More Funding, Without Tax Hikes

UofCharleston

State universities have been protesting for years that they’re not getting enough funding from the states, forcing them to pass costs on to students in the form of tuition hikes.

Duly noted, but it’s hard to get states to appropriate more money to colleges. In this economy citizens won’t stand for higher taxes. But is there another way? Students in Washington State are trying to figure out how to raise money without increasing taxes. According to an article by Katherine Long in the Seattle Times:

The choice often boils down to this: Cut social services or cut education funding.

Now, students at the University of Washington have come up with a slate of proposals they say would keep lawmakers from having to choose — by raising money for higher education without raising state taxes.

The three-pronged proposal includes: allowing colleges and universities to invest operating funds in higher-yielding investments; partly closing a tax break that gives business-and-occupation and sales tax credits to high-tech firms for research-and-development spending; and giving community and technical college districts the ability to raise money through ballot levies.

Not all of these are great ideas necessarily—higher-yield investments would generate more money, but they’d also put the university at much greater risk of losing money—but it’s about time someone began working to solve the problem.

Administrators at the state university system are working to change state rules to allow the universities to make riskier investments. Current rules require a conservative investment strategy.

Randy Hodgins, the vice president of external relations for the university system, told Long that a different investment strategy (which would require the state to amend its constitution) could “eventually raise” $10 million to $20 annually.

Many private colleges across the country have generated impressive sums using risky investments of their endowments. A report earlier this year by the Center for Social Philanthropy at the Tellus Institute demonstrated that such investments generated more money over the long term, though it also left schools very venerable to market trends, causing them to recurrently lay off staff and cut services and benefits.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer