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.

US Secretary of Education Arne Duncan joined Governor Chris Gregoire and legislative leadership today for an education roundtable. Duncan congratulated state lawmakers on discussing the issue of education reform, even through tough budget times. He further drew attention to the grave problems troubling education in the United States—a 25% national dropout rate, poor STEM education, the large number of students taking remedial courses, and gaping budget gaps, which challenge the adequate funding of education.

Of particular interest, Duncan commented on the current system of education governance in Washington, claiming: “Washington has eight different agencies with different strategic plans working in Washington and it’s very difficult for me to understand how having different agencies handling education…will transform education.”

Governor Gregoire has bills in both chambers to consolidate education governance into one Department of Education headed by the Governor. The plan would also consolidate many existing state education agencies into four primary education divisions: Early Years Division, K-12 Division, Community College and Technical Education Division, and the University Programs Division. All units would report to a new Department of Education Secretary.

Secretary Duncan reiterated President Obama’s commitment to investing in education despite the economic downturn, and gave examples of strategic programs and innovations the administration is working towards:

-Investing in Early Learning programs like Head Start, which studies have shown to improve achievement especially for disadvantaged students who do not have many educational opportunities at home

-Continuing the Race to the Top program which rewards schools for outstanding innovation and improvement in education (if approved by Congress)

Lastly, Governor Gregoire distributed a document describing how much it costs taxpayers when students “fall through the cracks” of the education system– by dropping out, taking remedial courses, or repeating grades–a number her advisers estimate at around $ 100 million a year. Though the problems facing education in Washington state and in the nation are indeed grave, it was encouraging to see lawmakers pause during a critical week to discuss education. As Secretary Duncan asserted, “our children cannot wait for the economy to bounce back”—education must remain a priority, despite the dire budget situation.

The Government Accountability Office (GAO) released a report and recommendations, DOD Education Benefits: Increased Oversight of Tuition Assistance Program is Needed, ahead of another Senate hearing focused on the conduct of for-profit colleges, this time held by Senator Tom Carper.

The GAO report focused on the DOD Military Tuition Assistance Program, which provides tuition benefits for active duty soldiers. In 2009, the program provided $517 million in tuition assistance to over 375,000 service members of which for-profit institutions received a disproportionate amount. The report addressed two primary points:

  • DOD oversight of schools receiving Tuition Assistance Program funds
  • The extent to which DOD coordinates with accrediting agencies and the U.S. Department of Education in its oversight activities

The Senators discussed the gaps in oversight exposed by the report, and also discussed the fact that Tuition Assistance Program revenue is not included in the calculation to determine whether at least 10 percent of annual revenue comes from non-federal sources, which is required for an institution to be eligible to receive federal student aid. This is a rule that Senator Tom Harkin has specifically mentioned as a target for reform in earlier hearings he has held on for-profit institutions.

Meanwhile, the association that represents for-profit colleges is suing the US Department of Education in an attempt to block new federal regulations, and House Republicans included an amendment to block the controversial gainful employment rule from moving forward in their recently passed budget.

For past OPBlog posts on this continuing story see:

Earlier this month the Pathways to Prosperity Project, based at the Harvard Graduate School of Education, released a final report: Pathways to Prosperity: Meeting the Challenge of Preparing Young Americans for the 21st Century.

The report lauds the current goal to increase college participation and attainment in the US, but cautions against a ‘one size fits all’ model of higher education. The authors note that the US currently has the highest college dropout rate in the industrialized world, and they call for a renewed focus on career oriented programs and occupational credentials for the large number of American youth who are not currently served or even ill-served by the traditional two or four-year academic system.

The report provides best practices from around the world, highlights robust programs across the US, and provides a blueprint for greater government and employer engagement in preparing American youth better by developing stronger links between education and employment. The report does not question the value or role of traditional higher education but instead wonders whether we are asking it to be all things to all people and thereby failing a large number of Americans as well as straining institutions.

The below are some of the non-Washington State higher education budget and policy stories that made the news this week:

  • Arizona: Senate Bill 1115 was passed out of Appropriations Committee after midnight on Tuesday. The hastily considered bill surprised many and would effect dramatic change in Arizona higher education should it make its way to law, including replacing the current state funding to institutions with a voucher system that would provide an as yet unspecified amount of money directly to the student, abolishing the Arizona Board of Regents and creating individual governing boards at each institution, and allowing for the addition of more state institutions, including making ASU’s East Mesa campus a freestanding Polytechnic University. Committee chair and bill sponsor, Andy Biggs, said, “I’m trying to get at greater autonomy and greater stability and flexibility to the university heads by having their own boards of trustees.” The universities oppose this measure.
  • Georgia: Budget pressures in Georgia make deep cuts and eligibility changes to the innovative HOPE Scholarship program likely. The current program is the most generous state financial aid program in the nation as it has no income caps and provides the full cost of an undergraduate degree at any public institution in Georgia for all students with a 3.0 or above high school gpa. Over one third of all resident students currently enrolled in Georgia public institutions benefit from the program.
  • Ohio: Inside Higher Ed pondered the role politics played in the resignation of University System of Ohio Chancellor Eric Fingerhut more than a year before his term was up.
  • Wisconsin: The revelation that Governor Walker was set to propose increased autonomy for UW Madison led to some fallout with the UW System Regents who support increased flexibility, but are troubled by the idea of separating UW Madison from the system. A special Regents meeting to discuss the proposal was called for today. In response, UW Madison produced a summary of the proposal and its anticipated effects to help quell opposition.

Also note that NYT reporter David Leonhardt published an interview with the authors of the recent book Why Does College Cost So Much?. We were pretty honored that Leonhardt recommended our summary of the book in the introduction of the piece!

Current protests in Wisconsin have dominated press coverage of Governor Scott Walker’s proposed 2011-13 state budget this week. Lost in the shuffle may have been news that the proposal contained a provision that would lead to greater autonomy for Wisconsin’s largest public institution of higher education, the University of Wisconsin at Madison. UW Madison Chancellor Biddy Martin has requested that the UW System Board of Regents not oppose the move, which she argues would be essential to protecting excellence and access for the state’s flagship campus.

Potential legislation based on the Governor’s proposal is expected to be introduced by Republicans and would be likely to include the following freedoms for UW Madison:

  • Tuition setting authority and freedom to manage all funds
  • Authority to implement institutional budget without System approval
  • Ability to recruit, hire and retain employees outside of the state system
  • New flexibility in purchasing
  • Authority to handle its own building projects

The University has sought such freedoms from the state for years, and the article suggests that the chancellor has been working for over a year to craft the current proposal, which she calls the New Badger Partnership.

For more information about this topic, read our recent OPB brief on institutional autonomy and the varying degrees to which it currently exists at the UW Seattle and our Global Challenge State peers.

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).

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.

We’ve previously mentioned the new book Why Does College Cost So Much? by two economists from the College of William and Mary, Robert Archibald and David Feldman. The authors have made a compelling argument that increasing higher education costs are not the result of institutional dysfunction, but of broader economic forces.

Read our summary of this book, and let us know what you think about their evidence, their conclusions, and their policy recommendations.

Three op-eds published recently by local newspapers outline the changing relationship between Washington State and its public higher education institutions. All three op-eds call for the state to increase institutional flexibility in the face of large budget cuts.

The Governor will release her initial state budget for the 09-11 biennium this morning. Stay tuned to the Office of State Relations and the Office of Planning and Budgeting for information about how higher education and the UW are affected.

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