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Higher Education in TexasPresentation for:
Senate Subcommittee on Higher Educationand
Senate Subcommittee on Higher Education Finance
March 24, 2008
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Higher Education in Texas
Closing the Gaps by 2015
Financial Aid
Higher Education Funding
• Funding Operations
• Funding Facilities
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By 2015, Close the Gaps in:By 2015, Close the Gaps in:
Participation
Success
Excellence
Research
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Close the Gaps in ParticipationClose the Gaps in Participation
By 2015, close the gaps in enrollment rates across Texas to add 630,000more students.
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Texas’ participation rate has improved, but Texas’ participation rate has improved, but remains lower than other statesremains lower than other states
Participation Rate of Total Population Rate of Total Population --20052005 (2000)(2000)
4.4%
4.7%
4.9%
5.4%
5.6%
6.0%
6.2%
6.5%
6.6%
5.4%
0.0% 2.0% 4.0% 6.0% 8.0%Source: U.S.DOE, IPEDS, and Census Bureau
California Illinois
Michigan New York
PennsylvaniaTEXAS
OhioFlorida
Georgia New Jersey
(6.6%)
(6.0%)
(5.7%)
(5.5%)
(5.0%)
(4.9%)(4.8%)
(4.4%)
(4.2%)
(4.0%)
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Enrollment increase is close to a quarter million
0
200
400
600
800
2000 2005 2010 2015
Thou
sand
s
Target Actual
235,466
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Percent of public high school graduates Percent of public high school graduates entering Texas higher education is increasingentering Texas higher education is increasing
48.5% 48.5% 48.6% 49.8% 50.4%
0%
20%
40%
60%
80%
100%
2002 2003 2004 2005 2006
Approximately 240,000 graduates annually
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Hispanic enrollment growth is substantial
(Increase Fall 2000 - Fall 2007)
50,946
103,915
34,762
0
20,000
40,000
60,000
80,000
100,000
120,000
White Hispanic African Am
10.5%
49%
38.3%
Note: Asian Americans are not targeted in the plan.
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Participation Summary
235,000 more students are enrolled
Hispanic enrollment growth is substantial
More students are entering directly from high school
On track to meet Participation goals, but challenges persist.
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Close the Gaps in Success
By 2015, award 210,000 undergraduate degrees, certificates and other identifiable student successes from high quality programs.
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2010 target is to award 171,000 bachelor’s, 2010 target is to award 171,000 bachelor’s, associate’s, and certificates annuallyassociate’s, and certificates annually
74,906
93,032
25,50537,613
21,06415,824
0
40,000
80,000
120,000
2000 2007
Bachelor's Associate's Certificates
Total 151,709Total 116,235
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Significant percentage increases in Significant percentage increases in undergraduate awards undergraduate awards
0
20,000
40,000
60,000
80,000
White African Am Hispanic Other
Fall 2000 Fall 2007+18.8%
+44.1%
+65.7%
+65.7%
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Close the Gaps in Close the Gaps in ExcellenceExcellence
By 2015, By 2015, substantially increasethe number of nationally recognized the number of nationally recognized programs or services at colleges programs or services at colleges and universities in Texas.and universities in Texas.
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Texas needs to develop more leading research universities
AAU Members Public Private Total
California 6
2
2
2
1
0
2
2
2
Total in United States 34 26 60
3 9
New York 5 7
Pennsylvania 2 4
Texas 1 3
Illinois 2 3
Massachusetts 3 3
Indiana 0 2
Iowa 0 2
Michigan 0 2
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Texas needs to develop more leading research universities
AAU Membership Public Private TotalCalifornia 6
2
Total in United States 34 26 60
3 9
Texas 1 3
Public Universities
Total Offering Doctorates
California 33 10
Texas 2435
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UCUC--Berkeley has more National Academy Berkeley has more National Academy members than all Texas institutionsmembers than all Texas institutions
Science Engineering Medicine TotalUT Austin 10 48 1 59TAMU/TAMUSHSC 5 18 1 24Rice U 2 12 1 15UT Med Cntr-Dallas 17 0 21 38U of Houston 3 5 0 8Baylor CO Medicine 4 0 12 16UTHSC-San Antonio 0 0 3 3UTHSC Houston 2 0 5 7UT Med Br-Galveston 0 0 4 4
Other (SMU, MDA, UNT, UTSA, TTU) 2 3 2 7
UT Dallas 1 3 0 4
State of Texas Total 46 89 50 185UC-Berkeley 126 71 7 209
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Access to excellent undergraduate education is critical
81% of all public university students are undergraduates
91% of all public college and university students are undergraduates
43% of all public college and university students are freshmen
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Close the Gaps in Research
By 2015, increase the level of federal science and engineering research funding to Texas institutions to 6.5% of obligations to higher education.
