A bold plan to turn UW into a Stanford died a quiet death

State universities have clumsy and stingy masters in state capitols. Is it time for divorce court? Here's the story of how some people advising the University of Washington looked at such a scheme.
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The University of Washington branch campus in Tacoma. (UW)

State universities have clumsy and stingy masters in state capitols. Is it time for divorce court? Here's the story of how some people advising the University of Washington looked at such a scheme.

"Privatization" is one of the no-nos in the populist politics of this state, where public employees are zealous about protecting their turf and suspicion of corporations runs high. Even so, the concept of shifting costs to the private sector is likely to grow stronger, particularly when it comes to building bridges and transit and new toll roads.

What about public research universities? Might they be weaned from state support and control, and turned into independent non-profits? Given the suspicion of many legislators toward exalted research universities, is some form of devolution the only way the UWs can keep up with the Stanfords?

Ambitious research universities like the University of Washington sometimes entertain heretical thoughts like these, struggling to stay competitive. This is the story of one such episode, about 10 years ago. The idea sprang mostly from outside financial advisers, definitely thinking outside the box. The notion was politically dead on arrival and remains only an interesting historic footnote. Since that more despairing time, the UW under its new and politically astute president, Mark Emmert, has made remarkable progress in patching up relations between Huskies and Olympians. It looks like this marriage can be saved.

A decade ago, some passionate advocates for the UW were feeling a lot of frustration with the ties that bind the university with the state. As universities grow much larger (especially through the medical schools), the percentage of state funding, compared to huge overall budgets, has actually been declining. (State support is about 13 percent of the total UW operating budget today, though a very significant 55 percent of the "core educational budget.") State regulations inhibit freedom of innovation at universities. The Legislature understandably likes the idea of subsidized low tuitions and stringently capped out-of-state undergraduates -- and these requirements cost the UW hundreds of millions of dollars in tuition it might otherwise collect.

What seems to have triggered the brief look at divorcing the state was the Legislature's insistence that the UW create branch campuses in Tacoma and Bothell. That move was supposed to get the UW more geographic support in Olympia, but it also diverted capital and other funds from the mighty Montlake campus. And so, well outside of public view, some financial advisers to the UW played around with an intriguing what-if?

As reconstructed by one of the key formulators (who declines to be identified), the idea was to have the state take the present value of its likely commitments to the UW for the next 10 years, currently running a bit over $400 million a year, float a bond for that combined amount, and give the bond proceeds to the university's endowment. In exchange, the UW would agree that it would never have any further claims against the state for compensation and that the university could run itself.

The UW would have purchased its freedom, and the state would no longer have to fund the university, once the bonds were paid off. The state might still fund scholarships for Washington residents, and lay down a few covenants, such as the governor appointing one member of the governing body or requiring in-state tuition to be half the out-state rate. But otherwise, the UW would be a non-profit like other great private universities, free to charge tuition it deems wise and to start and terminate programs as it sees fit. All the other state colleges and universities would remain state-supported.

In effect, we would have created a Stanford, and presumably this liberated university would turn into even more of an economic dynamo for the state, if one harder for local students to get into. (It's already getting pretty selective, as shown in this Seattle Times survey.)

My source says that some investment banks looked at the practicality of the scheme purely from a financial basis and concluded that it could work. And there the bold idea died, the politics of such an idea being daunting. Among the serious objections: How would the UW be able to afford buying all the land and buildings at a fair-market price, and how could the state could legally sell such asssts at lower than market value? House Speaker Frank Chopp is a fierce foe of "privatization." And one can just imagine the outraged Husky alums who would feel betrayed, along with staffers anxious about a loss of generous state benefits. End of idea.

The bond scheme was a much bolder version of another idea that some UW Regents and leaders pushed through the 1990s, modeled on the University of Michigan system. In that state's constitution, the University of Michigan is given a protected autonomy, under which the school (with qualifications) controls its own tuition and destiny, while remaining a state institution with some public support. The result is undergraduate and professional school tuitions significantly higher than UW's. (Tuition at Michigan for undergraduates is now $10,500, compared to $6,400 at UW.) In addition, UM draws its undergraduates from all over the country, and those from out of state (two thirds in Michigan's case, one-sixth in UW's case) pay tuitions comparable to elite private colleges. (Out-of-state tuition for UW is now $23,231, according to a recent story in The P-I.) Some badly strapped state universities, such as University of Oregon, have been forced by draconian state cuts to increase dramatically its percentage of out-of-state students.

Before the Michigan paradigm was advocated, the UW had pinned its hopes for more funding on the California paradigm, recalling when the Golden State (before Proposition 13) funded its public universities generously. Those days are pretty much gone in all the states, except a few catch-up states such as Oklahoma and Arizona. Facing reality, the UW proposed a kind of Michigan-lite scheme, offering Olympia a deal where it would shift taxes to "user fees" (tuition), off the books.

This proposition didn't make much headway under President Richard McCormick, an unpopular UW leader in Olympia, but now it is really gaining traction. The university has a lot more control over tuition rates for graduate and professional schools, and undergraduate tuition is rising at a steady 6 percent a year. Under Gov. Gregoire's Washington Learns program, funding for the UW is now pegged to benchmarks in 11 "New Economy" states, and state funding and tuition are linked (meaning if the state chops funding, the UW can make up the difference in tuition hikes). UW appropriations in the 2007 session were up 15 percent over the previous biennium, from $702 million to $807 million, the greatest rise in 20 years. The capital budget of $144 million was the best in 10 years.

The result is a guarded kind of detente, though still with plenty of border skirmishes. One particular trigger for animosity is the call for more branch campuses, such as the proposal for a new one in Snohomish County that the UW doesn't want. Other disputes concern technology transfer regulations or the university's ability to start new program areas. Some schools at the UW aspire to national prominence, and they prefer smaller more elite enrollments than the more populist Legislature has in mind.

Through it all, the UW still has a warm regard for the ideals of public universities, one of the great achievements of American governance, particularly in the West and Midwest. Some nearby states, including Oregon and Idaho, have clearly missed the train in transforming these large, beloved, football-crazy universities into research powerhouses, but not the UW. It's done this by becoming a place whose overriding goal is raising research grants, which punishes the humanities (who don't get many research grants) and devalues the undergraduate experience. It's exceeding an ambitious $2.5 billion "Creating Futures" drive for adding new programs, endowing professorships, and funding scholarships. There's obviously tremendous wealth locally that a skilled fundraiser like Emmert will be able to tap.

So the Stanfordization idea is long forgotten, at least until the next recession. Clearly a political non-starter, the idea nonetheless tantalizes as possibly the wiser course to follow for the long-term health of the University of a Thousand Years.


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