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Think tank report says Virginia higher education funding is unjust and lacks transparency

A new think tank report says the way Virginia funds its colleges is “irrational, inequitable and unjust” and criticizes the state for not giving enough money to the students who need it the most.

The report, released last week by Education Reform Now, singles out the College of William and Mary, a wealthy university that receives more money per student than Old Dominion University, Radford University and George Mason University, which all enroll higher shares of low-income students.

Too often, the report says, limited funds are going to already wealthy families, and the method the state uses for awarding funds lacks transparency and consistency.

“Our view is that colleges that need the most should get the most, not the least,” said Michael Dannenberg, a co-author of the report.

Underfunding needy students has serious effects after college when graduates are unable to pay off high loan costs, and the effects disproportionately affect Black students. The report comes at a time when the State Council of Higher Education for Virginia is already reviewing how schools are funded and whether they’re receiving fair amounts.

Some universities receive high levels of funding despite enrolling a small share of low-income students. William and Mary is the fifth highest funded university in the state, based on 2019 state appropriations per full-time student. It received $8,500 per student, despite enrolling the smallest percentage of Pell-eligible students in the state. Just 12% of its students were low-income, based on the 2018 three-year average.

Virginia Military Institute is right behind, receiving $8,000 per full-time student with a student body that is just 14% low-income.

Meanwhile, universities that have higher shares of low-income students are getting less in state funding. Old Dominion receives less than $8,000 per student but has a student body that is 38% low-income. Radford University receives about $7,000 per student, where one out of every three students is low-income. George Mason receives the least funding in the state, about $4,500 per student, but 29% of its students are low-income.

While William and Mary receives a large amount of state funding, some of it goes toward reinforcing a mission of equity, a school spokeswoman said. The upcoming year’s budget gives William and Mary funds to grow the number of underrepresented minority faculty in its data science program. The university also seeks state funding to support need-based financial aid for Pell-eligible students.

“While William and Mary’s percentage of in-state undergraduate Pell recipients compares favorably among its peers — highly selective private colleges and universities — the university also remains committed to increasing it,” the spokeswoman said.

The impact of not helping needy students is a big one, Dannenberg said. Thirty percent of student loan borrowers go into default, are late making payments or have stopped making payments after six years, according to a 2018 New York Times article. Among Black students, its 49%, Dannenberg said.

More students are borrowing to pay the cost of their education, and they’re borrowing more. The average amount borrowed by a Virginia public school student has more than tripled from $3,000 in 1992 to $10,500 in 2018. Accounting for inflation, the size of a student loan has nearly doubled.

Del. Luke Torian, D-Prince William, head of the House Appropriations Committee, disputed the notion that college funding isn’t transparent or consistent. Each university has its own formula for determining its need, he said, and each college has different needs, sizes and curricula. The General Assembly tries to keep funding equitable based on each university’s request and need, but some disparity is unavoidable.

“It’s up to each institution to make their own request to the commonwealth and be able to justify their request to the commonwealth,” Torian said.

Before the state allocates funding for each of the 15 public universities, each school makes a request. The governor’s office reviews the request and proposes funding levels. Then the General Assembly reviews the requests and proposal and makes adjustments as it sees fit. Universities also submit six-year plans that include general funding requests so all groups know the institution’s needs.

That system is broken and opaque, said James Murphy, a co-author of the report.

Virginia has some of the most expensive tuition and fee levels in the country, and state funding is diminishing. In 2001, students paid 23% of the cost of public higher education, with the state paying the remaining 77%. But state contributions have dwindled in the past two decades. In 2019, students paid about half the cost of college education, with the state covering the other half.

The high costs lead to high debt. More than half the students at public four-year schools in the state graduate in debt, and one in four of them owe more than $50,000.

Students who graduate from Virginia’s two public historically Black universities, Virginia State and Norfolk State, have some of the highest debt. Ninety percent of them graduate in debt, and half owe more than $40,000.

Fewer students at UVa and William and Mary graduate with debt, and those who do graduate owing less.

Former Gov. Doug Wilder called for the state to give $50 million to each of the state’s four HBCUs from American Rescue Plan dollars. HBCU funding should be a priority, Dannenberg said.

