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Connecting the Dots between Financing and Sustainability
 

Connecting the Dots between Financing and Sustainability

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Connecting the Dots between Financing and Sustainability by Jane V. Wellman

Connecting the Dots between Financing and Sustainability by Jane V. Wellman
Presented at the 2010 WASC Academic Resource Conference
April 22 2010 Long Beach, CA

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  • Top Line Findings:Spending Continues to RiseDoesn’t show effects of revenue volatility – (b/c investment return not part of budget?)Overall spending continued to increase for all institutions:increases were greater for the publics (2.5 – 3.5% between 07-08) than for the privates (.5 – 1.5%)All institutions are spending at or slightly above where they were in 2000 -Public Res, Pvt MA, BA <2%) and growth was less than in prior years

Connecting the Dots between Financing and Sustainability Connecting the Dots between Financing and Sustainability Presentation Transcript

  • Connecting the dots…
    between $$$ and institutional sustainability
    Jane Wellman
    WASC Commission on Colleges
    ARC Meeting
    April 22, 2010
  • 2
    The challenge: Increasing educational attainment to be best in the world…
    Current production v. increases needed to meet 60% goal
    Need +8 million more AA/or BA or credentials
    Current and projected levels of degree production with no change in performance
    }+4%/year
  • 3
    % Changes in state and local appropriations for higher education 1960 – 2006
  • Can we break the “Iron triangle”
    Access
    4
    Funding
    Quality
  • The conditions as they exist: contrary propositions we must try to reconcile
    5
    Professed goal to increase educational attainment
    Privatization of resources
    Growing financial stratification between institutions and sectors
    Spending cuts following recessions occurring primarily in instructional areas
    Public revenues not likely to return past 2006 levels any time in the next decade
    Public opinion skeptical of need for new investments
    Weak evidence about the relation between spending and results
    Poor use of evidence about spending within the academy
  • Conventional wisdoms that get in the way of change
    6
  • Public policy perceptions…
    American higher education is the richest in the world = we have the money, we just need to spend it better
    True: According to OECD, US spending per capita $19,746/student – compared to OECD average of $8,415
    False: OECD countries exclude benefits, and US figures include private colleges.
    7
    OECD, Education at a Glance 2009, Table B.1., annual expenditure per student
    For core educational services only (excludes research and organized activities).
  • Economic stratification in US postsecondary educationNATIONAL: WHERE THE MONEY GOES, WHERE THE STUDENTS ARE ENROLLED: E&R SPENDING PER FTE STUDENT/ENROLLMENTS
    Source: Delta Cost Project IPEDS Database, 1987-2008; 10-year matched set.
    8
  • Public policy perceptions…
    Institutions can substitute private resources for public funds
    True: private funding increased hugely in institutions in the 1990’s through around 2006, although an unstable source
    State revenues now a minority of funds in some public institutions –mostly research universities, in east
    Not so true: private revenues are not going to core academic functions
    And public revenues still a majority $ for most comprehensives and community colleges
    9
  • *Note: In private institutions, investment returns include unrealized gains/losses.
    All data are in 2008 dollars.
    Source: Delta Cost Project IPEDS Database, 1987-2008, 11-year matched set.
  • …where the money goes by major functional area
  • Public policy perceptions…
    Tuitions are going up because of out of control spending
    True: tuitions are increasing faster than almost any other commodity
    1998-2008 spending up 3% year each year over inflation/enrollment in private research universities
    But actual spending per student didn’t increase much at all in public institutions – barely above 1% in research universities and flat or declining in community colleges
    What has happened is a subsidy shift – costs are flat, but prices are going up
    12
  • Sources: College Board, “Trends in College Pricing, 2008”; Bureau of Labor Statistics, 2009, www.bls.gov ; U.S. Census, Current Population Study-ASEC, 2008.
  • Changes in subsidy share of costs – public institutions 1998-2008
    Source: Delta Cost Project IPEDS Database, 1987-2008; 10-year matched set.
  • All data are in 2008 dollars.
    Source: Delta Cost Project IPEDS Database, 1987-2008, 11-year matched set.
  • Cost v price 1998 2008 – National by Carnegie sector
    16
    • Research universities: Cost + 8%, Price up 41%
    • Masters’ universities: Cost + 6%, Price up 40%
    • Community colleges: Cost + 3%, Price up 32%
  • Conventional wisdoms inside the academy
    Costs inevitably increase because of the non profit ‘cost disease’
    And because the primary driver of costs is faculty
    True: costs do rise to meet revenue – and competition drives spending upward
    False: faculty are not the primary cost driver within institutions, spending on faculty has been declining relative to increases elsewhere
    17
  • All data are in 2008 dollars.
    Source: Delta Cost Project IPEDS Database, 1987-2008, 11-year matched set.
  • Conventional wisdoms inside the academy …
    Money = quality = performance
    True: money = prestige, strong correlate with admissions selectivity, academic credentials, class size, research
    False: money ≠ performance
    19
  • Productivity: Total Funding per Degree/Certificate(Weighted*, 2006-2007)Public Only
    slide 20
    *Adjusted for value of degrees in the state employment market (median earnings by degree type and level)
  • Performance (2006-07)
    Total Funding per FTE (2006-07)
    Performance Relative to Funding: Bachelors Degrees Awarded per 100 FTE Undergraduates(Public Research Institutions)
    slide 21
    Source: NCES, IPEDS
  • Performance (2006-07)
    Total Funding per FTE (2006-07)
    Performance Relative to Funding: Bachelors Degrees Awarded per 100 FTE Undergraduates(Public Bachelors and Masters)
    slide 22
    Source: NCES, IPEDS
  • Performance Relative to Funding: All Credentials Awarded per 100 FTE Undergraduates(Public Two-Year Institutions)
    Performance (2006-07)
    Total Funding per FTE (2006-07)
    slide 23
    Source: NCES, IPEDS
  • Tentative conclusions from research on money and effectiveness
    • Intentionality matters as much or more than money alone
    • Spending on instruction and student services pays off in learning, retention and graduation
    • Student aid programs are generally not designed with the goal of student learning or degree attainment
    • Excess units cost institutions money, cost students time and money, and do not get students to the finish line
    24
  • Spending is going up because of under-prepared students… and the costs of remediation
    25
    • True: Underprepared students are less likely to succeed, and we DON’T have a good track record with success in remedial/developmental
    Education
    • BUT: Remedial education is cheap – as is most ld/ug education – in public 4-yrs
    Institutions, likely a net revenue-producer
  • The reality of cross-subsidies
    26
    Data from 2002-2007 for Ohio, Florida and Illinois public four-year institutions; and
    1995 – 2004 for SUNY. Report available at
    http://www.sheeo.org/finance/SHEEO_Cost%20Study%20Report_2010.pdf
  • http://www.deltacostproject.org
    Insitution-level data using Delta metrics: http://www.tcs-online.org
    Contact:
    Jane Wellman,
    Delta Cost Project
    1250 H Street, NW
    Suite 700
    Washington DC 20005
    jane@deltacostproject.org
    27
    Estimates of attainment goals/gaps from NCHEMS. Data on state revenue trends from Doyle and Delaney. Measures of spending against degree attainment from Patrick Kelly, “The Dread P Word.” All other data are from Delta Cost Project spending data base.