South Carolina s Action Plan and the Knowledge Economy

1. South Carolina�s Action Plan and the Knowledge Economy Presentation to Governor�s Higher Education Summit September 28, 2010 Garrison Walters, Executive Director SC Commission on Higher Education

2. Overview What is the Knowledge Economy? What Are SC�s Challenges? What Can We Do? Will it be Worth It? Let�s Get Moving ! Making Higher Education a Priority Changing Public Awareness

3. Reminder The Knowledge Economy is a shift to knowledge-based content Intel�s multi-billion dollar Chandler, Arizona plant People with just HS degrees there are in food service, security, grounds maintenance. And they are contractors with no benefits and no job security. Even China wants to get out of the low-wage business You don�t want to be an economy where workers: 1) can be replaced by machines; or 2) can be replaced by people in low-wage areas Intel�s multi-billion dollar Chandler, Arizona plant People with just HS degrees there are in food service, security, grounds maintenance. And they are contractors with no benefits and no job security. Even China wants to get out of the low-wage business You don�t want to be an economy where workers: 1) can be replaced by machines; or 2) can be replaced by people in low-wage areas

4. South Carolina�s Challenge in the Knowledge Economy We are far behind and not catching up One of the few states in the Southeast (not to mention the nation) not focused on higher education Lack of public priority focus Lack of personal/ individual focus Both public priority and personal/individual focus are of equal importanceBoth public priority and personal/individual focus are of equal importance

5. We are far behind and not catching upHow bad is it?

6. South Carolina is far behind economically and needs to catch up 1. Connecticut $ 25,504 2. New Jersey 24,572 3. New York 23,523 12. Virginia 20,499 19. Florida 19,564 29. Georgia 17,603 34. North Carolina 17,246 40. South Carolina 15,894 44. Kentucky 15,437 1. Connecticut $ 56,272 2. New Jersey 51,358 3. Massachusetts 51,254 7. Virginia 44,224 21. Florida 39,267 35. North Carolina 35,344 38. Georgia 34,893 45. South Carolina 32,666 47. Kentucky 32,076 http://www.bea.gov/scb/pdf/2010/01January/DPages/0110dpg_i.pdf http://www.bea.gov/scb/pdf/2010/01January/DPages/0110dpg_i.pdf

7. We need to advance rapidly in higher education  How bad is it? 

8. 1. Massachusetts 37.7% 2. Maryland 35.1% 3. Colorado 35.0% 6. Virginia 33.2% 21. Georgia 27.0% 27. Florida 25.7% 31. North Carolina 25.6% 40. South Carolina 23.2% 47. Kentucky 20.0% 1. Connecticut 27.2% 2. Massachusetts 27.2% 3. Colorado 27.0% 6. Virginia 24.5% 25. Georgia 19.3% 29. Florida 18.3% 36. North Carolina 17.4% 41. South Carolina 16.6% 48. Kentucky 13.6% We use Bachelor�s degree because it�s been standard for a long time Associate Degree important and increasingly so Graduate and professional degrees rising in value as well We use Bachelor�s degree because it�s been standard for a long time Associate Degree important and increasingly so Graduate and professional degrees rising in value as well

9. Illustrating the Lack of Focus onHigher Education as a Public Priority

10. Share of budget has been shrinking - roughly a 50% decrease in share of base budget since 1986. All sources of appropriations to institutions included except nonrecurring funding prior to 1994-95 are not reflected. Would not anticipate much of a change if added these to the earlier years. Lottery expenditures began in FY 2002, institutions have received some lottery funds for operational purposes and for research CoEE program which are included. The state has been generous in its support of student financial aid (including merit- and need-based aid). In the coming year, it is estimated that approximately $249 million will be provided across the various programs to students attending public institutions - more than half of the amount of the $421 million base recurring appropriation. (As a comparison, in FY01, scholarships and grants was $52 million and base funding was $782 million or 15 times the amount spent on scholarships and grants in that year. Share of budget has been shrinking - roughly a 50% decrease in share of base budget since 1986. All sources of appropriations to institutions included except nonrecurring funding prior to 1994-95 are not reflected. Would not anticipate much of a change if added these to the earlier years. Lottery expenditures began in FY 2002, institutions have received some lottery funds for operational purposes and for research CoEE program which are included. The state has been generous in its support of student financial aid (including merit- and need-based aid). In the coming year, it is estimated that approximately $249 million will be provided across the various programs to students attending public institutions - more than half of the amount of the $421 million base recurring appropriation. (As a comparison, in FY01, scholarships and grants was $52 million and base funding was $782 million or 15 times the amount spent on scholarships and grants in that year.

