Transcript Financing in Sync: Aligning the Pieces of Higher Education

Financing in Sync:
Aligning the Pieces of Higher Education Funding
College Affordability Summit
Chicago, Illinois
February 26, 2010
National Center for Higher Education Management Systems
3035 Center Green Drive, Suite 150
Boulder, Colorado 80301
The Illinois Public Agenda for College & Career Success
• Goals
1. Increase educational attainment to match best-performing
states
2. Ensure college affordability for students, families, & taxpayers
3. Increase the number of high-quality postsecondary credentials
to meet the demands of the economy and an increasingly global
society
4. Better integrate Illinois’ educational, research, and innovation
assets to meet economic needs of the state and its regions
2
Among the principles established in conjunction with the public
agenda
“2. Priorities, policies, and budgets must
align with state goals.”
3
Policy Levers
Strategies for
Achieving
Goal
Attainment
Goal 1
Goal 2
Affordability
Goal 3
Consistency
Attainment
Increase
Credentials
Goal 4
Meet Economic
Needs
slide 4
Planning and
Leadership
Finance
Regulation
Alignment
Accountability
Governance
Of the Policy Levers Available to Legislatures, the
Most Powerful is Finance
• Finance Policy
– Sends the strongest signals
– Creates the strongest incentives for institutional behavior
In the absence of alignment between goals and finance
policy, failure to achieve goals will be assured.
5
Two Purposes for State Funding
• Sustaining institutions – capacity creation &
maintenance
• Investing in state priorities – capacity utilization
slide 6
The Flow of Funds
Economy
Federal
Government
Available
State and Local
Govt. Funds
•
•
•
•
Higher
Education
Student Aid
K-12
Corrections
Health Care
Other Govt.
Appropriations/Grants
Public
Tuition
Students
Scholarships &
Waivers
Student Aid (Restricted)
Federal
Government
7
Institutions
Private
Donors
Foundations
Corporations
The Flow of Funds - State
Economy
Federal
Government
Available
State and Local
Govt. Funds
•
•
•
•
Higher
Education
Student Aid
Appropriations/Grants
Public
Tuition
Students
Scholarships &
Waivers
Student
Aid
Federal
Government
8
Institutions
Private
K-12
Corrections
Health Care
Other Govt.
Public FTE
Enrollment, Educational
Appropriations
and Total Educational
per FTE,
State/Local
Funding
plus Tuition
Revenues
per Revenue
Student
(FTE)
Illinois -- Fiscal 1983-2008
Illinois Public Institutions, 1983-2008
450
$14,000
400
$8,000
$7,585
$7,329
$7,054
$7,459
$7,558
$8,167
$9,265
$9,306
$8,992
$8,839
$8,510
$8,228
$7,673
$7,427
$7,078
$6,767
$6,720
$7,255
$7,021
$6,841
$7,270
$7,220
$4,000
$2,000
50
Net Tuition Revenue per FTE (constant $)
2008
2007
2006
2005
2004
2003
2002
2001
Educational Appropriations per FTE (constant $)
Note: Constant 2008 dollars adjusted by SHEEO Higher Education Cost Adjustment. (HECA) Source: SHEEO SHEF
9
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
$0
1983
0
Public FTE Enrollment
Dollars per FTE
$3,194
$3,076
$2,929
$3,000
$2,665
$2,540
$2,340
$2,242
$2,188
$2,142
$2,116
$2,014
$1,904
$1,893
$1,849
$1,710
$1,687
$1,778
$1,968
$1,852
$1,651
$1,732
$1,740
$6,607
$6,525
150
100
$10,000
$6,000
$7,647
200
$1,437
250
$1,639
300
$5,813
Public FTE Enrollment
(Thousands)
350
$2,169
$12,000
State Tax Capacity & Effort
Indexed to U.S. Average
State Tax Capacity (Total Taxable Resources Per Capita)
1.7
DE
1.6
1.5
1.4
CT
NJ
1.3
MA
AK
1.2
NH
1.1
1.0
WY
MD
VA
CO
NV
IL
WA
NY
MN
CA
US
PA NE
SD
0.9
TN
0.8
RI
WI
NC GA
KS
HI
MO
OH
FL IN IA
VT
ORTX
AZ ND
MI
UTKY
SC
ID
NM
LA
AL
OK
WV
MT AR
0.7
ME
MS
0.6
0.6
0.8
1.0
1.2
State Tax Effort (Effective Tax Rate)
Source: State Higher Education Executive Officers (SHEEO)
slide 10
1.4
State Tax Capacity and Effort - Illinois
Indexed to U.S. Average
1.20
Tax Effort (Effective Tax Rate)
