Anyone working with the Ohio legislature and the Department of Higher Education over the last several years will be very familiar with the regular discussion of efforts to improve the accessibility and affordability of higher education. While one might argue about the effectiveness of strategies adopted by the state government, there is no doubt their attention has been focused on these issues.
It is thus puzzling to witness Congress take a series of actions in the tax bill last week that are directly opposed to accessibility and affordability in higher education. All the Southwest Ohio Republicans - Sen. Rob Portman, Rep. Steve Chabot, Rep. Warren Davidson, Rep. Michael Turner, and Rep. Brad Wenstrup – voted for the legislation.
The House version of the bill is harsher. It eliminates the interest deductions for student loans of up to $2,500, for interest paid on student loans; the Hope Scholarship Tax Credit, worth up to $2,500; the Lifetime Learning Credit, of up to $2,000; and the $5,250 corporate deduction for employee education-assistance plans. And the House bill would tax graduate student tuition waivers, an inexpensive and efficient way to fund graduate education. Such a tax would devastate graduate education in Ohio. The Senate plan does include those changes.
Both the House and Senate bills include a 20-percent tax on compensation in excess of $1 million paid to any of a nonprofit organization’s five highest-paid employees. The measure would apply to colleges as well as teaching hospitals and even to college and university foundations. While, clearly, top college administrators have salaries that are far too high, the solution is to reduce those salaries, not tax them. Extra taxes on the salaries are likely to have the very negative impact of boosting administrative salaries to make up for the tax so even more revenue will be diverted from instructional purposes.
As if these policies that create student barriers to higher education were not bad enough, the tax bill also contains provisions that undermine our universities financially. While the tax on investment income from university endowments may not affect any Ohio public colleges at this point, it opens the door for expansion of the tax in the future and the principle that this revenue – produced by individual donations to fund higher education – should instead be used to fund tax breaks for the wealthy seems dubious at best. Further, while our universities spend far too much money on our deficit-ridden athletic departments, taxing revenue derived from selling merchandise like t-shirts would simply generate even larger deficits that would suck even more revenue from the academic side making a bad situation worse.
It is no wonder that Moody’s credit rating agency has rated higher education from “stable” to “negative” in the wake of the tax bill.
This attack on higher education will, in the end, create barriers to completion and access that will hurt Ohio students and our institutions. Ohio needs policies to improve enrollments and graduations. And there is much room to improve.
Funding needs to be increased. In fiscal year 2017, we’ve not quite gotten back to what the same funding level we had in fiscal year 2011. With inflation taken into consideration, that represents a significant cut in funding over the last six years. While a freeze on tuition and fees has been imposed for several years, the Ohio College Opportunity Grant, the only need-based state source of student funding, remains well below what it was in fiscal year 2009.
We all agree that we need to increase the number of college graduates in Ohio but after years of inadequate initiatives, Ohio still ranks in the bottom third nationally for adults with college degrees. State leaders will undoubtedly say there is not enough revenue. Certainly, revenue is a problem but this can largely be traced to tax policies adopted by the state legislature, much like their Congressional counterparts, who are determined to cut taxes. These tax cuts, both state and federal, have been skewed to the wealthy so they clearly are not helping middle-class families pay for college costs.
Instead, the result in Ohio has been anemic economic growth and inadequate resources for, among other important issues, our state colleges and universities. Portman will be speaking Ohio State University’s graduation on Dec. 17. We wonder how he is going to explain actions that are so detrimental to OSU and its students.
As the tax bill is reconciled, we expect our Congressmen and Senators to produce tax policies that improve and enhance affordability and accessibility rather than to undermine hopes our young people have for building bright futures.
John McNay is president of the Ohio Conference of the American Association of University Professors.