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Why UMass Increased its Tuition: A Closer Look at the Budget Deficit

Updated on October 13, 2016

The University of Massachusetts (UMass) raised the cost of tuition this year by an average of $753 (or 5.8%) for in-state students. Last year, the cost of attending also went up by 5%. In fact, in the past six years, costs to students have gone up three times.

Going up against an $85 million budget deficit, the Board of Trustees voted 11-2 in favor of raising tuition.

The deficit forced the school to make cuts as well. In June, the UMass Boston notified 400 adjunct professors that their contracts may not be renewed in the fall.

However, students were hit the hardest, many will have to drop classes or take on extra job hours to make up for the increase, decreasing the time they can devote to school.

Around campus, the cry to increase funding for public schools has been clear; demonstrations by teachers and students, union officials collecting petition signatures, and the unwelcome greeting of Secretary of Education, James Peyser have set a precedent - the state is cutting funding for public subsidies of higher education.

Massachusetts Teachers Association President Barbara Madeloni gave her thoughts at the September 21 protest on campus:

“What we need to do is not constrain and narrow the possibilities for education, but open them up and create more possibilities. And that means funding,” said Madeloni.

With the November ballot fast approaching, Question 2 has sparked an even greater outcry from teacher and student activists. Question 2 will ask voters if they support giving Massachusetts the authority to lift the cap on charter schools, diverting millions of dollars from public school districts.

Teachers and staff have been pushing a narrative: the budget deficit stems from a lack of state funding - the evil Republican privateer Peyser is invading our “ship” (aka UMass) and maliciously stealing our “booty” (aka public funds) to turn the campus into a for-profit marketplace.

This oversimplified explanation fails to account for the underlying reason for the budget deficit in the first place, forcing the Board to hold a vote to raise tuition. In fact, upon closer investigation, such a vote could have been avoided.

Closing in on the deficit

As a result of the outcry from the teachers’ union, in September 2015, the President of UMass, Martin T. Meehan finally agreed to pay faculty and staff $10.9 million in retroactive wages - (wages due for past service).

The previous year, in 2014 UMass negotiated new contracts with the teachers’ union - 3-year contracts calling for 3.5 percent annual raises; a total of $13.1 million. The raise wasn’t guaranteed for every teacher, but only if he/she “did not receive a less than satisfactory rating on their annual evaluation”.

Due to disagreements between the legislature and UMass over who would pay for the first year of the agreements, they were left unfunded since they took effect in July 2014. Moreover, if it stayed unfunded until October of 2015, the payment would be lost.

In fear of missing out on their bonuses, teachers again took to collective bargaining. At UMass Amherst more than 300 protested; the faculty, staff, and students all joined in solidarity, marching around campus, chanting and carrying signs saying “UMass Unions United to Protect Our Rights.”

This pressure eventually paid off, In September 2015 Meehan finally agreed and went ahead and paid the 10.9 million to employees; however, he did this before actually knowing if the legislature would allocate an even higher amount. He would need a 3.5% increase from the previous year in order to avoid cuts. He therefore expected the legislature to appropriate additional funds for a supplemental budget and thereby make up for the 10.9 million given to teachers. When UMass only received a 1.5% increase the following year, Meehan found himself in an even deeper budget deficit, forcing the Board of Trustees to increase student tuition in order to make up for it.

At the time, the teachers’ unions celebrated their bonuses as a win for workers’ solidarity and collective bargaining: “This type of solidarity and strength works for our students, our schools and colleges, and all working people,” said Madeloni.

A win for students?

So who’s at fault?

It’s important to note Meehan’s uncertainty in making the decision to pay back the 10.9 million to employees. The school had limited money, so he took a great deal of time to make the decision owing to known consequences; yet, due to the pressure put on him by the teachers’ union he had little choice. He then anticipated a wishful and impractical increase in funding from previous years, so as to make up for the 10.9 million lost. In a sense, he put all his eggs in one basket - (the basket being the government and the eggs being the students of course). When he only received the expected 1.5% increase in funds rather than the 3.5% he asked for, the students had to suffer the consequences in tuition increases.

At the time, expectations of future budget deficits as a result of paying the retroactive wages was apparent to everyone else; UMass spokesmen, Robert Connolly acknowledged this after Meehan made the deal to pay employees: “If not, [if legislature appropriates the additional funds needed] the university will be forced to make mid-year cuts, that would make a challenging year even more challenging.” Decision makers knew the cuts were likely if they chose to pay the bonuses; in other words, they made the decision with the possible expense of the students in mind.

Despite this, the decision did initially come about because of the teachers’ union pressure through collective bargaining. From the start they pressed for their bonus at any cost, even if it meant at the expense of the students. Eventually, their hard work paid off and they got their well-deserved bonus.

So who are we to blame? Both the teachers’ union and the President of UMass? Or should we take a more top-down approach and blame “the evil privateer” Secretary of Education James Peyser for his support of charter schools?

In an attempt to avoid the childish blame game, the reality is that the fault lies on all stakeholders in the situation. In the words of Economist Milton Friedman, “If there is fault to be found, the fault is not to be found with the members of the teachers’ union, but with the rest of us for letting them get away with it.”

If one considers the bigger picture, this is a systemic problem more than anything.

Looking at the bigger picture

Not all the blame belongs to the President of UMass for his incautious decision that led to the tuition hike; as with most ex senior faculty in universities, he had academic tenure, a state of employment contract preventing him from being dismissed. This means that by nature he is used to acting more carelessly than he otherwise would, including irresponsible and unaccounted-for decisions due to his previous “career pass.” He simply is not as accountable for his actions as someone in a private corporation. This is partly why he chose to pay back employees $10.9 million, placing all his bets on the government bailing him, or shall I say us out. He was not a stakeholder in the situation, as his job was virtually permanent and he would experience no cost for his imprudent bet if it failed.

