An Era of Neglect

The Auto Lobbyist

A t first blush, Patrick E. Watson would seem to have little to do with public higher education. During his 36 years as South Carolina’s top lobbyist for car dealers, Mr. Watson’s sole focus was protecting the interests of his trade-association members. To the extent that he thought about public colleges at all, it was only to revel in memories of 1969, when he captained the University of South Carolina football team.

But every victory that Mr. Watson won for the state’s car dealers threatened to take money off the table for other interests. And every dollar is significant in a state where colleges are often told that there is no money left to spare for them.

The story of Mr. Watson’s greatest legislative coup begins one morning in 1984, when the governor’s top man summoned him to Cogburn’s Restaurant, in Columbia. Many a deal had been struck at the popular hangout in the state capital, where politicians and business leaders were known to trade horses over $4 rib-eye steaks, fries, and toast.

As Mr. Watson ate that morning, a war was brewing. Gov. Richard W. Riley, a Democrat, had proposed a one-cent increase in the sales tax to pay for improvements to elementary and secondary schools. Auto dealers hated the idea, fearing it would hamper car sales.

Hoping to placate Mr. Watson, the governor’s emissary made his first pitch: Call off your dogs, he said, and we will insulate your businesses from any tax hikes. At that moment, no one mentioned higher education.

It was a sweetheart deal for Mr. Watson, who was executive vice president and chief executive officer of the South Carolina Auto Dealers Association. But he wasn’t buying. Instead he stirred up his base, telling association members to stick to their guns.

“If one guy at Rotary Club says, ‘We’ve got to raise taxes,’ " he told them, “you don’t be afraid to stand up and say, ‘You’re crazy as hell.’ "

The strength of Mr. Watson’s army of car dealers, who populated every electoral district in the state, had lawmakers in a panic. The political winds were shifting in favor of the governor’s “penny tax,” but legislators feared getting on the wrong side of Mr. Watson. His talking points were powerful in a tax-averse state like South Carolina: Poor people here need cars to get to work, and they can’t afford to pay more in sales tax. It was bad teachers, not old buildings, the lobbyist argued, that were holding back education.

“If you can learn how to make love in the backseat of a Volkswagen, you can learn to read and write in a barn,” Mr. Watson said during a public debate with one of the governor’s supporters.

In their frantic efforts to satisfy Mr. Watson and his members, lawmakers soon rallied around a compromise not unlike what had been floated at Cogburn’s. The sales tax would increase by 1 percent, but taxes on the sales of cars, boats, and even airplanes would be capped at $300.

“The cap,” as it is known in South Carolina, is described by higher-education officials there as a giveaway to special interests that are less worthy than public colleges. Whether South Carolinians buy a Mercedes-Benz for $200,000 or a Ford Fiesta for $14,000, they pay the same sales tax.

The cap cost the state an estimated $169-million last year, which would be sufficient to restore about half of the cuts made to public colleges since 2008.

And the state’s budget pie just got even smaller. In recent months, South Carolina lawmakers decided that half of the revenue generated by the state’s capped sales tax for vehicles should go to road improvements rather than to a general fund that could finance other interests, such as higher education and public schools.

To Mr. Watson, 65, the capped tax was a success. Dealers sold more cars as a result, he says, and that is good for South Carolina. This sort of argument, that the economic stimulus of tax cuts offsets any losses in tax revenues, is winning the day in many states where support for public colleges has withered.

Behind this argument for more tax breaks, there is always some version of Mr. Watson, a self-assured power broker who has outmaneuvered his state’s public colleges.

Few tax-and-spend opponents, though, have been as successful or well known as Douglas Bruce.

Before there was a Tea Party, there was Mr. Bruce.

An early adherent of the gospel of limited government and low taxes, Douglas Bruce had ideas that are now in the mainstream. But in the fall of 1992, when he asked voters to amend Colorado’s Constitution to control taxes and spending, such economic populism had only recently begun to take hold. It was time, he believed, to put state agencies, colleges included, on a fiscal diet. You, not free-spending politicians, he told voters, should control the state’s purse strings.

