A Mid-Atlantic Miracle

How Maryland held the line on college costs.

If you had to pick one institution that best exemplifies the American dream, what would it be? Hollywood? Too vain and cutthroat. Professional sports? Too few winners making too much money. Wall Street? Um, no.

The institutions that arguably come closest to embodying the idea that anyone, regardless of family background, can make it on the basis of ability and hard work are the nation’s public universities. A distinctly American invention, they began with the creation of land-grant colleges in the nineteenth century—an effort to disseminate the latest agricultural and mechanical learning to as many ordinary Americans as possible. They expanded hugely after World War II, with the help of the GI Bill and other hefty federal and state government investments. Public universities remain the route of choice for striving middle- and lower-middle-class kids, serving two-thirds of America’s four-year undergraduates, at an average cost ($6,585 in tuition and fees for in-state students) that is less than a third the sticker price of private four-year schools ($25,143).

But the promise of social mobility that public universities represent is increasingly unraveling. Thanks to spendthrift institutional habits and stingy state legislatures, public universities of all kinds are on a rapid climb toward unaffordability, and average inflation-adjusted tuition has more than doubled from 1990 to 2008. Tuition has actually increased faster at public four-year universities than at private ones for a decade running. And with state tax revenues shrinking due to the recession, state government outlays for higher education are plummeting, meaning even higher tuition hikes for students attending public colleges this fall.

A handful of states have tried to fight the tide. Florida and Ohio put tuition caps on their state universities two years ago, but lifted them this summer in the face of economic woes. Missouri just imposed a two-year tuition freeze on its public universities, but only after having allowed big tuition increases over the last few years. For the most part, state-level elected officials and university administrators have been content to indulge in a tacit conspiracy, allowing school expenditures to rise unchecked while the costs of paying for them are shifted away from taxpayers and onto the backs of students and their families. It’s gotten to the point where some states are considering completely shutting off taxpayer support for their flagship universities—letting them become, in effect, like private institutions, able to hike tuition and cater to the upper middle class as much as they please.

There’s one state that has fairly successfully bucked the higher-tuition trend, however: Maryland. The approximately 150,000 students who attend the eleven campuses that make up the University System of Maryland—from the ivy-covered flagship University of Maryland in College Park to historically black Bowie State University in Prince George’s County—are paying the same tuition this fall that they did the previous academic year, and the year before that, and the year before that.

How did Maryland manage to hold the line on tuition for four years in a row, when no other public university system was able to do so? The system’s board of regents insisted on some modest long-term operational efficiencies, and the universities’ administrators and faculty actually complied. Then elected officials, responding to political pressure, agreed to increase funding for higher education. It’s not a terribly shocking tale—unless you work in academia, in which case you talk about the Maryland example the way soldiers discuss the Battle of Thermopylae. Indeed, what’s astonishing about this story is not so much what happened as the fact that in other states, such things almost never do.

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The story begins in 2003, when Robert Ehrlich, the newly elected governor of Maryland and the first Republican to hold that position since Spiro Agnew, invited into his office the state university system’s charismatic chancellor, William English “Brit” Kirwan. The governor had bad news. Facing an overwhelmingly Democratic General Assembly and a $1 billion deficit in a sputtering economy, Ehrlich informed Kirwan of the first of what proved to be draconian cuts of $122 million out of the state allocation of $868 million for the university system. Although only 7.5 percent of the state’s general-fund budget went to its universities, they suffered 20 percent of the cuts. It was a situation that would shortly be repeated in state after state. The impact of the cuts was compounded by higher fuel and health insurance costs and an enrollment spike over the subsequent year of more than 5,000 full-time students.

To make up the shortfall, the university system did what nearly all public universities do in lean times. First, it imposed short-term spending cuts of a kind that cannot (or will not) be sustained: it froze salaries and hiring, delayed new programs, trimmed library hours, and put off maintenance. Second, it raised tuition—around 40 percent during a span of three years, depending on the campus, making Maryland’s public universities the sixth most expensive in America.

