Higher ed: dangers of an unplanned future: this education expert believes we need to engage in a national dialogue to discuss funding, pricing, governance and society's expectations for public colleges and universities.

There is cause for concern about the future of public higher education. The unease is driven in part by the recent cuts in state funding of most public universities and by the harsh reality that today's strains are merely a continuation of a three decades-long trend driven by systemic tensions in state budgets.

The apparent transformation of public higher education is occurring piecemeal, campus by campus, state by state, absent any overarching design, significant national debate, or studied assessment of the broader implications. As Penn State University President Graham Spanier commented recently: "The privatization of public higher education is not related to any political party, any governor, or any legislative leader. But it is happening, nonetheless."

The precise circumstances vary from campus to campus, but the overall picture is disturbingly consistent. For the University of Michigan, the decline in state dollars as a percentage of the total budget went from roughly one-third of the total some 20 years ago to 18 percent now. The picture for the University of Illinois shows a comparable decline in state support, from 47 percent of the total two decades ago to 25 percent today. At the University of Colorado, state funding has dropped below 10 percent.

Compounding the pressures from Medicaid, corrections and other sectors of the state budget, states have yielded to the temptation in good years to create new and expanded obligations and to enact tax cuts. As state support for public institutions has been squeezed, tuition and other charges have escalated as campuses have attempted to replace lost state revenue. Hikes in tuition and fees have outpaced inflation, growth in personal income, and virtually every available benchmark.

As tuition and other college costs have grown, states and institutions have increased need-based financial aid, though such efforts too often have proved to be inadequate. In the face of an economic downturn, even state funding for need-based aid is not immune to cuts.

CONFRONTING REALITY

America is not likely to return to an earlier, simpler vision of the public university. It is time to confront reality and explore new options and approaches that will preserve the "public essence" of the public university while empowering these institutions to be more responsive to changed circumstances.

To address this challenge, we must confront at least four central issues.

1. The social contract--the public essence--that binds public universities, the states and society must be refined. At the time of the passage of the 1862 Morrill Act, the broad outlines of the social contract were fairly clear: Create a broader curriculum aligned with the changing needs of the new industrial society; expand access for the middle class; and apply knowledge to the broader welfare of the society.

Throughout the 20th century, the public university mission focused on teaching and on discovering and sharing knowledge. After World War II, however, the environment began to shift. As recently as 1960, the University of Illinois, like most other public universities, was a near-open-admissions institution. And while not free, it was relatively inexpensive.

Today, the university where I work is far from free, and admission is highly competitive. Sons and daughters of farmers and factory workers can still be found, but so too can the high-achieving children of surgeons and stockbrokers. The question that needs asking in Illinois and every state is this: What does the public want and require from public universities and colleges? In other words, what are the central interests of the state and the public, and what values underpin them?

In today's world, open and affordable access to high-quality education is crucial in every state. Research, innovation and the capacity to tackle the core challenges confronting society are no less important, as most state policymakers have known for years.

But how are these needs and values to be expressed in the expectations and commitments between public universities, governments and the many others with a stake in the outcome? Ultimately we must ask: What new policies and approaches can reconcile forces now threatening both the public interest and public colleges and universities? The answers should form the backbone of a new social contract defining the relationship between public higher education and society.

2. Prices at public universities must be set more rationally. More than any other factor, changes in tuition-pricing policies have set off alarm bells and triggered questions about the future of public higher education. Tuition increases alone, however, are not responsible. Novel actions taken in several states are setting fresh precedents--and raising new questions.

In 2003, Miami University of Ohio gained approval from the governor and legislature to increase tuition for all students, resident and nonresident, to the full-cost, non-Ohio-resident level. In return, the university shifted its total state appropriation from campus operations to student financial aid, some based on financial need and some based on merit and other factors.

Colorado is alive with pricing experiments and debates. Its university sought and received "enterprise" status that would have given it authority to set tuition. Then the legislature enacted a proposal backed by University of Colorado leaders to eliminate all direct state support and to adopt a quasi-voucher system coupled with contractual agreements with each institution.

While different in concept, the plans of Colorado and Miami of Ohio are similar in effect. And in some respects the pushback has been similar: In 2005 the Ohio legislature re-imposed a 6 percent tuition cap--and Colorado's governor and legislative leaders this year successfully encouraged the University of Colorado to scale back its planned tuition hikes.

