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South Carolina’s Action Plan and the Knowledge Economy Presentation to Governor’s Higher Education Summit September 28, 2010 Garrison Walters, Executive.

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Presentation on theme: "South Carolina’s Action Plan and the Knowledge Economy Presentation to Governor’s Higher Education Summit September 28, 2010 Garrison Walters, Executive."— Presentation transcript:

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 is the Knowledge Economy? What Are SC’s Challenges? What Are SC’s Challenges? What Can We Do? What Can We Do? Will it be Worth It? 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 Product Percent Traditional Inputs (cost at farm or factory of materials, energy, unskilled labor) Percent Knowledge Content (cost at farm or factory of design, engineering, R&D, administration, technical support) Bushel of wheat in 1800100%0% Model T Ford (~1920)~90%~10% New BMW 2008~75% ~25% and rising (over 50% by 2015 per BMW) Intel processor 2008~10%~90% Microsoft Office software 2008~1%~99%

4 South Carolina’s Challenge in the Knowledge Economy We are far behind and not catching up 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 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 public priority focus Lack of personal/ individual focus Lack of personal/ individual focus

5 We are far behind and not catching up How bad is it?

6 South Carolina is far behind economically and needs to catch up 1. Connecticut $ 25,504 1. Connecticut $ 25,504 2. New Jersey 24,572 2. New Jersey 24,572 3. New York 23,523 3. New York 23,523 12. Virginia 20,499 12. Virginia 20,499 19. Florida 19,564 19. Florida 19,564 29. Georgia 17,603 29. Georgia 17,603 34. North Carolina 17,246 34. North Carolina 17,246 40. South Carolina 15,894 40. South Carolina 15,894 44. Kentucky 15,437 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 Per Capita Personal Income 19902008

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% Percent of Population 25 & Over with a Bachelor’s Degree or Higher * SC has similar results for other degree levels, including increasingly critical Associate Degrees 19902008 South Carolina is Behind Because We’re Under-educated *ACS, 2006-08, 3-year estimates

9 Illustrating the Lack of Focus on Higher Education as a Public Priority

10 State Educational & General Operating Appropriations for SC’s 33 Public Colleges & Universities as a Percent of State Budget *FY11 estimated based on FY11 Appropriations including sustained vetoes. Lottery Expenditures began in FY 2002-03 and include operating appropriations and CoEE. Nonrecurring appropriations are not available for FYs prior to 1994-95 and include supplemental and Capital Reserve Fund for operating purposes.

11 SC Higher Education Support vs. Other States SHEEO State Higher Education Finance Survey Annual Survey for State-to-State Comparable Financial Data 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. 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 35 th nationally and In FY 2009, SC ranked 35 th nationally and 15 th out of the 16 Southern Regional Education Board States (SREB)

12 Educational Appropriations per FTE FY 2009 SC (red) falls 17% below National Average (green) SC ranks 35 th and 15 out of the 16 SREB States (dark blue) Source: SHEEO State Higher Education Finance Survey, FY2009, corrected post-release. US Avg. $6,904 SC $5,700 NC GA

13 Total Educational Revenue Per FTE 5 Year Percent Change – FY2004 to FY2009 SC (red) is one of 9 states in which total educational revenues (educational appropriations and tuition revenues) decreased over the past 5 years. Source: SHEEO State Higher Education Finance Survey, FY2009. Total Educational Revenue per FTE represents the sum of educational appropriations and net tuition excluding net tuition revenue for capital debt service. Information on capital expenditures across states is not available and varies state-to-state. The portion of tuition and fee revenue for debt service is removed for a better comparison of support for educational and general operating revenue. US Avg. + 8.0% SC - 0.4% GA NC

14 *FY11 = $421 million *FY08 = $758 million *Drop = ($337million) *Preliminary estimate based on FY 11 Appropriations Act including sustained vetoes. *FY11 = $421 million *FY08 = $758 million *Drop = ($337million) *Preliminary estimate based on FY 11 Appropriations Act including sustained vetoes. SC Public Colleges & Universities State General Fund Appropriations Enrollment Continues to Climb: Since 1985, added equivalent of 4 universities the size of USC with 50% reduction in state support adjusted for inflation. (Not adjusted for inflation)

