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FUTURES COMMITTEE: CHARTER REVIEW

The UW Futures Committee was convened to:• explore the state of higher education funding

across the country and in Washington State• discuss the current situation at the University• research cost and alternative delivery models and

revenue enhancement• identify the University of Washington’s critical

strengths• pinpoint opportunities to capitalize on potential

solutions

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FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 -

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

450,000,000

Annual State Appropriations to the UW

State Near General Fund

Appr

opria

tions

FUTURES COMMITTEE: STATE APPROPRIATIONS

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SNAPSHOT UW: WORKHORSE & SHOWHORSE

UW provides 30% of all BA degrees in WA (40% of public BA degrees) and 39% of graduate and professional degrees (72% of public degrees)• 50k students plus 41K outreach students• Produced 14K degrees last year alone• Over half of BA students graduate with no debt• Oversees four hospitals provide 1/3rd of state’s

charity care• Ranked in the top ten public research universities

in the country by US News & World Report• First public research university in the country for

federal research funding

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REVIEW OF FIRST MEETING

• President Young noted that the UW is on the cusp of significant change with respect to students, structure, and funding

• Paul Jenny reviewed UW budget, student data, personnel data, degree production, and research activity

• President Sexton discussed the differentiation of missions within higher education and affirmed that top universities should seek the most talented students and faculty, which is an expensive, but essential endeavor;

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FORTHCOMING MEETINGS

Costs and Goals

Mtg. 1

Exploration of Options and Ideas Identified by

Committee

Meetings 4-6

National Context, UW 101

Mtg. 2

Revenues & Options

Mtg. 3

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Contemplating College “Costs”

Paul JennyVice Provost, Planning & Budgeting

June 14, 2012

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COST and PRICE are different but often conflated in discussion of college ‘costs’

• Cost refers to expenditures made by the institution for the purpose of instruction on per-student basis

• Price refers to the amount of money a student pays to attend

GENERAL “COST” VS. “PRICE” PRINCIPLES

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It is easy to name the price of a degree; it is much more challenging to correctly evaluate its cost

• Some expenditures are difficult to distribute among research, instruction and public service: e.g. faculty salaries and benefits

Why discuss costs? To align the price of a degree with its cost? To evaluate productivity? We cannot do this without also assessing quality

Regardless of the challenges, we can meaningfully discuss cost drivers and their evolution over time

GENERAL “COST” VS. “PRICE” PRINCIPLES

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WHY DOES COLLEGE COST SO MUCH?

It is a service industry, and service industry costs rise more rapidly than the cost of producing goods

• Higher education prices have grown similarly to other personal services offered by highly educated providers (e.g. dentists, lawyers)

It is difficult for a service industry to increase productivity without decreasing quality – but remember, there is currently no established way to reliably measure quality

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UW CONTEXT: CONSTRAINED RESOURCES

At one time, the state legislature set UW enrollment and based tuition on an estimate of cost

Then the demand for more graduates increased and enrollments outpaced available state support

Overall tendency has been to “squeeze” in more enrollments with fewer resources and increased tuition, which places access to education and the quality of the education at odds

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SHIFTING SOURCES OF EDUCATIONAL REVENUE

1989-90

1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-130

5000

10000

15000

20000

25000

STATE AND TUITION FUNDING PER FTE(in 2013 Dollars)

Tuition Revenue per FTE State Funding per FTE Total Funding per Student FTE

$17,000(FUNDING PER FTE)

$16,000(FUNDING PER FTE)

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2007-08

2008-09

2009-10

2010-11

2011-12

2012-13$10,000

$12,500

$15,000

$17,500

$19,668

$18,927

$17,735$17,103

$16,835 $16,793

$741 $1,933 $2,565 $2,833 $2,875

Decline in Funding per FTE Student (in 2013 Dollars)

Gap from 2007-08 Funding Level

FUNDING TRENDS

Funding per FTE is $3,000 less than it was in FY08, due to declining state funding and increasing enrollments

Over the last ten years, comparatively more expensive STEM degree production increased 60%

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Our primary educational goals include: To contribute to building an educated and

engaged citizenry in Washington. To produce the graduates our economy

needs in order to prosper To make sure that all Washingtonians –

regardless of income – have an equal chance to work towards a UW degree

To preserve the quality of a UW diploma and honor our graduates’ Husky Pride

And yet…

A TIPPING POINT AT THE UW?

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Already doing more with less Additional efficiencies plus student growth

threaten quality and quantity of education, research and service

Non fungible sources are growing while educational funding sources decline

Public investment in unrestricted form unlikely to return

Tuition revenue can only be raised so much before the public mission is compromised

A TIPPING POINT AT THE UW?

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UW CONTEXT: EDUCATION COST DRIVERS

Human Capital• More than 77 percent of central educational

resources are spent on salaries and benefits Student Financial Aid

• As we maintain student access, higher prices (tuition) create new costs (financial aid)

Physical Plant• Increasing deferred maintenance backlog

Technology• Educational delivery and administrative

systems are at the end of their useful life

UW CONTEXT: EDUCATION COST DRIVERS

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Faculty

• We are raising enrollment while faculty numbers remain stagnant in comparison, increasing faculty’s instructional burden

• Faculty compensation for instruction is relatively flat, which may encourage them to focus more on seeking lucrative research grants than teaching

• We risk losing our best faculty to “richer” peers and limiting our opportunity to hire rising stars

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UW CONTEXT: EDUCATION COST DRIVERS

2007-08 2008-09 2009-10 2010-11 2011-12 -

1,000

2,000

3,000

4,000

5,000

0

10,000

20,000

30,000

40,000

50,000

Student Enrollment and Faculty/Staff FTE

Instructional Faculty FTE

"State-Funded" FTE Enrollment

Facu

lty/

Staff

FTE

Stud

ent

FTE

Enro

llmen

t

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UW CONTEXT: EDUCATION COST DRIVERS

• The proportion of faculty and all other staff that will be retiring in the near future is fairly high

AGE All Faculty Tenured/Tenure Track Faculty Other Staff

>60 24% 33% 40%

>65 12% 17% 30%

>70 4% 6% 19%

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UW CONTEXT: FINANCIAL AID AND STUDENT ACCESS

If we admit students without regard to ability to pay and strive to at least maintain student access, higher prices (tuition) create new costs (financial aid).

2007-08 2008-09 2009-10 2010-11 2011-12$0

$3,000

$6,000

$9,000

$12,000

$15,000

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

Undergraduate ResidentsTuition Levels and Tuition-Funded Need-Based Aid

Tuition

Tuition-Funded Aid

Und

ergr

adua

te R

esid

ent

Tuiti

on

Tota

l Aid

(mill

ions

)

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UW CONTEXT: FINANCIAL AID AND STUDENT ACCESS

In fact, in order to maintain access, a higher proportion of tuition needs to be used for aid as tuition increases, unless there are other sources of aid.

2008-09 2009-10 2010-11 2011-12 2012-13$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

Undergraduate ResidentsTuition Returned in Need-Based Financial Aid

Need-Based Aid

Tuition Remaining

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WHERE DO WE GO FROM HERE?

Opportunities abound Noted aging and underpaid workforce,

evolving student needs, baccalaureate degree expansion exigency

What do we want to be, and how do we get there?

What do we do best and how do we preserve it while simultaneously expanding its reach?