Transcript State of Financial Aid in Arkansas | 11.18.2008

The State of
Arkansas Financial Aid
At the end of WWII, the U.S
made a bold decision to invest
in the future of its economy by
providing $1.9 billion annually
to the education of returning
veterans of the war. This
commitment to human capital
helped enable the WWII
generation to become the
“greatest generation.”
Possibly, Arkansas’s
greatest generation is at the
schoolhouse door waiting
for the opportunity to
propel Arkansas into the
global economy.
Three things
• 30% to 15% proposal
• Scholarship fund balance
• Lottery questions
Preparation: Revisions to policies and legislation that
impedes “Speed to Market and Close to Customer”
• Finance
– 90/10: 90% course enrollment/ 10% complete term
1– Legislation to reduce institutional E&G scholarships
2– Annual Report of Institutional Financial Health
3– Revised calculation for bonds
• Academic
4– Program Viability threshold
5– Academic Program review
Business Leaders
• Strengths
–
–
–
–
–
–
Access
Access
Access
Many colleges
Geographic location of colleges
The two-year colleges are able to make changes
quicker to accommodate business and industry.
– Increased efforts to collaborate across institutions,
focus on teaching, recent priority on retention
– Providing “local” access to higher education
opportunities
Business Leaders
• Weaknesses
– Cost of attendance
– Turf battles, everyone not always on the same page about
what is best for the state.
– Unhealthy in-state competition
– Need for improved coordination duplication of curriculum
– Lack of accountability
– Higher education seems to have no accountability or ability
to control costs. Annual tuition increases of 7 – 10% seem
to be the norm while inflation is 3% or less.
– Graduation rates/retention – there is no incentive for higher
education to graduate students. Their funding incentive is
only to enroll them
– Not customer focused to business/manufacturing needs seem more concerned about turf.
State Per Capita Personal Income v. Share of Adult
Population with Bachelor's Degree or Higher (2007)
2002= 19.7%
No state with a low
proportion of
Bachelor’s degrees
has a high per capita
income.
$38,000
$36,000
$34,000
CT
NJ
Per Capita Income
$32,000
$30,000
MD
2007= 19.3%
DE
AK
NV
CA
IL
RI
MN
WA
VT
CO
No state with a high
proportion of
Bachelor’s degrees
has a low per capita
income.
WI FL
MI
PA
HI
ME GA
IA
OR KS
MO
AZ
OH
NC
NE
ND
TX
MT
SD
SC
UT
NM
WY
$24,000
IN
TN
AL
$22,000
KY
$20,000
WV
AR
MA
VA
NY NH
$28,000
$26,000
DC
LA
OK
ID
$18,000
MS
$16,000
15%
2007
20% 2005
2006
2002
25%
30%
35%
40%
Percentage of Adult Population with a Bachelor's Degree or Higher
Source: U.S. Census Bureau, ACS 2006
45%
50%
30.0%
-10.0%
Georgia
Kentucky
Arizona
Texas
Minnesota
Nevada
Arkansas
North Carolina
Idaho
Oklahoma
Maryland
Missouri
New Jersey
West Virginia
Florida
Indiana
Wyoming
Mississippi
Colorado
Virginia
Utah
Oregon
Michigan
Iowa
United States
New Mexico
Montana
Wisconsin
Massachusetts
California
Washington
South Carolina
Tennessee
Maine
Pennsylvania
Alabama
Connecticut
Ohio
Nebraska
South Dakota
Vermont
DC
Kansas
Delaware
Illinois
New
Alaska
New York
Hawaii
Louisiana
North Dakota
Rhode Island
80.0%
Growth in Associate Degrees Awarded by Public
Institutions by State from 1999-2000 to 2004-2005
68.1%
70.0%
60.0%
Arkansas ranks 7th in the growth of
associate degrees since 1999-2000
50.0%
36.6%
40.0%
22.1%
20.0%
10.0%
-6.6%
0.0%
SOURCE: U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data System (IPEDS), "Completions" survey.
20.0%
0.0%
-10.0%
Utah
Nevada
Minnesota
Georgia
Florida
California
Maine
Oregon
Maryland
Pennsylvania
Arkansas
Texas
Indiana
Oklahoma
New Jersey
Colorado
Arizona
South Carolina
Kansas
United States
Ohio
Idaho
North Carolina
Wisconsin
Washington
Connecticut
Kentucky
Michigan
Tennessee
Missouri
New York
Virginia
Iowa
West Virginia
Massachusetts
North Dakota
New Mexico
Delaware
Mississippi
Rhode Island
Hawaii
Louisiana
Alaska
Illinois
New Hampshire
Montana
Nebraska
Vermont
Alabama
Wyoming
South Dakota
DC
40.0%
Growth in Bachelor’s Degrees Awarded by Public
35.6% Institutions by State from 1999-2000 to 2004-2005
30.0%
18.9%
Arkansas ranks 11th in the growth of
bachelor’s degrees since 1999-2000
15.0%
10.0%
-20.6%
-20.0%
-30.0%
SOURCE: U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data System (IPEDS), "Completions" survey.
