Office of Planning and Budgeting

As state legislative season wears on, here is an update on some of the efforts in other states to achieve greater financial and regulatory freedom for public higher education institutions facing another year of steep budget cuts.

  • Virginia: The legislature passed the Virginia Higher Education Opportunity Act of 2011. For details on the major aims of this legislation, see our earlier post. The State Council of Higher Education for Virgina (SCHEV) provides an overview of how the final bill differs from the original bill, including, among other things, the addition of a goal to recognize the unique missions and contributions of different institutions.The Act now awaits the signature of the Governor, who proposed the initial bill.
  • New York:  The Legislature passed a budget that did not include provisions contained in the Public Higher Education Empowerment and Innovation Act proposed by the SUNY system. The Act sought increased autonomy from state processes and freedom in managing institutional resources, especially in light of significant budget cuts since 2008. The state not only decided to include none of the flexibility measures, but hit the system with another $210 million in cuts. Having lost 30 percent of its state funding in three years, this huge network of over 60 campuses is determined to continue fighting to maintain access and quality.
  • Wisconsin: The New Badger Partnership proposed by UW Madison continues to be controversial in Wisconsin. Feeling left behind by the proposal to ‘set free’ the flagship institution, the UW System Regents have endorsed their own proposal, the Wisconsin Idea Partnership, which includes freedoms and flexibilities for all system campuses. The Legislature will consider both proposals in the coming month.
  • Oregon: University of Oregon President Richard Lariviere has made an agreement with Governor John Kitzhaber to put the University’s ‘New Partnership’ legislation on hold for a year in favor of supporting passage of the Governor’s legislation, which creates an independent public university system in place of treating each institution as a  state agency. In exchange, the Governor has signaled an intention to support the University of Oregon’s New Partnership proposal for greater autonomy, including a new financing structure that replaces annual state operating support with a public endowment, in the 2012 Legislative session.

Note that the Washington State Legislature is also currently considering a number of proposals, both large and small, that might lead to regulatory relief and increased autonomy of varying types for the UW. Check out the bills that the UW ‘strongly supports’ and ‘supports’ in the BillTracker for more information on some of these bills.

Virginia’s Governor, Robert McConnell, endorsed all of the recommendations made by the Higher Education Commission he created last year to explore policy options for higher education reform. The resulting Virginia Higher Education Act of 2011 has moved quickly through both the House and Senate and may soon be on its way to the Governor. The bill provides $50 million in new funding for higher education institutions in Virginia, a UW Global Challenge State peer, as a ‘downpayment’ on the lofty reform goals outlined by the bill, including:

  • Producing 100,000 additional degrees over the next 15 years.
  • Providing incentives to increase enrollment of Virginia residents by creating target resident enrollment goals for institutions.
  • Creating incentives for improving retention, graduation, and time-to-degree.
  • Crafting new performance agreements focused on policy outcomes.
  • Enhancing efficiency by increasing institutional managerial autonomy.
  • Creating a higher education rainy day fund for use in economic crisis.
  • Establishing objective, peer-based funding goals.
  • Increasing state support and reducing reliance on tuition revenue.
  • Restoring state aid for students attending non-public Virginia colleges.
  • Increasing state need-based aid for low and middle income students.
  • Increasing year-round use of physical and instructional resources.
  • Increasing use of technology in the classroom, and increasing online course offerings.
  • Increasing enrollment in dual credit programs to shorten time-to-degree.
  • Creating public/private partnerships to increase STEM degree attainment, and facilitate commercialization.
  • Creating a catalog of R&D assets and activities so that the state can align investments with existing strengths/activities.
  • Creating an emerging technologies fund to recruit faculty, purchase equipment and provide seed funding.

The Washington State legislature is considering its own Higher Education Funding Task Force bill right now. Make sure to follow its progress via our UW BillTracker (bill number 5717).

A New Normal?

Posted under Higher Ed Policy by  

In A New Funding Paradigm for Higher Education, the National Association of State Budget Officers (NASBO) puts the Great Recession into context and discusses the cyclical nature of state funding for higher education, which has historically followed a pattern of major cuts in poor economic periods followed by generous reinvestment in good times.

Considering the generally bleak assessment of the speed of economic recovery for state budgets, NASBO asserts that this boom and bust funding pattern may finally be broken. Many do not expect state funding for public higher education to return to previous levels, and this has states, institutions, and other stakeholders wondering what a ‘new normal’ may look like.

Many institutions think that at least part of the answer lies in seeking greater autonomy from state processes and requirements, and more flexibility in managing institutional resources. Whatever the outcomes, many are hoping that achieving a more stable and predictable funding model might keep public higher education on solid ground as we move toward an uncertain future.

Last summer, Governor Gregoire created a Higher Education Task force, comprising both public and private leaders, and charged them with proposing a new funding strategy for public higher education, as well as new ideas for increasing institutional accountability. The Task Force released its report yesterday, January 3rd, recommending three major reforms to higher education policy in Washington State.

First, the group suggested that tuition setting authority be given to the universities to help make up for budget cuts from the legislature. Based on their proposal, the institutions would use a formula to determine appropriate tuition rates, taking into account state appropriations, tuition at peer institutions, and enrollment levels.

Second, the Task Force proposed the creation of a Washington Pledge Scholarship Program, which would be funded by private donors. They hope the fund would reach $ 1 billion by the end of the decade. Corporations would receive a tax credit for donating, although that benefit would not kick in until overall tax revenue returned to 2008 levels.

Third, they recommended that the state give cash incentives to universities that meet certain degree production targets. In addition, they encourage universities to make plans to reach retention goals set forth by the state.

Finally, the Task Force listed other money-saving strategies, such as including more online introductory-level classes, developing three-year degrees, giving more credit for college-level work done in high school and at other institutions, and eliminating underused degree programs.

Make sure to check the State Relations blog for a round-up of some of the local press coverage relating to this report.

Senator Tom Harkin, Chairman of the US Senate HELP Committee, has released another report on the practices of the for-profit higher education industry, this time focusing on whether or not such institutions are taking advantage of US veterans in an effort to capture newly increased GI Bill education benefits (read our earlier posts on this issue: Senator Tom Harkin and the HELP Committee Continue to Investigate For-Profit Colleges, and  Under Federal Fire, For-Profit College Point Finger at Publics).

The New York Times published Wednesday a detailed article on this topic, Profits and Scrutiny for Colleges Courting Veterans, that included a host of primary source documents.

Senator Harkin has moved a hearing on the topic from early December to a yet to be determined day in early 2011. Because the Senate will remain in Democratic control, Harkin will continue as Chairman of the HELP Committee and is expected to carry forward his investigation of this rapidly expanding sector of higher education, which relies almost entirely on federal student aid dollars to generate large profits for shareholders while many students drop out  and face high levels of education loan debt. Some speculate that recent Republican gains in the Senate and House may hamper the likelihood of passing strong regulatory legislation in the coming year.

Meanwhile, the US Department of Education is in the process of implementing new regulatory rules aimed at tightening oversight on the sector (see previous post: New Federal Higher Ed Regulation Published Today).

We will continue to monitor this ongoing story, as well as some calls for the federal government to extend their scrutiny to traditional institutions.

The Seattle PI drew attention to two major UW  Initiatives that were recently highlighted in a message from Provost Mary Lidstrom. Be sure to check out the new websites detailing both of these new efforts:

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