NYTimes - The Lows of Higher Ed

On September14th the NYTimes had a good article on the cost of college education and student borrowing by Gail Collins.

Here is an excerpt:

"Higher education is still the key to most good jobs, but the nation is starting to ask some questions about the way we finance it. Shouldn’t there be more of a match between the cost of school and the potential earning power of the graduates? Who speaks for the art history majors? And why is tuition so high, anyway? (Parents, if your kid is planning to take out student loans, you might want to avoid any college where the dorm rooms are nicer than your house.)"

The higher education system has become too expensive and entrenched.  This debate will only grow until the economics of college education come back down to earth.

Here is a link to the full article:
http://www.nytimes.com/2012/09/15/opinion/collins-the-lows-of-higher-ed.html?comments#permid=139




Here is my response:

I think this is a mess we all have created, students, families, schools and governments. 

State and local governments pay $75 billion a year to public universities to fund their losses. The Delta Project estimates that the cost of each 2-yr degree granted at a public university it about $46,000 per graduate. 

There is about $30 billion dollars a year donated to college endowments, much of which goes to elite schools with big endowments who use the money to fund the faculty and administration life style and amenities like high end dorms to attract quality students. Not much really helps poor at risk students, why we let this be tax deductible is beyond me.

Schools say education is a great investment but seldom counsel students on what borrowing money means and what they can expect to earn in the future.

Parents have given their kids bad advice and said college is a time to enjoy and find yourself - that was OK at $5,000 a year maybe, at $30,000 - $50,000 no way.

Students don't really want to be informed or responsible very often for their education and future - mom and dad have been doing that.

And lastly the government who tells us our schools are the best (as our college attainment rankings internationally drop), that our community colleges are cheap (ignoring the money we taxpayers give them directly to fund their annual losses), is pandering to education workers to get their votes, as they did with groups like auto workers in the past. We know where that got us.

Education Spending - no end in Sight?

I was looking at the level of K-12 spending in the country after reading an interesting article on the $100 million pledge that Mark Zuckerberg make to help improve the public schools in Newark NJ.  In 2008 -09 we spent approximately $660 billion on K-12 education or 4.7% of GDP.  On a per student basis, that averaged $11,231 per student with the lowest being Utah at $7,081, and the highest Washington D.C. at $19,166.


The article (link below) shows the growing tension between unions and states on the level of spending and how available dollars should be allocated.

I found the following excerpt very funny, but as in most political positioning, troubling in that the public may actually believe it! (Booker is the Mayor and the hedge funds are hedge fund owners who offered to make contributions to the effort, in addition to the $100 million committed)

"In a two-hour interview in his office in the city’s West Ward, Ronald Rice, a former police officer who is now a state senator, explains that Booker was planted in the city by hedge fund managers whose ultimate scheme is to privatize Newark’s public schools and run them for a profit. “Newark is a target because you have a billion-dollar budget,” says Rice. “That’s why the hedge funds are moving in.”"

You would think that the school system and the unions would welcome some help, but the reality is that outside support and involvement would shine a light on the system's ongoing sub-par performance.  Here is what the article states:

"In 1994, the average cost to educate a Newark student was $8,712. In the state overall, it was $7,378. The district’s graduation rate was 54 percent. In 2009 it spent $19,305 per pupil, more than many suburban districts. But Newark’s graduation rate remained a dismal 54 percent. By then, New Jersey was covering 81 percent of Newark’s $998 million annual school budget."


Here is a link to the article:
http://www.businessweek.com/articles/2012-06-28/newark-school-reform-about-that-100-million-dot-dot-dot


Below is a comment that I posted regarding the article:

A very insightful article.  Funny that unions in states like NJ ($17,605 per student) and Washington D.C. ($19,766 per student) complain about how they are being taken advantage of when the average annual spending per student per year in the U.S. at the K-12 level is $11,231.  

Seems whenever new money becomes available they use it to fund the "Status Quo",  Most of the stimulus money last year was just used to keep the existing teachers and administration employed.  I find it amusing that they don't get it.  Spending too much and getting bad results its not a formula to justify more funding.  You have to ask is anybody accountable?

Micheal Rae has some good stories about the situation in D.C..  Seems in both D.C. and NJ some of the new funds pretty much had to be used to pay bad teachers and administrators to stay home and not work,  It is a sad state and even worse when you realize that great teachers get lumped into the problem.  We have a long way to go.

Most of the comments here are troubling - does anyone care about the students?