Legislation to reduce
Institutional E&G Scholarships
• From 30% of Tuition revenue to 15%
• Not a new idea: October, 1999
Dr. Steven Gamble, president of SAU and Dr. Win
Thompson, president of UCA, addressed the
AHECB concerning resolution of the issue of the
excessive amount of money being expended by
four-year institutions for scholarships in the
competition for students.
Gamble and Thompson told the board that the
four-year presidents and chancellors could not
resolve the issue and requested that the board
intervene to establish a policy to limit the
percentage of E&G funds that four-year
institutions may use for scholarships.
Legislation to reduce
Institutional E&G Scholarships
The academic arms race…
“In an arms race, there is a lot of action, a lot
of spending, a lot of worry, but if it’s a
successful arms race, nothing much changes. The
essence of an arms race is position—how a country
or university stands relative to others. No single
institution alone can safely quit the race, even
though all institutions, together, would be better
off if everyone did. Unilateral disarmament will
swiftly be punished by loss of position and
increased vulnerability.” (Winston, 2003)
Institutional E@G Funded Scholarships are great for students receiving a
scholarship, but expensive for those who do not receive the scholarship
Sources of E&G Revenue
• Tuition/Fees and State Funds
• State Funding formula determines institutional need
– Need includes:
•
•
•
•
•
Faculty salaries, operating supplies, Library, equipment
Utilities, on-going maintenance
Student support, staffing
Does not include scholarships
Does not include debt service
• Legislature allocates funds according to formula with
assumption funds will go to address institutional
needs determined by the formula
• Quality instruction and quality student experiences
diminish if institutions use these funds for unintended
purposes.
• Prior to1997 -- 15% cap in board policy
• No cap from 1997-2005
• < 30% in 2005 by legislation, No repercussions
Impact of Scholarships on Tuition
$2,433
UCA
$3,232
$1,589
ATU
$5,665
$3,012
$4,601
HSU
$1,225
$3,670
$4,895
SAUM
$1,200
$3,390
$4,590
$1,111
ASUJ
$4,299
$960
UAM
$2,950
$513
UAPB
$5,808
$2,727
UALR $324
$3,130
$4,817
20%
40%
$5,141
60%
Portion of Tuition & Fees for Scholarships
Net Tuition & Fee Income
FY 2007
$4,027
$5,381
$403
0%
$3,910
$3,513
UAF $427
UAFS
$5,410
80%
100%
Academic Challenge/Governor's Scholarship, State Need-Based Aid, Institutional
Scholarships, Student Loans
(in $millions)
$500
454.03
395.73
$400
330.92
$300
215.42
$200
141.59
85.85
$100
66.21
34.77
24.97
13.9
$0
95.8
4.99
3.7
3.23
'98
28.77
24.83
'99
'00
'01
State Need-Based Aid
Institutional Scholarships
'02
'03
'04
'05
'06
'07
'08
Academic Challenge/Governor's Scholarship
Student Loans
Institutional E@G Funded Scholarships are great for students receiving a
scholarship, but expensive for those who do not receive the scholarship
Expendable Fund Balances should not be interpreted as an indication
of an institution’s cash funds or that an institution has difficulty in
meeting payroll or accounts payable.
