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Momentum Building to Reign in For-Profits

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It was speculated that Republican gains in Congress last November could stall the Senate’s aggressive investigation of the for-profit higher education industry and sweeping new Department of Education regulations that are set to go into effect July 1. While bipartisan action in the House did attempt to block some of the regulations, particularly the controversial gainful employment rule, they survived the final 2011 budget deal.

Meanwhile, as federal efforts to better regulate this run-away industry, which enrolls 10 percent of total students, eats up 24 percent of federal aid and accounts for 45 percent of  student loan defaults while making billions of dollars of profit annually, continues, several states, including Florida and Illinois, have launched their own investigations. Today, it has been reported that Attorneys General from at least 10 states will embark on a joint investigation of the industry.

Adding to pressure facing the industry is widespread media coverage, including investigative efforts from the New York Times, ABC News, and Frontline, among others. Even Stephen Colbert has addressed the topic.

While the for profit higher education industry lobbying effort is massive (likely paid for with the federal student aid dollars that, on average, make up over 90 percent of the annual operating budgets for these institutions), mounting scrutiny has already had effect as some of the industry’s largest actors have begun ‘maturing’ some of their practices ahead of anticipated regulations.

For past OPBlog posts on this continuing story see:

Turmoil in Texas Over Higher Ed Reforms

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Recent higher education reform efforts in Texas, developed by the conservative think tank Texas Public Policy Foundation (TPPF) and championed by Governor Rick Perry, have many wondering how much damage might be done to one of the country’s largest and best public university systems.

The ‘solutions‘ proposed by TPPF, and marketed heavily by  board member and major Rick Perry campaign donor Jeff Sandefer, would dramatically shift even the state’s top research campuses away from research and toward teaching. They cast the student in the role of consumer, basing professor pay and tenure decisions primarily on teaching evaluations, replacing state support to institutions with direct grants to students, creating contracts between students and institutions, and maintaining a distinct line between teaching and research activities and funding.

Mike McKinney, Texas A&M Chancellor and former Rick Perry chief of staff, has already drawn national criticism for creating and publishing a ‘balance sheet‘ that measured the revenue generation of each individual faculty member based on salary, teaching, and grant awards. This exercise, promoted by the Governor and TPPF, resulted in a swift rebuke from the Association of American Universities (AAU).

Next, Governor Perry announced that he wanted institutions to create a BA degree that would cost only $10,000 (compared to the current average cost of over $31,000 at Texas public universities). Widespread skepticism of the ability to create a quality degree that would cost so little did not stop the state’s Higher Education Commissioner from embracing the idea.

Then, a senior fellow at TPPF was given a controversial $200,000 consulting position with the UT System. His appointment lasted 50 days before the concerns of the public, legislators and institutions led to his dismissal.

Now, UT System regents’ chairman Gene Powell has circulated a memo that calls for increasing UT enrollment by 10 percent per year for four years and halving tuition at the same time, moves he claims would make UT the best public institution in the country. These recommendations are in direct opposition to a blue ribbon panel that recommended enrollment at UT Austin be reduced to improve the quality of the undergraduate education there. Judith Zaffarini, chairwoman of the state’s Senate Higher Education Committee, has issued sharp criticism of Powell’s suggestions, saying that his goals are “mutually exclusive”  and “detrimental to the pursuit of excellence.”

As this battle rages, others in Texas are weighing in against the reforms, including  alumni and university boosters. Meanwhile, all of higher education is watching to see if Texas will allow one of the nation’s top public institutions, UT Austin, be so radically undermined.

Encouraging News About Educational Attainment

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The U.S. Census Bureau recently reported new, encouraging numbers about educational attainment in the United States for the 2010 Census year. According to the report, the percentage of people 25 and older who held a bachelor’s degree or higher increased to 30 percent in 2010 from 26 percent in 2000. Additionally, the percentage earning a high school diploma or higher was 87 percent, up from 84 percent ten years earlier. Interestingly, women are earning more bachelor’s degrees than men in the 25-29 age group—36 percent of women earned a BA or higher, compared to 28 percent of men.

While the Census Bureau has not yet released disaggregated data that lists educational attainment by state, a few sites have interesting information about Washington degree attainment from the 2000 Census, as well as predictions from surveys since then. According to these numbers, Washington was ahead of the national average in 2000, with 87 percent of the population 25 and over holding at least a high school degree, and 27.7 percent holding at least a bachelor’s degree.