11. SC Higher Education Supportvs. Other States SHEEO State Higher Education Finance Survey Annual Survey for State-to-State Comparable Financial Data Educational Appropriations � measure state and local support for public higher education inclusive of state student financial aid and ARRA Stabilization funds. In FY 2009, SC ranked 35th nationally and 15th out of the 16 Southern Regional Education Board States (SREB) These data provide accurate information on higher education support. Other data, for example that from the NASBO organization, include all �state authorized� expenditures. In South Carolina�s case, this includes tuition, scholarships, federal grants, income from auxiliaries such as dormitories, and more (using both tuition and scholarships actually results in double counting). Since many other states do not follow the practice of state authorization for campus expenditures, their numbers look lower even though their support for higher education can be much higher. Only the SHEEO/SREB data should be used to compare states for higher education purposes. These data provide accurate information on higher education support. Other data, for example that from the NASBO organization, include all �state authorized� expenditures. In South Carolina�s case, this includes tuition, scholarships, federal grants, income from auxiliaries such as dormitories, and more (using both tuition and scholarships actually results in double counting). Since many other states do not follow the practice of state authorization for campus expenditures, their numbers look lower even though their support for higher education can be much higher. Only the SHEEO/SREB data should be used to compare states for higher education purposes.

12. Educational Appropriations per FTEFY 2009

13. Total Educational Revenue Per FTE5 Year Percent Change � FY2004 to FY2009

14. The appropriations include state general fund base appropriations and are not adjusted for inflation. If SC had kept pace with inflation using CPI would mean an appropriation of $977 million or $1.1 billion using HEPI. SC Public Colleges and Universities include: 3 Research Institutions (Clemson, USC and MUSC), 10 four-year comprehensive universities (Coastal Carolina, College of Charleston, Citadel, Francis Marion, Lander, SC State, USC Aiken, USC Beaufort, USC Upstate, Winthrop), 4 two-year regional branches of USC (USC Lancaster, USC Salkehatchie, USC Sumter, USC Union) and 16 technical colleges (Aiken Tech, Central Carolina Tech, Denmark Tech, Florence-Darlington Tech, Greenville Tech, Horry-Georgetown Tech, Midlands Tech, Northeastern Tech, Orangeburg-Calhoun Tech, Piedmont Tech, Spartanburg Community College, Tech College of the Lowcountry, Tri-County Tech, Trident Tech, Williamsburg Tech, and York Tech)The appropriations include state general fund base appropriations and are not adjusted for inflation. If SC had kept pace with inflation using CPI would mean an appropriation of $977 million or $1.1 billion using HEPI. SC Public Colleges and Universities include: 3 Research Institutions (Clemson, USC and MUSC), 10 four-year comprehensive universities (Coastal Carolina, College of Charleston, Citadel, Francis Marion, Lander, SC State, USC Aiken, USC Beaufort, USC Upstate, Winthrop), 4 two-year regional branches of USC (USC Lancaster, USC Salkehatchie, USC Sumter, USC Union) and 16 technical colleges (Aiken Tech, Central Carolina Tech, Denmark Tech, Florence-Darlington Tech, Greenville Tech, Horry-Georgetown Tech, Midlands Tech, Northeastern Tech, Orangeburg-Calhoun Tech, Piedmont Tech, Spartanburg Community College, Tech College of the Lowcountry, Tri-County Tech, Trident Tech, Williamsburg Tech, and York Tech)

15. South Carolina�s current appropriation is $421 million. In FY10 (latest year for which data are available), we have 158,330 full-time equivalent students enrolled in the state�s 33 public colleges and universities. To keep pace with North Carolina would mean an additional appropriation over twice that of the current level. South Carolina�s current appropriation is $421 million. In FY10 (latest year for which data are available), we have 158,330 full-time equivalent students enrolled in the state�s 33 public colleges and universities. To keep pace with North Carolina would mean an additional appropriation over twice that of the current level.

