Transcript Slide 1

Fiscal and State Policies Impacting Higher Education
Daniel J. Hurley
Director, State Relations and Policy Analysis
American Association of State Colleges and Universities
December 2, 2011
Agenda
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3.
4.
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6.
7.
U.S. economic outlook
Unemployment scenario
State revenues
Budget pressures
Higher education funding
Higher education governance activity
2011 elections
U.S. Economy:
Recent Term Growth…
U.S. GDP Growth Rate
Adjusted for Inflation
U.S. 3Q growth: 2.5%
Sources: Tradingeconomics.com; Bureau of Economic Analysis; U.S. Department of Commerce
…But a Downgraded Forecast
June IMF
September IMF
Growth Forecast Growth Forecast
2011
2012
2011
2012
U.S.
2.5%
2.7%
1.5%
1.8%
E.U.
2.0%
1.7%
1.6%
1.1%
China 9.6%
9.5%
9.5%
9.0%
Global 4.3%
4.5%
4.0%
4.0%
U.S. historical average quarterly GDP growth rate (1947-2011): 3.28%
IMF World Economic Outlook, September 2011
Unemployment: Slow Improvement
• November: 120,000 new jobs created
• Unemployment rate: 8.6% Lowest level since March 2009
• October: 80,000 new jobs created
• 158K private sector jobs created; 24K public sector jobs lost
• Unemployment rate: 9.0%
• 125,000 new jobs per month needed to keep
unemployment rate level
• 200,000 new jobs per monthly needed to
reduce UE rate 1% over a year
• CBO estimate:
• Rate dissipation to 8.5% by 4Q 2012
• Rate to remain above 8.0% until 2014
• Feb 2010-Oct 2011:
• Private sector: Added 2,600,000 jobs
• Public sector: Shed 520,000 jobs
State Revenues on
the Rebound
• State revenue increases 6 consecutive quarters – after 5
consecutive quarters of losses (longest on record)
• Second quarter: +10.8% compared to 1Q 2010
• FY 2011: Overall, up 8.4% (strongest since 2005)
• Only NH witnessed lower revenues in 2Q and FY 2011
• Preliminary July-August revenue reporting: +6.8%
• Overall revenues still 7.8% lower than in 2008
• Continued weak growth expected for balance of FY 2012
• Future implications? -- State sales tax collection
by online retailers?
Revenue data source: Nelson A. Rockefeller Institute of Government, University at Albany, SUNY
State Budget Pressures
• States’ Medicaid costs: up 29% in FY 12 alone
• State obligations: Medicaid, K-12,
unemployment insurance, employee health care,
pension programs
• State/public priorities: K-12, health care, public
safety, economic development
• Diminishing legislative capacity to affect state
policy agenda through the state budget
• Budget pressures
• Spending obligations
• Spending restrictions
• Interference by the Courts
• Anti-spending public
sentiment
State Higher Education Funding
• Current fiscal year – most difficult on record
Fiscal Year 2012 Funding*
• Decreased funding: 36 states
• 15 states double-digit cuts
• Increased funding: 8 states
• Flat funding: 6 states
• Largest cut: New Hampshire (-48%)
• Largest increase: North Dakota (+6.8%)
• Average change: -6.4%
AASCU informal survey of FY 2012 funding for Public 4-Year Institutions Only, as of July 12
State Higher Education Funding
State appropriations per full-time student
• 1980s
• 1990s
• 2000s
• 2010 alone
+6%
+5%
-23%
-4%
State Higher Education Funding
State-to-Student Cost Shift in Who Pays for
a Public College Education
1985
% Paid by State
75%
% Paid by Student 25%
2011
52%
48%
State Higher Education Governance –
A Sampling of 2011 Actions
Advancing Student Success
• TX: Requirement for students to file “degree plans”
upon completion of 45 credit hours
• Retroactive A.S. degree granting
for transfer students
• VA: Governor-SCHEV funding
partnership to generate 100K more
degrees by 2015 (via $100M in new
funding)
State Higher Education Governance –
A Sampling of 2011 Actions
State Funding, Performance-Based Funding (PBF)
• Some 17 states looking into PBF models
• Legislation requiring recommendations/models
due in 2012 for consideration; implementation
in 2013
• Among active states: AZ, AR, CO, IL, MA, MI,
MS, MO, UT
State Higher Education Governance –
A Sampling of 2011 Actions
State-Planning Imperatives
• TX: “Seven Breakthrough Solutions” proposal by
Texas Public Policy Foundation (with Gov. Perry’s
support)
• Calls for faculty-performance pay, and tenure,
based on student success—as measured by student
evaluations, retention and graduation rates
• FL: Gov. Rick Scott looking at duplicating approach;
is using criteria in making state and institutional
governing board appointments
State Higher Education Governance –
A Sampling of 2011 Actions
Restructuring Governance and Statewide Coordination
• CA: Eliminated statewide advisory board (CPEC) due to
Gov. line item veto
• WA: Gov. eliminated state H.E. coordinating board. C/Us
now have control over tuition policy. Steering committee to
create alternative plan for overseeing H.E. governance
prior to 2012 legislative session
• CT: Gov. eliminated free-standing statewide H.E.
