OpportunityTexas™ College Access, Success, & the 82 nd Legislature RAISE Texas Summit Federal Reserve Bank of Dallas November 2, 2011 Don Baylor, Jr. Senior Policy Analyst, Economic 1

“Balancing” the State Budget Medicaid “I.O.U”: $5 billion General Revenue Shortfall of $23 billion (after use of Rainy Day Fund for 2011, plus other 2011 revenue not in January estimate) Cuts to Budget: $7 billion (at least $5.3 b to PreK-12) Cuts to 2011 Budget: $1.4 billion Nontax revenue: $125 million (net) GR-Dedicated Balances: $4.9 billion Federal EduJobs: $831 million Accounting tricks: $3 billion Revised estimate: $1.2 billion

The Texas State Budget for Biennial Total: $175 billion (6% below ; 15% below current services) Federally funded = shown in white; other areas are General Revenue, GR-Dedicated, & “Other” State Funds. Source: Legislative Budget Board, HB 1 and HB 4, May Includes $2.3 billion delayed Foundation School Program payment.

Public School Grants Eliminated from State Budget for Pre-Kindergarten Early Start ● High School Completion/ Success ● Science Lab Funding ● Texas Reading, Math and Science Initiatives ● Tuition Credit Program (Early High School Graduation) ● Extended Year Programs ● Teen Parenting Program ● Middle School Physical Education and Fitness Programs ● LEP Student Success Initiative ● Disciplinary Alternative Education Programs (Safe Schools) ● Rural School Technology ● School-Based Prevention Services ● School Improvement/Parental Involvement AVANCE ● Arts Education ● Science and Math Outreach ● One Community One Child

College Access & Completion Areas of Focus 2011 RAISE Texas Summit6 Postsecondary Access & Success College Savings & Financial Prep Career & Skills Development Financial Aid (Grants, Loans, Work-Study) Developmental Education Reform K-16 Financial Education & Capability

College Access & Completion Program and Policy Recommendations Financial Aid Index state funding for need-based grant aid to student population growth Create and fund an early commitment financial aid program for economically disadvantaged elementary and high school students College Savings Improve outreach and marketing of the Texas Save & Match program and 529 plans Connect financial education to a college savings product Support and promote VITA programs that connect low-income families with college savings products Financial Planning & Screening Integrate college financial preparation into the financial aid curriculum in public schools Promote awareness and Access to planning and screening tools such as the FAFSA4Caster and Net Price Calculators Integrate FAFSA preparation activities at public schools, colleges and VITA sites Developmental Education Improve developmental education assessment policies at community colleges Reform the design and delivery of developmental education courses to better target student needs 2011 RAISE Texas Summit7

Higher Education Partners RAISE Texas Summit

Higher Educational Attainment Drives Better Employment and… Source: CPPP Analysis, Economic Policy Institute analysis of Current Population Survey data, RAISE Texas Summit

…More Income Source: CPPP Analysis, Economic Policy Institute analysis of Current Population Survey data, RAISE Texas Summit

Children are nearly three times more likely to emerge from poverty as adults if they complete college. Source: Brookings Tabulations of PSID Data, Isaacs, Sawhill& Haskings, February 2008, Children in the Bottom Income Quartile RAISE Texas Summit

Financial Barriers to College Access Families overestimate college costs Uncertainty over financing college decreases a student’s likelihood of college enrollment Grant aid funding lagging behind enrollment growth and student need Low- and moderate-income students are less likely to be enrolled in college savings plans FAFSA application is difficult to navigate 1 in 5 Texas students do not complete the FAFSA because they do not know how to apply 1 in 5 Texas students do not apply for financial aid because the process is too time-consuming 58% of Texas students do not complete the FAFSA because they believe they are ineligible for financial aid RAISE Texas Summit

Texas Grant Aid Investments Lag Behind Other States Source: CPPP Analysis, National Center for Public Policy and Higher Education, Measuring Up RAISE Texas Summit

Source: CPPP Analysis, Texas Higher Education Coordinating Board & General Appropriations Act RAISE Texas Summit