In Virginia, the leaders of the College of William and Mary, Virginia Tech and the University of Virginia backed legislation to trade some state support for greater independence from state control, including tuition-setting authority. The final bill adopted in 2005--while eliminating the tuition proposal and other items on the schools' wish list--still offered new institutional autonomy on matters ranging from capital construction projects to personnel and procurement. The level of autonomy an institution attains will depend on its financial and management capacity, as well as an explicit agreement to meet specific state policy goals such as increased access and affordability.

In Illinois, the legislature enacted a bill guaranteeing incoming students a relatively stable tuition level for the four years of undergraduate enrollment while giving institutions an implied nod to raise tuition for each incoming freshmen class.

Other examples could be cited. But it is obvious that present efforts are piecemeal, fraught with risk, and lacking in context against which the public interest can be gauged.

3. A more diversified funding base for public universities is essential. Thomas Kane and Peter Orszag in their Brookings Institution report, "Funding Restrictions at Public Universities," estimate that state appropriations for public higher education would be about $13 billion higher--roughly 20 percent above current levels--were the fraction of personal income devoted to public higher education in 1977 to prevail today. That lost ground is unlikely to be regained. More ominously, there is scant reason to believe the trend toward diminishing state government funding will be reversed in the foreseeable future.

As a consequence, public institutions rely to an increasing extent on tuition income and contributions from alumni and friends, and federal grant and contract support is essential for major research universities. Corporate partnerships, economic development, the exploitation of intellectual property and other points of contact between public universities and society will continue to be a central and unapologetic part of any strategy for public higher education.

On the other hand, the capacity of public universities and colleges to tap these alternative sources of revenue varies widely. What are the societal and institutional consequences, and how should these be addressed?

4. It is time for governance reform. Most public university boards are too small and are not reflective of the diverse mission and lines of accountability found in most major public universities. Most governing boards were shaped long ago, when tuition was relatively low, private gifts were rare, and links with the federal government and the business community were modest. Then and now, the state--often through the office of the governor--held all or nearly all of the seats on the governing board.

Times have changed. We need to craft new governing structures consistent with the broader public interests, the emergence of new stakeholders, and a clarified "state-public-university partnership" or "social contract."

The current path to the public university boardroom is treacherous. Quality of appointments varies from state to state and governor to governor.

Although recent corporate governance scandals and ethical lapses have placed the spotlight on governance reform in publicly held companies, no comparable wave of reform has touched public higher education. Who are the shareholders and stakeholders of public universities not now at the board table? What about independence, conflicts of interest and stakeholder accountability?

Governing structures of public universities and colleges need to be reexamined and reformed. The size of some boards needs to be increased. Sources of appointment or election must be diversified. No single governor, legislative committee, or party caucus should control the composition of public university governing boards. Alumni, donors, the business community, agriculture and other segments of society should be more directly and independently represented than they are at present.

TALKS ARE VITAL

Some will say this path toward a stronger future for public colleges and universities is too ambitious, that we are unlikely to clarify the social contract, create a more rational pricing policy, diversify the financial base, and reform governance structures anytime soon.

Others will argue the agenda misses the need for internal academic reform, for public universities to focus more sharply on core priorities, to increase efficiency and contain costs, to become more accountable and engaged. Such criticisms may be on target. Still, the day-to-day internal academic agenda of public universities and colleges will not move forward as it should until the "public essence" of these institutions has been reaffirmed.

In the end, the issue is not just about the future of public higher education. Given the changing nature of society and the economy, American public universities and colleges represent the crucial and indispensable means toward more compelling ends: a healthy, vital democratic society; satisfying, meaningful life chances for citizens; and survival in a rapidly changing, increasingly competitive, and uncertain world.

It is an unthinkable mistake for society to take the future of public higher education for granted. Institutions, missions, policies and programs are shifting in response to powerful forces, and the implications remain largely unexamined. The silos separating state policymakers, business and civic leaders, academics and the public must be deconstructed and a national conversation on the future of public higher education begun.

Piecemeal, campus-by-campus, state-by-state solutions may be inevitable, but when weighed against the broader public interest and the needs of the nation as a whole, they offer little comfort that public higher education will be all it needs to be in the future.

Stanley O. Ikenberry, a senior fellow at the Association of Governing Boards of Universities and Colleges, is former president of the American Council on Education and regent professor and president emeritus of the University of Illinois at Urbana-Champaign. A longer version of this piece was published in the Association of Governing Boards' Trusteeship magazine.