The voters agreed. They passed the amendment, the Taxpayer Bill of Rights.

After its passage, Mr. Bruce did a victory lap at the statehouse. He had a message for the legislators: Ladies and gentlemen, you have no idea what we’ve done to you.

What he and the voters had done was to tie the hands of Colorado’s lawmakers, then and ever since. The amendment, known as Tabor, caps annual increases in government spending and requires that any revenue above that threshold be returned to taxpayers, no matter the need for the money. Any tax increase requires a public vote.

The state budget was squeezed, but back in 1992, it’s doubtful that many Coloradans were thinking about how their votes would affect spending on higher education and other government services a generation off.

Mr. Bruce got involved in Colorado’s antitax movement in 1986, months after moving to the state from his native Los Angeles. California is home to the granddaddy of measures to limit taxes, Proposition 13, and Mr. Bruce studied it and others around the country. As he crafted the Colorado amendment, he adopted the best, and often most stringent, components of other states’ measures.

Mr. Bruce, 64, can be both courtly and combative. His observance of the rules of etiquette—taking pains, for example, to ensure that a female reporter visiting from “Washington, District of Corruption” never walked on the curb side of the sidewalk—would make Emily Post proud. But he doesn’t let chivalry get in the way of making a political point.

He offers up his late mother, a public-school teacher, as evidence of the problems with overgenerous public-employee pensions. After a former governor decried his “terrorist” political tactics, Mr. Bruce printed up business cards stamped with the words, “Douglas Bruce, terrorist,” which he handed out until the Oklahoma City bombing.

Mr. Bruce sold the Taxpayer Bill of Rights on the basis of a simple message: You, the taxpayer, will get to vote on every tax hike. But the 1,703-word amendment was far more complicated.

Shortly after its passage, a small group of state-policy wonks was assigned to rewrite the budget to comply with Tabor’s rules. Hunkered down in a conference room for more than two weeks before Christmas, they combed, line by line, through the budget. Even money collected from relatively inconsequential items, like driver’s-license fees and towel charges at university gyms, they found, could add up and force the state to return money to taxpayers. The amendment, it turned out, was farther-reaching than many had imagined.

Still, in its first years, Tabor’s effect on the state budget was muted, in part because of Colorado’s strong economic growth throughout the 1990s. The measure was held up as a national model, although no other state adopted as restrictive an approach.

All that changed in 2001, when the state’s economy went into free fall. Because of the way the law works, any drops in revenue trigger further spending restrictions—restrictions that are slow to loosen even when the economy rebounds. That meant lawmakers couldn’t make up the lost ground.

At the same time, just as in other states, Colorado’s colleges faced growing competition from other government programs for a share of the shrinking budget. The state increased spending on prisons, public schools, and Medicaid, while putting less and less money into higher education.

Today six of Colorado’s 12 public universities have been placed on a legislative watch list because of shaky finances. And students and families, who once paid less than a third of the cost of college, now cover almost three-quarters of it.

To Mr. Bruce’s way of thinking, that responsibility is just as it should be. “Why should some truck driver or waitress have to pay for someone to get their degree in medieval literature?” he asks.

The amendment, says its architect, was always meant to rein in the growth of government, higher education included. Two decades ago, Mr. Bruce was an outsider taking his case to the public. Today he has set the terms of the debate. In the battle over government spending, Mr. Bruce won.

W hile men like Mr. Bruce were winning, Robert K. Poch was learning what it felt like to lose.

Mr. Poch was 28, fresh out of the University of Virginia’s Ph.D. program in higher-education administration, when he began his work as a staff member and then a lobbyist for the South Carolina Commission on Higher Education. He had come to the state in 1988, thinking he would help to shape a sustainable financial model for public colleges.

Instead he watched things get worse.