But around that same time, the first of a series of unusual events happened. Ehrlich says it started with him. “I said, ‘Look, I’ll get you additional dollars, if you find me additional efficiencies,'” the former governor says now. Most others say the idea started with the chairman of the board of regents, a retired CEO named Clifford Kendall. Boards like these tend to be pretty risk averse, but Maryland’s regents were no wallflowers. They included a retired senator, an admiral, and a former U.S. ambassador, along with business honchos such as Kendall. The board was also under pressure from students, the press, and Republican members of the General Assembly to cut bloated administrative expenses in the face of tuition hikes. Overcoming what he says was some initial resistance from Kirwan, Kendall proposed a full-blown effort to investigate the system’s underlying costs and find long-term savings—an effort that came to be known as the Effectiveness and Efficiency Initiative. “Every suggestion for improvement, every criticism, we recorded and brought back,” says Kendall.

Among the things the regents learned was that facilities were going unused more than a third of the time on some campuses, students were taking far too long to graduate, and faculty teaching loads were below the universities’ own targets, all of which was costing money that was in fast-diminishing supply.

Kendall and the regents wanted things tightened up. Chancellor Kirwan was now on board too. He got to work convincing his intransigent university presidents to support the idea of instituting new efficiencies, taking them “up to the mountaintop,” as Kirwan puts it, on a retreat to a conference center near system headquarters. “It was a matter of making clear to them that we had to do something significant and serious, but we could shape it. If we didn’t, we would be implementing an agenda we didn’t set.”

Basic efficiencies were put in place. Auditing, construction management, and procurement were centralized. The separate campuses saved several million dollars by buying electricity and computer software collectively. To speed up graduation and reduce instructional expenses, students were required to earn at least twelve credits outside the classroom through online courses, internships, study-abroad programs, or Advanced Placement tests. To handle growing enrollment, new students were steered to less costly campuses. To deal with the high failure rate in introductory classes—which cost the system money by dragging out students’ college careers—some of these courses were converted from an exclusively lecture format to a mix of online study aids and tests, team projects, and small classes led by undergraduate mentors—cheaper than even notoriously low-paid graduate teaching assistants.

But the most audacious challenge the regents took on was to get the faculty to teach more courses. Few things have been so forcefully resisted elsewhere. When public Kean University in New Jersey last year pressed its faculty to be in their offices at least four days a week—some now spend as few as two days a week on campus, university officials said—the faculty filed a grievance with the state labor relations board.

In Maryland, however, another unusual thing happened: the faculty agreed to the idea. When Kendall was asked to speak before the faculty senate—an invitation, he admits, he approached “with great trepidation”—he says he asked them, “Would you rather have the board of regents, which cares about higher education, taking care of this, or would you rather have somebody else doing it?” It was the same message Kirwan had given his presidents on his proverbial mountaintop.

Faculty had to look no further than Ehrlich’s deep cuts to get the point. “It was the handwriting on the wall,” says William Stuart, chairman of the Council of University System Faculty. “To fight it too much we stood to lose even more ground.”

Faculty at the research universities agreed to increase their teaching loads by 10 percent, from five courses a year to five and a half, and at the comprehensive universities from seven courses a year to seven and a half. “We wanted to demonstrate to the public that higher education can change,” says Patricia Florestano, a regent who is a former university professor. “There’s a perception out there, not entirely inaccurate, that higher education doesn’t like to change.” (“Man, no kidding,” Ehrlich says.)

Pragmatism won the day in Maryland, says Daniel Hurley, director of policy analysis at the American Association of State Colleges and Universities. “The fact that the faculty bought into this is remarkable,” he says. “That was tremendous foresight on the faculty’s part, because there are faculty layoffs and furloughs and all types of retrenchment going on now” in other states.

Still, the initiative saved only slightly more than $25 million in its first year, when the Ehrlich budget cuts and other added costs by then exceeded $200 million. Meanwhile, rising tuition was fueling student anger. A petition protesting the tuition hikes garnered 20,000 student signatures. One student leader parked a rusty Pinto in front of the State House to accuse Ehrlich, who went to Princeton, of having had a Cadillac education while sticking students in Maryland with a lemon.

