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Quest for Greater Autonomy for Public Higher Ed Continues

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As state legislative season wears on, here is an update on some of the efforts in other states to achieve greater financial and regulatory freedom for public higher education institutions facing another year of steep budget cuts.

  • Virginia: The legislature passed the Virginia Higher Education Opportunity Act of 2011. For details on the major aims of this legislation, see our earlier post. The State Council of Higher Education for Virgina (SCHEV) provides an overview of how the final bill differs from the original bill, including, among other things, the addition of a goal to recognize the unique missions and contributions of different institutions.The Act now awaits the signature of the Governor, who proposed the initial bill.
  • New York:  The Legislature passed a budget that did not include provisions contained in the Public Higher Education Empowerment and Innovation Act proposed by the SUNY system. The Act sought increased autonomy from state processes and freedom in managing institutional resources, especially in light of significant budget cuts since 2008. The state not only decided to include none of the flexibility measures, but hit the system with another $210 million in cuts. Having lost 30 percent of its state funding in three years, this huge network of over 60 campuses is determined to continue fighting to maintain access and quality.
  • Wisconsin: The New Badger Partnership proposed by UW Madison continues to be controversial in Wisconsin. Feeling left behind by the proposal to ‘set free’ the flagship institution, the UW System Regents have endorsed their own proposal, the Wisconsin Idea Partnership, which includes freedoms and flexibilities for all system campuses. The Legislature will consider both proposals in the coming month.
  • Oregon: University of Oregon President Richard Lariviere has made an agreement with Governor John Kitzhaber to put the University’s ‘New Partnership’ legislation on hold for a year in favor of supporting passage of the Governor’s legislation, which creates an independent public university system in place of treating each institution as a  state agency. In exchange, the Governor has signaled an intention to support the University of Oregon’s New Partnership proposal for greater autonomy, including a new financing structure that replaces annual state operating support with a public endowment, in the 2012 Legislative session.

Note that the Washington State Legislature is also currently considering a number of proposals, both large and small, that might lead to regulatory relief and increased autonomy of varying types for the UW. Check out the bills that the UW ‘strongly supports’ and ‘supports’ in the BillTracker for more information on some of these bills.

Report Confirms Deep Cuts to Higher Ed Across US

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The SHEEO State Higher Education Finance report for FY 2010 was released last week. Unsurprisingly, it confirms that the same general pattern in Washington of deep state cuts to higher education funding coupled with steep tuition increases is being replicated in states across the US.

Report Highlights: National Trends

Nationally, on average, state support for public high education per full-time-equivalent (FTE) student declined by about 7 percent between 2009 and 2010, and, at $6,454 per student, is at its lowest level in 25 years. The reports notes that average increases in net tuition revenue of 3.4 percent per student partially offset these budget cuts.

These cuts comes at a time when enrollment continues to grow partly due to more citizens seeking out higher education during the economic crisis. Nationally, enrollment grew by 15 percent between 2005 and 2010. Even when state and federal and increased tuition support manage to stay whole or increase, the report notes that increasing enrollments continue to erode per student funding levels over time.

The report highlights the importance that state support continues to play in education related spending by public institutions even as tuition revenue rises. They acknowledge that this importance is sometimes obscured by the complex finances of large institutions that have many other (non-fungible) funding sources.

Ultimately, SHEEO purports that public and policymaker values are consistent with continued public support for higher education, and they are hopeful that investment will rise again once state budgets stabilize and improve.

Report Highlights: Washington State

SHEEO presents the following averages for Washington State higher education for the 2005-2010 period:

  • 12th in increased enrollment in public higher education (19.2%).
  • 30th in appropriations per FTE.
  • 40th in percent of net tuition revenue as percent of total education revenue.
  • 40th in total educational revenue per FTE.

These numbers are a testament to the comparatively low tuition rates enjoyed by WA residents combined with lower than average state appropriations.

Read the full report for more data, analysis, and methodological details.