The all-consuming budget-setting process in the statehouse, Mr. Poch quickly discovered, bore little resemblance to the deliberative world of academe. Why bother developing a coherent strategy for higher education when each year brings a new budget? And anyway, who really had time to listen?

“You were always in a state of chaos,” says Mr. Poch, who is now a senior fellow in the University of Minnesota’s College of Education and Human Development. “It’s like being in a washing machine. It’s hard to get people to say, ‘Let’s stop. Let’s look at the longer range here.’ "

Mr. Poch was lucky to get five minutes with key lawmakers rushing between meetings or sprinting into the bathroom. On any given day during a legislative session, he would circle the Capitol with a throng of lobbyists. They would scribble their names and issues on little scraps of paper, stack them on a desk outside the House or Senate chambers, and wait for pages to run the messages down to legislators on the floor.

“B. Poch,” he might write. “Restructuring of higher ed.”

Then he would wait, sometimes minutes, sometimes hours, for a lawmaker to emerge for a brief chat. The conversations, such as they were, often lent themselves to small-bore issues, such as changing the name of a college or getting money for a one-time project. These were not times for deep discussions about the instability of the public-college business model.

When it came to fighting off budget cuts, Mr. Poch’s case was repeatedly undermined by scandal: “Ex-Leader of University Is Charged With Misconduct in South Carolina,” one 1991 New York Times headline declared.

What’s more, at a time when other state agencies seemed very much on point with their lobbying efforts, public colleges were often at odds with one another, seeking special treatment from lawmakers and subverting the commission’s unified front, Mr. Poch says. As a result, the colleges’ messages were muddled, and they were simply outmatched by the competition.

The biggest win for South Carolina’s colleges came in 2000, four years after Mr. Poch left the state, when voters approved a lottery to pay for merit-based scholarships. But even that deal had its downside for both colleges and students.

To hear it from higher-education officials, lawmakers were emboldened to cut appropriations to colleges after the lottery’s approval because they knew that the scholarships would cover any tuition increases that came in response to the cuts. But that is no longer the case. Scholarship awards have remained largely stagnant, unable to keep pace with rapid tuition increases that college officials say were necessary to offset budget cuts.

When the lottery-supported scholarships were introduced, the maximum base award of $5,000 covered the full cost of tuition at the University of South Carolina. Today the scholarships cover half of the $10,000 sticker price.

The lottery is widely supported by college officials, who celebrate its approval as a big win for higher education in South Carolina. But to extent that it gave lawmakers cover to slash budgets, it’s hard not to see the victory as Pyrrhic.

The Lawmaker

T The most bruising battles for public colleges often happen largely out of sight. They occur in the most mundane of places, like obscure legislative hearings that few reporters would think to attend.

To see what it looks like when colleges get bloodied up, witness one such hearing, held on a hot and sticky morning not long ago in Columbia, S.C. It was August 1, 2012, and Rep. W. Brian White, a Republican, was fired up.

A recent article in The State, the local newspaper, had reported that South Carolina’s colleges, still reeling from “years of state budget cuts,” were burdened by an estimated $1.1-billion in deferred-maintenance needs. Who was to blame? Was it the colleges that had ignored their upkeep obligations? Or the lawmakers who had starved them of money?

Mr. White had reached his conclusion: The colleges had plenty of money for repairs but were spending it instead on lavish new buildings. The meeting of the Joint Bond Review Committee was an opportunity to prove as much.

Just as Mr. White knew they would, a train of college officials came before the committee that morning and asked him to sign off on proposals for new tennis courts, dormitories, and libraries. They did not mention cracks in ceilings or outdated chiller plants.

South Carolina’s colleges are hardly exceptional in this regard. Even during the tightest of budget years, public colleges across the nation put up plenty of brick and mortar. In 2012, when per-student appropriations were at their lowest point in a quarter-century, public colleges spent $7-billion building more administrative and classroom space, according to McGraw Hill Construction, a market-research company. That figure does not even include gymnasiums, student centers, and dormitories, where colleges are most often accused of excess.