15 Capital Funding - There is a critical need for a Bond Bill in SC  Higher education has received almost nothing for capital since 2000.  Capital is a normal operating cost — not an exceptional or unusual one. Good comparative state data on higher education funding should include capital, and when it is, we fall much further behind others than where we are now.  Investing as soon as possible in urgently needed capital offers the prospect of getting interest rates at an historical low while paying the bonds off in a rising economy. A good deal! State Support for Operating and Capital Budget State Educational Appropriation and Capital Support per FTE Average over 10 Yrs 1997-2006 Difference Compared to SC Additional Dollars Needed for SC to Keep Up NC$9,192 + $4,720 + $747 million GA$8,278 + $3,158 + $500 million KY$7,021 + $1,901 + $301 million SC$5,120$0-

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 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 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. 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 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 : Driver of Increased tuition in SC : Sharp decline in state support, and Sharp decline in state support, and Need to retain and attract highly educated people Need to retain and attract highly educated people We can help offset these factors with increased productivity and efficiencies We can help offset these factors with increased productivity and efficiencies Strong Leadership at Colleges and Universities and many efficiencies in place Strong Leadership at Colleges and Universities and many efficiencies in place Many strong collaborations Many strong collaborations Have avoided the costly graduate/professional duplication that plagues other states Have avoided the costly graduate/professional duplication that plagues other states Can always do more, need to move faster on : Can always do more, need to move faster on : More shared services, e.g. computing, HR systems More shared services, e.g. computing, HR systems More shared programs, e.g. existing DegreeSC effort and similar More shared programs, e.g. existing DegreeSC effort and similar

18 #1 Making Higher Education a Public Priority We Need to Implement our Action Plan for Higher Education #1 Making Higher Education a Public Priority

19 Action Plan Goal 1 Raise Educational Levels S OUTH C AROLINA TO BE ONE OF MOST EDUCATED STATES BY 2030 Action Plan Goal 2 Increase Research & Innovation Action Plan Goal 3 Improve Workforce Training and Education Services # 1 Changing Public Priority

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 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 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 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) 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) #1 Making Higher Education a Public Priority

21 Impact to Overall Size of SC’s Economy - Ongoing Benefit of a Permanent “Baked In” Increase #1 Making Higher Education a Public Priority Highly Educated South Carolina vs. Same Old South Carolina Additional $6.9 Billion Additional 44,514 Additional $7.8 Billion

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) 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 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 By 2030, return rate reaches $25 for each $1 invested #1 Making Higher Education a Public Priority

23 Additional ROEI Benefits Educated individuals Educated individuals  earn more and pay substantially more taxes  have lower unemployment  less incarceration  better health #1 Making Higher Education a Public Priority

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. 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

25 Employment Growth Set to Resume in 2011 Actual and Projected Employment in millions Source: Georgetown University, Center on Education and the Workforce

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

27 NATIONALLY 63% of all jobs will require postsecondary training beyond high school by 2018 NATIONALLY 63% of all jobs will require postsecondary training beyond high school by 2018 Source: Georgetown University, Center on Education and the Workforce

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 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. 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 The difference is unity: NC and GA developed specific plans and all worked together Issue isn’t system organization, it’s behavior Issue isn’t system organization, it’s behavior Campus trustees are an asset, not a liability Campus trustees are an asset, not a liability #1 Making Higher Education a Public Priority

29 # 2 Changing Public Awareness More support for higher education is essential, but dollars alone aren’t enough 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 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? Can we change attitudes? Can we acquire a pervasive education culture? #2 Changing Public Awareness

30 Culture Change in Kingsport, Tennessee Kingsport, Tennessee Kingsport, Tennessee  Economic Summit of 1999 Losing manufacturing jobs Losing manufacturing jobs  initiative of 2001  Educate and Grow initiative of 2001 All citizens at least two years of college All citizens at least two years of college Cover 70% of cost with local scholarships Cover 70% of cost with local scholarships Changed K-12 to K-14 Changed K-12 to K-14 Brought in Community College/ added facilities Brought in Community College/ added facilities #2 Changing Public Awareness

