Diminishing Funds = Diminishing Leverage

It's too bad the Washington Post reporter covering a new piece of higher education legislation in Virginia didn't read the bill's fiscal impact statement. If she had, she might not have portrayed the it as evenhandedly as she did. The legislation, which would force Virginia institutions to enroll at least 80 percent of their undergraduates from in-state, would impose almost $21 million annually in additional costs on the institutions. In exchange, state legislators have offered to appropriate about half that amount, $12.5 million, for this initiative while simultaneously cutting about $150 million from general fund appropriations to higher education. It's not exactly a fair trade.

This fight is mainly about coveted spots at the University of Virginia and the College of William and Mary. Legislators proposing the changes have heard from constituents that qualified in-state applicants are being rejected to these schools in favor of out-of-state students. The institutions now have in-state enrollment rates of 58 and 64.3 percent, respectively.

It's an admirable sentiment for state legislators to see the state universities as serving state residents. Unfortunately, the same legislators do not see their own obligations, namely, that it takes state revenue to do so. Prior to the current round of budget cuts, the state provided only 18 percent of William and Mary's budget and eight percent at UVa. Those numbers will likely fall in coming years, and with already low percentages of revenue coming from state coffers, the state has little leverage to demand changes in enrollment policies. The institutions got used to the current funding model in which out-of-state tuition heavily subsidizes in-state students. The state cannot easily rescind one half of that equation.

If legislators are successful in passing this bill, they should be mindful of another passage in the impact statement:

Given that the additional general fund can cover only a portion of the lost revenue under this proposal, it is likely that these institutions would increase their tuition and fees to cover the difference.

If and when this happens, legislators will have only themselves to blame.