The West Virginia Higher Education Policy Commission holds the Sword of Damocles over Wheeling University. The commission has required the college, early in the current academic year, to provide enrollment estimates, financial audits and progress reports. If the reports are favorable, Wheeling University will exist a while longer. But if the reports are unfavorable, accreditation may be forfeited. It would be sad to lose a college in these parts, especially since the struggle of Wheeling University is due in part to West Virginia’s bloated higher education system.

There’s a long list of things that went wrong at Wheeling Jesuit University, the predecessor of Wheeling University. This list includes administrative missteps, competition from online schools, too many sports teams, too few high school graduates in West Virginia, Covid-19, and more.

But there is another pernicious force at work — an effect economists call “crowd out.” Crowd out is a common result of public versus private sector competition. It occurs because government, with its ability to levy taxes, can provide services and give them away “free” or below cost, whereas the private sector must collect full fare. This gives government a huge advantage when public and private sectors compete, as they do in health care, financial markets, recreation, and in this case, education. When selecting colleges, students and their parents favor lower-priced public schools and, all else equal, public colleges crowd out private ones.

Crowd out is benign when college demand is strong but it becomes troublesome when supply exceeds demand. Some West Virginia numbers help make the case. On the demand side, the number of high school seniors dropped from 18,400 to 17,500 over the past decade (www.wvde.us). These seniors make up the pool of future college students and, as you might expect, West Virginia college enrollments fell over the same period. The decline was precipitous — HEPC data show 9,000 fewer full-time students attended state-supported colleges in 2020 compared to 2011. The HEPC reports a 16 percent drop was felt across the entire system as 10 of the 11 public colleges lost students — only WVU Tech grew. Most expect these downward enrollment trends to continue.

Well-operating systems reduce supply in the face of falling demand. This happened among West Virginia private colleges with the closure of Mountain State University in 2013 and Ohio Valley University in 2021. Unfortunately, the opposite occurred in public higher education. The number of colleges stayed the same and program offerings grew at most institutions. As an example, West Virginia University recently tried to streamline its curriculum with an academic “transformation.” The transformation proposed the elimination of 15 programs, but went on to recommend the expansion of 25 others. Elimination of low-enrollment programs was fiercely resisted by the WVU faculty. Another example is Glenville State which, to gain university status, added two online graduate programs in education even though similar online programs can be found anywhere. There are many other examples, all of which show expansion of a system which should be contracting. These expansions put pressure on struggling private colleges.

With a higher education system out of balance, what can be done? First, the West Virginia Legislature and HEPC must act on the long-standing problem of too many colleges and pare them down. This is not easy because host communities and employees suffer, but it’s necessary because supply exceeds demand. Economic hardship can be reduced by generous grants to help rebuild affected communities. Second, policymakers could reconsider the funding formula for West Virginia colleges. Currently, college funding correlates with student enrollments, as is logical. Perversely, though, this funding formula creates bad incentives for state-supported schools. Colleges search far-and-wide for more students resulting in lower admissions standards, costly recruitment and the failure of colleges to specialize — as they did with the “teachers colleges” and “engineering schools” of yesteryear. While expansion is good strategy for a single school, it’s bad strategy for the group — a textbook example of the fallacy of composition. A funding model rewarding high-demand programs with low-cost delivery would improve things. Finally, policymakers would be wise to recognize that private and public colleges can cooperate rather than compete. Private colleges require little taxpayer support — they exist on tuition, charitable contributions and endowments. They are more nimble as a result of having fewer regulations. To take advantage of this, public-private partnerships are attractive. This has been done successfully with the Promise Scholarship, which extends financial aid to West Virginia students attending in-state colleges be they public or private.

Ultimately, West Virginians want an educated populace regardless of where the education occurs. Crowding out private colleges like Wheeling University is not in the state’s best interest.

M.L. Wilson lives in Charleston and holds a bachelor’s degree in History.