To see more interesting information about the 2010 Census, check out the Seattle Times’ maps and interactive features or visit the Census website directly.

UC System Boosts Nonresident Enrollment

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Last year, the UC Board of Regents increased the system-wide cap on nonresident undergraduate enrollment from 6 percent to 10 percent based on final recommendations from  the University of California Commission on the Future. Newly released 2011 UC freshman admissions statistics for all nine campuses show how aggressively UC has moved to increase nonresident enrollment as a result.

Like in Washington, steep state funding cuts have forced California’s public research institutions to rely more heavily on nonresident students who pay, on average, three times the price that resident students pay. As a result, the average percentage of nonresidents (international and out of state) admitted to UC campuses has increased sharply in just two years:

  • 2009: 11.6%
  • 2010: 14%
  • 2011: 18.1%

Note that at the ‘flagship’ UC campuses, Berkeley and UCLA, where the applicant pools are much deeper and acceptance rates much lower, the numbers are much higher. At Berkeley, 31.2 percent of admitted Freshman were nonresidents, and at UCLA, 29.9 percent were nonresidents.

However, the system anticipates that nonresident students will ultimately make up less than 10 percent of the enrolled 2011 UC system freshmen class due to an overall lower yield rate among nonresident admits, and due to the fact that the system offered 12,700 Californians who were denied spots at their preferred UC campuses the option of enrolling at the newest UC campus in Merced even though they did not apply there (this move also keeps UC in compliance with the Master Plan, which requires that the system admit at least the top 12.5 percent of California high school students).

UC notes that, like the UW, while they are increasing nonresident enrollment, they continue to hold nonresident applicants to higher academic standards than residents. They also point out that peer institutions such as the University of Colorado, the University of Michigan, and the University of Virginia continue to rely far more heavily on nonresident students,  who comprise  over one third of enrolled undergraduates.

While the move to increase nonresident student enrollment at public institutions is sometimes heavily criticized, the tuition rates paid by these students help institutions keep resident tuition down while maintaining the quality of education despite significant funding cuts.

Bleak Future for State Budgets Through 2060?

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A new GAO (Government Accountability Office) report released last week provides an update to an ongoing assessment of State and Local Government fiscal health. The GAO has been publishing fiscal simulations for the state and local public sector (in aggregate) since 2007, and their modeling has consistently shown structural problems facing state budgets into the future.

The April update notes that, absent major policy changes, state operating budgets will face continuing decline through 2060 primarily due, in the short term, to decreased tax receipts, and, over time, to rising healthcare-related costs (both for Medicaid and Medicare as well as to meet the cost of providing health benefits to state employees and retirees).

The report concludes that in order to close the ‘fiscal gap’ (estimated action required today to ensure long-term fiscal balance), the state and local sector would have to, on average, decrease spending or increase revenue by about 12.5 percent and maintain that change in each successive year.

The conclusions in the report reflect adjustments made  for costs and savings associated with the Patient Protection and Affordable Care Act (PPACA) passed by Congress in 2010.

See our previous post for links to sources that provide updated assessments of state budgets as they continue to evolve.

Special Session Likely as WA Senate Passes Budget with 6 Days to Spare

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The Washington State Senate passed its budget last night after adopting two floor amendments. The budget cuts, compensation reductions, and policy issues we outlined were not amended in any substantive way in the engrossed budget passed by the Senate last night. Find out more about the evolution of the House and Senate versions on this Washington State Legislature page and this page.

Regular session is scheduled to end this Sunday, but legislators will not be in Olympia over the weekend due to Easter. A special session will likely be called after the holiday and reaching agreement on a conference (negotiated) budget would be at the top of the agenda. For more information, TVW’s Capital Record blog provides an excellent summary of special session details.

Fast Track to Graduation: WA Senate Bill 5442

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In an effort to give more students the opportunity to earn a bachelor’s degree and enter the workforce early, the legislature passed SB 5442, “Requiring the development of three-year baccalaureate degree programs.” The bill, which was delivered to the Governor for approval on April 12th, requires institutions of higher education to provide degree programs that enable academically qualified students to graduate in three years. The bill does not explicitly define “academically qualified students,” thereby leaving it up to the higher education institutions to make their own rules. According to the bill, qualified students must not be required to enroll in summer school or take a more than full-time credit load in any term in order to graduate early. They must also be able to take classes in their major starting in their first term. The legislature hopes this will have a positive effect on graduation rates, as well as lower the cost of a baccalaureate degree for both the state and the student.

