Office of Planning and Budgeting

The Institute for Higher Education Leadership & Policy at California State University, Sacramento recently released a report titled “Consequences of Neglect: Performance Trends in California Higher Education.” The report claims that, although California is considered the world’s leader in public higher education, the state’s college and university system is closer to average—and may be declining.

The report uses six measures of higher education quality and access—preparation, affordability, participation, completion, benefits, and finance—to measure California’s performance in relation to other states. Their findings, if correct, are troubling:

  • Preparation: The report uses graduation rates, standardized test scores, and the percentage of students taking college preparatory classes to measure preparation for college. According to the report, college preparation in California is worse than most states, particularly in rural and inland areas and for black and Latino students. However, these measures have been steadily improving over the past seven years.
  • Affordability: Without taking into account room and board, the California system ranks high in affordability (largely due to the very low tuition at California community colleges), however, because of the high cost of living in California, affordability is significantly compromised. Furthermore, tuition and fees have been increasing dramatically at UC, CSU, and CCC, which will negatively impact affordability.
  • Participation: One of the highlights for California is that participation in public higher education remains high (California ranks 6th in the percentage of 18-24 year old enrolled in college), though the trend is declining as tuition and fees increase.
  • Completion: Although California ranks 12th in the nation in the number of associate degrees awarded per 100 high school graduates, it ranks only 41st in the number of bachelor’s degrees awarded per 100 high school grads. The report suggests focusing efforts on improving the transfer process from California’s two-to four-year institutions.
  • Benefits: The report lists benefits from education in California as average, with high personal income tempered by low proportions of citizens with bachelor’s degrees and very low voter turnout.
  • Finance: State appropriations per student FTE in California are slightly lower than the national average, and local and state funding has been steadily decreasing during and after the Great Recession.

The report urges California’s government to protect their investment in colleges and universities, long considered the best public higher education system in the world. Furthermore, it cautions policymakers not to be blinded by the stand-out performances of a select few California universities, while ignoring the vast majority of California’s higher education institutions that may be struggling.

As the for-profit higher education industry continues to fight federal regulation, states are starting to pay more attention to the fast growing sector. The National Conference of State Legislatures (NCSL) reports that, as of May, twenty states have introduced at least 34 bills aimed at regulating or supporting for-profit higher education. NCSL reports that eight of these bills have already passed, six have failed or been vetoed, and twenty remain in play. They provide a summary of each piece of legislation, as well as a webpage that centralizes information on this topic from various sources.

Meanwhile, Senator Harkin continues to investigate the sector, and a 10 state joint investigation into the practices of for-profit institutions remains ongoing. It appears that one result of all this scrutiny is that the industry has been pressured to begin to take preemptive action toward restructuring and increased transparency.

For previous OPBlog posts on this topic see:

As of July 15, all UW Global Challenge State Peers had approved resident undergraduate tuition increases for the upcoming 2011‐12 academic year. See the latest OPB brief for details.

Despite implementing a 20 percent tuition increase for resident undergraduates, the University of Washington, which has consistently ranked as the least expensive among the GCS peers, will continue to rank in the bottom third of the peer group in 2011‐12.

A new study, released by the National Student Clearinghouse Research Center sheds light on enrollment patterns before, during, and after the Great Recession. According to the report, enrollment increased steadily from 2006 to 2009, and then decreased by 1.6 percent in 2010. The authors attribute this finding largely to a decrease in state funding for institutions, which led to significant tuition increases at many public colleges causing some middle-income families reevaluate their higher education plans.

In the West specifically, where 90 percent of students are enrolled at public colleges and universities, enrollment dropped from 467,000 students in 2009 to 455,000 in 2010. Interestingly, the West has the highest proportion of students at community colleges, with 50.8 percent attending public two-years. Furthermore, Western public four-year universities had the highest rates of retention and persistence in their region (retention being the percentage of freshmen that return to the institution the next fall, and persistence the percentage that continue their education at some higher education institution the next year), with rates of 73 percent and 85 percent, respectively.

For a more detailed discussion of the findings and limitations of the study, check out Inside Higher Ed’s summary here.

A survey carried out by The Chronicle in conjunction with Moody’s Investor Service shows college CFO’s are cautiously optimistic about future economic prospects for their institutions. The survey included 480 responses from CFO’s of public and private four-year and public two-year, nonprofit institutions. In the face of slow economic recovery from the recession, 32 percent of all CFO’s reported being more optimistic about the general U.S. economy, and 39 percent felt more optimistic about the financial prospects of their own institutions than they did a year ago.  Among  public four-year CFO’s, these percentages were markedly higher, with 42 percent more optimistic in general and 45 percent more optimistic for their specific institution. Further highlights from the report included:

  • Overall, 60 percent of CFO’s claimed further layoffs in 2011/12 were “very unlikely,” though 19 percent of public four-year CFO’s said layoffs were still “very likely”
  • Very few CFO’s are considering furloughs to cut costs, with 79 percent claiming they are “very unlikely”
  • Public four-year CFO’s are about evenly split about salary freezes, with 45 percent planning to implement them, and 43 percent not planning to use this cost-cutting measure
  • 18 percent of public-four year institutions reported increasing tuition by 10 percent or more in the face of steep cuts in state support

Despite the slow growth of the economy and high unemployment, some economic indicators are proving encouraging to higher education institutions—low interest rates facilitate borrowing, the stock market is up, and demand is higher than ever (83 percent of public-four years reported meeting or exceeding their enrollment targets this year). Additionally, philanthropic support is still a major component of university budgets, and most institutions plan to keep it that way, with only 12 percent of CFO’s planning to lower their annual giving goals.

