1. National Center for Higher Education Management Systems 3035 Center Green Drive, Suite 150 Boulder, Colorado 80301 Financing in Sync: Aligning the Pieces of Higher Education Funding College Affordability Summit Chicago, Illinois February 26, 2010

2. The Illinois Public Agenda for College & Career Success Goals 1.Increase educational attainment to match best-performing states 2.Ensure college affordability for students, families, & taxpayers 3.Increase the number of high-quality postsecondary credentials to meet the demands of the economy and an increasingly global society 4.Better integrate Illinois’ educational, research, and innovation assets to meet economic needs of the state and its regions 2

3. “2. Priorities, policies, and budgets must align with state goals.” Among the principles established in conjunction with the public agenda 3

4. Policy Levers slide 4 Strategies for Achieving Goal Attainment Planning and Leadership FinanceRegulationAccountabilityGovernance Goal 1 Attainment Goal 2 Affordability Goal 3 Increase Credentials Goal 4 Meet Economic Needs Consistency Alignment

5. Of the Policy Levers Available to Legislatures, the Most Powerful is Finance Finance Policy –Sends the strongest signals –Creates the strongest incentives for institutional behavior In the absence of alignment between goals and finance policy, failure to achieve goals will be assured. 5

6. Two Purposes for State Funding Sustaining institutions – capacity creation & maintenance Investing in state priorities – capacity utilization slide 6

7. The Flow of Funds 7 Federal Government Public Institutions Private Tax Policy Appropriations/GrantsStudent Aid Tuition Scholarships & Waivers Student Aid (Restricted) Income Available State and Local Govt. Funds Federal Government Higher Education Students Economy K-12 Corrections Health Care Other Govt. Donors Foundations Corporations Stimulus Funds

8. The Flow of Funds - State 8 Federal Government Tax Policy Appropriations/GrantsStudent Aid Tuition Scholarships & Waivers Available State and Local Govt. Funds Higher Education Students K-12 Corrections Health Care Other Govt. Stimulus Funds Federal Government Student Aid Income Economy Public Institutions Private

9. State/Local Funding plus Tuition Revenues per Student (FTE) Illinois Public Institutions, 1983-2008 9

10. State Tax Capacity & 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 10

11. State Tax Capacity and Effort - Illinois Indexed to U.S. Average Source: State Higher Education Executive Officers (SHEEO) U.S. Average

12. Revenues Per Student from Net Tuition, State, & Local Appropriations Public Research slide 12 Sources: NCES, IPEDS 2006-07 Finance Files; f0607_f1a and f0607_f2 Final Release Data Files. NCES, IPEDS 2007-08 Institutional Characteristics File; hd2007 Final Release Data File. NCES, IPEDS 2006-07 Enrollment Files; ef2006a, effy2007, and efia2007 Final Release Data Files.

13. Revenues Per Student from Net Tuition, State, & Local Appropriations Public Masters and Baccalaureate slide 13 Sources: NCES, IPEDS 2006-07 Finance Files; f0607_f1a and f0607_f2 Final Release Data Files. NCES, IPEDS 2007-08 Institutional Characteristics File; hd2007 Final Release Data File. NCES, IPEDS 2006-07 Enrollment Files; ef2006a, effy2007, and efia2007 Final Release Data Files.

14. Revenues Per Student from Net Tuition, State, & Local Appropriations Public 2-Year slide 14 Sources: NCES, IPEDS 2006-07 Finance Files; f0607_f1a and f0607_f2 Final Release Data Files. NCES, IPEDS 2007-08 Institutional Characteristics File; hd2007 Final Release Data File. NCES, IPEDS 2006-07 Enrollment Files; ef2006a, effy2007, and efia2007 Final Release Data Files.

15. Net Tuition as a Percent of Public Higher Education Total Educational Revenue by State, FY 2008 Note: Dollars adjusted by 2008 HECA, Cost of Living Adjustment, and Enrollment Mix Source: SHEEO SHEF 15

16. Affordability 16

17. Percent of Family Income Needed to Pay for College Minus Financial Aid Public 2-YearPublic 4-Year Source: Measuring Up 2008 Private 4-Year Not for Profit 17

18. Illinois Public Institutions – State & Family Share of Funding 1988-2008 Source: Delta Project on Postsecondary Education Costs, Productivity, and Accountability; Delta Cost Project IPEDS Database. 18

19. Illinois Public Research Institutions State & Family Share of Funding 1988-2008 Source: Delta Project on Postsecondary Education Costs, Productivity, and Accountability; Delta Cost Project IPEDS Database. 19

20. Illinois Public Masters & Bachelors Institutions State & Family Share of Funding 1988-2008 Source: Delta Project on Postsecondary Education Costs, Productivity, and Accountability; Delta Cost Project IPEDS Database. 20

21. Illinois Public Associates Institutions State & Family Share of Funding 1988-2008 Source: Delta Project on Postsecondary Education Costs, Productivity, and Accountability; Delta Cost Project IPEDS Database. 21

22. Affordability: Need-based Financial Aid slide 22 Source: Measuring Up 2008 State need-based aid as a proportion of federal need-based aid.

23. Finance Policy – The Options slide 23 Base-Plus Formulas Investment Funds Tuition & Aid Policy Focused on Revenue Generation Performance Funding Tuition & Aid Policy Focused on Attainment of Specified Outcomes Capacity Creation & Maintenance Capacity Utilization/ Public Agenda Institution Focused Student Focused

24. Question – are the incentives created consistent with pursuit of stated goals? Remember – all funding mechanisms create incentives for behavior Institutions Students 24

25. Incentives in the Current Funding Mechanism Keep students enrolled – but not necessarily completing Increase tuition to compensate for declines in state allocations 25