1. A new script for financing higher education What can SHEEO’s do? SHEEO Professional Development Conference August 10, 2011 Jane V. Wellman Executive Director, Delta Cost Project

2. Unsustainable Funding Trends at 4 Year Public Institutions

3. “The broken finance model” The “cost problem” has a public policy and an institutional dimension to it… solving one doesn’t solve the other

4. … on the public policy side Instability and decline in public revenues Rising tuitions, growing debt levels, eroding affordability Attainment and other goals are not explicit, and are not connected to needs to increase funding or capacity State budget practices on auto-pilot: base plus funding, input driven, focused on revenues and not spending, and framed around ‘equitable’ treatment of public systems rather than strategic investments Gridlock in government in many states and at federal level Public and media focus on elite private institutions - especially east coast

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7. … and on the institutional side “Upside-down” spending based on historic cost patterns Administrative layering and duplication Inefficient use of facilities Cost intensive instructional delivery Underfunding of growing need for ‘co-curricular’ academic/student support necessary for academic success Curriculum ‘drift’ and program fragmentation Competition pushing spending increases in areas that may not be ‘public’ priorities – – Merit aid – “Star” faculty Weak definitions and measures of learning outcomes Rising benefits costs pushing toward more part-time faculty Weak use of evidence about spending or results to guide strategic decision making

8. Credit Hour Distribution and Average instructional costs Public-four year averages, 4-state cost study (SUNY, Florida, Ohio, Illinois) % of all credits taken % of total spending on instructionAvg weighted cost/credit Lower Division36%23%1.00 Upper Division48%44%1.42 Grad 112%23%2.88 Grad 24%9%4.00 100% 1.55 Source: SHEEO, 2010.

9. Source: NCES, BPS, undergraduates only.

10. CFO Opinions about effectiveness of the budget model - % reporting it to be ‘Effective or very effective’ 39.7%Overall model is effective or very effective 49.9%Helps us to manage during good times 36.7%Helps us to manage during difficult times 27.6%Helps us re-assess priorities 20.9%Helps develop a business plan for new academic programs 10 Inside Higher Education, 2011 Survey of College and University Business Officers, July 2011.

11. % CFOs believing institution is effective in… 54.3%Managing resources in good times 39.4%Use financial data to inform decision-making 37.6%Explaining/educating key constituencies about financial challenges 36.3%Aligning financial planning with the institutional strategic plan 22.8Using technology to enhance mission or finances 29.2%Operating as efficiently as possible 11 Inside Higher Education, Survey of CFO’s, July 2011.

12. Recommendations for SHEEO agencies Focus on ways resources are used to meet public goals, not primarily on adequacy or equity Include attention to private providers and role of non-profits as well as for-profits Maintain focus on tuition and aid policies, and to protection of economic access along with degree attainment Focus on state funding policies and practices, and ways to reform budgets to stabilize resources for postsecondary education Address public and policy concerns about costs and effectiveness through constant attention to communication and translation Improve transparency of fiscal data 12