Another survey by Inside Higher Ed showed college business officers a bit more optimistic.  52 percent of the business officers surveyed claimed their institutions were in good financial health, and 17 percent asserted they were in excellent health. Though most see no immediate financial emergency, 66 percent believe that potential cuts in core state funding or operating support would have a major impact on their institution’s quality. As in the Chronicle’s survey, most cited securing higher enrollment and more philanthropic support as being integral to future funding. Interestingly, 27 percent claimed they would have to lay off employees in the coming year—as opposed to 19 percent in the Chronicle’s survey.

Please follow the hyperlinks to read the full Chronicle and IHE reports, as well as the Chronicle’s and IHE’s analysis of their results.

The National Association of State Student Grant and Aid Programs (NASSGAP) has published their Annual Survey Report on State-Sponsored Student Financial Aid.

The new report, based on 2009-10 survey data, shows that while state support for institutions has fallen rapidly for several years, many states have increased their commitment to students via financial aid. On average, state spending on financial aid increased 3.8 percent between 2008-09 and 2009-10. For many states, increases in financial aid were necessary to help maintain student access as steep budget cuts for institutions necessitated significant increases in tuition.

Note that the survey does not contextualize increases in spending on financial aid with tuition increases, nor does it specifically address changes in financial need for students during the Great Recession. Inside Higher Ed addresses some of these issues in their report on the survey.

The survey also shows that while most state spending on financial aid continues to be in the form of need-based grants ($8.9 of $10.8 billion was spent in the form of grants), state spending on merit-based or mixed merit and need based financial aid programs continues to increase. The survey shows that 47 percent of all state aid to undergraduates is need-based, while 18 percent is merit-based, and 35 percent is tied to programs with both need and merit-based components.

Having already increased tuition by 8 percent for the upcoming academic year, UC Regents are expected to consider an additional 10 percent increase due to the Governor’s failure to win extension of various temporary tax measures in California. As a result, the overall cut to the University of California has been increased from $500 million to $650 million (equaling a 21 percent cut in state funding for UC), which is expected to increase further if an agreement on revenue measures is not reached.

The latest talk of another tuition increase for resident students comes as the UC system has been increasing nonresident enrollment to help make up for state funding cuts.

On July 2nd, the US Court of Appeals for the Sixth Circuit ruled that the state affirmative action ban, which was passed as ‘Proposal 2’ by Michigan voters in 2006, is unconstitutional because it violates the equal protection clause of the 14th amendment to the US Constitution.

While Washington State is not under the jurisdiction of the Sixth Circuit, the decision may have future bearing as Washington is one of seven states where voters have passed similar affirmative action bans in government hiring and university admissions, including:

  • California in 1996
  • Texas in 1996
  • Washington in 1998
  • Florida in 1999
  • Michigan in 2006
  • Nebraska in 2008
  • Arizona in 2010

The legal challenge in Michigan focused on the ban of the use of race or ethnicity in college admissions. The three person panel ruled 2 to 1 that banning the use of race/ethnicity in college admissions qualifies as an unconstitutional alteration of the political structure because it places a larger burden on minorities, who would have to rely on Michigan voters to reinstate race as an admissions criterion, compared to other groups who would only have to lobby the University Regents and administration to enact or maintain preferential admissions treatment based on non-academic factors (e.g. geography, a specific talent, legacy status, etc.)

Michigan’s Attorney General will request a rehearing by the full panel of Sixth Circuit judges, and, if they hold up the decision, he will appeal to the US Supreme Court, which has changed substantially in composition since the 1982 case involving mandatory school busing in Seattle on which this opinion was heavily based.

When Congress renewed the Higher Education Opportunity Act in 2008 it contained some significant revisions, including new mandates to increase transparency around the issue of college cost and affordability. As a result, all institutions were required to develop and publish some form of a ‘net cost calculator’ that could help a prospective student get a sense of what the student and their family might have to pay to attend the institution once their basic financial circumstances were taken into account. At the UW, we refer to this as our Financial Aid Estimator Service.

In addition, the US Department of Education was charged with collecting, analyzing and reporting specified information about sticker price, net cost, cost increases and more via an easily accessible public website. Just last week, the Department published that website. Most of this information was already publicly available via the National Center for Education Statistics (NCES), but the new site focuses on enhancing understanding and navigability for citizens.

The creation of this website is a step forward for citizens seeking more coherent information on college pricing, but the site and data have some already clear weaknesses that will hopefully be addressed.