Of course, the idea of three-year degree programs is not new. In fact, students coming into the UW with 45 credits or more can already, with attentive advising and careful planning, earn a bachelor’s degree in three years. However, the degree must still meet the same university requirements as those earned in four years. While legislators want to make it easier to apply existing credits to students’ degrees, those students must still earn at least 180 credits total and meet all distribution requirements. With more and more students coming into the UW with AP and IB credit, this option has become increasingly attractive to students eager to graduate and enter the work force. However, others have actually found that the push to graduate in three (or fewer) years is detrimental to their college experience. This prompted the ASUW Senate to pass a resolution giving students the right to waive excess AP and IB credits if they so choose. Either way, students’ options for shaping their educational experience, be it three years or four, are likely increasing.

WA Senate Budget: Deeper Cuts, Higher Tuition, Compensation Reductions

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Senate Ways & Means leadership released their bipartisan budget last night after a 7PM press conference. Budget reductions total $4.8 billion and the largest cuts are targeted to K12 education, higher education,  employee compensation across all sectors of state governemnt, and basic health.

The UW’s general fund appropriation is cut more in the Senate budget ($217 million) than the House engrossed budget, but the Board of Regents would be authorized to increase resident undergraduate tuition higher (16% per year). BEFORE tuition increases, the Senate budget cut would be a 34.2% reduction from our maintenance level.

The Senate budget contains two compensation related cuts, which are limited to employees paid from state general fund (GOF), the medical account, and the accident account (the latter two provide critical funds for Public Health).

  1. Like the House engrossed budget, the Senate budget includes 3% “compensation savings” reducing our appropriation by $24 million over the biennium. Individual salaries will not be affected but our general fund, medical aid, and accident approprations would be reduced.
  2. The Senate budget would require stepped furloughs for “highly paid” employees, excluding faculty and Harborview personnel. The budget bill does not contain language to this effect but rather, the budget overview indicates that the policy will be included, perhaps in SB 5860. The general fund cut for furloughs would be $10.2 million over two years.

A full OPB brief is available for review.

State House of Reps Passes Operating Budget Saturday

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After considering numerous floor amendments last Friday evening, the House passed their operating budget on Saturday afternoon. The House budget appropriates $32.2 billion in general fund state operating funds and makes significant cuts to health and human services, K-12 education, and higher education.

Like the House Ways & Means chair budget, the engrossed budget cuts $204 million from the UW’s state general fund appropriation over two fiscal years. However, that reduction is somewhat mitigated by the fact that all UW units took part of these cuts in November 2010 permanently. As a result, our brief outlined the approximate cut (before tuition revenue) that would be implemented in Seattle should the House budget ultimately pass after negotiations between the chambers.

The engrossed budget contained an extremely important amendment which exempts university and college employees from individual salary reductions of 3%. However, institutions will still need to come up with requisite “savings” (read: cuts) of 3% from all appropriated funds, which for the UW, are general fund state and the medical aid and accident accounts.

The Senate is expected to release operating and capital budgets this evening. After the Senate passes its budget, leadership in each chamber will begin negotiations toward a conference budget.

Tuition-Setting Authority Coupled with Accountability: Two Bills Propose Reforms

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Preserving the access to and quality of higher education is paramount in the face of massive budget cuts. Two bills, HB 1795 (Enacting the higher education opportunity act) and SB 5915 (Regarding higher education funding and performance), seek to achieve this goal by:

1.       Giving tuition-setting authority to universities

2.       Reforming Financial Aid

3.       Strengthening accountability

Legislators hope this will preserve the quality of higher education while protecting affordability for students and their families. The House Higher Education committee passed a substitute version of HB 1795 in February, while SB 5915 just had its first hearing in the Senate Ways & Means committee on April 6th. While HB 1795 has not been altered since its hearing more than a month ago, the issues that it seeks to address are still relevant, and we anticipate both bills to remain in play. Please click on the table below to see a summary of the similarities and differences between the two bills.