State data on average annual per student spending:
http://nces.ed.gov/programs/digest/d11/tables/dt11_195.asp

Can you Imagine the Reaction if the Prior Adminstration Had Floated This Thought??

U.S. Rethinks Strategy for the UnthinkableBy WILLIAM J. BROAD


Published: December 15, 2010 NYTimes

Suppose the unthinkable happened, and terrorists struck New York or another big city with an atom bomb. What should people there do? The government has a surprising new message: Do not flee. Get inside any stable building and don’t come out till officials say it’s safe.
 
The advice is based on recent scientific analyses showing that a nuclear attack is much more survivable if you immediately shield yourself from the lethal radiation that follows a blast, a simple tactic seen as saving hundreds of thousands of lives. Even staying in a car, the studies show, would reduce casualties by more than 50 percent; hunkering down in a basement would be better by far.

But a problem for the Obama administration is how to spread the word without seeming alarmist about a subject that few politicians care to consider, let alone discuss. So officials are proceeding gingerly in a campaign to educate the public.

http://www.nytimes.com/2010/12/16/science/16terror.html?hp

I think I know how my non-conservative  friends and  family would have reacted - boy how they must miss Bush, Cheney and Rumsfeld........

Never Thought The Democrats Would be the Party To Dismantle The Big Autos

But Even More Interesting Is The UAW.

I Hope their members get's some good lawyers - otherwise a lot of the value created will get siphoned off to the union management rather than the members!

It worked for Jessie Jackson and Al Sharpton......

From the NYTimes

June 2, 2009

Now a G.M. Owner, U.A.W. Faces Nimble Balancing Act
By STEVEN GREENHOUSE

For decades, the United Automobile Workers had a simple strategy for getting what it wanted from the carmakers — it would go on strike. The tactic proved so successful that the mere threat of a walkout often won better wages, benefits and job security.

Now, with General Motors and Chrysler in bankruptcy and the union a major shareholder in both through its retiree health fund, life has become a lot more complicated for the U.A.W.
The union, which was born of labor strife, has pledged not to go on strike against the two companies before 2015, as part of the rescue plan hammered out by the Obama administration. Whether this brokered peace helps end the antagonistic relationship between union and management could determine the future not only of G.M. and Chrysler, but also of the U.A.W. itself.

With the union’s health fund set to own 17.5 percent of G.M.’s shares and 55 percent of Chrysler’s, the U.A.W. will both represent workers and be an owner, a novel dual role.
“We don’t run corporations. We represent people,” said Brian Fredline, president of the local representing 3,000 workers at a G.M. plant in Lansing, Mich.

Some industry experts predict that the union, far more than before, will help management increase profitability — with the goal of pushing up the automakers’ stock prices. A higher share price could mean billions more for the retirees’ health plan, helping to ensure ample funding for decades to come.

But other experts say the union will stick to its traditional truculence, focusing on preserving jobs rather than maximizing profits and share price. As evidence, these experts point to the union’s recent, successful campaign, directed at G.M. and the Obama administration, to prevent the automaker from importing small cars from China, a move that would have increased G.M.’s profits while very likely reducing the number of domestic automobile jobs.

“I don’t think the union is going to act that different,” said Harry C. Katz, dean of the Cornell University School of Industrial and Labor Relations. “I wish it would, but mostly things won’t look that different.”

In fact, over the years the U.A.W. has taken two different postures toward Detroit: by turns, hard-charging adversary and strategic partner. Sometimes the union has been an unyielding bargainer, leading to strikes that have lasted for months as well as to much-derided perks, like overtime pay for union members who work less than 40 hours a week. But other times the union has worked with management to assure labor peace, raise productivity and, over the last few years, push down labor costs.

One example: when G.M. was hurting in 2005, the union agreed to establish the retiree health plan, known as a voluntary employees beneficiary association, to save the automaker $1 billion a year in health costs.

Union officials acknowledge their discomfort with the union being a major shareholder. “The reason we’ve received this equity stake is we’re trying to help the corporation survive and fund the VEBA,” Mr. Fredline said.

The Obama administration has pushed hard to bring out the U.A.W.’s cooperative side, evidenced by the union’s agreeing to a wage freeze and the no-strike clause.
But the union is likely to continue fighting future layoffs, plant closings and line speedups — there are many ways to pressure management without going on strike.

“They’ll want to maximize the number of jobs for their members, and they’ll use their influence for that,” said Sean McAlinden, chief economist with the Center for Automotive Research. “And there are other fears the industry has — they might want to force G.M. to only use unionized suppliers. And they could use their political influence to make it easier to organize the international automakers in the South.”

