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Private Universities and Colleges

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There are four main points of contact for independent colleges with the rest of higher education. The first involves Cal Grants. Private higher education has consistently opposed changing the constitutional prohibition against capitation grants. They prefer to have funds awarded through students. Independent colleges are eligible for the Cal Higher Facilities Bonding Authority. This provides funding for alternative student loans as well as for facilities using tax-exempt revenue bonds. To date some $2 billion of such bonds have been issued. The independent colleges also have a representative on CPEC. Finally, there are informal relationships such as those involving the California Education Roundtable.

While the 1960 Master Plan mentioned private higher education only in the context of student financial aid, the private institutions were influential in the development of the Master Plan. From 1960 to the 1986 Master Plan revisions, private higher education was largely ignored in policy discussions. A representative of the independent sector told us that for much of his experience, independent institutions have been known as the "by the way sector." For the most part, the private sector has been happy to be left alone as long as the state gives adequate attention to "that which it holds dear," said a private college president, "namely the Cal Grants." Until 1985, student demand and available resources created an environment in which higher education was one big happy family. There was, for practical purposes, no market competition.

Between 1985 and 1990, tuition costs increased rapidly. Private institutions, in competition with the public sector, engaged in tuition discounting, leading to a decline in institutional health ratios. Because of the health problem, language was inserted in the 1987 Master Plan Revision requiring the state to consider the capacity and utilization of the private sector in making planning decisions. In the early 1990s, fiscal problems in the public sector and declining enrollments at CSU have led to a recovery in private sector ratios. There is in the seeds of this experience, however, a growing realization that the health of the private sector may in some ways be related to the status of the public sector. Current estimates suggest that the private sector might be able to supply from 10,000 to 40,000 seats or about ten percent of the projected demand for "Tidal Wave II." While a representative of the private sector sits on the Education Roundtable, and individual presidents of major institutions like Stanford have influence, the overall impact of the private sector in California remains weak.

Private institutions are represented in Sacramento by the Association for Independent California Colleges and Universities (AICCU). The Association has three or four primary functions, including representing the institutions' interests in Sacramento, coordinating joint financial activities such as recruitment and group purchase of insurance, coordinating information about the independent sector both for its members and an external audience, and working on anything else that members request. Member institutions are charged for the services they use to band together in such areas as worker's compensation and dental care. Through this arrangement, smaller institutions gain economic clout.