Mr. White, who is fond of bow ties and buffalo-nickel cufflinks, is regarded as one of the state’s true conservatives. Known as a grinder who thrives on tedious committee work, he rose to become chairman of the powerful House Ways and Means Committee.

Mr. White is often critical of public colleges, but he has little personal experience with postsecondary education. In the late 1980s, he enrolled for two semesters at Erskine College and left the private institution before completing a degree. He works as an insurance agent in Greenville.

As the bond-review hearing dragged on, Mr. White and his fellow lawmakers grilled college officials, one after another, for nearly two hours. The chairman lectured a college business officer about how private companies, “out in what I call the real world,” judiciously set aside money for upkeep of facilities.

At one point, Mr. White extracted a confession from a technical-college official: You already have all the money you need, Mr. White said, don’t you? “I’ll say yes,” the official told him. “Hesitantly, I’ll say yes.”

None of the projects were approved that day. The meeting laid bare the growing mistrust between some lawmakers and the public-college establishment.

It is difficult to see how college officials and Mr. White will ever find much common ground, because he is fundamentally skeptical about one of the sector’s core arguments. The lawmaker says he simply does not believe that cuts in appropriations justify tuition increases.

What distinguishes public colleges from all other state agencies, he says, is the ability to bring in more tuition revenue with the flick of a switch. When other agencies are faced with cuts, they tighten their belts, Mr. White says. Public colleges just find someone else to pay for it.

“They kept raising tuition,” he says, “to meet their needs.”

I t’s no surprise that lawmakers like Mr. White aren’t in colleges’ corner. But political allies, too, don’t always have higher education’s back. True-blue liberal states aren’t necessarily friendlier territory than those considered conservative, and university budgets have taken a beating under Democrats and Republicans alike.

More than a decade ago, the new governor of Michigan stood before a group of more than 1,000 business leaders and posed a simple question: Where would you make the first cut? The options were projected onto large screens in the Detroit convention hall: Health care. K-12. Prisons. Welfare. The arts. Higher education.

A few weeks earlier, in January 2003, Jennifer M. Granholm, a 43-year-old Democrat, had taken the oath of office on the frigid steps of the state Capitol. Now she was bracing for something more forbidding than Michigan in winter—a $1.7-billion budget shortfall, triple earlier estimates.

Tax revenues were down. Unemployment had spiked. Few people were buying the cars produced by Detroit automakers, whose executives were among those gathered in the hall.

The governor was going to the public to help her decide where to trim the budget. In the middle of each table was a device sort of like a television remote. As a list of programs and government services flashed on the screen, Ms. Granholm asked members of the audience to press a button: Cut or keep?

“Where would you spend your first dollar?” she prompted. “Where would you make the first cut?”

The vote wasn’t even close. At the top of the list of cuts: the state’s universities.

Over the next year, the governor would conduct a dozen similar forums around the state. Sometimes she asked participants to rank their favored programs. Other times she presented specific trade-offs: Eliminate after-school programs or scholarships for students at private colleges? Cut money for cooperative extension or prescription-drug help for senior citizens? No matter the size of the group, no matter where in the state, the results were always the same: Higher education should go on the chopping block.

That was the governor’s position, too.

It wasn’t that Ms. Granholm was hostile to higher education. Far from it. The first in her family to go to college, at Berkeley and then Harvard Law, she knew the power of a degree. Indeed, she would make doubling the number of college graduates a priority and promote community colleges as a way to retrain the state’s blue-collar workers.

But when it came down to it, as much as she valued higher education, Ms. Granholm considered other programs more crucial. She sought to insulate public schools from deep reductions. During her administration, she is proud to say, not one person was dropped from health-care rolls. But protecting those programs meant that higher education took a hit. In midyear cuts during her first year in office, one dollar in every five came out of the budgets of state universities and community colleges.

