Office of Planning and Budgeting

A new telephone survey, conducted by the Public Policy Institute of California, suggests that although Californians appreciate the quality of their higher education system, they are concerned about the direction in which it is headed. In fact, only 28 percent of Californians think that the system is headed in the right direction, while 62 percent claim it is headed in the wrong direction. While respondents still believe higher education is integral to future success in the workplace, they are worried that affording higher education is becoming increasingly difficult.

Californians’ main concern for the future of higher education is affordability. 61 percent believe affordability is a big problem. Among parents of college students in California, 77 percent are very concerned about the increasing tuition. Fully 69 percent of Californians do not believe we should increase fees to fund higher education. Furthermore, only half of respondents agree that financial help is available for those who need it, and 75 percent believe that students must borrow too much for college.

Respondents mainly blame California’s government for the declining affordability of higher education. Only 29 percent think Governor Jerry Brown is handling higher education well, and only 14 percent think the legislature is doing a good job. 74 percent say the state does not fund higher education adequately. This assertion breaches the ideological divide, with 58 percent of Republicans agreeing that more funding is needed. However, respondents are split on their willingness to pay higher taxes to support higher education (52 percent unwilling, 45 percent willing).

To read more about the survey, check out the full report here.

Released this morning, the November state revenue forecast indicates that the state is short another $122 million below needed revenue for the current biennium. Dr. Arun Raha, Executive Director of the Economic Revenue and Forecast Council, wrote that uncertainty over Southern Europe’s debt crisis and potential political gridlock in Washington, D.C., produced largely expected economic results predicted in September’s dismal forecast. In essence, we still have a $2 billion budget problem and since September, it has grown by $122 million.

The Governor will use this forecast as her benchmark for budget reductions in the 2012 Supplemental budget (first supplemental budget of the 2011-13 biennium). All told, the Governor will need to cut over $2 billion from the current biennial budget in order to produce a balanced budget, which she is required to do before proposing any revenue increases to offset reductions.

This budget will be released this Monday, November 21. We will release a budget brief and blog detailing the impact of the Governor’s budget on the UW as soon as possible. While the Governor’s budget release is a critical first step of the special and regular legislative sessions, we are months away from a final legislative budget.

A new report by the Georgetown Center on Education and the Workforce finds that higher education is becoming increasingly integral to earning a middle class wage. The Center predicts that, in 2018, while there will still be jobs for high school dropouts and workers with only a high school degree, good jobs for these candidates will be scarce and an associate’s degree, and for many, a bachelor’s degree will be necessary.

The report seeks to paint a picture of the likely employment landscape in 2018, including those job fields (or “clusters”) that are expected to be growing and pay higher wages. It further analyzes what educational qualifications jobs in that cluster will require, finding that upward mobility for workers without higher education will be difficult to achieve—most workers do not stay in the same job for very long and most higher-paying jobs require more education, not simply more experience. Other key findings include:

  • In 2018, 37 percent of jobs are expected to require a high school diploma or less. Of these jobs, however, only one third will pay over $35,000 a year (defined here as the Minimum Earnings Threshold necessary to enter the middle class) and will be concentrated in the areas of Transportation, Distribution and Logistics, Architecture and Construction, and Manufacturing. The higher paying clusters are also heavily male-dominated, making higher education even more determinant for women seeking higher paying employment.
  • Completing any degree significantly improves a worker’s job prospects and earnings. 54 percent of workers with an A.A .degree earn more than $35,000 a year, as do 69 percent of workers with B.A.s and 80 percent of workers with M.A.s.
  • Health Sciences, Information Technology, Law, Public Safety, Corrections and Security are career clusters defined by this report as High Wage, High Demand, and High Skill. This means that wages are higher than the average wage, employment is growing quickly (more than 10 percent expected between 2008 and 2018), and most workers in these industries hold a postsecondary degree.

To read more about the report, refer to the Executive Summary or the Full Report. Also see the Chronicle of Higher Education’s article on the topic.

As we continue to experience a very slow recovery from a deep recession, the ideas of long-time critics of modern, inclusive American higher education who question the value of college for many have gained traction and blossomed into widespread public speculation about whether undergraduate education might be the next economic bubble to threaten the US economy. We explore this topic in the latest OPB brief and hold that, in the context of data, the ‘bubble’ metaphor, though effective at capturing public attention in an economic climate characterized by fear and uncertainty, is ultimately inaccurate, misleading, and harmful.

We would love to hear your feedback on this topic!

We’ve been busy and the blog has been a bit quiet as a result, but we have a queue of posts on interesting new reports and OPB briefs that will show up soon. We are also preparing for the special legislative session that will commence in Olympia on November 28th, so stay tuned.