SCHEV is currently studying how schools are funded. This year’s budget allocated $300,000 to review higher ed costs, funding needs, appropriations and efficiencies. It also will address the impact of funding on underrepresented student populations. A preliminary report is due in December, and a final report is due by July 2022.

The state’s current funding model doesn’t completely ignore need. The state’s highest funded universities, based on per-student funds, are the University of Virginia’s College at Wise, Norfolk State University and Virginia State University, which enroll some of the highest shares of low-income students. UVa-Wise has a student body that is 36% Pell eligible. At Norfolk State and VSU, the student bodies are 63% and 71% Pell eligible.

Virginia Commonwealth University is the fourth highest funded school, and it enrolls the seventh most low-income students. VCU receives about $9,000 per student and has a student body that is 29% low-income.

A university doesn’t have to sacrifice quality to recruit a diverse, equitable student body, Dannenberg said.

“Equity and quality are not mutually exclusive,” he added. “Diversity and equity are components of quality.”

The report also criticizes how much funding the state awards to community colleges. Virginia ranks 44th in the country in state funding for two-year colleges when considered on a per-student basis. Four-year schools receive about $7,000 per full-time student, while two-year schools get about $4,000. Many two-year schools serve a high number of low-income and Black students.

Tuition Assistance Grants, which go to Virginia residents attending the state’s private schools, were also identified in the report. Recipients don’t have to prove need or meet a level of academic merit to receive a grant, whose average value was $3,000 in 2018.

The state spent $71 million on VTAG in 2020, and the report argues that a chunk of that money goes to wealthy families who don’t need it. Some $10 million went in 2018 to students who didn’t qualify for financial aid or didn’t bother applying, and more went to students of families making more than $100,000 than students whose families earn $50,000 to $100,000.

Liberty receives far more in VTAG funds than any other Virginia private school, receiving more than $16 million in 2019, four times as much as any other private college. But the graduation rate there is just 47%, and Black students graduate at a rate of 17%.

VTAG funds, Dannenberg said, should be need-based.

VTAG was enacted in 1972, beginning as loans and then transitioning to grants a few years later. Historical accounts suggest legislators wanted to support Virginia residents in higher education beyond those who attended public schools, a SCHEV spokeswoman said. A VTAG grant costs the state less per student than if the student enrolled in a public four-year school.

Vinton inks deal for downtown hotel

Vinton is making way for a hotel downtown, giving up about two acres and leaving available some of First Street for development.

The McDevitt Company, based in New England, is entering a sales agreement to receive six downtown Vinton parcels on Cedar Avenue and South Pollard Street for $10. The company plans to invest $12 million for the construction of a 90- to 120-room hotel, said Town Manager Pete Peters during a town council meeting Tuesday night.

The council voted unanimously to enter into that sales and performance agreement, effectively agreeing to convey the land, under the restriction that a hotel will go up.

“A number of things determined there was a market here in the community for a hotel,” Peters said, referencing a 2016 study. Compared to surrounding areas, “we had a very favorable leisure and recreation environment.”

First Street could become a block shorter at the Wells Fargo downtown, as Vinton abandons a stretch of the road and enters into a performance agreement with McDevitt Co. to ensure the hotel’s development. The town acquired those six parcels throughout 2019, razing four old and overgrown buildings on the premises, according to town documents.

“It took us a couple years to acquire those parcels,” Peters said, adding it was a 6-year effort. “Wells Fargo actually donated their parcel.”

In total, Vinton invested less than $500,000 on land acquisition and demolition, Peters said in an email. A limited-service hotel — like a Hilton, Marriott or Wyndham — of that size could generate almost $500,000 annually in new tax revenue, town documents said.

“The direct revenue is great,” Peters said. “But it will capture a lot of visitor spending that typically leaks out of the community.”

The hotel will bookend Vinton’s efforts to revitalize and reshape the southern entrance to its downtown business district, Peters said. It will be the first multi-story hotel in Vinton, and plans should soon solidify.

