Office of Planning and Budgeting

New OPB Brief

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This week, UPenn’s Institute for Research on Higher Education (IRHE) released a report assessing the state of higher education policy in Washington State. While satisfactorily describing the key facts and long-term trends and potential future problems for higher education in Washington State, the report is somewhat unrealistic in its recommendations. It seems to assume that, absent any change in state funding trends, policymakers can dramatically alter educational attainment via structural changes in governance.

Read the latest OPB brief for more information.

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.

Georgetown University’s Center on Education and the Workforce released a report that investigates the importance of American science, technology, engineering and math (STEM) positions in the US economy and the perceived shortage of qualified STEM workers to fill them. The report finds that, contrary to popular belief, America already has enough students studying STEM related fields to potentially satiate the demand for STEM workers in the economy without seeking talent from abroad. However, they hold that a process they label ‘diversion’ redirects many students majoring in STEM fields toward employment in non-STEM areas because their professional interests and values do not correspond with traditional STEM jobs. The Center estimates that 43 percent of students that graduate with STEM majors immediately choose non-STEM jobs. It also finds that many high school students capable of entering STEM majors, as measured by their math SAT scores, choose not to because of their preferences or values.

The Center also provided some interesting statistics on the present and future of STEM professions, including:

  • Wages in STEM fields are, on average, higher than wages in other fields (no matter what level of educational attainment), though healthcare and professional and managerial occupations still have higher wages
  • Women and minorities are still underrepresented in STEM jobs, with women constituting only 23 percent of STEM workers. Women and minorities also make less than Caucasian men in STEM positions, though the wage gap is smaller than for other occupations.
  • STEM jobs will grow to represent 5 percent of the labor market in 2018.
  • Two thirds of STEM jobs will require a Bachelor’s degree or higher by 2018.

To read more about this report, check out the Executive Summary or the full report. Also note Inside Higher Ed’s discussion of the report and our previous blog posts on Georgetown Center reports:

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.

Georgetown University’s Center on Education and the Workforce has published a report entitled “The College Payoff” which calculates the lifetime median earnings of workers at various levels of educational attainment. As could be expected, the more degrees a worker has, the more they will earn, on average, in their lifetime. This holds true even for workers with different degrees in the same jobs: An accountant with an associate’s degree will make $1,636,000 in their lifetime, while earnings for the same position rise to $2,422,000 for a worker with a bachelor’s degree, and to $3,030,000 for those with a master’s degree. Other notable findings included:

  • Holding a Bachelor’s degree results in a median lifetime income of $2.8 million, 84 percent higher than a worker with a high school diploma
  • Workers with a professional degree make almost four times as much as workers without a high school diploma in their lifetimes ($3,648,000 versus $973,000)
  • Women working full-time, full-year make 25 percent less over their lifetimes than men with the same level of educational attainment. In order to make more than a man with a bachelor’s degree, a woman must hold a doctoral or professional degree.
  • Latinos make on average 34 percent less than white workers, African American workers make 23 percent less, and workers of other races and ethnicities (Native American, Pacific Islander) make 22 percent less. Asian Americans, however, make roughly the same amount as white workers.

To read more about the report, check out Inside Higher Ed’s analysis: “Degrees of Wealth.” Also read our previous blog posts about the Center’s two preceding reports on this same topic: Help Wanted, and The Undereducated American.

Education Sector, an education policy think tank, recently released a report entitled “Debt to Degree,” which measures the ratio of student and parent, government-backed loans taken by students to the number of credentials awarded by an institution per year.  Based on this, the report concludes that:

  • Across all institutions and sectors, for each degree awarded in 2008/2009, $18,102 was borrowed
  • Degree to credential ratios varied considerably across institution types:  On average, families at four-year public institutions borrowed $16,247 per degree, compared to $21,827 at private four-years, and $43,383 at for-profit schools
  • Among elite research universities, Princeton, with its no-loan financial aid policy, had the lowest debt to credential ratio ($2,385), while NYU had the highest ratio ($25,886), due to its small endowment and less wealthy student body
  • Washington state has one of the lowest borrowing to credential ratios in the nation, with debt to degree ratios in the $5,000 to $9,999 range

Note that the study excluded private loans and Perkins loans, which some argue might mask even larger debt burdens, particularly at for-profit schools where institutional financial aid is limited. To read more about the study, including its limitations, check out the Chronicle’s and Inside Higher Ed’s articles.

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.

In 43 years, the world’s population is expected to double.  In developing countries the urban population is expected to double between 2000 and 2030.  The urban land cover will double in 19 years and the built-up area of major cities in the developing world will triple.  At least, this is according to a new report, “Making Room for a Planet of Cities,” that was published by The Lincoln Institute of Land Policy last month.

For the past five years, a team of researchers looked at GIS-based maps, satellite images, and historical maps to create a comprehensive data set to look at five key attributes of urbanism – urban land cover, density as measured by population in relation to built-up areas, centrality (distance from city center), fragmentation (the amount of open space within cities), and compactness. The summary from all of the historical research: “average densities declined as population and wealth grew, not just in the U.S. as part of the familiar pattern of sprawl but worldwide.”

Looking to the future, the research conducted by this report suggests that planners and policy makers should look at growth management within the context of the following: realistic projections of urban land needs, selective protection of open space, generous metropolitan limits, and infrastructure to support mass transportation.

As a planner at the University of Washington, this emphasizes the importance of the University’s location in an urban center.  Assuming that increased urbanization will continue, as suggested in the report, the University District area is on track for increased density.  This makes the report timely in its reinforcement of the growing importance of planning for the future using realistic projections, protection of open space, and an emphasis on infrastructure prior to significant urban growth.

On Monday, the Supreme Court heard oral arguments for Stanford University v. Roche Molecular Systems et al.. At issue is whether the Supreme Court will agree with the argument made by research institutions to expand the current interpretation of what is known as the Bayh-Dole Act (1980’s University and Small Business Patent Procedures Act), which requires that royalties received from patents awarded based on federally funded research are retained by universities and used to fund research, education, and payments to inventors.

The case originated as a dispute between Stanford University and Roche, a company that required a Stanford researcher to sign a consultant agreement  containing language regarding patent rights (“do hereby assign”) that was stronger than the language contained in the Stanford contract he had signed a year earlier  (“I agree to assign”). Stanford sued Roche in 2005 after they refused requests to acquire a license to Stanford’s patents relating to the researcher’s work.  A federal district court initially ruled in Stanford’s favor, but that ruling was overturned by a federal appeals court, which determined that the Roche contract language  superseded the Stanford contract language, giving Roche a rightful patent claim.

While universities can be more careful with contract language going forward, a Supreme Court decision in favor of Roche could call  into question decades of patents that have provided billions of dollars in royalties to institutions. At the urging of the President and Justice Department, the Supreme Court agreed to hear the case. In addition to the support of the Obama administration, many institutions and organizations have filed amicus briefs. Notably, former Senator Birch Bayh, co-sponsor of the Bayh-Dole Act in question, filed his own amicus brief emphasizing that the federal legislation was never meant to allow ambiguity about whether universities had exclusive rights to patents generated by federal funded research.

Monday’s oral arguments provided no clear indication of how they might rule in the case. A decision is expected by July.

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