FY 2008 Expendable Fund Balances
(Without Accounts Receivable, Inventories or Encumberances)
$35,000,000
$30,000,000
$25,000,000
UAF Fund Balance is
Consolidated UA Fund
Balance
ASUJ Fund
Balance is
Consolidated
Fund Balance In
this Chart Only
$20,000,000
$15,000,000
FY08 Fund Balance
Expendable Fund Balance
$10,000,000
$5,000,000
$0
ASUJ
($5,000,000)
($10,000,000)
ATU
HSU
SAUM
UAF
UAFS
UALR
UAM
UAPB
UCA
Revised calculation for bonds
University
Tuition and Fee Revenue
22%
78%
Institutional Scholarships
Actual Tuition and fees
Revised calculation for bonds
Community College Tuition and Fee Revenue
93%
7%
Institutional
Scholarships
Actual Tuition and fees
Academic and Performance Scholarship
Expenditures for Fiscal 2007-08
Institution
ASUJ
ATU
HSU
SAUM
UAF
UAFS
UALR
UAM
UAPB
UCA
University Total
Scholarships
as a Percent
of Tuition & Fees
14.1%
31.1%
22.1%
25.6%
9.7%
12.3%
11.3%
15.9%
19.6%
26.3%
16.7%
Institution
ANC
ASUB
ASUMH
ASUN
BRTC
CCCUA
EACC
MSCC
NAC
NPCC
NWACC
OTC
OZC
PCCUA
PTC
RMCC
SACC
SAUT
SEAC
UACCB
UACCH
UACCM
College Total
GRAND TOTAL
Scholarships
as a Percent
of Tuition & Fees
4.4%
10.4%
3.6%
3.1%
2.8%
0.0%
5.9%
4.0%
4.1%
5.1%
1.7%
16.2%
6.6%
4.4%
3.0%
10.1%
1.8%
3.3%
2.0%
4.7%
17.4%
7.1%
4.7%
14.5%
Recommend that the legislature reduce
E&G scholarship threshold to 15%
• (b) Beginning with the 2013-2014 fiscal year, no public college or
university’s educational and general spending for academic and
performance scholarships shall exceed fifteen percent (15%) of its
unrestricted educational and general tuition and mandatory fee
income.
Repercussion:
• (c) Any expenditure for academic and performance scholarships
over fifteen percent 15% of unrestricted educational and general
tuition and mandatory fee income will be deducted from the state
funding recommendations as determined by the appropriate funding
formula model for each fiscal year in the following biennium.
What can we do to improve
our performance?
Plenty
• Performance Measures:
– Accountability, Oversight, Repercussions
– Incentives connected to student success
– Remove impediments to student success
– Target particular workforce needs
• Greater State Support
– Imbalance in Tuition/State Funding ratio
– Low tuition
• Enhance Scholarships
What can we do to improve
our performance?
Plenty
• Performance Measures:
– Accountability, Oversight, Repercussions
– Incentives connected to student success
– Remove impediments to student success
– Target particular workforce needs
• Greater State Support
– Imbalance in Tuition/State Funding ratio
– Low tuition
Historically there has been
• Enhance Scholarships
no enthusiasm for any of
these measures
IF you could develop a scholarship system for
a state, what would it look like?
The scholarship should:
• Motivate/reward students to be prepared for college. –
Smart core? More prepared? Less?
• Allow students to choose where to attend college.
• Encourage students to complete their degree.
• Encourage students to major in disciplines important to
Arkansas.
• Address student merit.
• Address student need.
• Easy to understand rules and regulations.
• Financially stable.
21 Scholarship Programs: difficult to qualify,
difficult to keep.
FY08 Scholarship Fund Balance?
$ 51,854,906
How in blazing saddles could that
happen?
What in tarnation are you going to
do to fix it?
• ADHE authorized by the legislature to spend
up to X amount for each scholarship
• Each scholarship has strict criteria
• Unawarded funds are deferred for future
years in fund balance as required by law
• Every student who applied and met the current
scholarship criteria was awarded the funds
$ 51,854,906
Exacerbating Factors/Excuses
• Advertising funds are not authorized for all
programs (Only for GO and Academic Challenge)
• Very precise qualifications for many scholarships
• Paperwork, paperwork
• Inability to adjust as needed
How did we get such a large
fund balance?
Scholarships (21 programs)
51,854,906
Academic Challenge
Other
Governor’s
Adults -
w/ Need
Go Grant
5 M Targeted
6 M Need
Teachers (4)
8M
WIG
Other
Of Those that lose AC:
20% Lose Academics
27% Lose Hours
53% Both
Merit
26 M
Need- Merit
How did we get such a large
fund balance?
Scholarships (21 programs)
51,854,906
2002 - 2003
2004
2005
5M
2006
8M
2007
2008
10 M
15 M
13 M
-1 M
Does ADHE want to spend these
funds on scholarships? YES
And we will. Based upon future projections
the fund balance will be needed to cover
current scholarships.
Should we be careful in doing this? YES
Absolutely. We need to be careful. We do not
want to have an inability to pay our
scholarship obligations such as happened
in 2002-2003. The next three charts
illustrate our concerns.
Percentage of Incoming Freshmen Receiving Academic
Higher Income limits Challenge Scholarships (Fall Semester)
Higher award
PUBLIC 2-YEAR
40
PUBLIC 4-YEAR
No Awards
Lower income limits
30
INDEPENDENT
Higher award
20
10
0
2001
2002
2003
2004
2005
2006
2007
Financial Aid Growth Projections
Financial Aid Growth
$70,000,000
ExpenseExpense
$60,000,000
16 M
$16 million
$50,000,000
General Revenue
General Revenue
$40,000,000
$30,000,000
Carry Forward
Fund Balance
$20,000,000
$10,000,000
Expanding current scholarships
will impact the fund balance even
more than the above scenario
illustrates.