Then another unexpected thing happened. Richard Hug, Ehrlich’s campaign finance chairman and one of his first appointees to the board of regents, poured fuel on the fire by publicly suggesting not that tuition at the universities be moderated, but that it be doubled over five to six years, largely weaning public higher education from dependence on the state.

Although Ehrlich quickly distanced himself from the idea, it didn’t come out of nowhere. The University of Michigan at Ann Arbor has given up much of the allocation it once got from taxpayers, and some legislators there have talked of privatizing it completely. A similar proposal has been made in Colorado, and there have been murmurs about privatization at Virginia Tech, the College of William and Mary, and the University of Virginia, where state support already has fallen from its peak of 26 percent of the total budget to about 8 percent, where it resides today.

In Maryland, however—the nation’s wealthiest state as measured by median household income, and the fourth most educated (after Massachusetts, Colorado, and Connecticut) based on the percentage of the population with at least a bachelor’s degree—a poll showed voters overwhelmingly against similar cuts in state support. Democrats quickly sensed that the tuition increases at the universities made Ehrlich vulnerable on higher education. “It’s ultimately a middle-class issue,” says Democratic state senator Brian Frosh. “This is where people who can’t afford a private higher education send their kids.” Frosh quickly offered legislation that would reverse Ehrlich’s cuts to universities and limit further increases in tuition to 5 percent. As expected, Ehrlich vetoed the bill.

As events barreled forward, two of the regents—James Rosapepe, a former U.S. ambassador to Romania, and former U.S. Senator Joseph Tydings—began a grassroots organization to keep the pressure on, which they called Marylanders for Access to Quality Higher Education (since renamed Marylanders for College Opportunity). Insiders say an earlier attempt at this had been rejected by the campus presidents, who thought it undercut their own control of lobbying on their universities’ behalfs. The group hired a political consultant named Laslo Boyd to run the operation and began to e-mail people likely to feel strongly about the cost of university tuition.

It was a tactic that seemed as logical as it had been underused. “Universities have e-mail addresses for all of their students, many of their alumni, many of their parents, professors, staff,” says Rosapepe. “A state university by definition should have the largest, best-informed, most articulate grassroots constituency of any institution in the state.”

The growing grassroots constituency and its legislative allies continued to put pressure on the governor. But most of that pressure was behind the scenes; Maryland voters weren’t paying attention. That was about to change.

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Still groggy from the New Year’s weekend that ushered in 2006, a hastily assembled crowd of students and their parents flanked Baltimore mayor and Democratic gubernatorial candidate Martin O’Malley on the College Park campus of the University of Maryland. At that event, O’Malley opened an attack on Ehrlich over the tuition increases of the previous three years and proposed an outright freeze on any further rises in the cost of public university tuition.

The event was carefully choreographed to preempt a news conference that Ehrlich had planned to hold on the campus one day later, and it marked something else that seldom happens in American politics: the elevation of higher education to the status of a major issue in a gubernatorial campaign. O’Malley also aired an onslaught of TV ads about the topic, including one in which a child tried in vain to reach a university diploma on a mantelpiece. “It became a nice wedge issue,” Boyd says.

Ehrlich was suddenly in a bind. He needed to counter O’Malley’s attacks with a higher education initiative of his own, without seeming to reverse his previous decisions to cut state higher ed spending and raise tuition. The Effectiveness and Efficiency Initiative gave him cover for this. The next day Ehrlich promised to increase funding for the universities and beef up financial aid, saying that the university system’s E&E plan had convinced him it deserved the money.

A high-profile bidding war broke out over higher education. Democrats called Ehrlich’s announcement of more money for universities an election-year ploy. Ehrlich responded by announcing another funding increase for campus building projects. Democratic legislators introduced a bill to eliminate the planned tuition increase and freeze tuition. Ehrlich called that “an election-year gimmick,” then put enough money in a supplemental budget to keep tuition unchanged for in-state undergraduates.

This election-year skirmishing was good news for the university system. “Obviously we were pleased” by how things were going during the campaign, says Kendall. “We ended up in a position where both candidates were advocating for higher education and low tuition.” It also put the higher education issue at the center of public debate in Maryland. Even voters whose children were in diapers, O’Malley press secretary Rick Abbruzzese says, “were seeing the news coverage of that and thinking, ‘How are we going to afford to send our kids to college?'”

