Higher education’s version of “Too Big to Fail”

Higher education’s version of “Too Big to Fail”

by Andrew P. Kelly

On Monday, House Minority Leader Nancy Pelosi appeared at the City College of San Francisco (CCSF), the city’s giant, multi-campus community college, where she urged San Franciscans to sign up for the spring semester. Pelosi was hopeful that with her help, the college could “intensify that sign up” during the open enrollment period. Nothing wrong with touting the hometown community college, right?

Not if the hometown college is in serious disarray. CCSF is hanging on by a thread after being told this past July that it would lose its accreditation after years of financial mismanagement and troubled governance. Citing 357 separate tasks that the college had to complete in order to stay solvent and serve its students, the Accrediting Commission for Community and Junior Colleges (ACCJC) decided that City College would lose its seal of approval in July 2014. Losing accreditation is essentially a death sentence for an existing college; without it, schools are not eligible to receive federal student aid money, meaning students will go elsewhere.

The decision was not sudden. In 2012, the college had been put on “show cause” status and told to fix 14 serious problems in financial management, governance, and instruction, many of which had been highlighted for years. That same year, the state issued a devastating fiscal review of CCSF, finding that the institution had twice as many faculty per 1,000 students and spent $17 million more than comparable colleges. In order to balance the budget on paper, CCSF listed “anticipated savings” without “identifying any specific reductions.” When the hypothetical savings didn’t materialize, CCSF had to draw down its reserves, leaving just $3 million left. The school’s graduation and transfer rates are above average, but in 2010 more than 17% of students defaulted on their loans within two years of leaving school, much higher than the average across all community colleges (13%).

Last week, a San Francisco Superior Court judge blocked the ACCJC from revoking accreditation pending the outcome of a lawsuit filed by the city against the accreditation agency. Now San Franciscans are in for months of charges and countercharges about procedural compliance and due process, all while the larger structural issues that doomed CCSF in the first place—a bloated budget, unwieldy faculty governance, and a failure to pay sufficient attention to student learning—go unchanged. The temporary stay of execution serves the interests of CCSF employees (and the unions that represent them) in the short-term, but leaves taxpayers and students to wonder how long it will be until the next crisis arrives.

Welcome to higher education’s version of “too big to fail.” Because accreditation is a binary variable—you either have it or you don’t—the stakes of revoking it are enormous. The higher the stakes, the less likely accreditation agencies are to pull the trigger, and the more difficult it is to ever put a bad college out of business. Faculty and advocates can argue that kicking more than 50,000 students to the curb is unjust, and current students will side with them.

And because public institutions are a creation of politics, not markets, politics will protect them. So the city of San Francisco and the House minority leader can step in to save local public colleges, regardless of whether they are serving the needs of students and taxpayers. According to Politico, Pelosi even hinted that Congress might get involved with an investigation of the ACCJC. As if the very real, structural problems uncovered by California’s own state audit were somehow ginned up by the accreditation agency.

Higher ed regulation is a mess. Accreditation is simultaneously ineffective at kicking bad colleges out and supremely effective at keeping new ventures out. Perhaps Pelosi and others in Congress should spend their time developing a new approach to quality assurance and taxpayer protection. That would be more productive than recruiting students to a college that’s hanging on by a thread.


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