What tea leaves do you read?
For college leaders trying to plan for the months and years ahead—whether they oversee academic affairs, admissions, or revenues, expenses, and investments—there’s no shortage of economic indicators to consult. Catch a TV newscast or glance at Google News, and you’re likely to find something like the federal government’s May unemployment figures—which registered an uptick to 9.1 percent from 9 percent in April—or maybe an account of a swooning stock market, or a drop in gasoline prices, or softness in durable-goods orders.
But which to watch? And how closely? And what are those indicators pointing to now? That depends a lot on your institution, provosts and vice presidents say.
Many keep an eye on national and state unemployment figures because parents who lose their jobs can’t contribute to college costs. And public-university officials everywhere study state revenue projections intently for hints about whether cutbacks are in the offing—and if so, how bad they’ll be.
The Higher Education Price Index tracks items that colleges spend money on—library books and journals, for instance—but that don’t figure into the Consumer Price Index. Officials at many colleges also follow energy prices, since campus buildings need to be heated, cooled, and lit. And the performance of the stock market is crucial to endowments, while the cost of borrowing money is critical both to seeking loans for big projects and to keeping debt-service manageable afterward.
Meanwhile, anyone concerned with admissions stays up to date with regional and national demographic trends. And then there’s public opinion—public opinion about higher education in particular—which is harder to track precisely but in many ways is just as important. “Election results are certainly part of the story,” says Morgan R. Olsen, chief financial officer at Arizona State University. “Anyone who works at a public university these days hears a lot from legislators about sticker price.”
‘Flat Is the New Up’
So what are college leaders seeing this summer?
Rebecca Wyke, vice chancellor for finance and administration for the University of Maine system, says the forecast for the state’s general fund remains bleak: Revenue is not expected to return to 2008 fiscal-year levels until 2014. “What that tells us is the state will be struggling to maintain all of its services, and pent-up demand for funding will be very competitive over the next few years,” she says.
The good news, she says, is that the Legislature appears set to approve a budget with no new cuts for higher education. “Flat is the new up,” says Ms. Wyke. “We’re happy to be where we are right now.”
Jane A. Nichols, vice chancellor for academic and student affairs for the Nevada System of Higher Education, would be happy with flat, but as she looks at forecasts for two of the state’s biggest industries—gambling and mining—that’s not what she’s predicting. In fact, she says, Nevada’s economy is in such bad shape that the state has just cut support for higher education by another 15 percent.
The outlook is not much better in Arizona or Oregon, to judge by unemployment figures. “Job creation is really critical for all of us, and right now the news is pretty mixed,” says Mr. Olsen. About the best he can say is: “We’d like to think that state budgets will start solidifying a little bit, meaning that year-over-year decreases will start to stabilize.”
Edwin O. McFarlane, vice president and treasurer at Reed College, says joblessness remains a big worry in the Pacific Northwest too. “Oregon has had one of the highest unemployment rates in the country,” he says, and that “puts a lot of pressure on your financial-aid budgets.” He adds, “I don’t see the economic situation getting better very soon—not in the next three, four, five years.”
Unemployment is an especially big worry for colleges that still pledge to meet the financial-aid needs of everyone who enrolls, says Robin J. Aspinall, vice president for business and administration at Claremont McKenna College. The college is fortunate, she says, in that “we’re going to fill a class no matter what—but we fill a class on a need-blind basis, and that’s the big risk for us.”
In Florida and Michigan—the former slammed by the housing bubble, the latter a rust-belt state—the outlook seems slightly brighter, if only because people in both states feel they have nowhere to go but up. Based on state revenue forecasts, officials at the University of Florida are hopeful “that the state has bottomed out and now is recovering,” says Joseph Glover, the university’s provost. “Our mood is flat, maybe a little cautiously optimistic.”
Michigan, meanwhile, “has been going through years of drip-drip-drip cutbacks in state appropriations,” says David A. Burdette, vice president for finance and administrative services at Central Michigan University. But recent turnarounds in the auto industry have produced a remarkable development: In May, says Barrie J. Wilkes, the university’s associate vice president for finance, state officials predicted that they would receive an extra $500-million in revenue. It was, Mr. Wilkes says, “the first time in years” that officials anticipated a revenue gain, rather than an additional loss.
And the job market seems to be picking up. “I’m more optimistic now for our students than I was a year ago,” says James Sawyer, provost at Macomb Community College, outside of Detroit. “But for us as an institution, the state is still cutting funding to higher education. So we haven’t reached a bottom there.”
One issue many colleges have with unemployment statistics is that parents worry so much about them.
“The one factor that it’s very tough to get families to understand is that your child isn’t graduating until four years from now,” says Louis L. Hirsch, director of admissions at the University of Delaware. “The job market is going to look a very different way in four years, and certain jobs that aren’t there now will be there when they graduate. Often kids who follow their gut instinct wind up just fine. But if you keep trying to second-guess the economy, it’s going to drive you crazy.”
In Texas, says Nan Massingill Davis, admissions vice president at Austin College, institutions are enjoying an increase in the number of high-school graduates—a rarity, given the demographic slumps in many other areas of the country.
But the good news is balanced by worries over a highly politicized debate about the value of scholarship.
Robert B. Fairbanks, chairman of the history department at the University of Texas at Arlington, says he keeps one eye on the economy and the other on the Capitol, in Austin, as he makes plans for his department. “The debate in Texas is whether or not the world needs more research universities,” he says. “And the governor and the State Legislature are openly hostile on that front.”
One Eye on the Sky
Up in Garden City, Kan., meanwhile, Dee Wigner is keeping one eye on local housing starts and sales and the other on the sky—and she’s also listening to the talk on Main Street. Ms. Wigner, executive dean of administrative services at Garden City Community College, says the institution gets half its support from local taxes, so the housing market matters. So do proceeds from taxes on oil and gas production.
And so does the weather. “We’re kind of unique here in western Kansas,” she says. “We’re so driven by agriculture that if we have a good crop, we’re kind of cushioned.”
That’s not the story now, though.
“They’re saying our wheat crop’s going be pretty pathetic because of drought,” Ms. Wigner says. “The weather’s not something you can take to the bank.”
Ryan Brown and Molly Redden contributed to this article.