Furthermore, neither is the teachers’ union fully responsible for pressuring the president to make that decision; Friedman reminds us, “They [the teachers union] have an enormous strong personal private interest to keep the situation the way it is now, where they exercise an effective monopoly position on the public school system.”

Simply put, the teachers’ union is a special interest group that uses its power to promote their special interests, including higher pay and more security benefits. By all means this is the purpose of a union; however, invariably, this has been and will continue to be at conflict with representing the interests of the students.

This monopoly which Friedman speaks of is perpetuated by the laws embedded within the teachers’ union that advocate for less accountability.

The truth is, ever since the teachers unionized in the 1960s, arbitrary laws such as tenure and seniority have become the norm; seniority rules include allowing senior teachers to take desirable jobs as they open without considering qualifications or if the professor is a bad fit for the school. All the while, younger teachers are left to themselves amidst a crisis. This is exactly what occurred at UMB – the administration notified 400 adjunct professors (all without tenure) that their contracts were not going to be renewed, resulting in mass layoffs.

Making sense of it all; so how do teachers’ unions remain so powerful?

Teachers’ unions sustain and solidify their power through collective bargaining and the political process. This enables them to gain sluggish and inert rules in their contracts. (ex. seniority job openings, tenure, etc.).

Through the political process, the unions' lobby for greater state funding, thus receiving higher pay and more security benefits. They also counteract reforms that carry with them the freedom of choice - this being the campaign to stop the expansion of charter schools. The teachers’ unions have over 4 million members that are top contributors to political campaigns.

Moreover, they oppose any performance bay pay, making consequences for low performance rare. Teachers in the union never pay a price due to mismanagement or overlooking a school budget.

More importantly, the teachers’ unions are able to enjoy incredible amounts of lobbying power due to the laws which they have shaped. In Massachusetts, by law, every public school teacher is required to join a union – whereby the union automatically deducts dues from their paychecks. This dissolves the authenticity of unions as “voluntary” associations of workers seeking to improve their own economic well-being; in theory, the decision to join a union should always be voluntary. It clearly is not. For this reason, unions perpetually generate huge amounts of revenue since they’re basically taxing their members of the top of every paycheck. The head of the teachers’ union then uses dues to fund the campaigns of Democratic politicians, aiding their win to office. In return, the candidate promotes security benefits and higher pay for public school teachers when running, and after elected he uses all his power to spend more money on the public school system. Unions in this way get a kickback in the form of more dues from all the new spending and the politician gets more union contributions for his next campaign.

The reason the fault should lie on all of us is because the taxpayers fund it all as a public institution after all. Our tax dollars go to teachers’ unions, enabling them to fund politicians for the sake of increasing their pay and striking down progressive reforms which enable greater transparency and accountability in the public school system.

To make matters worse, economists have long recognized the discrepancies in creating and enabling municipal unions.

As with any other union, a raise in their salaries leads to fewer available jobs - there is no way in which a union can simultaneously increase the number of jobs and pay - the laws of demand and economics do not allow it. If one raises the price of something, fewer people will want to buy it.

Friedman gave an example during a lecture; in the 1980’s around 10-15% of U.S. workers were able to raise their salaries through union organization; however, this was at the cost of roughly a 4% reduction in wages earned by the other 85 percent of American workers. Friedman is not alone in this claim. Senior Policy Analyst in Labor Economics, James Sherk states, “Unions only raise wages for their members by raising prices and reducing job opportunities for non-union workers. Few economists believe unions increase overall living standards.”

The fact of the matter is that unions do not redistribute wealth from the rich to the poor - low income and middle-income workers suffer the brunt of the consequences. Nearly all the income that unions redistribute comes from other workers, rather than stock owners.

Sherk brings up the case of the United Auto Workers (UAW), a union which comprised nearly the entire U.S. auto market - General Motors, Ford, and Chrysler. Preceding the 2008 financial recession, through collective bargaining they received more than $70 an hour in wages and benefits. However, with it came an economic downturn - the cost of every Detroit vehicle was increased by about $800; therefore, the consumer started buying less and automakers sold fewer cars. At the end of the day, those same workers also suffer in the form of layoffs, but particularly the low-end wage workers. Consequently, non-union suppliers in the steel, plastic, and other industries are also hurt by the lack of production.

For these reasons, it’s not a coincidence that right-to-work states have 1.3% lower unemployment rates than non-right-to-work states.

There is a unique problem at hand when we talk about municipal unions – taxpayers fuel them. Since the 1980’s they’ve become the strongest unions as the government has become bigger. Since the people that arrange their employment are not the ones who pay their salary, the opportunity for incompetence is endless.

Because of this, it’s no surprise that since the 1970’s, as teachers’ unions started to grow (with the growth of government) student performance in public schools also began weakening. An increase in federal school spending has correlated to a downfall in test scores. The Department of Education was also created in the seventies, so that the government began pouring vast amounts of money into the public school system. This just shows that constantly demanding more federal funds isn't necessarily the answer to solving problems.

Source

Moreover, for decades teachers’ unions have been one of the largest political donors, exercising immense influence in deciding which Democratic Party candidate gets elected to office. This also means maintaining the status quo - a failing public school system, hikes in tuition, diminishing accountability, and putting students’ performance in jeopardy.

The machine that we’re all part of is not designed to create any real progressive change.

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