Under the rescue plan, the federal government will own 60 percent of G.M.’s stock. It might be politically difficult for the union to confront the federal government if it were managing the company. But President Obama emphasized on Monday that he wants professional managers, not the government, to run the company.

While workers often feel an initial thrill about employee ownership, after several weeks of drudgery back on the assembly line, the thrill sometimes wears off and the us-against-them attitude toward management reasserts itself.

But Christopher Mackin, president of Ownership Associates, a firm based in Cambridge, Mass., that advises businesses and workers about employee ownership, argued that the U.A.W.’s roles need not conflict.

“When you get workers to understand they are the owners of the enterprise,” he said, “they realize there are two significant bites of the apple: one is when you get paid in current compensation, and one is what you get paid for success” through profit-sharing or an employee stock ownership plan — although he noted that VEBA stock ownership differed from traditional employee ownership.

Some employee-owned companies have failed, however, because management, mindful of their employee owners, often gave in to wage demands. That, some analysts say, helped drive United Airlines into bankruptcy when it was employee-owned.

For this reason, industry experts say, the Obama administration structured the G.M. and Chrysler plans to lessen the union’s voice in management. The retirees’ health fund has six public-appointed trustees and five union-appointed trustees. Though the union health trust owns 55 percent of Chrysler, it will hold just one seat on the Chrysler board. And at both automakers, the health fund’s shares will be nonvoting. All this makes clear, one administration official said, that the union will not dominate and “this will not be Gettelfinger Motors.”

The U.A.W. president, Ron Gettelfinger, says he wants to sell the health fund’s shares as soon as practical. The union’s advisers have warned it would be unwise to tie up so much of the fund’s assets long term in a single company’s shares.

This, some say, could cause the U.A.W. to make nice, at least for a while. “In order to sell their shares at a good price,” said Maryann Keller, an auto industry analyst who runs her own consulting firm, “they’re going to at least give the appearance of helping maximize profits.”

Dr. No and the Wisdom of Our Sage Politicians

With the economy bobbing in rough seas and the american public growing more fearful by the day I want to thank the Republication Party for their unabashed gall. All they can do to President Obama is say no. Very constructive behavior coming from the party of our recent reckless spending. It seems all the politicians want to show how fiscally responsible they are all of a sudden. Believe me, in spite of what you may think, the housing crisis was not of Republication or Democrat making. Both parties drove and took credit as it snowballed.

I thought that David Brooks summed it up best in his Column of March 19th, Perverse Cosmic Myopia, where he points out how politicians never really want to deal with the issues that confront us.

"The Washington political class has spent the past week going into made-for-TV hysterics over $165 million in A.I.G. bonuses. We’re in the middle of a multitrillion-dollar crisis, and our political masters — always willing to throw themselves into any issue that is understandable on cable television — have decided to risk destroying the entire bank-rescue plan because of bonuses that account for 0.001 percent of the annual G.D.P."

A Letter to the Senators and Congressman of the United States

The American public is wondering how so many of you can have so many, many years of experience, yet we as a country keep making mistakes in how we manage our economy, our education system and our international image. The “demon” corporate executives of our country must be very jealous of the tenure that the voters have permitted you. Have you considered that maybe that is why the approval ratings are so low for both parties?

Your recent actions in debating the stimulus package, that it seems most informed people believe we need, is a case study in politicians putting on a show to try to impress voters. It is great to see the Republicans are against wasteful spending and that the Democrats want to help the underprivileged, isn’t that how we got here?

It seems you are all feeble (lifelong) politicians who believe it better to pander to voters and your party than to tell the truth. One must ask - would you manage your own family finances the way you do the country’s and we all hope you all would treat your family and, especially your children and grandchildren, with a bit more honesty and concern than you do the voting public.

Maybe you should all change careers and let qualified people work to solve the challenges the country faces. The voters have given you much too much time and all you seem to do is blame the other party for our problems………

More Data On The Republican Health Care Proposal

Today's WSJ had an Opinion piece from Robert Carroll, vice president for economic policy at the Tax Foundation, and an executive-in-residence with American University's School of Public Affairs. In it he makes the case that even for a family that has to purchase a $14,000 health care policy, the tax credit proposal would save the family money (I used $10,000 in the example I posted yesterday). Click here for the link.


Here is the chart they used:

Also you can read Mr Carroll's full Tax Foundation review by clicking here. I think you will find that the Tax Foundation does a good job of pointing out how both parties try to spin their policies.