Who will pay for Stockton?s borrowing and spending spree?
By Seth Grossman, Political Columnist
(Reprinted from July 21, 2010 Current-Gazette Newspapers of Atlantic and Cape May Counties, http://www.shorenewstoday.com/index….ing-spree.html)
?Total liabilities increased by $101,042,726 in fiscal 2009 primarily due to an increase in debt from the newly acquired tax-exempt debt series 2008A. Total liabilities increased by $33,128,651 in fiscal 2008 primarily due to an increase in debt from the newly acquired tax-exempt debt series 2007G.??
? Richard Stockton College Financial Statements and Independent Auditors? Report, Years Ended June 30, 2009 and 2008
Earlier this month, I wrote, ?Stockton?s spending pleases politicians, hurts students.?
It has been reported that the college wants to buy the $16.2 million Seaview Resort Hotel and Golf Course in Galloway Township, while raising tuition, room, and board to more than $23,000 a year.
Student loans were unheard of in the 1960s because the cost of a year in a state college like Rutgers was less than what a student could earn on the Boardwalk in a summer. Most of today?s students will not pay off their student loans until their own children are old enough for college.
That?s why President Obama and the Democrats have plans to wipe out their debts sooner ? if they ?volunteer? to do years of ?public service? on new government programs that advance left-wing agendas.
But when I read Stockton?s latest financial report, I saw that the college is in far worse shape than I thought. I invite you to read it at http://intraweb.stockton.edu/eyos/pa…124&pageID=37/.
If other colleges around the country are doing the same thing, we are about to see the collapse of another big financial bubble.
Except for the U.S. government under Bush and Obama, most governments and businesses around the world stopped borrowing and cut spending after the financial collapse of the summer of 2008. But the people who run Stockton College were in a different world. They went on a lavish borrowing and spending spree.
In 2007, Stockton had roughly $129 million in long-term debt or about $20,000 of debt for each of its 6,321 full-time students. In 2009, just two years later, it doubled to almost $265 million or about $42,000 of long-term debt for each student.
Stockton agreed to pay 4 to 5 percent per year of tax-free interest on that debt for the next 21 years ? a very high price. It now pays about $10.6 million per year just on interest ? that?s about $1,700 per student per year, more than double what it paid just two years ago.
Stockton spent $137,522,000 in 2009 or $21,756 per student. It collected $78,378,000 in tuition from students, an average of $12,400 per student. It got another $40,017,000 ($6,331 per student) from state taxes, and $18,642,000 ($2,939 per student) in other ?government grants,? mostly paid with federal taxes. The final $8,662,000 ($1,370 per student) came from ?other? sources.
Who will pay for this two-year borrowing and spending spree? Students and their parents. Money from the state and federal governments went up by 6 percent, but tuition, fees, room and board collected from students and their parents jumped by more than 17 percent in the last two years. And there is another 4 percent hike this year.
How can students and parents pay so much more, when most are earning so much less in these troubled times? And why should they pay such a high price when there is no longer an assurance that college leads to better jobs and incomes?
Page 12 of the audit report tells us what the folks at Stockton are thinking:
?The College is moving ahead with. . . a new college center building, on-campus housing, two parking structures, and a new science building. . . The populations of Atlantic, Cape May, and Ocean counties are increasing dramatically. . . The College is rated highly. . . and continues to fall below the sector average with respect to tuition and fees charged among the nine state colleges. For these and many more reasons, the College is never at a loss to fill our classrooms; we can afford to be very selective.?
Is this the stupidity of the Wall Street ?experts? who packaged sub-prime mortgage loans, since there would always be buyers for high-price houses? Is this the greed of the old railroad barons of the 1890s who raised rates to ?what the market could bear? until they broke the backs of the farmers? Is this the arrogance of the French queen, Marie Antoinette, who said ?Let them eat cake? when told that the peasants could not afford bread?
It is all of the above. It is what liberal ?public servants? do when they have absolute power to act in the ?public interest.?
Somers Point attorney Seth Grossman appears live on WVLT-92.1FM, heard throughout South Jersey 8-9 a.m. every Saturday. For information see www.libertyandprosperity.org, email firstname.lastname@example.org or call (609) 927-7333. Breakfast discussions are held 9:30-10:30 a.m. every Saturday at the Athena Diner, 1515 New Road, Northfield.