general, and Chapel Hill in specific, are in real danger of disappearing from the list of first class universities. The few states that had the financial will to provide a truly world class educational opportunity for their citizens are losing that will. This university has been in slow decline for the last decade, sliding toward mediocrity, lacking the resources to do otherwise. The economics department recently had an external review. The first paragraph of the report of the external reviewers is informative.
"Upon arrival at UNC, the committee chair was asked to prepare a report that described how UNC Economics could achieve a rank of 15-th in the country. The committee's report does not address this question. For UNC Economics to reach equivalence with Wisconsin Economics (currently ranked 15th) would take a massive resource injection. These resources simply do not exist at UNC."
That statement could be applied to department after department at UNC. Academic reputations are slow to decline. Our current students will still graduate from a university with national prestige. However as we lose our best faculty and are unable to replace them with equivalent quality, the future generations of students from this state will have lost their easy (and outrageously cheap) access to a major research university education and will have to settle for having gone to a good state college, fork up the twenty grand to go to the University of Michigan, or the 35 grand to go to Harvard (if they can get in). Increasing our tuition to the level of peer institutions may not stop UNC's decline, but it is one of the few options that is current available.
John F. Stewart, Professor
Department of Economics
University of North Carolina-Chapel Hill
Full text of letter sent to DTH 10/20/99 (published DTH 10/22/99)
To the editor,
With the publication of the editorial "Overpaid Whiners," the Daily Tar Heel produced the best argument I have seen for not increasing tuition. If a childish personal attacks on Professors Guilkey and Samulski is the best argument you can devise with the intellectual you have honed at this university, then no matter how little you have paid for your education you were cheated.
John F. Stewart, Professor
Department of Economics
University of North Carolina-Chapel Hill
The implication of the 10/20/99 editorial in the Tar Heel is that professors are terribly over paid. Here are some facts to consider
How big is the tuition subsidy?
Students currently pay about $2,300 ($11,500 for non-residents) per year for tuition. Compared to what it cost to educate them, is this a lot or a little. Appendix 5 of the Report on Faculty Salaries and Benefits provides some information of Educational and General Expense at UNC and peer institutions (data is from 1996-97 and this table is not shown in the WEB version of the report, but is reproduced below. FTE means "full time equivalent." These are cost per year per student. Based on these numbers, instate students contribute about 10% of the cost of their education.
| E&G Expenditures per Student FTE | Expenditure |
| UCLA | $38,129 |
| University of Michigan-Ann Arbor | $37,304 |
| University of Washington | $33,983 |
| UC-Berkeley | $32,837 |
| University of Wisconsin-Madison | $30,241 |
| University of Virginia | $28,568 |
| University of Florida | $26,906 |
| Ohio State University | $22,252 |
| University of Illinois-Urbana | $21,582 |
| University of Texas-Austin | $19,167 |
| University of North Carolina-Chapel Hill | $34,703 |
There are some things to think about:
My rant about the editorial page of the Daily Tar Heel
The Editorial Board of the Daily Tar Heel has shown consistently poor judgement during this debate, judgement that can only be characterized as immature. The viciousness of the personal attacks on Professors Guilkey and Samulski was totally uncalled for. These are both good men, productive scholars, and concerned teachers. The University gets far more out of these faculty members than it puts in in their salaries.
The students should speak out. Their interest are clearly at stake, but rationality and civility need to be maintained. The staff reporters of the Tar Heel have generally done an objective and complete job of reporting the facts, but the editorial board has come off the wall. The latest childish little snide remarks under the quotes of Trustees Cates and Davis on Friday's editorial pages are just, well childish. The sad part is the stance the Editors have taken will hurt the students not help. Like it or not the students are judged by the behavior of their institutions. If I were a student, I would be checking to see if there is a recall provision in the election code for DTH editors. The Tarheel editorial staff laments that the proposal will have a divisive effect on faculty-student relations yet their rotten child behavior is also divisive.
Letter to DTH from Rhode and Mroz:
Letter:
We are dismayed by the inaccurate and vituperative attacks on two highly productive scholars and leaders within our University in your editorial entitled "Overpaid Whiners" (DTH, October 20, 1999). These two faculty members, David Guilkey and Edward Samulski, proposed a solution to a serious salary shortfall at our University that would benefit future faculty and students. We are not aware of any realistic and viable alternative to their proposal; the best the DTH editorial had to offer was to express wishfully that there must be "other ways of raising the money." And that was done only after a backhand attack on Professor Guilkey's professional competence, and after a DTH claim that contagious whining, rather than careful and critical thought, was the reason Professor Andrews came to support the higher tuition increases.
Their proposal stems from the fact that faculty salaries at UNC-CH are currently among the lowest in the country at major research universities. A recent report by the Department of Economics demonstrates that the compensation paid to full professors at UNC-CH, adjusted for regional differences in the cost of living, is lower than that paid at 57 of 85 Research I Universities in the U.S. Among a group of peer institutions, full professors here ranked 14th out of 17 Universities. For assistant professors, only 20 of the 85 Research I Universities provide lower compensation. These salary disparities are not trivial, especially if one expects to continue to attract and retain outstanding faculty. We encourage you to visit the web page containing the full report on faculty salaries (http://www.unc.edu/depts/econ/reports/salaries.htm). There is little evidence that the legislature, at least over the next few years, will be able to provide adequate funding to remedy the situation. Minor tuition increases would make up at most only a fraction of the compensation shortfall at UNC-CH.