Chronicle Corrects UW Data

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Were you surprised to learn in the Chronicle of Higher Education this week that, in 2008, the UW received over $19,500 in state appropriations per student, the second highest rate in the country? Well, so were we!

Office of Planning Budgeting staff worked with the Chronicle to clarify that they were not reporting state appropriations per student, but what the Delta Cost Project calls the overall educational ‘subsidy’ enjoyed by students, which includes state appropriations but also other revenues such as gifts and endowment income.

The Chronicle agreed to revise the text of their chart to match the measure they were actually reporting, and they also wrote up an accompanying article to explain why the revision was important, using the UW as an example. Please read our brief for more detail and links to the revised publications.

We don’t think the overall ‘subsidy’ figure that DELTA produces by looking at IPEDS finance survey data is a very useful one when comparing institutions on education related funding per student, nor do we think that 2008 funding levels tell us much about where public flagship institutions are now, but it is very important that the Chronicle narrative now matches the data and the chart is no longer misleading.

State Budget Updates

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OPB published a new brief yesterday discussing expectations for the upcoming Washington State revenue and caseload/entitlement forecasts, and how both are likely to affect UW state funding levels.

**EDITED TO ADD: Note that after we released this information, the new caseload forecast was released and lowered the expected growth of caseloads for K-12, Medicaid, and Corrections. In particular, the anticipated impacts of federal healthcare reform lowered the predicted caseload for state-supported medical programs by $117 million in the long-term and $70 million in the short-term.**

Nationally, the Center on Budget and Policy Priorities (CBPP) updated their analysis of state budget shortfalls this week. They summarize the challenges faced by states via their blog:

  • For fiscal year 2012, one of the most difficult budget years on record. Some 44 states are projecting shortfalls totaling $112 billion for the year, which begins July 1 in most states. (See chart below.)  This figure is somewhat lower than in our previous version of this analysis, largely because of actions that Illinois took in its last legislative session that reduced the size of its 2012 shortfall.
  • The loss of emergency federal assistance. Assistance through the 2009 Recovery Act and the August 2010 jobs bill has been a huge help to states, allowing them to balance their budgets with smaller budget cuts and tax increases than they would otherwise need to make.  But that aid will largely be gone by the end of fiscal year 2011.
  • A long road to recovery. Already, 26 states are projecting shortfalls totaling $75 billion for fiscal year 2013, which begins in 16 months.  This number will likely grow once all states have prepared estimates.

More on the Public/Private University Resource Gap

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Two higher education news stories leapt out at us this morning as emblematic:

  • Pennsylvania Governor Tom Corbett announced 50 percent state funding cuts for four-year public institutions. The largest institution, Penn State, would see its state subsidy reduced from $465 million per year to $233 million. The University describes the proposed cuts as devastating:  “A reduction of this magnitude would necessitate massive budget cuts, layoffs and tuition increases, with a devastating effect on many students, employees and their families,” said Al Horvath, senior vice president for Finance and Business. “While we have for many months been planning for a potential state funding cut, we could not have envisioned one so damaging to the future of the University and the Commonwealth.”
  • Meanwhile, in Los Angeles, the University of Southern California kicked off the day with an announcement of a new, record high, unrestricted $200 million gift to the College of Letters, Arts and Sciences. The College will be named after the alumni donors, David and Dana Dornsife, who told the Los Angeles Times that they “had confidence in USC faculty and administrators to spend it wisely.” USC intends to use the money primarily to enhance the humanities and social sciences through faculty hiring, graduate fellowships and research funding.

As mentioned in yesterday’s post about faculty salaries, the growing resource gap between public and private institutions predates the Great Recession, which appears to be dramatically accelerating the existing trend. Read the 2009 Association of Public and Land-Grant Universities (APLU) report, Competitiveness of Public Research Universities & Consequences for the Country, to learn more about this concern: “from 1987 through 2006 revenue per student in private research universities in every revenue category except state funding has grown to be multiples of that available to the publics.”