“In really tough times,” Ms. Granholm said in a recent interview, “you have cut what’s important to keep funding what’s essential.”

As it turned out, tough times got only tougher. The auto industry’s collapse deepened and prolonged Michigan’s recession. The “lost decade” is how people around the state talk about that period of economic hardship.

Eventually almost no program or service was spared. Thirteen prisons were closed. More than 10,000 jobs were cut from state government. In inflation-adjusted terms, general-fund revenue today is below what it was in 1969.

Even so, no major area of state government absorbed financial blows as deep and as sustained as those to higher education.

“We looked under every rock, we tightened every belt,” Ms. Granholm said of the cuts borne by Michigan’s colleges. “We did cut into muscle.”

Bruce D. Benson is a pragmatist, a realist, a man who believes in picking his battles. And there is one fight he’s not confident he can win: the one to restore the precipitous cuts to the budget of the University of Colorado, where he is president.

Sure, Mr. Benson puts in his time at the Capitol shaking the hands of legislators, some of whom he helped get elected in his former life as a Republican power broker. But state funds now make up less than 6 percent of the university’s $3.1-billion budget. Although the governor, John W. Hickenlooper, a Democrat, has proposed an increase for colleges in the coming year, Mr. Benson calls spending on higher education “the rounding error” in Colorado’s budget.

Instead of counting on a reversal of fortune in state support, he goes about the business of hunting for money elsewhere. Like college presidents across the country, he has intensified fund raising and scoured the university’s books to find efficiencies: $1-million here, $1-million there. He has also increased tuition—48 percent in the six years he has led Colorado.

Although Mr. Benson is outwardly upbeat, implicit in his actions is a sense of resignation. The state is no longer—will not likely again be—a full partner with public colleges. These are the new rules of the game. “Of course I worry,” he says, “but you know that old saying? You play with the hand you’re dealt and move forward.”

He knows what’s at stake. Mr. Benson worked as a roughneck on oil rigs to put himself through the university, trading in his coveralls each semester for a college classroom. Back then, in the early 1960s, a year’s tuition at Boulder was $358, or roughly $2,700 in current dollars. Today it’s $8,760.

And Mr. Benson, who went on to make a fortune in the oil fields, fears that a public-college education could be slipping out of the reach of low- and middle-income students, as he was once. Which tuition increase, he wonders, will be the breaking point?

Mr. Benson isn’t one to point fingers, but he’s been around Colorado politics and higher education for years, as a university trustee, chairman of the Colorado Commission on Higher Education, and member of countless blue-ribbon panels on education. In 1994 he ran for governor. So he knows the culprits: A cap on residential property taxes. A constitutional mandate that guarantees spending for public schools. The Taxpayer Bill of Rights. All those Coloradoans who voted over time to protect their pocketbooks and as a result—without really knowing it—gutted higher education.

When the amendment was approved, Mr. Benson was chairman of the state Republican Party. He’d backed the amendment, but only half-heartedly, he says now. He liked the idea of letting voters decide on taxes, but he didn’t fully understand the measure’s implications. “It’s the fine print that’s bad,” he says. “If we’d realized the headaches it created. …"

Mr. Benson has entertained the idea of going back to the voters, this time to ask for special funds for higher education. But the political mood isn’t right, he said. It might never be.

In Colorado and across the country, this fraying of ties between states and their universities didn’t happen overnight. To get to this point, there was no one vote taken, no single cut made, no lone backroom deal struck. Rather, many, many individual choices together weakened the bonds between the public and higher education. And one day soon those bonds could finally snap.

Indeed, if Colorado continues on its current trajectory, some time in the next decade public money for higher education will be gone. Disappeared. Spent on other things. And while Colorado may be first, projections suggest that other states could follow. Soon Alaska. Then South Carolina. Arizona. Rhode Island. Vermont.

A tradition of public support, lost.