16. Out-of-State Students CHE data show conclusively that the tuition paid by out of state students more than covers the costs of their education The fact is that the presence of out-of-state students substantially lowers tuition for South Carolina residents CHE�s data are statewide: individual institutions can provide detailed information. Out-of-state students also contribute significantly more than their in-state peers to their higher education facilities

17. Continuous Improvement in Productivity is Essential Driver of Increased tuition in SC : Sharp decline in state support, and Need to retain and attract highly educated people We can help offset these factors with increased productivity and efficiencies Strong Leadership at Colleges and Universities and many efficiencies in place Many strong collaborations Have avoided the costly graduate/professional duplication that plagues other states Can always do more, need to move faster on: More shared services, e.g. computing, HR systems More shared programs, e.g. existing DegreeSC effort and similar * Can�t use CPI inflation as a reference for higher education. Higher education is in an unusual situation in that most of its expenditures are for highly educated people whose salaries are rising in a knowledge economy (Microsoft and McDonalds hire in different markets). * Can�t use CPI inflation as a reference for higher education. Higher education is in an unusual situation in that most of its expenditures are for highly educated people whose salaries are rising in a knowledge economy (Microsoft and McDonalds hire in different markets).

18. #1 Making Higher Education a Public PriorityWe Need to Implement our Action Plan for Higher Education  ..

19. # 1 Changing Public Priority Detail in Reference SlidesDetail in Reference Slides

20. Will Investing Be Worth It?Analyzing the Return on Educational Investment Study completed by USC�s Darla Moore School of Business, Division of Research Objective - Understand the benefits and costs in achieving the goal of becoming one of the most educated states Target Analyzed � Moving SC from 23% to 30% of the working population with bachelors degrees by 2030 Key Metrics � Compared Benefits (personal income, statewide gross domestic product, employment, and SC revenue collections) to Costs (tuition/fees, state appropriations/lost earnings while in college)

21. Impact to Overall Size of SC�s Economy - Ongoing Benefit of a Permanent �Baked In� Increase Highly Educated South Carolinavs. Same Old South Carolina Those with a bachelor�s degree earn $1.2 million more than a full-time worker with a high school diploma in the course of a working career. State�s Economy � During the period toward reaching the goal (2010-2030), there is a cumulative gain $67.8 billion in total personal income $77.0 billion in gross state product Average annual benefit over the 20 years in reaching the goal of $11 for every $1 invested. The ongoing benefit � an increase which becomes a permanent component of the economy (does not add an additional cumulative benefit each year) � $6.9 billion in total personal income $7.8 billion in gross state product An additional 44,514 permanent jobsThose with a bachelor�s degree earn $1.2 million more than a full-time worker with a high school diploma in the course of a working career. State�s Economy � During the period toward reaching the goal (2010-2030), there is a cumulative gain $67.8 billion in total personal income $77.0 billion in gross state product Average annual benefit over the 20 years in reaching the goal of $11 for every $1 invested. The ongoing benefit � an increase which becomes a permanent component of the economy (does not add an additional cumulative benefit each year) � $6.9 billion in total personal income $7.8 billion in gross state product An additional 44,514 permanent jobs

22. Return on Educational Investment Benefits to the individual � Lifetime income of the average full-time worker in SC with a bachelor�s degree is $2.5 million versus $1.3 million for a high school graduate (more than twice that of high school graduate) Over the period of 2010-2030, investing in higher education returns on average $11 for each $1 invested By 2030, return rate reaches $25 for each $1 invested On average, those with a bachelor�s degree earn $1.2 million more over a lifetime than a full-time worker with just a high school diploma. State�s Economy � During the period toward reaching the goal (2010-2030), there is a cumulative gain $67.8 billion in total personal income $77.0 billion in gross state product Average annual benefit over the 20 years in reaching the goal of $11 for every $1 invested.On average, those with a bachelor�s degree earn $1.2 million more over a lifetime than a full-time worker with just a high school diploma. State�s Economy � During the period toward reaching the goal (2010-2030), there is a cumulative gain $67.8 billion in total personal income $77.0 billion in gross state product Average annual benefit over the 20 years in reaching the goal of $11 for every $1 invested.

