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Fool’s Gold

Privatizing public higher education undermines its very purpose — building a highly educated middle class needed to keep Virginia competitive.

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After a rocky start in 2009, Michael Rao is getting a pay raise. The president of Virginia Commonwealth University will receive $30,000 more a year in deferred compensation and $25,000 a year for personal expenses. His base pay of $488,500 is the same, but he can get $50,000 more annually in incentive pay a year, according to his contract, which has been extended by two years to 2017.

Thomas Snead, rector of the university's board of visitors, tells the Richmond Times-Dispatch that he's "extraordinarily pleased" with Rao, who last year was the object of a special board review for the confused way he put together his top staff and for letting his wife have too much say in university policies.

There's a bigger issue, however. Why is Rao enjoying pay raises when the university has been getting 42 percent less from the state in funding? In-state students have been saddled with whopping increases of up to 24 percent in tuition and fees in 2010 and another 7.9 percent hike last year. In-state tuition and fees are now $9,517 and room and board is $6,952.

The answer could be a sweeping, long-term trend that threatens the very purpose of public universities in Virginia — creeping privatization.

The state started going down the privatization road seven years ago when the General Assembly agreed to a deal in which it wouldn't be pressed to pay as much for top public universities. In exchange, the schools would get more autonomy from state lawmakers and have more freedom to set their own tuitions, capital spending programs and academic curricula. Involved were some of the country's best-rated public universities, including the University of Virginia, the College of William and Mary and Virginia Tech. Shortly afterward, VCU added itself to the deal.

State education bureaucrats and legislators don't call it "privatizing" but "restructuring." This euphemism means the schools gradually will demand tuition closer to the top national, private institutions without going through the hassle of actually having to sell off public property and make good on repaying decades of public investment.

The idea's proponents rationalize it this way: If Virginia's elite public colleges start approaching national market rates for tuition, then the state could spend more on lesser public institutions, such as Old Dominion, Longwood, Radford and community colleges. More financial-aid money supposedly would become available. The state could more easily reach its goal of having 100,000 more students earn degrees.

The latest wrinkle came when Taylor Reveley, president of William and Mary, proposed bringing tuition to market rates, which for a top-rated, national private school would be about $45,000 a year. Out-of-state W&M students pay close to that now while in-state students pay $22,024. Reveley justifies tuition increases by claiming that if more in-state parents or students paid full freight, then it will be easier for his school to offer more generous financial aid packages to middle- and lower-income students.

While there may be some logic in his argument, his ideas present a number of problems. One is that as public colleges, the state's schools should be recruiting from all socio-economic classes. Currently, Virginia students applying to top state schools face more competition for acceptance letters from out-of-state students with deeper pockets.

Privatization is thought of by conservatives and some moderates as a catch-all panacea for the state's budget woes and the popular anti-tax crusade. Tax hawks, for instance, constantly dodge the need for higher taxes to pay for highways by passing the problem off to public-private partnerships that keep public funding down by charging tolls and letting others assume the debt burden. Thus, the tax hawk's dogma is kept squeaky clean.

But privatizing public higher education undermines its very purpose — building a highly educated middle class needed to keep Virginia competitive nationally and globally. VCU's original and admirable goal was to help lower-income local residents attend college while working at outside jobs.

A straight sell-off of state schools isn't likely. What is possible, says James Alessio, chief of higher education restructuring at the State Council for Higher Education, is a steady series of tuition hikes in the 5- to 7-percent range. "Within maybe 40 years, you'll see tuition at the public schools go to $40,000 or $50,000," Alessio says.

Other public universities are concerned about tuition creep. The University of California at Berkeley, rated the nation's top public school, announced Dec. 14 that it would start offering more financial aid to students whose families make less than $140,000 next fall. They wouldn't be charged more than $21,000 for tuition, or 15 percent of their household incomes. A year at Berkeley now costs $32,000. Virginia Gov. Robert F. McDonnell also has announced a proposal to add $100 million for higher education — but only $6.4 million, not much, will go to help with financial aid.

Virginia and VCU should be looking to places like Berkeley for solutions to tuition creep. The university's priority shouldn't be paying top dollar to Rao. If VCU needs a model, it should look no farther than the University of Virginia, where President Teresa Sullivan has declined pay raises.

Meanwhile, Virginia's taxpayers should ask themselves if it is really in their best interest to let their legislators and college administrators lead them down the treacherous road to public-college privatization. S

Peter Galuszka is a contributing editor for Style Weekly.

Opinions expressed on the Back Page are those of the writer and not necessarily those of Style Weekly.

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