Washington
The recession may be over, but state-financed colleges and universities will feel its ill effects for the next two or three years, an economist told a group of university administrators here Monday.
Michael H. Strauss, chief economist at Commonfund, an asset-management company serving about 1,300 college and university endowments, said that increases in industrial production and corporate profits have helped the world economy begin to recover.
As major American corporations are faring better, some may soon start hiring again, shoring up state tax coffers, Mr. Strauss said during a presentation at the annual conference of the Association of Public and Land-Grant Universities.
But income-tax revenue, on a year-over-year basis, will probably decline for most of 2010 and possibly into 2011, forcing many state and local governments to continue to cut budgets. Colleges and universities, some of which have already faced deep reductions in state appropriations, will have to continue finding other sources of revenue, Mr. Strauss told administrators.
"The strains on state and local budgets stay with us even if we get a better economy," Mr. Strauss said. He predicts that the domestic economy will start to strengthen early next year, and that state and local revenues will improve six to 12 months after that. "It is going to be a tough couple of years for state revenues coming into higher education."
To fill in the gap, Mr. Strauss encouraged higher-education officials to increase their outreach to prospective international consumers. The number of foreign students attending American colleges hit an all-time high in 2008, according to data released this week by the Institute of International Education.
But Mr. Strauss said American colleges should keep pushing into maturing countries like China and India, and recruit students to study in the United States, on satellite campuses in other countries, or through distance education.
Though the recession has presented challenges for higher education, it has also shown its value, as people with college degrees suffered fewer layoffs than individuals without college degrees, Mr. Strauss said. Unemployment rates for minorities and men are particularly high, he said, and those groups are also less likely to complete high school or college. Universities should ask, "How are we going to get people to be better students, to stay in school?" he said. "We need to figure out how to better educate our young people so they gain the skill sets that get them jobs."
Comments
1. smilenwave - November 17, 2009 at 09:12 am
I wonder what this means for schools trying to hire? Will job searches be cut, or frozen? (more than they already are?)
2. smilenwave - November 17, 2009 at 09:22 am
This idea:
To fill in the gap, Mr. Strauss encouraged higher-education officials to increase their outreach to prospective international consumers. The number of foreign students attending American colleges hit an all-time high in 2008, according to data released this week by the Institute of International Education.
But Mr. Strauss said American colleges should keep pushing into maturing countries like China and India, and recruit students to study in the United States, on satellite campuses in other countries, or through distance education.
contradicts this idea from the linked story:
http://chronicle.com/article/Number-of-Foreign-Students-in/49142/
"You can't just sit on the sidelines and rely on word of mouth," says Mr. Sevanthinathan, who came to the United States from Indonesia as a student.
In fact, many of the institutions that reported international enrollment increases this fall credit active recruitment efforts.
But fiscal belt-tightening has squeezed international-recruitment budgets at many colleges, leaving them to rely on more novel and cost-effective ways to attract top students....
It also ignores the fact that when the bubble (economic) in China and India finally bursts, and the students stop coming, that it will be even more difficult to recruit foreign students.
3. davi2665 - November 17, 2009 at 02:46 pm
The author makes a huge and largely unfounded assumption with the statement "the recession may be over." Au contrere- we are likely seeing the lull before the real storm. With unemployment continuing to grow, home foreclosures continuing to occur, salary cuts continuing in many sectors, the likelihood is that the impact of this recession will continue for at least a decade. In some of the wealthier areas of Michigan, tax revenues have fallen by considerably more than one third; as the unemployed continue to struggle to make their mortgage payments and face upsidedown mortgage conditions, foreclosures will continue and home valuations will fail to recover. In formerly affluent areas of Michigan, county officials estimate that it will be 2025 before the tax revenues reach 2007 levels. This is occurring locally at a time when the state is totally bankrupt and there is no more general fund from which to borrow for educational support. Since states cannot print money, unlike the federal government, the states will continue to wallow in the financial doldrums for many years to come, markedly affecting revenue for supporting higher education. If they are foolish enough to pile on more taxes, affluent people will leave those states for a more reasonable environment. And this is all based on the assumption (hope), however unlikely, that the wanton printing of trillions of dollars will not result in hyperinflation that would even further destroy any governmental source's ability to fund higher education. Universities need a long term strategy that weans them from state (and federal) funding and rethinks the bare-bones infrastructure necessary to maintain quality education. This may require rethinking being all things to all disciplines, and may require focusing on a core mission for the institution. While it would be wonderful if we could all sing "happy days are here again", and have international students help out the universities in the short run, that would seem to be a wildly optimistic scenario.
4. smilenwave - November 18, 2009 at 11:02 am
Nice one, davi2665!
I guess, technically speaking, "the recession may be over" is true.
0.05% chance of averting the fallout you described is a possibility. So "may be" is the magic -- don't commit yourself or anything -- phrase.
So what strategies do you see universities pursuing, to wean them from the state (and fed)? Maybe large investment banks will create universities.... and like Florence, the great minds will work for the Medici once again?