Down to the core

Last April, University of Washington President Ana Mari Cauce picked up a purple shovel to break ground on the new Population Health building—a $230 million investment in reducing health disparities locally and worldwide. About $210 million of the project will be paid for with a donation from the Bill & Melinda Gates Foundation. Six months later, as the footings for the building emerged from the site, Cauce appeared across the Seattle campus at wǝɫǝbʔaltxʷ – Intellectual House to deliver her state of the University address. She was in a less celebratory mood.

After a decade of diminishing state funding, the quality and affordability of the University is in jeopardy, Cauce warned. “It’s time to sound the alarm that our great public service mission is at risk.”

Like many top public research universities nationwide, there is a tension at the center of the UW’s finances. While rising private donations have created pockets of prosperity, other corners of the University are struggling. State funding for higher education—the core of the UW’s operating budget and what pays for the majority of undergraduate teaching, basic operations and building maintenance—has declined in what public universities nationwide are calling a “lost decade” for public funding.

To weather the 2008 recession and balance their budgets, most states slashed support for higher ed. Here in Washington, state cuts chipped away about half of the UW’s per-student funding.

“We really haven’t recovered from that,” says Sarah Norris Hall, UW’s vice provost for planning and budgeting. Although higher education funding has ticked up slightly in recent years, a UW budget office study shows that Washington’s flagship university still receives among the least state dollars per student compared to 22 other top public research schools around the country.

***

On a late December afternoon in his office, Robert Stacey, dean of the College of Arts & Sciences, recalled what drew him to the UW three decades ago. In 1988, Stacey decided to leave his job teaching medieval history at Yale for a position at the University of Washington. Going west meant more to him than a better shot at tenure. It gave him the opportunity, he says, “to teach at an institution where middle-class kids like me could get a really good, affordable education and, if they did well, they could go anywhere in the world.”

Stacey often draws upon the past to make his case. His examples sweep from education in ancient Greece to the postwar baby boom. He turns wistful as he describes the rise and what he fears could be the decline of a public commitment to higher education.

During the heyday of public funding for higher ed, which began with the GI Bill after World War II, states met the demographic boom in middle-class, college-aged Americans by expanding and opening new campuses. “I think that model is up for grabs at this point,” Stacey says. “Whether it will survive or not, I don’t know, because one of the things it rests on is the idea that higher education is a public good and its purposes are greater than simply to provide workers for industry.”

When the conversation turns to budgets, Stacey becomes practical. The College of Arts & Sciences is a workhorse for the UW, he says. It grants 60 percent of all undergraduate degrees and most students, regardless of major, take their prerequisites in the college.

In the past three years, the college has lost 56 faculty members due to retirement or offers from other schools. Last year, for example, a recently promoted associate professor in chemistry left for the University of Wisconsin, Madison, in large part because of the cost of living in Seattle, according to Stacey.

In the decade since the Great Recession, as concerns about cost and student debt weigh on Americans across the political spectrum, the value of higher education is increasingly measured by how well students are prepared in certain high-demand fields like STEM, Stacey says. That means funding for less popular subjects can be hard to come by, he adds.

When professors resign or retire, money to replace them is scarce, especially in the humanities and social sciences, where enrollments are down. The history department, for example, no longer has a full-time faculty member who specializes in U.S. history between 1750 and 1900. “To not be able to offer a class on the Civil War and Reconstruction is really kind of embarrassing,” Stacey says.

But there are only so many ways to slice up the state budget. Unlike the federal government, states must balance their budgets. That means tough choices. Washington is also one of only seven states without a personal or corporate income tax, leaving it dependent on property and sales taxes for more than 50 percent of its revenue.

In most states, including Washington, Medicaid is one of the fastest-growing expenses, second only to K-12 education for the portion of the budget it consumes. When a recession hits and state revenues fall, taking money from higher education carries a certain logic in the minds of some legislators, who reason that universities can draw on tuition and seek private support, says Douglas Webber, a professor at Temple University who specializes in the economics of higher education.

Higher education is also an investment in the future—a future lawmakers may not be around to claim as a victory, Webber says. “Spending on health care will help people today in a tangible way,” he adds, explaining that legislators tend to prioritize immediate results for which they can take credit. “When you cut higher education, you’re not going to see any bad effects for the next two or three years or even decades.

***

In 2003, state money made up about two-thirds of the University’s general operating costs. Today it covers just one-third. Tuition fills much of the gap left by the loss of state dollars. Still, despite a 66 percent increase in undergraduate resident tuition adjusted for inflation between 2003 and 2018, the UW’s tuition remains among the lowest of top public research universities in the country.

That relatively low tuition combined with lagging state funding leaves the University with few options for paying the bills, says Norris Hall.

In 2013, the state Legislature froze tuition for two years, then reduced it for two years, before authorizing a roughly 2 percent increase in 2017-18 and 2018-19.

Limiting tuition helps keep the price of college in check for students, but when paired with a lack of state funding, there is also a cost to students, Norris Hall says. Less money coming in means fewer classes can be offered, new labs do not get built, and a backlog of $2 billion in deferred maintenance persists, she explains.

Private donations can help to some extent, but that money does not flow into the University’s budget to spend as needed. Nearly all gifts are tied to donors’ priorities, whether for specific building projects, scholarships or particular research efforts.