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Texas ranks 5Texas ranks 5thth in the percent of federal funds in the percent of federal funds to colleges and universitiesto colleges and universities
2.1%
2.4%
3.0%
3.0%
3.7%
4.1%
5.8%
6.0%
8.2%
14.2%
5.6%
0.0% 5.0% 10.0% 15.0%
GeorgiaFlorida
MichiganOhio
IllinoisNorth Carolina
TexasMaryland
PennsylvaniaNew YorkCalifornia
$25 Billion Total in Federal Funds FY 2005
Source: National Science Foundation
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Top institutions in federal research & development Top institutions in federal research & development expenditures for science and engineering expenditures for science and engineering
FY 2005FY 2005
SOURCE: National Science Foundation
1 John Hopkins
2 University of Michigan
3 University of Wisconsin
4 UC Los Angeles
5 UC San Francisco
6 UC San Diego
7 Stanford
15 UC Berkeley
25 Texas A&M
26 Baylor College of Medicine
32 UT Austin
46 UT Southwestern
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Accomplishments 2000 - 2007
Recommended High School program is the default program and starting in 2008 will be required for admissions to a public university.
New College Readiness Standards developed
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Accomplishments 2000 - 2007
By fall 2007, more than 230,000 additional students enrolled.
956,000 additional undergraduate degrees awarded. 143,000 more than if it had remained constant.
By 2007, awarded 4,256 more Nursing graduates than in 2000.
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Financial Aid in Texas
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Texas students are more Texas students are more reliant on loansreliant on loans
Loan49%
Work-Study1%
Grant50%Loan
61%
Work-Study1%
Grant38%
NationalTexas
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The majority of student financial aid in Texas and nationally comes from
federal sources
Federal 76%
State11%
Inst7%
Other6%
Federal66%
Inst20%
Other8%
State6%
Texas National
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Profile of Grant and Loan Distributionin Texas
0%
20%
40%
60%
80%
100%
$0-9,999 $10,000-19,999
$20,000-29,999
$30,000-39,999
$40,000-49,999
$50,000-59,999
$60,000 &Above
Grants Loans
Family Adjusted Gross Income
Per
cen
t of
Fin
anci
al A
id
Rec
ipie
nts
Source: FADB
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TEXAS Grant Funding
In the current biennium TEXAS Grant estimates --• 90,500 students will receive grants• 90,800 eligible students will not receive grants• To fund all eligible students with financial
need would cost $897 million for the current biennium (an additional $469 million)
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Texas Educational Opportunity Grant (TEOG) (two year college program)
At current funding levels for TEOG we estimate -• 6,000 students will receive grants• 160,000 eligible students will not receive
grants• To fund all eligible students would cost $447
million in the current biennium (an additional $433 million)
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Nationally, Texas has gone from 15th to 6th in providing grant aid
Since 2000
Source: 2006 NASSGAP Report
$201
$221
$257
$383
$412
$418
$465
$758
$900
$400
$0 $200 $400 $600 $800 $1,000
Michigan
Ohio
New Jersey
Illinois
TEXAS
Pennsylvania
Florida
Georgia
California
New York
(in millions)
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Funding Higher Education in Texas
Funding Operations• Formulas
• Special Items
Funding Facilities• Tuition Revenue Bonds
• Capital Funding Work Group Recommendations
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Institutions receive funds from a variety of sources
Appropriated Funds
Formula Funds
Special Items
HEAF
Research Development
Fund
State Endowments
Local Funds
Statutory Tuition*
Some Fees*
__________
*For Com. Colleges – non-appropriated
Available University Fund (PUF)
Tobacco Settlement
Funds
General Revenue
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Non-appropriated funds vary by sector
Community CollegesCommunity Colleges•• Local taxesLocal taxes•• Tuition and feesTuition and fees
HealthHealth--related related InstitutionsInstitutions•• Practice plan revenuePractice plan revenue•• Designated tuitionDesignated tuition•• Incidental fees Incidental fees •• Research grantsResearch grants
•• UniversitiesUniversities-- Designated tuitionDesignated tuition-- BoardBoard--authorized authorized
(graduate) tuition(graduate) tuition-- Incidental feesIncidental fees-- Research Indirect cost Research Indirect cost
recoveryrecovery
Examples
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Students are paying a larger share of the cost of education
22%
40%24%
14%
27%
13%
26%34%
StateStudentsInstitutionsFederal Gov
FY 2003 FY 2007
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There are big differences among institutions
25%
32%21%
22%
22%
16%
14%
48%
StateStudentsInstitutionsFederal Gov
UT El Paso University of North Texas
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Public Universities(per FTSE)