23. Additional ROEI Benefits Educated individuals earn more and pay substantially more taxes have lower unemployment less incarceration better health * If people earn higher incomes and pay more taxes, the tax burden for everyone can fall. * If people earn higher incomes and pay more taxes, the tax burden for everyone can fall.

24. Will There Really be Jobs for More Graduates? Yes! Things may look bad now, but when the economy rebuilds, as it will start to do very soon, there will be huge demand for educated people. New Study: Help Wanted: Projections of Jobs & Education Requirements through 2018 by Georgetown University�s Center on Education and the Workforce Georgetown Study �Help Wanted: Projections of Jobs and Education Requirements through 2018, June 2010, Georgetown University, Center on Education and the WorkforceGeorgetown Study �Help Wanted: Projections of Jobs and Education Requirements through 2018, June 2010, Georgetown University, Center on Education and the Workforce

25. SOUTH CAROLINA�s SHARE Between 2008 and 2018, SC will create 630,000 job vacancies both from new jobs and from job openings due to retirement. 349,000 (56%) of these job vacancies will be for those with postsecondary education, 206,000 (33%) for high school graduates, and 75,000 (12%) for high school graduates. SOUTH CAROLINA�s SHARE Between 2008 and 2018, SC will create 630,000 job vacancies both from new jobs and from job openings due to retirement. 349,000 (56%) of these job vacancies will be for those with postsecondary education, 206,000 (33%) for high school graduates, and 75,000 (12%) for high school graduates.

26. As the Knowledge Economy DevelopsDemand for More Highly Educated People will be Much Greater than for High School Grads and Below

27. For SC, the estimate is 56% of all jobs (1.2 million) will require some postsecondary training beyond high school in 2018. SC is ranked 42 of the 50 states in terms of postsecondary intensity (i.e., % of jobs requiring postsecondary training beyond high school. The proportion by level for SC by 2018 is estimated as follows: 8% (168,000 jobs) graduate degree; 17% (369,000 jobs) bachelor�s degree; 21% (452,000 jobs) associate�s degree; 10% (215,000 jobs) some college, no degree; 33% (710,000 jobs) high school graduate; and 12% (258,000 jobs) high school dropout. Very important to note that the proportion of new jobs for high school and below is higher in SC because of our relatively undeveloped economy. For SC, the estimate is 56% of all jobs (1.2 million) will require some postsecondary training beyond high school in 2018. SC is ranked 42 of the 50 states in terms of postsecondary intensity (i.e., % of jobs requiring postsecondary training beyond high school. The proportion by level for SC by 2018 is estimated as follows: 8% (168,000 jobs) graduate degree; 17% (369,000 jobs) bachelor�s degree; 21% (452,000 jobs) associate�s degree; 10% (215,000 jobs) some college, no degree; 33% (710,000 jobs) high school graduate; and 12% (258,000 jobs) high school dropout. Very important to note that the proportion of new jobs for high school and below is higher in SC because of our relatively undeveloped economy.

28. To Make Higher Education a Public Priority, Unity is Key North Carolina and Georgia invest far more in higher education and get far more back in economic growth But, history, culture, and economic structure are very similar to S.C. The difference is unity: NC and GA developed specific plans and all worked together Issue isn�t system organization, it�s behavior Campus trustees are an asset, not a liability

29. #2 Changing Public Awareness More support for higher education is essential, but dollars alone aren�t enough If people don�t believe education is important, we can�t possibly make the progress we need Can we change attitudes? Can we acquire a pervasive education culture?

