Fierce Competition for Dollars

By Ellie McGrath

When the going gets tough, the tough go fund raising

The campaign season is under way, but more than one president is out on the stump. The nation's colleges and universities are vying for some $5 billion in gifts from corporations, foundations and private citizens. Bowdoin College in Maine kicks off a $56 million fund-raising drive this fall. The University of Southern California is gearing up for a $500 million campaign. Another California university, Pepperdine, is pushing its $100 million "Wave of Excellence" effort. Such fund raising is nothing new; private colleges and universities have been passing the hat for centuries.

Public institutions are another matter. They still rely primarily on the revenues of state taxpayers, but now they are also tapping into sources once considered the preserve of private colleges. The University of California, Los Angeles, will inaugurate an unprecedented drive for $200 million in November. The University of Georgia, which celebrates its 200th anniversary next year, is wrapping up a first-time campaign that has raised $63 million, including $1 million from Coca-Cola. The University of Illinois enlisted Alumnus John Chancellor to star in a 19-city teleconference as part of an effort that has raised $109 million. Observes Hayden Smith, senior vice president of the Council for Financial Aid to Education: "Competition between public and private higher-education institutions is getting fierce." Cornell University President Frank Rhodes concurs: "We have seen what was once a more or less friendly rivalry between public and independent institutions degenerate into an unhealthy scramble for resources."

The reasons are clear: the number of 18-to 22-year-olds is rapidly declining; some demographers predict a drop of 25% over the next decade. Furthermore, 30 years ago college students were about evenly divided between the public and private sectors. Today 78% of all college students attend public institutions. Even though the total cost of educating a student is roughly the same, public tuition, aided by state and federal taxes, averages $1,126 a year, vs. $5,016 at private institutions. Notes Gary Quehl, president of the Council of Independent Colleges: "American higher education is the only national industry that requires one sector [private] to compete with the other [public] at more than a 4-to-l economic disadvantage."

In some states conflicts are sharpening. Public university presidents in Ohio openly opposed a new program that gives $500 to each Ohio student attending a private college. Since the 1960s, New York State has granted money to private institutions and students attending them. Yet while discussing assistance guidelines last year, presidents from both sectors disagreed so vociferously on the formula that the meeting dissolved. An agreement worked out in March now provides more state aid to students at private institutions.

As college presidents move away from genteel competition, the old rules are being bent out of shape. Some leaders in the private sector, including the Rev. James Finlay, recently retired president of Fordham University, have begun calling for a sliding tuition scale for state universities. Their argument is succinct: Why should a student from an affluent family pay only $1,126 to attend State U. when it costs the taxpayer much more to provide an education? Some public institutions, until private colleges complained, were trying to compete on the basis of cost. One ad for the State University of New York read, "SUNY's tuition costs less for four years than some colleges charge for one."

Optimists insist that there are enough bucks and bodies to go around. Says University of Southern California President James Zumberge: "We're competing for the same dollar, but if my predictions are right, those dollars are going to continue to increase." He has a point. Voluntary giving to colleges is up 6% over last year. William Orme, an executive of the General Electric Foundation, agrees that corporate giving will go up "once the issues are recognized." Pepperdine President Howard White complacently notes, "There is no competition among lighthouses." Yet not every college has a 1 million-candlepower beacon, and small private liberal arts colleges are the most likely to be left in the dark. Says Dennis Griffin, a vice president of St. Olaf College in Minnesota: "Private education is a sort of endangered species."

Cooperation may be the only way to avert a civil war in higher education. Last year Chancellor William Danforth of private Washington University in St. Louis and the president of the University of Missouri brought together 40 college and university presidents to try to head off skirmishes. They had plenty of motivation: in their home state, aid to higher education has failed to keep pace with inflation in the past decade. Says Danforth: "This is a long-range problem, and we thought it would be good for people in both sectors to talk about how to serve our institutions and the state together." In Pennsylvania, where there is little strife between the two sectors, the Pennsylvania Association of Colleges and Universities has been lobbying the legislature on behalf of both public and private institutions for the past decade. The Exxon Education Foundation gave a grant this year to the Association of Governing Boards of Universities and Colleges, a group of public and private trustees, to explore similar cooperative programs. At stake, ultimately, is the survival of a uniquely American system of higher education that combines the vitality and access of public schools with the excellence and experimentation of private institutions. Says Cornell's Rhodes: "Our dual system forms an education enterprise which is rightly the envy of the world."--By Ellie McGrath. Reportedby Dorothy Ferenbaugh/New York and Barbara Kraft/Los Angeles

With reporting by Dorothy Ferenbaugh, Barbara Kraft