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A Prophet of Higher Ed’s Financial Woes

Earl Cheit got it right.

His 1971 book, The New Depression in Higher Education, relied on good data to deliver the bad news that many American colleges were in financial trouble. The message was disconcerting, because most colleges had had a decade of full enrollments and major construction, combined with generous support from donors and state legislatures, and abundant federal grants for research. If there were problems in higher education, most news coverage focused on student protests.

Cheit looked beyond such events (which were especially pronounced on his own campus, Berkeley). His book focused on the less obvious insight that college costs were surpassing college income.

Along with colleagues at the Carnegie Commission on Higher Education, Cheit was a pioneer in systematic research on the condition of higher education.  The aim was to work with academic leaders to achieve enduring fiscal fitness. He and his fellow researchers showed that research about higher education mattered if colleges were to chart a course in harmony with proper educational values and missions. Assessing—and sustaining—a college was not at all the same as analyzing a business corporation.

Cheit’s death, on August 2, reminds us that we cannot afford to ignore research on the economics of colleges and universities. He was a central figure on a Carnegie team that collaborated for more than a decade on a succession of provocative studies. Along with such economists as Howard Bowen and Clark Kerr, he represented a thoughtful fusion of high-level administrative experience and timely studies of the fabric of higher-education planning. In addition to their own expertise in economics, the researchers were part of an initiative to bring other disciplines, including sociology, history, philosophy, and anthropology, to bear on a range of higher-education topics.

This effort echoed Cheit’s own distinctive contribution to M.B.A. programs when, as dean of the business school at Berkeley, he included readings and lectures by such scholars as the historian Richard Hofstadter and the American-studies scholar Henry Nash Smith as central to the education of future business leaders. In 1974, Cheit obtained permission to teach a new course at Berkeley’s School of Education that focused on how such professional schools as engineering, agriculture, business, and forestry came to have a place in the American university structure.

Today we rely on and take for granted such indispensable sources as The Chronicle’s annual Almanac of Higher Education and the comprehensive periodic reports of  AIR’s Delta Cost Project. Publications such as Charles T. Clotfelter’s Buying the Best, Ronald G. Ehrenberg’s Tuition Rising, David W. Breneman’s Liberal Arts Colleges, and Bruce Johnstone’s research on international trends in higher-education finance allow us to have informed discussions about where the money comes from and where it goes. More recently, the data and debates gain in depth and sophistication with such works as Robert Archibald and David Feldman’s Why Does College Cost So Much?

In 1971, however, such works were scarce. Colleges were largely unexamined in their operations and idiosyncratic in their financial reporting. At Boston University, the business officer maintained the entire endowment in an interest-bearing account because, after all, it provided free checking. Standardized federal databases were embryonic and incomplete. Institutional reporting for the first version, Hegis (Higher Education General Information Survey) was not mandatory. Its summaries tended to emphasize annual enrollments, with marginal provision for institutions to compile and share financial data. Ipeds (Integrated Postsecondary Education Data System) did not yet exist, so obtaining timely, accurate institutional budgets was difficult. Making meaningful nationwide comparisons across institutions and categories of institutions on financial trends was impossible.

The problems that Cheit reported in 1971 did not go away in ensuing years. From 1972 to 1984, a wave of unexpected budgetary problems hit colleges and universities. Twelve years of inflation, declining numbers of high-school graduates, tapering federal research-grant awards, and some reductions in state appropriations led to deferred maintenance, reductions in faculty and staff, and elimination of numerous academic programs. The end of World War II had led to increased enrollment, prompted by the GI Bill, but the opposite happened with the end of the Vietnam War. Tens of thousands of young men no longer sought college as a haven from the military draft.

The challenge for colleges and universities, as suggested by Lewis Mayhew’s book, was Surviving the Eighties. Carnegie’s final report, Three Thousand Futures, published as a book in 1980, presented the grim projection that about a fourth to a third of colleges in the United States could face extinction if they did not alter their financial practices and course.

Fortunately, Cheit helped develop responses. The so-called “academic revolution” of the 1960s was followed by an administrative transformation by the late 1970s and early 80s.  One windfall was Congress’s 1972 reauthorization of the Higher Education Act, with its provision for portable financial aid for students, including what would come to be known as Pell Grants. the incentive was to make colleges more competitive, since students carried these federal grant dollars to a campus of their choice. In this new era of student consumerism, college administrators had to be informed and active, not passive, both in recruiting students who matched their admissions profile and carried with them the new alphabet soup of BEOG, SEOG, and SSIG grants. An office of financial aid, once a marginal presence on campus, became vital if a college wished to remain competitive and solvent.

Systematic data collection emerged on campuses, often integrated with such offices as development and fund raising, admissions, financial aid, the vice president for business affairs, and officers for endowments and investments. The cumulative result represented institutional responses demonstrating that colleges could, indeed, be responsive and resourceful. In the face of adversity, they could add new features to analyze and then make decisions. Cheit, along with such figures as Clark Kerr, Howard Bowen, and Harold Hodgkinson, led by example in showing that there need not be a barrier between being a faculty member who was a scholar and teacher and being a dean or other high-level administrator on campus or at a foundation, state agency, or national association.

Research by Cheit and his Carnegie colleagues provided simultaneously a critical edge and a critical mass. They asked questions about higher education that an individual institution was either unlikely to ask or, perhaps, unwilling to answer.

The unfinished business of this research agenda is that there persists a disconnect between nationwide studies and institutional research. For all the gains in financial-data collection, detailed campus-based numbers often remain difficult to acquire. Data from individual institutions often have been shaped into glossy annual reports with selective information effective as public relations, yet ill-suited for independent analysis of how a college fits into a national profile or a nationwide trend. Higher-education analysis gains from such independent studies as the Delta Cost Project, which documented over a decade how proportional spending on educational programs was waning.

In a similar vein, the Knight Commission’s nationwide study of college sports contributes a finding that spending on intercollegiate athletics has increased substantially faster than has spending on educational programs. Those were precisely the kinds of trends that campus administrators on their own were reluctant to examine or broadcast. The national studies improve the conversation and the policy forum. Higher education remains indebted to Earl Cheit, a dean of business who went beyond business as usual.

John R. Thelin is a professor of educational-policy studies at the University of Kentucky.  As a graduate student at the University of California at Berkeley from 1969 to 1974, he was a research assistant at the Center for Research and Development on Higher Education.

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