$4,170$4,689
$5,034 $5,283
$3,881$4,040$3,881$4,036
$5,605
$4,070
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
2003 2004 2005 2006 2007
Formula Funding Tuition & Mandatory Fees
Increased costs are being paid by students instead of general revenue
NOTE: In Constant Dollars, CPI-U
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Special Items and Debt Service funding is taking a larger piece of the appropriations
9%4%
87% 82%
7%
11%
2002-03 2008-09
Special ItemTRB Debt SrvFormula
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State support is below national averageState Appropriations for General Operating Expenses
FY 2006
$6,595
$5,641
$5,640
$4,454
$7,057
$5,301
$5,493
$5,353
$4,945
$4,352
$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000
North Carolina
New York
Florida
Nation
California
Pennsylvania
Texas
Illinois
Michigan
Ohio
Per Full Time Equivalent Student
Source: State Higher Education Executive Officers
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Formulas equitably allocate - not budget - available funds among institutions.
Appropriations are made on a “lump-sum” basis, rather than by line item.
Except for a few items like debt service and benefit pay, institutions may spend their appropriated funds for any legal purpose without regard to the method by which the amount of funding was generated.
Formulas are used for allocating - not budgeting - a base amount of funds
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October-JanuaryFormula Advisory Committees meet
and make recommendations to Commissioner
Feb-MarchStaff works thru
the numbers with CB internal
leadership and Board
Committees
April 17, 2008CB Adopts
Formula recs.
No later than 6/1Staff forwards
formula recommendations
to LBB/GOBP
Nov/DecLBB runs formulas
using Spring, Summer, Fall 2008 numbers (surrogate
base year)
Summer Session 2008
Official base year begins
Timeline for Formula/Appropriations Process Fall 2007 through Fall 2008
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One formula
• Instruction and Administration
Covers Academic and Technical programs
Based on annual cost study of 26 disciplines
Community Colleges Formula
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Two formulas• Instruction and Operations (provides funding for faculty
salaries, departmental operating expense, library, instructionaladministration, research enhancement, student services, and institutional support)
• Infrastructure (facility maintenance and operations, utilities)
Two Supplements• Teaching Experience (currently 10 percent premium added to
all undergraduate semester credit hours taught by tenured or tenure-track faculty)
• Small Institution (for universities with fewer than 5,000 students)
General Academic Formulas
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Two formulas• Instruction and Operations – Allocation based on contact hour
rates established from cost study with Community Colleges.(provides funding for faculty salaries, departmental operating expense, library, instructional administration, research enhancement, student services, and institutional support)
• Infrastructure – Allocation calculated from space model (facility maintenance and operations, utilities)
One Supplement• Small Institution (each campus with fewer than 5,000
students)
State and Technical College Formulas
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Five formulas• Instruction and Operations (provides funding for faculty
salaries, departmental operating expense, library, instructionaladministration, research enhancement, student services, and institutional support)
• Infrastructure (facility maintenance and operations, utilities)
• Research Enhancement (based on each institution’s research expenditures)
• Graduate Medical Education (provides funding based on each institution’s residents)
• Mission Specific (for M.D. Anderson and UT Health Center at Tyler)
Health-Related Institution Formulas
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Draft Formula Funding Recommendations
2010-2011
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Draft Recommendations Community and Technical Colleges
Advisory CommitteeFund the formula at 100% of the median cost level less tuition and fees collected – based on attemptedcontact hours
Continue the 10% premium in the critical fields
Provide for a 10% premium for developmental education courses
Provide funding for alternative teacher certification programs
Provide small institution supplement funding for all Colleges with less than three million annual contact hours
CommissionerFund the formula at 100% of the median cost level less tuition and fees collected – based on completedcontact hours
Provide incentive funding to reward increased effort in the critical fields
Provide for $40 million in trusteed funds for developmental education
Provide funding for alternative teacher certification programs
Provide small institution supplement funding for Colleges with less than one million annual contact hours.