Forward looking students should not be too upset about a tuition increase, as their gain will be that a UNC-CH degree will continue to be regarded as a sign of outstanding scholarship and potential. It is equally important to put the tuition increase into a global perspective. After three years of $500 increases, tuition and fees at UNC-CH will be about the same as current levels at Wisconsin and South Carolina. In three years' time tuition and fees at UNC-CH will still be below those currently charged at UVa and Berkeley, and only about half of that currently charged to juniors and seniors at Michigan. A UNC-CH degree will remain an outstanding bargain, as a college degree from a top flight school is known to increase average salaries by about $500,000 over the course of a working lifetime. With that level of benefit, even four years of Duke's tuition is a pretty good investment.
Professors Guilkey and Samulski are not unaware of the hardship that a tuition increase may impose on some students. This was a difficult solution for them to have proposed. Their willingness to propose an unpopular and difficult remedy to the salary shortfall is a testament to the integrity and leadership that both regularly demonstrate within their home departments. If we, as professors, had to pick one universal idea to impart to our students, it would be that carefully reasoned arguments and ideas, however unpopular, are always welcome in an academic environment; ad hominem attacks are never appropriate or productive. We believe the DTH editorial board owes these University leaders a public apology.
Thomas A. Mroz and Paul W. Rhode
Department of Economics
Current Tuition setup Aids Rich, Hurts Poor
DTH March 20, 2000
Please consider a new policy initiative for the state of North Carolina. Knowing how difficult it is for young people to make the transition to adulthood, I propose we soften the blow by taking a couple of hundred million dollars of general tax revenue each year and providing several thousand $50,000 grants to some of the state's young adults. However, I suggest that we structure the grants to insure that a third of the grants go to the children of the 10% of North Carolina families with the highest incomes and that at least half of the grants go to children of the 25% of the families in the state who earn at least twice the median state income.
I would hope that by now the hairs on the back of the necks of members of Students for Economic Justice are beginning to bristle. However, before you storm Gardner Hall to burn me in effigy (or in person) realize that what I have just described is the distribution of benefits of the current UNC-CH tuition structure. As reported in the Tar Heel on March 2, more than a third of the UNC-CH entering freshman class came from homes in the top 10% of the income distribution (family incomes in excess of $100,000 per year). The median income of families of entering freshman was more than $80,000 a year, roughly twice the state's median family income.
Though you can quibble with my numbers if you wish, the truth is that a UNC-CH education costs about $50,000 more than is covered by instate tuition. The difference between what your education costs and what you pay is made up largely by general tax revenue. You are feeding at the public trough, and the majority of the feed is going to North Carolina families who need it the least. This may or may not have been the intent, but it is the result.
If you support the current tuition structure, you are supporting a tax-funded subsidy that flows disproportionately to the state's highest income families. How can you justify this result? Let's examine the logical possibilities.
You could argue that we should be using tax revenue to benefit high income people. This argument can be as simple as individual preferences. If you just are willing to state that you favor subsidizing high income families, then fine. We're done. That's exactly what we are doing now.
You could, however, take the argument a little farther than just whom you like and whom you don't. Maybe you could find some logical basis to argue high income people are more "deserving" than low income people. Or maybe income really isn't the issue here. If the state is going to subsidize higher education, shouldn't it put its money where the return is the highest and subsidize the best, the most deserving, students without regard to income? Anyone with any knowledge of the relationship between socioeconomic status and most measures of educational achievement knows that students from higher income families have, on average, higher test scores, higher GPAs, higher high school graduation rates and so forth.
Though this provides an explanation of why high income families get a disproportionate share of the subsidy, does it justify the subsidy? On this point, we often hear Frank Porter Graham's "education is a public good" pronouncement. Because the general population benefits from education, they should cover the cost. At risk of committing a heresy second only to publicly criticizing Dean Smith, Dr. Frank was wrong or partially wrong. Though higher education undoubtedly produces some external benefits, most of the benefits of education go to the individual receiving it. The student gets the consumption value of what many will recall as the four best years of their lives, the student gets the warm glow of the knowledge they accumulate, and the student gets the additional half million dollars of lifetime earnings a college education confers.
Even if the public benefits exceed the cost of the subsidy, support for the current distribution of the subsidy requires you to argue that 1) the public benefits more from educating a rich students than from educating an economically disadvantaged ones and 2) that in the absence of a subsidy, the rich are less likely to purchase education on their own than the poor. Neither strikes me as particularly plausible.
What if you can't buy the "more deserving" or the "public good" argument? How else could one rationalize the disproportionate subsidy to the rich? You could argue that taxpayers would never support a system of higher tuition for those able to pay while providing a generous subsidy to low income students. Maybe the only way to get affordable higher education for the poor is to subsidize a lot of rich families in order to get a little trickle-down. Or, I suppose you could argue that the current system of low tuition combined with increasingly inadequate state funding will ultimately diminish the quality of UNC-CH to the point where high income families will choose to send their children elsewhere leaving more room for low income students to receive a subsidized, albeit lower quality, education.
If you want to justify the current tuition structure using one of these last two arguments, I will have to admit with great sadness, you may have a point.
John F. Stewart
Professor, Economics
rev. 3/17/00
If your interested in a tuition structure that sound a little more like economic justice (at least to me). Check out Harvard. The highest income students pay $35k; the lowest income students pay $1,900.