“There’s a lot of things that gift money will never do for you,” says Walt Dryfoos, principal analyst for the UW’s fundraising department. At private universities, donors are accustomed to writing checks for unrestricted donations to the institution, he explains. In contrast, the UW encourages donors to give based on their personal commitments or values—an approach that until about a decade ago assumed state funding would cover necessities like teaching and operations, leaving donors free to contribute added value to achieve greater impact, Dryfoos says. The Population Health building or a gift from Paul Allen of $40 million to an endowment for Computer Science & Engineering and $10 million from Microsoft in Allen’s honor are ways in which donor dollars are now supporting the core mission of the University, rather than providing the “margin of excellence,” Dryfoos says. “We really don’t see private support as additive anymore.”

The UW’s Be Boundless fundraising campaign has received more than $5 billion to date. The new Population Health building will be one of the most visible landmarks of the campaign’s success. But donor support reaches all over campus and beyond, including nearly $250,000 in fellowships for students who plan to go into public service, two recently endowed real estate professorships in the College of Built Environments, a new building for Computer Science & Engineering called the Bill and Melinda Gates Center, and a research vessel for exploring the waters in and around Puget Sound.

When state funding is declining, balancing the two messages can be tricky, Dryfoos says. “We have a huge challenge. We need the Legislature to be more supportive—we’re not going to be successful if they don’t reinvest. On the other hand, we need our prospective donors and current donors to understand we continue to be among the best in the world in areas they care deeply about and that their investments are a part of that success,” he explains. “They need to know that the state’s issues don’t mean we are going to take their money and put it into deferred maintenance.”

The UW, like many public universities, has long benefited from private philanthropy to round out the money it receives from state funding and tuition. In 1861, the Denny and Lander families donated 10 acres in downtown Seattle for the original University of Washington campus. “It started with a gift,” Dryfoos says.

He began his career in 1981 raising money at the University of California, Berkeley. He says research shows that most people want to give, but “you have to ask.” Public universities came to the practice of asking relatively late compared to their private counterparts. The UW hired its first professional fundraiser in 1958 to help manage bequests from alumni, but the school did not begin actively soliciting donations until 1966.

During the 1980s, in the wake of severe state budget cuts and campus layoffs, UW President William Gerberding launched a new approach to private fundraising. He oversaw the UW’s first capital campaign, which brought in $284 million between 1988 and 1992.

Last year, the UW ranked second behind UCLA in the average amount of private money raised by public universities over five years, according to the Council for Aid to Education.

As president of a flagship public research university that can attract prominent donors, Cauce is wisely “going all in on both” private dollars and state support, says Scott Jaschik, editor and a co-founder of Inside Higher Ed, an online news outlet that covers higher education. Robust private fundraising helps public universities rely less on other, often unpopular strategies for bringing in more cash, including tuition increases and recruiting out-of-state students, Jaschik explains.

The state’s role in higher education is about more than funding, Jaschik says. “If you focus entirely on private money and don’t think about the state mission, it’s easy to lose sight of the connection between the university and communities all over the state.”

***

In December, Gov. Jay Inslee, ’73, released his proposed two-year budget, which includes a capital gains tax and other new revenue sources. It would provide more money to help the UW pay for salary and benefits as well as a $103 million increase in financial aid to students from families whose incomes are 70 percent or less of the state’s median. Inslee, who has proposed changing the name of the State Need Grant to Washington College Promise, says his plan includes enough funding for all qualified students by 2021-22.

“We’re thrilled and we have a ways to go,” says Norris Hall, from the office of planning and budgeting. “We look forward to seeing what the Legislature proposes, as well.”

To that end, Cauce and her fellow college and university presidents from around the state are approaching lawmakers with a pitch to emphasize the value of higher education statewide. With the Legislature’s constitutional obligation met to fully fund K-12 education, “the air has finally cleared to focus on the next step for students: higher education,” wrote Cauce, Kirk Schulz, president of Washington State University, and Jan Yoshiwara, executive director of the Washington State Board for Community and Technical Colleges, in a recent Seattle Times opinion piece.

At an event in January sponsored by UW Impact, the legislative advocacy arm of the Alumni Association, Cauce joined other higher education leaders and legislators in a panel discussion about the public perception of higher education and the appetite in Olympia for increasing funding to the state’s public colleges and universities.

Rep. Drew Stokesbary, the ranking Republican on the House Appropriations Committee, said while there is broad support for higher education in the Legislature on both sides of the aisle, there are also many competing priorities.

“Nobody wants to make cuts to higher education,” Stokesbary said. “Nobody thinks that college is dumb, but there are a lot of other important things, too.”

In November, Cauce and Schulz offered an unusual display of unity around the Apple Cup football game in Pullman. The two presidents jointly delivered the message that higher education is “affordable and achievable” for all Washington state residents. University leaders hope their ongoing “Yes, It’s Possible” public awareness campaign will convince families that a state college or university is within their reach.

This sort of cooperation is especially critical for reaching legislators across the state and for overcoming what William M. Zumeta, a professor at the UW’s Daniel J. Evans School of Public Policy & Governance and the College of Education, calls higher education’s “long hangover” after state cuts. In Washington, where there is no statewide system of colleges and universities, working together helps counter concerns among lawmakers in Eastern Washington, for example, that the UW is not relevant to their constituents, Zumeta says.

Given the state’s thriving economy and Inslee’s proposal to raise revenues and increase the state budget by 20 percent, Zumeta says the timing is right to ask lawmakers to give more to higher education.

“If you can ride the wave while we’ve got it before the economy tanks again,” Zumeta says, “you’d better get it while you can.”

Julie Davidow is the staff writer for Columns Magazine.