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Draft Recommendations Draft Recommendations Community and Technical CollegesCommunity and Technical Colleges
(Increase over 2008(Increase over 2008--2009 biennium)2009 biennium)
Recommendation Advisory Committee Commissioner
Formula Funds
Developmental Ed 0 $40 million
$884.2 million
Developmental Ed Premium $30.1 million 0
Total Formula Increase $874.3 million $590.0 million
Trusteed Funds
Total Trusteed Increase $17.3 million $149.28 million
Student Success Not Specified $100 million
Alternative Teacher Cert. $4.5 million $4.5 million
Dramatic Enrollment Growth Not Specified ($.02 million)
Small Institution Supplement $12.8 million $4.8 million
Total Increase $891.6 million $672 million
Increase in Formula $590.0 million
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State, Local, and Student Revenue per Full State, Local, and Student Revenue per Full Time Equivalent Two Year StudentTime Equivalent Two Year Student
52% 54% 47% 44% 40% 40% 39%
25% 26%28% 29% 30% 30% 32%
24% 21% 26% 27% 29% 30% 29%
0%
20%
40%
60%
80%
100%
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
State General Revenue Local Revenue Tuition and Fees
Data Source: Southern Regional Education Board
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Draft Recommendations General Academic Institutions
Advisory CommitteeFund Attempted Semester Credit Hours
Continue to fund 10% premium for undergraduate courses taught with tenure or tenure track faculty
Implement final phase of cost based formula
Phase out the small institution supplement between 5,000 and 7,500 students using a three average.
CommissionerFund Completed Semester Credit Hours
Replace teaching supplement with success funding
Implement final phase of cost based formula
Phase out of small institutions supplement between 4,000 to 6,000 students using a three year average.
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Draft Recommendations General Academic Institutions
(Increase over 2008(Increase over 2008--2009 biennium)2009 biennium)
Recommendation Advisory Committee Commissioner
Formula Funds
Trusteed Funds
Increase in Formula $478.0 million $300.0 million
Infrastructure $248.5 million $242.8 million
Student Success Not Specified $178 million
Small Institution $3.9 million ($1.79 million)
Dramatic Enrollment Not Specified $3.5 million
Total Formula Increase $726.5 million $542.8 million
Total Trusteed Increase $3.9 million $179.71 million
Total $730.4 million $722.01 million
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Recommendation Advisory Committee Commissioner
Formula Funds
Mission Specific Formula $5.6 million $5.6 million
Total $90.2 million $107.0 million
Nursing Shortage (All Sectors Eligible) Not specified $10.3 million
Total Formula Increase $90.2 million $90.2 million
Trusteed Funds
Total Trusteed Increase 0 million $16.8 million
Instruction & Operations Formula $22.3 million $22.3 million
Research Enhancement $17.7 million $17.7 million
Graduate Medical Ed Not specified $16.5 million
Infrastructure $50.2 million $50.2 million
Multi-campus adjustment 0 ~ .3 million
Draft Recommendations Health-Related Institutions (Increase over 2008(Increase over 2008--2009 biennium)2009 biennium)
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HEAF structure should be fully funded as called for in existing legislation.
Request that corpus target be raised to $4.5 billion; and,
Restrict Permanent Higher Education Fund distributions to capital and renovation and repair projects.
Increase the maturity period to 20 years to allow the institutions to use the funds for more capital projects.
Allow institutions to pledge up to 75% of the funds.
Capital Funding Work GroupRecommendations
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State Matching Set Aside Fund for maintenance and repair projects
Evaluate methods of financing capital projects other than Tuition Revenue Bonds that allow:
• Long-term planning for capital projects
• Reduces the amount of debt service being carried by the systems
Capital Funding Work GroupRecommendations
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Economic Benefits of Achieving the Goals of Closing the Gaps
By 2030:By 2030:•• For every $1 the state invests in higher For every $1 the state invests in higher
education, it receives approximately $8 in education, it receives approximately $8 in return.return.
•• Annual gains (in 2006 dollars) of: Annual gains (in 2006 dollars) of: $489.6 billion in total spending$489.6 billion in total spending$194.5 billion increase in gross state product$194.5 billion increase in gross state product$121.9 billion increase in personal income$121.9 billion increase in personal income1,023,281 increase in permanent jobs1,023,281 increase in permanent jobs
Source: The Perryman Group, “A Tale of Two States”
http://www.thecb.state.tx.us/reports/PDF/1345.PDF