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UC Commission Proposes Familiar Strategies for Cutting Costs

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The recently released its final report addressing potential solutions for keeping public higher education in California vibrant in the face of declining resources.

A group that included regents, administrators, faculty and students, the Commission’s 50 page recommended a host of actions for UC to consider, including:

  • Expand on the somewhat controversial
  • Develop and offer three year degree programs where feasible
  • Increase nonresident student enrollment from 6% to 10% to generate additional tuition revenue
  • Ease the community college student transfer process

The Commission also acknowledged that in extreme financial circumstances the UC system might need to consider raising both tuition and nonresident enrollment even more sharply, and consider decreasing resident enrollment and/or financial aid.

The Commission rejected other popular proposals such as differentiated tuition by major or class status, and the practice of cohort tuition pricing.

The UC Commission’s recommendations are familiar to anyone keeping up with current discourse on higher education reforms. While the recommendations may have considerable merit, none constitute the re-imagining by one of UC’s own, John Aubrey Douglass.

Federal Scrutiny of For-Profit Colleges Turns to Recruitment of Veterans

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Senator Tom Harkin, Chairman of the US Senate HELP Committee, has released another 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: , and聽 ).

The New York Times published Wednesday a detailed article on this topic, , that included a host of .

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聽 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: ).

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

Loss of Federal Stimulus Funds About to Hit State Budgets Hard

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The National Conference of State Legislatures released their today. While the report notes that many states are experiencing some level of stabilization in revenue collections, and beginning to be more optimistic聽 about the general revenue outlook, they are at the same time facing unprecedented pressures on the demand for services such as healthcare and education, and also facing the withdrawal of the federal stimulus funding that has been critical in mitigating severe budget cuts for the last two years. Referred to as an impending ‘funding cliff’, the ramifications of the loss of federal fiscal support are expected to translate into painful budget cuts in states across the country starting in fiscal year 2012.

Inside Higher Ed provides some additional to reports that echo these same facts. Meanwhile, the Center on Budget and Policy Priorities continues to update their own on state budget cuts.

Federal Maintenance of Effort Requirement Makes State Financial Aid Programs Vulnerable

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Both the American Recovery Act (ARRA) of 2009 and the 2010 Education Jobs Fund provided federal funding for education. In exchange for accepting federal funds, both fiscal relief vehicles came with (MOE) provisions requiring states to continue financial support for higher education institutions at certain minimum levels. However, some forms of state support, such as capital projects, financial aid, and research support are exempt from MOE calculations.

The 91探花received ARRA funding in the state budget in the 2010 fiscal year. As a result, MOE requirements from both federal actions helped protect higher education funding in Washington State from what may have been even deeper budget cuts. Last year, the State reduced higher education spending down to the federally-required MOE floor for fiscal year 2011. Federal MOE requirements expire after FY 2011.

Due to a state budget deficit that continues to grow, the Governor has called a to achieve another round of mid-year budget cuts for the current fiscal year. If the state further reduces funding for higher education, it must choose to violate the federal MOE mandate, or reduce state support for higher education activities exempt from federal MOE, primarily the State Need Grant (SNG), Washington’s need-based financial aid funding program.

In her for FY 2011, the Governor chose the latter, recommending that the state delay $76 million of SNG funding until July 1, 2011 (start of FY 2012), with institutions temporarily funding the gap to protect students. The UW鈥檚 share of this funding shortfall would be $15 million. While the Governor鈥檚 proposal assumes reimbursement on the first day of the new fiscal year, delay of this payment would require the University to cut $15 million to balance its current FY 2011 budget. In addition, given the $5.7 billion state deficit that remains for the upcoming 2011-13 biennial budget, it is not at all certain that this delayed payment would be made to institutions in 2012, when the federal maintenance of effort provision will no longer be in effect.

Any option that reduces or delays funding for higher education will impact 91探花 faculty, staff and students. The Office of State Relations and the Office of Planning and Budgeting will work hard to keep the 91探花 community up to date on special session, and important state budget related news in the coming days.

California Projects Annual Deficits of $20b Through 2016

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A new report from California’s non-partisan Legislative Analyst’s Office (LAO), , details current California state budget projections through at least 2016. The LAO projects that CA will have to solve at least a $25.4 billion deficit for 2011-12, and will continue to face budget gaps of at least $20 billion per year through 2015-16.

While analysts are clear that doomsday scenarios threatening the collapse and/or bankruptcy of the state are not realistic, they do emphasize the importance of lawmakers and citizens making painful choices now to avoid placing a massive burden on future generations of Californians. The LAO recommends a multi-year approach to addressing the state’s structural deficits, including making difficult choices on increasing revenue while making additional spending cuts. Detailed estimates are provided for each major area of government spending– see pages 29-30 for higher education.

California is unique in many ways, but the choices facing the state and its citizens are, though perhaps grander in scale, very similar to those being faced by states across the country, including Washington.

