Wednesday, October 27, 2010

University of Minnesota Law Prepares For State Budget Cuts

A couple of weeks ago I noted that Arizona State Law was preparing to ease itself off the state subsidy in the next few years.  Dean Paul Berman took the bold - and perhaps dangerous, from a PR point of view - step of getting in front of the problem before actual cutbacks decimated the school's program.  But news out of Minneapolis this week highlights the challenge many state law schools are facing. 

Over the next two years, the Minnesota legislature will reduce its contribution to the law school from 22% of its budget to 11%.  That's serious money - millions of dollars per year.  To deal with this problem, the school hiked tuition 13.5% this year.  Indeed, tuition at the U has jumped about 33% over the past four years. 

While the administration is working to beef up gifts, endowment is a very difficult way to make up revenue.  The school would need to raise well north of $40 million dollars to cover a $2 million shortfall.   Plainly, tuition is an essential approach to filling the gap.  A $3000 tuition hike at a school with 780 students yields $2.34 million in revenue.  Even if the school gives back a quarter of that in scholarship, that's enough to keep on lots of lights.

We're obviously moving toward a segmented market in public legal education.  There will be top-tier schools that want to compete with their private brethren.  This means staying nose to nose with private schools on both faculty compensation and course load.  It also means investing in institutes, centers, and programs that facilitate research.  As a practical political matter, it's going to be near impossible for any state school to achieve this without amping tuition beyond $30K.  We've already seen the Berkeley/Virginia/Michigan move and the real question is which other schools intend to follow that model.  (I would have guessed Minnesota, among others.)  Then there will be the remainder of state schools that temper their commitment to super high-end hiring and retention with the practical reality that state governments neither desire, nor can afford, a Lexus law school. 

The interesting question is where these decisions will be made.  Will faculties decide they want to support and grow elite programs, moving strategically to reduce or eliminate state subsidies? Or will university administrations, or state governments, insist that tuitions remain low - insuring that their state law schools are affordable and signaling that access is an extremely important value.  (The UC system may be pursuing a third model - one a tad more redistributive - featuring high sticker prices and unusually expansive need-based financial aid.)

In a world of unlimited resources, one law school can be everything to everyone.  As things now stand, however, law schools are forced to make critical choices.

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