coordinating entity as cost savings measure—per
recommendation of bi-partisan committee
• NJ: Gov. eliminated several commissions,
created/appointed new Secretary of Higher Education
State Higher Education Governance –
A Sampling of 2011 Actions
Restructuring Governance and Statewide Coordination
• ND: Legislative proposal to merge K-12 and H.E.
coordinating boards (only passed one chamber). Strong
resistance from K-12, H.E.
• Same result this session in RI
• OR: New Higher Education Coordinating Commission
created to develop state goals and accountability measures
• LA: Gov. call for merger of two public universities (failed)
And call to merge five H.E. boards into one (failed)
• NY: Increased tuition control at institutional level; more
control over procurement, HR policies, assigning more than
1 campus to a single president
State Higher Education Governance
– A Sampling of 2011 Actions
Regulation and Autonomy
• OH: “Enterprise University Plan” – state’s 14 public U’s
to receive tuition flexibility and autonomy/easing on 50
mandates/regulations – in exchange for meeting
performance benchmarks (10-20% of approps)
• OR: Oregon University System – now a university system
as opposed to a state agency; greater control over
finances; investment in student aid (biggest victory in 2011)
• WI: Proposal to separate UW-Madison from rest of UWSystem Board of Regents (failed; controversial)
• Gov. subsequently created task force to study
structure of H.E.—recommendations due Jan. 1
(UW system just received mid-year cut)
State Higher Education Governance –
A Sampling of 2011 Actions
Regulation and Autonomy
• LA: Passage of Grad Act 2.0 – C/U’s have more authority
of contracting, purchasing, budgeting/financial
investments—if performance measures are met
• SC: Gov. signed legislation alleviating bureaucracy
involving building projects; same with procurement
Institutionally-Related Foundations
• CA: “Transparency Act” requires foundations to publicly
disclose all financial records, including private gifts (Yee,
Stanislaus, Palin)
2011 State Elections
• Limited state elections
• Gubernatorial elections: KY, MS, WV (special)
• Legislative elections: LA, MS, NJ, VA
• Victories for Democrats in OH, AZ, MS (social issues)
• Victories for Republicans in MS, VA (party control)
• Overall, mixed messages sent by electorate
• Ballot initiative of interest:
Colorado
Proposition 103: Temporary increase in state income tax of .37%
(to 5%) and increase in state sales tax of .1% (to 3%).
$3 billion in annual funds generated to be invested in education.
Failed 64% to 36%
Looking Ahead to 2012
State Higher Education Policy Issues in the Mix
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Higher education financing reform (PBF)
Student aid programs (reforms, cuts)
Governance, regulatory impact, reform
Policy focus on college readiness, completion
“Social” issues
• Guns on campus legislation
• Undocumented students—tuition policy
• AASCU “Top 10 Higher Education
State Policy Issues for 2012” due out
in early January
Thank You to 2011 Conference Chair:
Mary Davenport, Interim Dean, Health and Service Programs
Saint Paul College
Welcome to 2012 Chair:
Brian K. Jammer, Associate Vice Chancellor for Governmental
Relations
University of Texas System
And to 2012 Vice Chair and Chair of the State Relations
Awards Committee:
Imelda Cuyugan
Assistant Vice Chancellor for Government Relations
Pima Community College
2012 Higher Education Government
Relations Conference
Wednesday, November 28 – Friday, November 30