A new script for financing higher education What can SHEEO’s do?

1. A new script for financing higher educationWhat can SHEEO’s do? SHEEO Professional Development Conference August 10, 2011 Jane V. Wellman Executive Director, Delta Cost Project

2. Unsustainable Funding Trends at 4 Year Public Institutions

3. $ “The broken finance model” The “cost problem” has a public policy and an institutional dimension to it… solving one doesn’t solve the other

4. $ … on the public policy side • Instability and decline in public revenues • Rising tuitions, growing debt levels, eroding affordability • Attainment and other goals are not explicit, and are not connected to needs to increase funding or capacity • State budget practices on auto-pilot: base plus funding, input driven, focused on revenues and not spending, and framed around ‘equitable’ treatment of public systems rather than strategic investments • Gridlock in government in many states and at federal level • Public and media focus on elite private institutions - especially east coast

7. $ … and on the institutional side • “Upside-down” spending based on historic cost patterns • Administrative layering and duplication • Inefficient use of facilities • Cost intensive instructional delivery • Underfunding of growing need for ‘co-curricular’ academic/student support necessary for academic success • Curriculum ‘drift’ and program fragmentation • Competition pushing spending increases in areas that may not be ‘public’ priorities – • Merit aid • “Star” faculty • Weak definitions and measures of learning outcomes • Rising benefits costs pushing toward more part-time faculty • Weak use of evidence about spending or results to guide strategic decision making

9. Source: NCES, BPS, undergraduates only.

10. CFO Opinions about effectiveness of the budget model - % reporting it to be ‘Effective or very effective’ 39.7% Overall model is effective or very effective 49.9% Helps us to manage during good times 36.7% Helps us to manage during difficult times 27.6% Helps us re-assess priorities 20.9% Helps develop a business plan for new academic programs Inside Higher Education , 2011 Survey of College and University Business Officers, July 2011.

11. % CFOs believing institution is effective in… 54.3% Managing resources in good times 39.4% Use financial data to inform decision-making 37.6% Explaining/educating key constituencies about financial challenges 36.3% Aligning financial planning with the institutional strategic plan 22.8 Using technology to enhance mission or finances 29.2% Operating as efficiently as possible Inside Higher Education, Survey of CFO’s, July 2011.

12. Recommendations for SHEEO agencies • Focus on ways resources are used to meet public goals, not primarily on adequacy or equity • Include attention to private providers and role of non-profits as well as for-profits • Maintain focus on tuition and aid policies, and to protection of economic access along with degree attainment • Focus on state funding policies and practices, and ways to reform budgets to stabilize resources for postsecondary education • Address public and policy concerns about costs and effectiveness through constant attention to communication and translation • Improve transparency of fiscal data