This could be confusing to a libertarian like myself. We believe government subsidy isn't a good thing.
It's not a good thing, and if they wanted to truly privatize the system, we would have been fine with that. However, if you're going to have the government owning and funding something, the big decisions that affect the public should be made by elected officials. It's the same reason Congress rather than the IRS Commissioner sets income tax rates.
But in the specific case not everything is what it seems. The state funding came through the Permanent University Fund. It didn't come from taxes as I understand it.
It's actually both. The PUF assets have a significant return, and a percentage of that return gets directed to the Available University Fund and ultimately to the universities themselves. However, the state also provides general revenue to the universities.
After the change, the funding was transferred to the national student loan type of scheming. I don't know this for sure, but I think Federal funds were then used for education loans. This money didn't come from production or investment but taxes, debt, and money printing. All bad things.
Certainly a much greater percentage of the universities' funding comes from tuition, and as we know, that's financed heavily through student loan money, which is bankrolled with taxes, debt, and money printing.
think the key here is that Republicans, which you call conservative above, weren't willing to cut spending. This is the kind of betrayal from Republicans that I have come to expect and disdain. Republicans aren't conservatives when it comes to money
To be fair, they did cut spending in 2003 and took a lot crap for it. There was a real budget shortfall, and they closed it with several mechanisms, including spending cuts (and also with increases in federal money after 9/11, hikes in several fees, traffic fines, and tuition, and tapping into the Rainy Day Fund). Personally I didn't like the political claim that they balanced the budget with no tax increases, which was repeated countless times in 2004 and 2006. They balanced it without increasing anything that's called a tax. To me, anytime you make the government more expensive for the public, it's a tax increase.
Nevertheless, the real problem I have with what happened on this particular issue is that instead of telling the universities to tighten their belts during a tough economic time, they made a permanent, structural change and basically let the universities have a long term method to get as much money as they want from the public without accountability to the people or to the market. Again, it's government at its worst.