31 Education Education 23% increase in high school graduates 23% increase in high school graduates 248% increase in HS grads going directly to college 248% increase in HS grads going directly to college 27.5 % increase in adults with Associate Degrees 27.5 % increase in adults with Associate Degrees 19.2 % increase in adults with Bachelor’s Degree 19.2 % increase in adults with Bachelor’s Degree Employment Employment Lost 12,600 manufacturing jobs Lost 12,600 manufacturing jobs Gained 22,600 jobs in service, health care, professional Gained 22,600 jobs in service, health care, professional Income Income Median family income up 20% Median family income up 20% Kingsport Outcomes So Far “Advanced Learning as a Key to Unlocking Economic Growth” #2 Changing Public Awareness

32 We Need a Kingsport-type Effort in Every Community Spartanburg County is well advanced. 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 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 Private leadership at the community level is essential, government can’t do this #2 Changing Public Awareness

33 When We’re Unified and Have the Right Plans We Can Transform South Carolina’s Economy and Quality of Life When We’re Unified and Have the Right Plans We Can Transform South Carolina’s Economy and Quality of Life South Carolina A National Leader Continuous Improvement in Efficiency Public Awareness and Responsibility Competitive State Suppo rt

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 Several previous planning efforts Legislatively appointed Higher Education Study Committee (2007-2008) Legislatively appointed Higher Education Study Committee (2007-2008) Action Plan complete in 2009 Action Plan complete in 2009 Three Broad Goals plus specific recommendations Three Broad Goals plus specific recommendations ROEI Study accompanied the report ROEI Study accompanied the report For additional details and to access the Action Plan and ROEI reports, visit CHE’s website http://www.che.sc.gov/HigherEd_ActionPlan.htm

36 Action Plan Goal 1 Raise Educational Levels What could we do by 2030? What could we do by 2030? More associate, baccalaureate, and 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) 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 Focus on areas that make a difference to the state Nursing Management Nursing Management Engineering Teacher Education Engineering Teacher Education Health technologies More… Health technologies More…

37 Action Plan Goal 2 Increase Research & Innovation Today’s economy is driven by innovation, much of which can be traced to research universities. These institutions foster a culture of talent that benefits regions and states because they attract business investment, create new businesses, and sponsor federal and industrial research that create high-value, high-paying jobs. Examples: Create a culture of discovery Create a culture of discovery Optimize process for technology transfer Optimize process for technology transfer Enhance research and innovation partnerships among colleges and universities and the private sector Enhance research and innovation partnerships among colleges and universities and the private sector

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 Align programs with economic clusters Create reverse-bridge programs Create reverse-bridge programs Communicate the importance of the action plan Communicate the importance of the action plan Connect adults to education and training programs Connect adults to education and training programs Identify financial pathways Identify financial pathways Strengthen higher educational services Strengthen higher educational services Strengthen the foundations for a technical workforce Strengthen the foundations for a technical workforce

39 HELP WANTED: PROJECTIONS OF JOBS & EDUCATION REQUIRMENTS THROUGH 2018, JUNE 2010 Anthony P. Carnevale, Nicole Smith, and Jeff Strohl Center on Education and the Workforce, Georgetown University http://cew.georgetown.edu/jobs2018/ State Level Analysis - Summary Points for South Carolina Between 2008 and 2018, new jobs in SC requiring postsecondary education and training will grow by 94,000 while jobs for high school graduates and dropouts will grow by 40,000. 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 credentials, 206,000 (33%) for high school graduates, and 75,000 (12%) for high school graduates. SC ranks 39 th in terms of the proportion of its 2018 jobs that will require a bachelor’s degree and is 12 th in jobs for high school dropouts. 56% of all jobs in SC (1.2 million jobs) will require some postsecondary training beyond high school in 2018. This is 7 percentage points below the national average of 63%. SC ranks 42 nd in postsecondary education intensity for 2018.


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