That’s another thing that has been different about Maryland. Higher education elsewhere seldom rises to the level of a major political issue, as it did there. “Universities in many places are incredibly politically inept,” says Boyd, who once served as Maryland’s acting higher education secretary. Whatever the right combination of political skills required to get things done, adds Patrick Callan, president of the National Center for Public Policy and Higher Education, “there aren’t many people in higher education who have them.”

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O‘Malley won. There were few things, he says, that better demonstrated the difference between him and Ehrlich than their positions on support for higher education. “Marylanders understand the connection between quality education, affordable colleges, and the strength of their economy,” he says.

Still, even with O’Malley in Annapolis instead of Ehrlich, the universities were nervous—especially about what O’Malley says they considered the populist notion of tuition freezes. “Any university administrator who hears an elected official say the words ‘tuition freeze’ apparently wants to jump out the window,” the governor says. “I had to field countless calls from university presidents who very painstakingly explained to me, as if I didn’t understand, that they couldn’t hold the line on tuition without state funding.”

In fact, O’Malley, forced to keep his campaign promises, has boosted spending on universities by about 32 percent in the last four years, compared to a 15 percent cut in the previous four. The average student now pays about $1,000 a year less than he or she would have if tuition had continued to increase by 4.5 percent a year, and Maryland has moved from sixth to sixteenth among the fifty states in the cost of public university tuition.

It’s beginning to look doubtful that the governor can continue the freeze in the face of a recession-induced drop in state tax revenue. O’Malley managed to keep tuition steady with the aid of federal stimulus money, and has cut the universities less drastically than other departments. But over the summer he announced budget cuts to higher education that could result, say officials, in higher tuition as early as the spring. The governor has already announced more cuts, including a big hit to community colleges and at least $40 million more from the public universities, which are laying off twenty-four people, eliminating 151 open jobs, freezing hiring, reducing maintenance expenses and travel, and having to draw from cash reserves. Kirwan says class sizes will increase, courses will be harder to get into, and the time it takes students to graduate will start to creep back up.

Regardless of what happens next, however, Maryland has accomplished something legendary in higher education circles. It has made its universities more productive and cost-efficient—not by a lot, but by enough to help open a floodgate of further support from the state. By doing so, it allowed those universities to keep faith with their original mission of serving all types of students, not just the economically advantaged.

The question is whether Maryland’s success represents a model that might be replicated in other states, or whether it’s a “black swan”—a one-in-a-thousand event that is unlikely to be repeated. Supporting the latter view is the fact that universities are notoriously resistant to change. Several other states have tried, and usually failed, to reform them. It’s also true that a unique confluence of circumstances supported reform in Maryland: an unusually energetic and forward-thinking board of regents, a highly educated citizenry, and a partisan political dynamic that played out in just the right way.

On the other hand, the basic ingredient of reform in Maryland exists throughout the country: bubbling middle-class anger against the status quo in higher education. Forty-three percent of Americans think universities raise prices whenever they can, according to polls conducted by Public Agenda for the National Center for Public Policy and Higher Education. Only 19 percent believe that schools do anything to control costs. More than half say universities could spend less and still maintain a high quality of education. And a majority also think that higher education is being priced beyond the income of the average family.

What happened in Maryland is that some smart players tapped into that latent anger and turned it to good use—first by convincing the universities that it was in their interests to increase productivity, then by finagling a political bidding war in support of greater state funding for higher education. There’s no reason to presume that clever political actors in other states can’t do this too.

Certainly the time is ripe. State subsidies for higher education are falling. More and more people are enrolling in college to upgrade their skills in a tough job market. And as they do, they’re feeling the pinch of higher and higher tuition. If universities don’t begin to change their operating models in an environment like this, will they ever?

This story was reported with the assistance of the Hechinger Institute on Education and the Media at Teachers College, Columbia University.

Jon Marcus

Jon Marcus is a higher education editor at the Hechinger Report, a nonprofit, nonpartisan education news outlet based at Teachers College, Columbia University.