Seattle Times Highlights Importance of Pension Funding Policy

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The Seattle Times published an yesterday that outlined the State Treasurer’s desire to pursue a state constitutional amendment that would require the Legislature, starting in 2015, to invest more money into pension plans up front to help the state avoid ever entering ‘pay-go’ status where pension obligations must be covered from the state general fund.

In the meantime, the Treasurer, Jim McIntire, has requested that the Legislature invest $1.4 billion in existing pension plans for the 2011-13 biennium, a doubling of the $770 million invested in 2009-11.

The current estimated state budget shortfall for the 2011-13 biennium is , and pension policy will play an important role as the state is forced to reorganize a shrinking budget.

For more information about this issue, read the published earlier this month.

Elevating the College Cost Debate

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As we last month, two economists at the College of William and Mary have published a new book called Why Does College Cost So Much?. We are almost finished reading this very well written and researched book and will provide our own assessment soon.

In the meantime, the book continues to generate passionate discussion–see Stanley Fish’s at the New York Times. If you are as intrigued by this topic as we are, and have a lot of time to spare over Thanksgiving break, I might suggest reading some of the left on Fish’s column. To keep the discussion going, Fish handed his column over to the book’s authors, Robert Archibald and David Feldman, to some of the most common objections to their arguments. If you really want to punish yourself, readers have thus far left another to sift through!

And for a break from all of this talk about budget cuts and cost crises, here are some links to a couple of feel-good, holiday themed pieces published today:

Inside Higher Ed:

The Chronicle of Higher Education:

We wish the entire 91探花community a very happy Thanksgiving holiday. Stay warm and travel safely!

Additional Near- and Long-Term Cuts Expected as State’s Revenue Forecast Worsens

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After the November 18, 2010 release of the state’s November revenue forecast, Vice Provost of Planning and Budgeting Paul Jenny released the following information to 91探花leadership:

As most of you are aware, the for the state was released yesterday, and it was not good news.聽 The forecast projects a shortfall of $385 million聽in the current fiscal year budget and a deficit for the upcoming 2011-13 biennium聽(FY12 and FY13) of $5.7 billion. There are many factors for the continuing lack of improvement in state revenues:聽 the real estate market remains weak, expected revenue increases will not materialize due to voter rejection of the soda and candy sales tax measure, case loads continue to increase, and so forth.The most immediate concern is the reduction in revenue of $385 million聽for the current fiscal year.聽 To bring the budget back into balance, there are three options available:

  • The governor could impose across the board reductions as she did following the September revenue forecast.
  • The governor could call a special session of the legislature to balance the budget.
  • The legislature could take up this issue in passing a final supplemental budget for FY11 that addresses this shortfall as the beginning agenda item in the normal legislative session that commences聽on January 10, 2011.

While we do not know what , we need to anticipate another mid-year reduction as a result of any of these options. As a point of reference, the shortfall in the September revenue forecast of $520 million聽resulted in a cut to the 91探花of $17.1 million.聽 If the response to the current shortfall of $385 million聽is consistent with the September actions, we may see a reduction of approximately $10 million -$13 million.聽 Again, this is just our best guess at this point. My office will provide greater detail as it becomes known to us.

Longer term, we need to understand that the solution to a $5.7 billion聽deficit in the 2011-13 biennium will not be pleasant. We don鈥檛 know what our share of the cut will be. 聽What we do know is that only 30 percent of the budget can be touched at this point 鈥� the rest considered 鈥榦ff-limits鈥�. We can safely assume that because higher education is the biggest part of the discretionary budget, we will be hit very hard. While we had to model a , we should anticipate that our cut may be higher than 10%.聽 Cuts of these magnitudes will inevitably place more pressure on the discussion surrounding tuition increases as a mitigating factor to these cuts.

While this is distressing news, the Offices of Planning & Budgeting, External Affairs, and State Relations聽will be working with our elected officials to consider different solutions that can stave off some of the impact these cuts, if not mitigated, would create.

Latest NCES Report Provides Data on Higher Ed Employees

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The National Center For Education Statistics (NCES) is a part of the US Department of Education’s Institute of Education Sciences. Every US University governed by Title IV of the Higher Education Act (federal student aid programs) is required to submit annual data to NCES via nine surveys that cover topics such as pricing, admissions, enrollment, employment, financial aid, graduation/completion, institutional finance and more.

NCES releases regular reports synthesizing the massive amount of data that institutions submit. The latest, , summarizes national trends in higher education employment. Some of the findings include:

  • Institutions reported employing (not including medical schools or hospitals) 3.8 million employees– 2.4 million full-time and 1.4 million part-time.
  • Of the 2.4 million full-time employees,聽 1.4 million were classified as professional (see report for definition), 46% of whom had faculty status: 21% with tenure, 9% on the tenure-track, and 17% not on the tenure-track or at an institution without tenure.
  • Of full-time faculty with tenure, 65% were men while 35% were women.
  • Of full-time faculty with tenure, 81% were White, 8% were Asian, 5% were African American, and 4% were Hispanic.

You can explore more NCES online. Additionally, you can and pull up institutional data based on any set of universities you identify.