Student Loans are Primary Source of “Financial Aid” RAISE Texas Summit

Despite Federal & State Grants, Lower-Income Students Face Higher Unmet Need Source: CPPP Analysis of National Postsecondary Student Aid Study of 2008, NCES Powerstats RAISE Texas Summit

Source: CPPP Analysis, Texas Higher Education Coordinating Board, Report on Student Financial Aid in Texas Higher Education, FY RAISE Texas Summit

18 Source: CPPP Analysis of National Postsecondary Student Aid Study of 2008, NCES Powerstats. Total Family Contribution Total Costs = $15,009Total Costs = $17,708

2011 RAISE Texas Summit19 Source: CPPP Analysis of National Postsecondary Student Aid Study of 2008, NCES Powerstats.

Source: CPPP Analysis, Texas Higher Education Coordinating Board, RAISE Texas Summit

Doing More With Less Budget Texas Community Colleges -5.8% $3.56 $ % Annual Appropriations per Contact Hour & Number of Contact Hours & Instructional Formula Funds & % +20.4% 259M 312M $1.84M $1.74M Source: CPPP Analysis, Texas Association of Community Colleges 82 nd Legislature Session Summary, July RAISE Texas Summit

Budget Financial Aid & Post-Secondary Training -5.8% $0 Jobs and Education for Texans Grant Program Skills Development Fund State Financial Aid Programs -15% -40.1% $48.5M $81M$1B $879M Source: CPPP Analysis, Texas Association of Community Colleges 82 nd Legislature Session Summary, July 2011 $15M -100% RAISE Texas Summit

New Laws Strengthen Higher Education SB 851 – Uniform deadline for financial aid applications HB 2910 – Establishes grant program for higher education institutions to partner with non-profit institutions to improve degree completion rates HB9 - Outcomes-Based Funding bases a portion of higher education funding on specific student success measures, including graduation/completion rates HB 1244/SB1564 – Developmental Education Assessment and Curriculum Reforms SB 162 – Developmental Education Plan for Underprepared Students RAISE Texas Summit

2011 Policy Accomplishments New Laws Improve Texas’ financial capability and college savings SB 290 (Watson)—expands mandatory financial literacy into statewide K-8 curricula and assessment platforms HB 34 (Branch)—builds on current financial literacy requirement (12 th grade economics) to include: Instruction on paying for postsecondary education and training Instruction on completing the FAFSA Curricula to be finalized for academic year RAISE Texas Summit

Policy Accomplishments (continued) HB 2594 (Truitt)—Payday and Auto Title Lending Reform Licensing Bill creates Texas Financial Education Endowment to fund initiatives such as: “school and youth-based financial literacy and capability”; “advertising, marketing, and public awareness campaigns to improve the credit profiles and credit scores of consumers in this state”; HB 399 (Castro)—requires universities to make available training on personal financial literacy (e.g. credit cards, loan repayment, retirement planning, budgeting, saving) HB 3708 (Hochberg)—improves Save & Match program by eliminating college savings penalties (financial aid, public benefits) RAISE Texas Summit

Upcoming Work  Engage New Stakeholders  Monitor rulemaking for HB 3708 (Texas Save & Texas Prepaid Higher Education Tuition Board  Participate in rulemaking for HB 2594 (Texas Financial Education Texas Finance Commission  Pursue K-12 Financial Education Texas Education Agency (HB 34/SB 290)  CPPP to release review of Texas Financial Aid programs and policies  Perform Analysis of Local-Level Student Loan Data  Acquire and analyze local-level FAFSA completion figures  Develop College Readiness “Scorecard” 2011 RAISE Texas Summit26

 Payday and Auto Title Lending: Stop the Cycle of Debt (  State Revenue: Balanced Budget=Balanced Approach (  Savings, Asset Building, & Financial Success (  Issues Affecting Low- and Moderate- Income Texans (  Creating Good Jobs, Increasing Income, & Promoting Savings ( Ways to Get Involved, Be Informed RAISE Texas Summit

Laura Rosen OpportunityTexas Coordinator Don Baylor Senior Policy Analyst, CPPP

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