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National Center for Higher Education Management Systems3035 Center Green Drive, Suite 150Boulder, Colorado 80301
Higher Expectations and Fewer Resources:
Finding a Way
Dennis P. JonesSHEEO Higher Education Policy Conference
Denver, COAugust 12, 2009
The Expectation
“By 2020, America will once again have the highest proportion of college graduates in the world”
President Barack Obama, February 24, 2009
slide 2
slide 3
Current Annual Degree Production – 2,252,212
Additional Annual Degree Production Needed – 150,528 per Year
Associate and Bachelors Degrees Needed to Become the Most Educated Country by 2020
Increase in State and Local Funding at Current Cost per FTE
Note: Assumes private institutions will maintain current share
Annual Increase in Degree Production Required to Meet the Goal – 11.7 Million Additional Degrees by 2020
Adjusting for Current Levels of Educational Attainment and Population Growth by State
THE FISCAL REALITIES
slide 5
Expenditures on Tertiary Educational Institutions as a Percentage of GDP, by Source of Fund (2004)
*Some levels of education are included with others**Including public subsidies to households attributable for educational institutions, as well as including direct expenditure on
educational institutions from international sources.***Net of public subsidies attributable for educational institutions. Source: OECD.
Expenditures
slide 7
Annual % Budget Increase, Fiscal 1979 to Fiscal 2009
*32-year historical average rate of growth is 5.9 percent **Fiscal 09 numbers are estimated
***Fiscal 10 numbers are recommended Source: NASBO June 2009 Fiscal Survey of States
Combined Budget Gaps of $230B
slide 8
*Only 24 states have forecasted FY 2011 budget gaps to date
37 states
24 states
For most states – and for most public institutions – the stimulus package is not an
answer.
• But it could slow the impact
• And it could buy enough time to adjust to substantially changed circumstances
slide 9
After stimulus wanes, gaps could approximate 4% of spending, or $70 billion, even under the “Low-Gap”
Scenario
Source: Don Boyd (Rockefeller Institute of Government), 2009slide 10
After stimulus wanes, gaps could approach 7% of spending or $120 billion under the “High-Gap”
scenario
Source: Don Boyd (Rockefeller Institute of Government), 2009slide 11
Projected State and Local Budget Surplus (Gap) as a Percent of Revenues, 2016
slide 12 Source: NCHEMS; Don Boyd (Rockefeller Institute of Government), 2009
State Tax Capacity and Effort—Indexed to U.S. Average
Source: State Higher Education Executive Officers (SHEEO)
AL
AK
AZ
AR
CA
CO
CT
DE
GA HI
IL
IN IAKS
KY
LA
ME
MD
MA
MS
MT
NE
NV
NJ
NY
NC
ND
OH
OK
PA
RI
SC
SD
UT
VT
VA
WA
FL
ID
MI
MN
MO
NH
NM
TNTX
WV
WI
WY
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
0.6 0.8 1.0 1.2 1.4
Sta
te T
ax C
apacity
(Tota
l Taxable
Reso
urce
s Per C
apita
)
State Tax Effort (Effective Tax Rate)
US
OR
Slide 13
THE DEMOGRAPHIC REALITIES
slide 14
The big population growth will be in students of color. In the main these will be individuals of
modest means.
Therefore there are real limits as to how high tuition can go before price affects participation and completion.
slide 15
Change in Population Age 25-44 By Race/Ethnicity, 2005-2025
Source: U.S. Census Bureau
slide 16
…2,689,700
…1,044,516
Difference Between Whites and Next Largest Race/Ethnic Group in Percentage of Adults Age 25-
34 with an Associate Degree or Higher, 2000
35
.8
19
.3
1.4
0
10
20
30
40
Colorado
California
Connecticut
Nebraska
South D
akotaN
ew Y
orkM
assachusettsN
ew Jersey
Kansas
Rhode Island
Texas
North D
akotaW
ashingtonA
rizonaA
laskaU
tahIllinoisIow
aW
isconsinO
regonM
innesotaN
ew M
exicoIdahoV
irginiaN
evadaM
ontanaP
ennsylvaniaM
arylandW
yoming
Delaw
areU
nited States
Michigan
South C
arolinaN
ewN
orth Carolina
Mississippi
LouisianaG
eorgiaM
issouriO
hioA
labama
IndianaA
rkansasF
loridaT
ennesseeK
entuckyV
ermont
Oklahom
aM
aineW
est Virginia
Haw
aii
Source: U.S. Census Bureau, PUMS (based on 2000 Census)
Family Incomes of Families with School Age Children
slide 18
Source: American Community Survey
Expectations
• Maintain access – serve an increasing number of students
• Maintain affordability to both students and the state
slide 19
Invest stimulus funds in:• Developing more cost-effective ways of
doing business• Paying for the transition
Short-Term Actions• Be clear about goals & accountability measures
– Degree production
– Reduced cost/degree
• Create a Coherent Financing Plan
– Align policies regarding appropriations to institutions, tuition, & student aid policies
– Treat different sectors differentially
– “Reset” base funding levels
• Invest more (reduce less) state appropriations in institutions that must contribute most to student access and success
slide 20
Short-Term Actions(continued)
• Protect need-based financial aid
• Mandate increases in instructional productivity
– SCHs per FTE faculty
– Have a plan for use of savings
• Invest in reform
• Return to General Fund
slide 21
Long-Term Actions• Refocus institutional missions
– Directly
– Through de-funding certain programs/functions
• Require certain programs to be self-supporting (e.g., MBA)
• Align state & federal student aid programs – leave no federal money on the table
• Administer need-based aid as a state – not institutional – program
• Tackle developmental education on a statewide basis
– Consider a separate delivery entity
• Undertake a policy audit with an eye toward eliminating unnecessary bureaucracy
• Adopt a strategy for investing in productivity enhancement
– Course redesign on a system-wide basis
– Retrofitting buildings for energy efficiency
– Reengineered business processes
– Inter-institutional collaboration
slide 22