Matthew Kahn and Michael O’Hare both hail the trend toward more out of state enrollments in the University of California system. Kahn, the economist, makes the economist’s case: “When you produce a high quality product, you can raise price without losing your market share […] With the extra revenue, UCLA could subsidize tuition further for the needy.”
O’Hare makes a broader argument about diversity, but in some ways I think Kahn’s point is the more important one. And the question is what is the University of California in fact doing with the extra revenue. My fear is that what’s happening is that the state is reducing its level of funding to the system, and the system is making up the gap by enrolling fewer Californians and more profit-making non-Californians. That is, for the UC system, a rational response. But it also reflects a trend toward privatization of the UC system and a declining level of public services for Californians. It’s a trend that we should find troubling.
Now conversely, per Kahn you could imagine a more productive dynamic. The University of California does have a high-quality product. The high quality of the product could be used to offer quality college to more non-Californians and the extra revenue that brings in could be used to either lower the price for needy Californians or else (even better in my view) expand overall system capacity so that more Californians have the opportunity to go to college. There’s nothing wrong, as such, with an institution having mixed public and private characteristics and at their most successful I think that’s how both formally public and formally private colleges have operated in America. But a kind of stealthy move toward operating on a pure private motive isn’t a good trend.