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

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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

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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

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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

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