Tax Capacity (Total Taxable Resources Per Capita)
1.10
U.S. Average
1.00
0.90
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: State Higher Education Executive Officers (SHEEO)
Revenues Per Student from Net Tuition, State, &
Local Appropriations
$30,000
$29,172
$9,682
$11,243
$11,620
$12,324
$12,449
$12,666
$13,121
$13,675
$14,006
$14,018
$14,777
$14,865
$15,003
$15,093
$15,125
$15,180
$15,406
$15,541
$15,568
$15,714
$15,774
$15,837
$16,057
$16,059
$16,092
$16,155
$16,172
$16,195
$16,275
$16,774
$16,974
$17,267
$17,360
$17,610
$18,537
$18,657
$18,773
$18,843
$18,989
$19,227
$19,545
$19,721
$19,783
$19,865
$20,010
$21,384
$21,640
$22,095
$23,263
$24,184
$25,000
$20,000
$15,000
$10,000
Colorado
Montana
South Dakota
Oregon
Mississippi
Louisiana
Texas
New Hampshire
North Dakota
Florida
Illinois
Arkansas
Arizona
West Virginia
Ohio
Nevada
Oklahoma
Wisconsin
Utah
Georgia
Virginia
Kansas
Rhode Island
Missouri
Michigan
Indiana
Idaho
Nation
New Mexico
Pennsylvania
Maine
South Carolina
Washington
Tennessee
New Jersey
Delaware
Iowa
California
Alabama
Nebraska
Maryland
Wyoming
Kentucky
Massachusetts
North Carolina
Vermont
New York
Connecticut
Hawaii
Minnesota
Alaska
Sources: NCES, IPEDS 2006-07 Finance Files; f0607_f1a and f0607_f2 Final Release Data Files.
NCES, IPEDS 2007-08 Institutional Characteristics File; hd2007 Final Release Data File.
NCES, IPEDS 2006-07 Enrollment Files; ef2006a, effy2007, and efia2007 Final Release Data Files.
slide 12
Public Research
$35,000
$5,000
$0
Revenues Per Student from Net Tuition, State, &
Local Appropriations
$17,984
$5,105
$6,311
$7,209
$7,877
$7,964
$8,400
$8,414
$8,748
$8,846
$8,959
$9,185
$9,410
$9,622
$9,630
$9,701
$9,702
$9,933
$9,945
$9,957
$10,039
$10,162
$10,179
$10,251
$10,275
$10,312
$10,343
$10,370
$10,405
$10,464
$10,721
$10,778
$10,788
$10,836
$11,063
$11,249
$11,266
$11,284
$11,389
$11,443
$11,443
$11,862
$12,011
$12,105
$12,324
$12,929
$13,683
$14,426
$14,440
$14,587
$16,148
$18,000
$16,000
$14,000
$12,000
$10,000
$8,000
$6,000
Colorado
Utah
Arizona
South Dakota
West Virginia
Georgia
Louisiana
Oklahoma
Nevada
Wisconsin
Nebraska
Arkansas
North Dakota
Oregon
Tennessee
Indiana
Texas
Minnesota
New Hampshire
California
Pennsylvania
Kansas
DC
Missouri
Idaho
Nation
Mississippi
Ohio
Kentucky
South Carolina
Michigan
Florida
New York
Washington
Illinois
Montana
Alabama
Rhode Island
Virginia
Vermont
Maine
Massachusetts
Maryland
Iowa
New Mexico
New Jersey
Alaska
North Carolina
Connecticut
Hawaii
Delaware
Sources: NCES, IPEDS 2006-07 Finance Files; f0607_f1a and f0607_f2 Final Release Data Files.
NCES, IPEDS 2007-08 Institutional Characteristics File; hd2007 Final Release Data File.
NCES, IPEDS 2006-07 Enrollment Files; ef2006a, effy2007, and efia2007 Final Release Data Files.
slide 13
Public Masters and Baccalaureate
$20,000
$4,000
$2,000
$0
Revenues Per Student from Net Tuition, State, &
Local Appropriations
$14,793
$5,297
$5,517
$5,712
$5,939
$5,945
$5,970
$6,028
$6,082
$6,353
$6,465
$6,510
$6,630
$6,676
$6,714
$6,823
$6,844
$6,895
$6,918
$7,018
$7,117
$7,222
$7,239
$7,329
$7,403
$7,416
$7,432
$7,448
$7,507
$7,509
$7,566
$7,633
$7,772
$8,044
$8,067
$8,214
$8,378
$8,411
$8,449
$8,480
$8,625
$8,705
$8,801
$8,844
$9,125
$9,953
$9,964
$10,287
$10,683
$11,197
$12,000
$10,000
$8,000
$6,000
$3,369
West Virginia
Kentucky
Indiana
Colorado
South Dakota
Virginia
Mississippi
Georgia
Florida
South Carolina
Oklahoma
New Jersey
Arkansas
Iowa
Tennessee
Louisiana
Missouri
Nebraska
Illinois
Alabama
Nevada
Maine
Washington
California
Montana
Nation
Texas
North Carolina
Utah
Ohio
Rhode Island
Arizona
Minnesota
North Dakota
Pennsylvania
Michigan
Alaska
New Mexico
Massachusetts
Idaho
New Hampshire
New York
Oregon
Kansas
Vermont
Connecticut
Delaware
Maryland
Wyoming
Hawaii
Wisconsin
Sources: NCES, IPEDS 2006-07 Finance Files; f0607_f1a and f0607_f2 Final Release Data Files.