“Up to this point, we’ve done a lot of analyzing from 10,000 feet,” Peters said. “Now we’re really going to start putting pen to paper doing actual site planning.”

Opioid lawsuits on verge of settlements

The yearslong effort by state and local governments in the U.S. to force the pharmaceutical industry to help pay to fix a nationwide opioid addiction and overdose crisis took a major step forward Tuesday when lawyers for local governments announced they were on the verge of a $26 billion settlement with the nation’s three biggest drug distribution companies and the drugmaker Johnson & Johnson.

Under the deal, Johnson & Johnson would not produce any opioids for at least a decade. And AmerisourceBergen, Cardinal Health and McKesson share prescribing information under a new system intended to stop the avalanches of pills that arrived in some regions about a decade ago.

Lawyers for local governments said full details could be shared within days. That would not be the end of the deal though; each state would have 30 days to decide whether to join. And local governments will have five months after that to decide. If governments don’t opt in, the settlement total would go down.

“This is a nationwide crisis and it could have been and should have been addressed perhaps by other branches of government,” Paul Geller, one of the lead lawyers representing local governments across the U.S., said in a conference call with reporters Tuesday. “But this really is an example of the use of litigation for fixing a national problem.”

If approved, the settlement will likely be the biggest of many settlements to opioid litigation. While it means billions for lawyers who worked the cases, it is expected to bring more than $23 billion to abatement and mitigation efforts to help get treatment for people who are addicted along with other programs to address the crisis. The money would come in 18 annual payments, with the biggest amounts in the next several years.

The deal echoes one the companies have been pushing, sometimes in public, for two years.

Johnson & Johnson reiterated in a statement that it’s prepared to contribute up to $5 billion to the national settlement.

“There continues to be progress toward finalizing this agreement and we remain committed to providing certainty for involved parties and critical assistance for families and communities in need,” the company said. “The settlement is not an admission of liability or wrongdoing, and the Company will continue to defend against any litigation that the final agreement does not resolve.”

But Cardinal Health declined to comment early Tuesday, and the other distribution companies did not respond to requests for comment.

An Associated Press tally finds there have been at least $40 billion in completed or proposed settlements, penalties and fines between governments and the toll of opioids since 2007, not including one between the federal government and OxyContin maker Purdue Pharma in which most of the $8.3 billion would be waived. Purdue is trying to reach a deal through bankruptcy court that could be worth $10 billion over time; a hearing on that plan is scheduled for August.

Other deals are possible. While a growing number of companies in the industry have struck deals, some manufacturers have not — and no pharmacy companies have struck nationwide settlements.

But the total amount in the settlements is far below estimates of the financial costs of the epidemic. The Society of Actuaries found that the cost of the crisis in the U.S. was $630 billion from 2015 through 2018, with most of the costs borne by the private sector. And the White House Council of Economic Advisers, when considering the economic impact of people who fatally overdosed, put the one-year cost at about $500 billion nationally.

Unlike with the tobacco settlements reached in the 1990s, governments have agreed to spend money they bring in from opioid-related settlements to deal with the opioid crisis.

In a joint statement, the attorneys general for Connecticut, Delaware, Florida, Louisiana, Massachusetts, New York, North Carolina, Ohio, Pennsylvania and Tennessee said the settlement talks with the four companies are “potentially nearing their completion,” and that, “we look forward to bringing much-needed dollars home to our states to help people recover from opioid addiction and to fundamentally change the opioid manufacturing and distributing industries so this never happens again.”

But they still have choices ahead on exactly how they do it.

“Is it a nice chunk of change?” asked Ryan Hampton, who is in recovery from an opioid addiction and is a Las Vegas-based advocate for policy to address the overdose crisis. “Sure it is. Will it go to where it needs to go? The jury’s still out on that.”

Even before the settlement plan was unveiled Tuesday, a group of public health advocates and experts began calling for any settlement money to be spent to address the opioid crisis.

“It’s money that can do a lot of good if it’s used well,” said Joshua Sharfstein, a vice dean at the Johns Hopkins Bloomberg School of Public Health, who is spearheading the effort. “It’s really important to use it well to save lives because it’s coming at the peak of the overdose epidemic.”