In the meantime, here are links to recent stories that have caught our eye:

  • The UW gets a mention and a link in this lengthy Inside Higher Ed article about the relationship between state funding cuts and rising tuition at public institutions across the country.
  • Washington State’s continuing budget woes kick off this NYT article about another year of anticipated state budget cuts across the country.
  • Education Sector’s The Quick & the Ed blog has been providing detailed coverage of the Elementary and Secondary Education Act (ESEA) re-authorization process currently underway in the US Senate. While primarily focused on K-12, the bill contains some interesting higher education provisions.
  • The Institute of Medicine (IOM) elected 65 new members at their 41st annual meeting. Congratulations to Dr. Dave Eaton, Associate Vice Provost in the UW Office of Research and Professor of Environmental and Occupational Health Sciences, for being among the new inductees! The UW ranks 11th in the nation among research universities (4th among publics) in IOM and National Academy membership.

Governor Gregoire announced that she will call the Legislature back to Olympia for a 30-day special session at the end of November after the next revenue forecast is released. Gregoire will outline her expectations for the special session during a press conference this morning, which will be aired on TVW.

A November 2011 special session is not a complete surprise, as the latest revenue forecast reduced general fund revenue by $1.4 billion for the biennium. Many anticipate that the next revenue forecast will reduce anticipated revenue further. During the special session, the Legislature will likely move to reduce general fund appropriations for both the current fiscal year and FY13.

Please check this blog regularly for information about the upcoming special session, state budget cuts, and impacts on the UW budget.

On Thursday, September 16, the Washington State Economic and Revenue Forecast Council (ERFC) released its quarterly update of State General Fund Revenues. The forecast reduced expected revenue for the upcoming 2011-13 biennium to $30.3 billion, $1.4 billion less than the previous forecast released in June. A deficit of this magnitude is expected to necessitate another round of budget cuts for state agencies, including the UW, in the upcoming legislative session set to commence in January.

Read the latest OPB Brief for more detail.

The Delta Cost Project has published its latest Trends in College Spending report. This year’s version reports on revenue and spending trends in higher education from 1999 to 2009, the latest year of IPEDS data available at this time. As such, this version includes the first year of the recession’s impact on higher education finances.

Overall, the report confirms several already noted trends:

  • The resource gap between public and private institutions continues to grow, and is now so wide that competition between the sectors is virtually impossible (see Figure 22 on page 43 of the report linked above for a stark depiction).
  • At public institutions, the share of education related spending derived from tuition revenue has increased dramatically, surpassing the contribution from state appropriations at a number of universities, including the UW.
  • At public institutions, tuition increases in 2009 represented cost shifting from the public to the student and not increases in institutional spending.
  • At public institutions, administrative and maintenance spending remained flat or declined while spending on instruction went up slightly, indicating that, unlike previous recessions, institutions are making cuts more strategically to help protect the core academic mission.
  • Whether from improved retention or decreased extraneous course-taking, student credit hours per degree appear to have decreased between 2002 and 2009, which is one measurement of efficiency.
  • At public institutions, faculty salaries have been very flat as the cost of benefits have, on average, risen by over 5 percent per year, now accounting for almost 1/4th of all compensation costs.

Overall, this report does a great job of making it clear that the majority of students attend relatively affordable, cost-effective public institutions in the United States, even though a small number of pricey private institutions dominate the public perception. It also places revenue and expenditures in the context of student enrollment and the spectrum of university activities.

One issue we have consistently had with this report is the calculation of what is called the ‘subsidy’, an attempt to measure overall cost by combining various forms of institutional revenue with state appropriations and contrasting that with tuition revenue to determine what portion of overall cost is paid by the student and what portion is subsidized for the student. Our concerns with this measure were detailed in an earlier blog post and brief, if you are interested.

The controversial US News and World Report University Rankings have been released for 2012 and are freely available online for a limited period of time. The University of Washington slipped one spot to 42nd among National Universities in the US. The UW, however, comes in at the 10th best public institution in the nation.

Although the US News rankings have long been dominated by endowment-rich private institutions, it is notable that no public institution makes the top 20 anymore. A recent Washington Post article reported that, over the past 20 years, the five highest ranked public institutions have each dropped seven or more spots in the rankings.

In previous posts we have laid out the massive resource gap between public and private institutions that has widened over several decades and is reflected in these rankings:

Across the US, deep cuts in state funding for public higher education have accelerated this trend dramatically over the past three years. In response, the Seattle Times Company and several partners have formed to create the Greater Good Campaign to highlight the risks this trend poses to public higher education in Washington State and to the future of Washingtonians.

The American Association of State Colleges and Universities’ (AASCU) July 2011 State Outlook confirms that most states cut higher education spending for fiscal year 2012. For some states, this is the third or even fourth consecutive year of higher education spending cuts.

Also unsurprising, AASCU identifies the 23 percent funding cut for higher education in Washington as the second highest in the country (behind a 24 percent cut for such spending in Arizona, and equal to a 23 percent cut in California). That cut, combined with previous reductions, mean that the University of Washington has lost half of its state funding in just four years.

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