NCES, IPEDS 2007-08 Institutional Characteristics File; hd2007 Final Release Data File.
NCES, IPEDS 2006-07 Enrollment Files; ef2006a, effy2007, and efia2007 Final Release Data Files.
slide 14
Public 2-Year
$16,000
$14,000
$4,000
$2,000
$0
0%
13.0%
20%
Wyoming
New Mexico
California
Nevada
Georgia
Idaho
North Carolina
Hawaii
Louisiana
Florida
Alaska
Washington
New York
Illinois
Utah
Oklahoma
Nebraska
Tennessee
Mississippi
Texas
Arkansas
US
Wisconsin
Connecticut
Missouri
Massachusetts
Arizona
Kansas
North Dakota
Alabama
Kentucky
Minnesota
Maryland
New Jersey
West Virginia
Oregon
Virginia
South Carolina
Iowa
Maine
Montana
Indiana
Ohio
South Dakota
Pennsylvania
Colorado
Michigan
Rhode Island
Delaware
New Hampshire
40%
15
36.3%
29.6%
80%
69.9%
Net Tuition as a Percent of Public Higher Education
Total Educational Revenue by State, FY 2008
70%
60%
50%
30%
10%
Note: Dollars adjusted by 2008 HECA, Cost of Living Adjustment, and Enrollment Mix
Source: SHEEO SHEF
Affordability
16
Percent of Family Income Needed to Pay for College
Minus Financial Aid
Public 2-Year
Public 4-Year
Private 4-Year
Not for Profit
Source: Measuring Up 2008
17
Illinois Public Institutions – State & Family Share of Funding
1988-2008
Source: Delta Project on Postsecondary Education Costs, Productivity,
and Accountability; Delta Cost Project IPEDS Database.
18
Illinois Public Research Institutions
State & Family Share of Funding
1988-2008
Source: Delta Project on Postsecondary Education Costs, Productivity,
and Accountability; Delta Cost Project IPEDS Database.
19
Illinois Public Masters & Bachelors Institutions
State & Family Share of Funding
1988-2008
Source: Delta Project on Postsecondary Education Costs, Productivity,
and Accountability; Delta Cost Project IPEDS Database.
20
Illinois Public Associates Institutions
State & Family Share of Funding
1988-2008
Source: Delta Project on Postsecondary Education Costs, Productivity,
and Accountability; Delta Cost Project IPEDS Database.
21
82%
84%
84%
86%
88%
70%
74%
56%
57%
59%
62%
0%
0%
1%
1%
3%
5%
5%
5%
6%
8%
8%
9%
10%
13%
16%
17%
19%
20%
21%
24%
28%
28%
28%
29%
32%
33%
36%
37%
41%
41%
43%
46%
48%
48%
49%
50%
South Dakota
Georgia
Wyoming
Mississippi
Arizona
Idaho
Hawaii
Alabama
Alaska
Utah
Louisiana
Montana
North Dakota
New Hampshire
Tennessee
Kansas
Nebraska
New Mexico
Florida
Oregon
Rhode Island
Michigan
Arkansas
Missouri
Texas
Iowa
South Carolina
Maine
Oklahoma
Colorado
West Virginia
Ohio
Nevada
Kentucky
Delaware
Virginia
California
Massachusetts
Maryland
Wisconsin
North Carolina
Connecticut
Illinois
Minnesota
Indiana
Pennsylvania
New York
Vermont
New Jersey
Washington
0%
96%
80%
60%
40%
20%
slide 22
State need-based aid as a proportion of federal need-based aid.
102%
108%
100%
Affordability: Need-based Financial Aid
120%
Source: Measuring Up 2008
Finance Policy – The Options
Institution
Focused
Capacity
Creation &
Maintenance
Capacity
Utilization/
Public Agenda
slide 23
• Base-Plus
• Formulas
• Investment
Funds
Performance
Funding
Student
Focused
Tuition & Aid
Policy Focused on
Revenue
Generation
Tuition & Aid
Policy Focused on
Attainment of
Specified
Outcomes
Remember – all funding mechanisms create
incentives for behavior
•
Institutions
•
Students
Question – are the incentives created
consistent with pursuit of stated goals?
24
Incentives in the Current Funding Mechanism
• Keep students enrolled – but not necessarily completing
• Increase tuition to compensate for declines in state
allocations
25