30. Culture Change in Kingsport, Tennessee Kingsport, Tennessee Economic Summit of 1999 Losing manufacturing jobs Educate and Grow initiative of 2001 All citizens at least two years of college Cover 70% of cost with local scholarships Changed K-12 to K-14 Brought in Community College/ added facilities

31. Education 23% increase in high school graduates 248% increase in HS grads going directly to college 27.5 % increase in adults with Associate Degrees 19.2 % increase in adults with Bachelor�s Degree Employment Lost 12,600 manufacturing jobs Gained 22,600 jobs in service, health care, professional Income Median family income up 20% Kingsport Outcomes So Far�Advanced Learning as a Key to Unlocking Economic Growth�

32. We Need a Kingsport-type Effort in Every Community Spartanburg County is well advanced. The South Carolina Higher Education Foundation and CHE are taking a lead in helping communities around the state get started Private leadership at the community level is essential, government can�t do this * South Carolina is making a major effort in culture change. We will be the national leaders in this. * South Carolina is making a major effort in culture change. We will be the national leaders in this.

33.  When We�re Unified and Have the Right PlansWe Can TransformSouth Carolina�s Economy and Quality of Life In conclusion, look at this graphic and you�ll see the three parts of South Carolina�s challenge: � First, we have to recognize we�re in a knowledge economy and make a competitive investment in education, including higher education. We can�t compete just by cutting corners. Second, we have to recognize that continuous improvement in efficiency and productivity are essential and that the taxpayers have every reason to expect us to be leaders in return for every dollar invested. We�ve done a lot; we can do more. Third, money and efficiency will only get us so far. Our citizens, our communities, have to step up too. All of our citizens have to recognize the importance of being educated and commit to doing the things necessary to move forward. This is something government can�t do�individuals and communities have to take charge of their own destiny. � Finally, we have to recognize that we can�t improve the competitiveness of our investment in education until the economy improves. That will be a year or two from now. But there�s much work that can be done to make us ready for takeoff. So let�s approach the future with energy and determination, but also with patience and civility.In conclusion, look at this graphic and you�ll see the three parts of South Carolina�s challenge: � First, we have to recognize we�re in a knowledge economy and make a competitive investment in education, including higher education. We can�t compete just by cutting corners. Second, we have to recognize that continuous improvement in efficiency and productivity are essential and that the taxpayers have every reason to expect us to be leaders in return for every dollar invested. We�ve done a lot; we can do more. Third, money and efficiency will only get us so far. Our citizens, our communities, have to step up too. All of our citizens have to recognize the importance of being educated and commit to doing the things necessary to move forward. This is something government can�t do�individuals and communities have to take charge of their own destiny. � Finally, we have to recognize that we can�t improve the competitiveness of our investment in education until the economy improves. That will be a year or two from now. But there�s much work that can be done to make us ready for takeoff. So let�s approach the future with energy and determination, but also with patience and civility.

34. Reference Slides The following slides provide additional detail relating to the state�s investment in higher education, the SC Higher Education Action Plan Goals, and the recent Georgetown University study on jobs and education.

35. Higher Education�s Action Plan Background Several previous planning efforts Legislatively appointed Higher Education Study Committee (2007-2008) Action Plan complete in 2009 Three Broad Goals plus specific recommendations ROEI Study accompanied the report

36. Action Plan Goal 1 Raise Educational Levels What could we do by 2030? More associate, baccalaureate, and professional graduates Specific goal: 30% baccalaureates (vs. 23%--baccalaureate is the easiest comparative measure but other degree levels are equally important) Focus on areas that make a difference to the state Nursing Management Engineering Teacher Education Health technologies More�

37. Action Plan Goal 2  Increase Research & Innovation

38. Action Plan Goal 3 Improve Workforce Training and Education Services The availability of a highly skilled workforce is key to economic prosperity for any city, state, region, or nation. Higher Education is both an individual and public benefit. Align programs with economic clusters Create reverse-bridge programs Communicate the importance of the action plan Connect adults to education and training programs Identify financial pathways Strengthen higher educational services Strengthen the foundations for a technical workforce