$0
2009
2010
2011
2012
2013
2014
-$10,000,000
Expense
General Revenue
Carry Forward
2015
2016
2016
Financial Aid Growth Scenario
c
Fiscal year
Expense
Increase
Balance
General
Revenue
Carry
Forward
2009
46,500,000
3,470,000
1,100,000
47,600,000
52,900,000
2010
49,290,000
2,790,000
(1,690,000)
47,600,000
51,210,000
2011
51,754,500
2,464,500
(4,154,500)
47,600,000
47,055,500
2012
53,824,680
2,070,180
(6,224,680)
47,600,000
40,830,820
2013
55,977,667
2,152,987
(8,377,667)
47,600,000
32,453,153
2014
58,216,774
2,239,107
(10,616,774)
47,600,000
21,836,379
2015
60,545,445
2,328,671
(12,945,445)
47,600,000
8,890,934
2016
62,967,263
2,421,818
(15,367,263)
47,600,000
(6,476,329)
Appropriation levels assumed flat at fiscal 2009 levels
GR Funding assumed flat at fiscal 2009 levels
Programs rules, eligibility unchanged from fiscal 2009
Fiscal 2010 -2011 growth = 5% Fiscal 2012-2016 flat 4%
Student Aid Performance:
Then, Now and Going Forward
Academic Challenge
8,306
7,547
2003
7,196
2008
Students
23.4 M
18.9 M
2013
2003
19.5
2008 2013
Dollars
Student Aid Performance:
Then, Now and Going Forward
Governor’s Scholars
1,350
1,118
10.7 M
7.0 M
705
2003
2008
Students
2013
2003
9.3 M
2008 2013
Dollars
Student Aid Performance:
Then, Now and Going Forward
WIG
3,695
3,422
2006
2008
Students
3,600
2013
3.7 M
2006
3.9 M
3.9 M
2008 2013
Dollars
Student Aid Performance:
Then, Now and Going Forward
Go Grant
5,000
5.0 M
1,170
2003
2008
Students
1.1 M
2013
2003
2008 2013
Dollars
Student Aid Performance:
Then, Now and Going Forward
Teacher Programs
1,250
Minority Teachers
7.9 M
Minority Masters
999
6.6 M
STAR
TOP
SREB Doctoral
Scholars
535
Arkansas
Geographical
Critical Shortage
Minority Teacher
Scholarship
2003
2008
2013
Students
* STAR added 2004
Faculty Admin
Fellows
0.9 M
2003
2008 2013
Dollars
Proposed Scholarship Changes
• Streamline Programs - Common application for all
programs Use 800k of fund balance to do this
• Simplify process for applicants
• Improve efficiency
• GO! Opportunities Grant – expand
• Expand eligibility to all students enrolled in college that meet the
income guidelines ($25,000 or less)
Current allocation for this program should cover this
• Consolidate Teacher Programs – (STAR, Minority
Teachers Scholars & Minority Masters)
• Simplify process for applicants
• Convert from a loan forgiveness program to a loan repayment
program that will assist teachers in paying outstanding federal
students loans
Current allocation for this program should cover this
• Increase award or income requirement for academic
Challenge
May draw from current fund balance in future years
College Access Challenge Grant
Week of February 16-22
ADHE has a grant from US DOE and
Winthrop Rockefeller Foundation to
promote college going and scholarships
Lottery Scholarship Questions
Many groups have suggested different lottery ideas. ADHE feels we should budget
40-50 million as projected revenue for lottery and should use the funds to expand
current aid programs. Here are the questions that groups have been wrestling with:
•
•
•
•
•
•
•
How many $$$ will the lottery create for scholarships? $30-50100-120 million?
Smart core or not smart core?
–
Will there be a preparation component?
Expand current programs?
–
Add a separate lottery scholarship?
–
Merge most programs into one big program?
Do you want to target funds for particular workforce needs?
How much?
Need? Merit? Both? Income cap?
How many $$$ should reside in the fund balance?
Is the legislature willing to address shortages, if scholarships
out spend the lottery/fund balance?
Time and Place
Nearly all economic growth and prosperity for
individuals, families, cities, states, and the country
is now driven by college educated workers.
Those individuals, families, cities, states and –
increasingly—countries with the most education
are prospering, while those with the least higher
education are experiencing relative and often
absolute economic decline.
--Postsecondary Education OPPORTUNITY, June 2005.