Public/Private Faculty Salary Gap Widens

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New CUPA-HR faculty salary survey results released today show that faculty at public institutions of higher education, on average, received no salary increase for the second year in a row, while salaries for faculty at private institutions increased, on average, by about 2 percent (compared to also being stagnant last year).

This trend is particularly troubling because the current economic crisis seems to be accelerating pre-existing gaps between public and private faculty salaries.  Inside Higher Ed reports.

State Budget Pressures Continue to Mount

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Here are a few interesting and updated resources on the current budget pressures being faced by states across the US:

  • This CNN chart shows, by state, projected deficits for FY 2012, ruling political parties, number of public employees, and whether most public employees have bargaining rights.
  • This NASBO document is continuously updated and contains compiled information on municipal debt, pension liabilities, bankruptcy proposals and other issues related to state and local government finances.
  • This CBPP report compiles information about initial FY 2012 budget proposals for those states that have released them, documenting a fourth year of deep cuts for many states.

GAO Details How For-Profit Colleges Exploit Veterans

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The Government Accountability Office (GAO) released a report and recommendations, DOD Education Benefits: Increased Oversight of Tuition Assistance Program is Needed, ahead of another Senate hearing focused on the conduct of for-profit colleges, this time held by Senator Tom Carper.

The GAO report focused on the DOD Military Tuition Assistance Program, which provides tuition benefits for active duty soldiers. In 2009, the program provided $517 million in tuition assistance to over 375,000 service members of which for-profit institutions received a disproportionate amount. The report addressed two primary points:

  • DOD oversight of schools receiving Tuition Assistance Program funds
  • The extent to which DOD coordinates with accrediting agencies and the U.S. Department of Education in its oversight activities

The Senators discussed the gaps in oversight exposed by the report, and also discussed the fact that Tuition Assistance Program revenue is not included in the calculation to determine whether at least 10 percent of annual revenue comes from non-federal sources, which is required for an institution to be eligible to receive federal student aid. This is a rule that Senator Tom Harkin has specifically mentioned as a target for reform in earlier hearings he has held on for-profit institutions.

Meanwhile, the association that represents for-profit colleges is suing the US Department of Education in an attempt to block new federal regulations, and House Republicans included an amendment to block the controversial gainful employment rule from moving forward in their recently passed budget.

For past OPBlog posts on this continuing story see:

Supreme Court Hears Arguments in Research Patent Case

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On Monday, the Supreme Court heard oral arguments for Stanford University v. Roche Molecular Systems et al.. At issue is whether the Supreme Court will agree with the argument made by research institutions to expand the current interpretation of what is known as the Bayh-Dole Act (1980’s University and Small Business Patent Procedures Act), which requires that royalties received from patents awarded based on federally funded research are retained by universities and used to fund research, education, and payments to inventors.

The case originated as a dispute between Stanford University and Roche, a company that required a Stanford researcher to sign a consultant agreement  containing language regarding patent rights (“do hereby assign”) that was stronger than the language contained in the Stanford contract he had signed a year earlier  (“I agree to assign”). Stanford sued Roche in 2005 after they refused requests to acquire a license to Stanford’s patents relating to the researcher’s work.  A federal district court initially ruled in Stanford’s favor, but that ruling was overturned by a federal appeals court, which determined that the Roche contract language  superseded the Stanford contract language, giving Roche a rightful patent claim.

While universities can be more careful with contract language going forward, a Supreme Court decision in favor of Roche could call  into question decades of patents that have provided billions of dollars in royalties to institutions. At the urging of the President and Justice Department, the Supreme Court agreed to hear the case. In addition to the support of the Obama administration, many institutions and organizations have filed amicus briefs. Notably, former Senator Birch Bayh, co-sponsor of the Bayh-Dole Act in question, filed his own amicus brief emphasizing that the federal legislation was never meant to allow ambiguity about whether universities had exclusive rights to patents generated by federal funded research.

Monday’s oral arguments provided no clear indication of how they might rule in the case. A decision is expected by July.