1. National Center for Higher Education Management Systems 3035 Center Green Drive, Suite 150 Boulder, Colorado 80301 Higher Expectations and Fewer Resources: Finding a Way Dennis P. Jones SHEEO Higher Education Policy Conference Denver, CO August 12, 2009

2. The Expectation “By 2020, America will once again have the highest proportion of college graduates in the world” President Barack Obama, February 24, 2009 slide 2

3. slide 3 Current Annual Degree Production – 2,252,212 Additional Annual Degree Production Needed – 150,528 per Year Associate and Bachelors Degrees Needed to Become the Most Educated Country by 2020 Increase in State and Local Funding at Current Cost per FTE Note: Assumes private institutions will maintain current share

4. Annual Increase in Degree Production Required to Meet the Goal – 11.7 Million Additional Degrees by 2020 Adjusting for Current Levels of Educational Attainment and Population Growth by State

5. THE FISCAL REALITIES slide 5

6. Expenditures on Tertiary Educational Institutions as a Percentage of GDP, by Source of Fund (2004) *Some levels of education are included with others **Including public subsidies to households attributable for educational institutions, as well as including direct expenditure on educational institutions from international sources. ***Net of public subsidies attributable for educational institutions. Source: OECD.

7. Expenditures slide 7 Annual % Budget Increase, Fiscal 1979 to Fiscal 2009 *32-year historical average rate of growth is 5.9 percent **Fiscal 09 numbers are estimated ***Fiscal 10 numbers are recommended Source: NASBO June 2009 Fiscal Survey of States

8. Combined Budget Gaps of $230B slide 8 *Only 24 states have forecasted FY 2011 budget gaps to date 37 states 24 states

9. For most states – and for most public institutions – the stimulus package is not an answer. But it could slow the impact And it could buy enough time to adjust to substantially changed circumstances slide 9

10. After stimulus wanes, gaps could approximate 4% of spending, or $70 billion, even under the “Low-Gap” Scenario Source: Don Boyd (Rockefeller Institute of Government), 2009 slide 10

11. After stimulus wanes, gaps could approach 7% of spending or $120 billion under the “High-Gap” scenario Source: Don Boyd (Rockefeller Institute of Government), 2009 slide 11

12. Projected State and Local Budget Surplus (Gap) as a Percent of Revenues, 2016 slide 12 Source: NCHEMS; Don Boyd (Rockefeller Institute of Government), 2009

13. State Tax Capacity and Effort—Indexed to U.S. Average Source: State Higher Education Executive Officers (SHEEO) AL AK AZ AR CA CO CT DE GA HI IL IN IA KS KY LA ME MD MA MS MT NE NV NJ NY NC ND OH OK PA RI SC SD UT VT VA WA FL ID MI MN MO NH NM TN TX WV WI WY 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 0.60.81.01.21.4 State Tax Capacity (Total Taxable Resources Per Capita) State Tax Effort (Effective Tax Rate) US OR Slide 13

14. THE DEMOGRAPHIC REALITIES slide 14

15. The big population growth will be in students of color. In the main these will be individuals of modest means. Therefore there are real limits as to how high tuition can go before price affects participation and completion. slide 15

16. Change in Population Age 25-44 By Race/Ethnicity, 2005-2025 Source: U.S. Census Bureau slide 16 …2,689,700 …1,044,516

17. Difference Between Whites and Next Largest Race/Ethnic Group in Percentage of Adults Age 25-34 with an Associate Degree or Higher, 2000 Source: U.S. Census Bureau, PUMS (based on 2000 Census)

18. Family Incomes of Families with School Age Children slide 18 Source: American Community Survey

19. Expectations Maintain access – serve an increasing number of students Maintain affordability to both students and the state slide 19 Invest stimulus funds in: Developing more cost-effective ways of doing business Paying for the transition

20. Short-Term Actions Be clear about goals & accountability measures –Degree production –Reduced cost/degree Create a Coherent Financing Plan –Align policies regarding appropriations to institutions, tuition, & student aid policies –Treat different sectors differentially –“Reset” base funding levels Invest more (reduce less) state appropriations in institutions that must contribute most to student access and success slide 20

21. Short-Term Actions (continued) Protect need-based financial aid Mandate increases in instructional productivity –SCHs per FTE faculty –Have a plan for use of savings Invest in reform Return to General Fund slide 21

22. Long-Term Actions Refocus institutional missions –Directly –Through de-funding certain programs/functions Require certain programs to be self-supporting (e.g., MBA) Align state & federal student aid programs – leave no federal money on the table Administer need-based aid as a state – not institutional – program Tackle developmental education on a statewide basis –Consider a separate delivery entity Undertake a policy audit with an eye toward eliminating unnecessary bureaucracy Adopt a strategy for investing in productivity enhancement –Course redesign on a system-wide basis –Retrofitting buildings for energy efficiency –Reengineered business processes –Inter-institutional collaboration slide 22