“Using Finance to Meet State Goals in the Master Plan for Education”
The charge of our working group was to identify and
evaluate the most consequential state policies for financing the current
operations and facilities within California’s postsecondary sector, both
public and private.
From the
beginning, the group agreed that its role was to concentrate the expertise of
its members on those issues of most importance to the Joint Committee and state
government, and to perform high quality
analysis.[1] We agreed to gather the
best research studies as basis for our discussions, address the most difficult
issues in finance policy, and recommend a long-term framework rather than just
quick fixes. We chose to compile a short paper with the highlights of our
ideas, letting the extensive minutes of our
meetings,[2] appendices, and
references to other documents serve as means for elaboration.
The group also understood that its
contribution should be congruent with the mission and orientation of its
creator, the Joint Committee to Develop a Master Plan for Education –
Kindergarten through University. That Committee, unlike its predecessors, was
organized to draft a comprehensive Master Plan for the three levels of
education—elementary, secondary, and postsecondary. As another
distinction, the Committee hoped that the new Plan “places learning at the
center of policy decisions, rather than focusing on debates around individual
system issues.”[3] Our working
group was instructed to place most attention on funding for direct instruction,
not on the other important dimensions of higher education such as research and
public service.[4]
We agree with the Joint
Committee’s staff that “California owes much of its success to the
unwavering priority that has been given to encouraging the educational
attainment of its people and to a commitment to ensuring that ample access is
provided” to high quality
programs.[5] Our work is dedicated
to ensuring that the financial resources are available to continue this priority
of access and quality.
California has an extensive set of
postsecondary institutions which offer a vast array of activities, ranging from
English courses for recent immigrants to the most advanced medical education in
the world, from cosmetology classes to genetics research, from general education
to advanced graduate study in specialized fields, from concerts to athletics,
and from bookstores to travel abroad. The financial support for all these
activities, and for the facilities where they take place, come from many sources
beside state government.
Even so, State
appropriations constitute the core funding for the mission of each public
segment and a large portion of financial aid available to students in private
institutions. The state government also controls directly, or strongly
influences, the level of student charges in public institutions. The amount of
these appropriations and their basis for distribution appear to us the most
important ways that public officials communicate with higher education
institutions.
Because of this
importance, this state’s financing approach should be tied directly to
policy goals that meet the needs of students, serve the interests of the
institutions, respond to the workforce needs of business, and fulfill the
fiduciary responsibilities of state government to the taxpayers.
We believe the financing approach
should support these
goals:
Access. Forty
years ago, California’s Master Plan for Higher Education stated
unequivocally that a tuition-free, undergraduate “space” for every
qualified adult would be available somewhere in higher education. Over the
years, this has been translated into policies that define different pools of
eligibility among the public segments based on the academic records of students,
maintenance of “low student
fees,”[6] and aid for
financially needy students.
Affordability. No one,
especially undergraduates, should be deterred from attendance because of limited
finances, but students should still pay in fees what they can reasonably afford.
While the principle is clear, its measurement in practice is difficult because
of the intermixture of family resources and current earnings, and the rapid
increase of scholarships, grants, government-guaranteed student loans, and
federal tax credits for tuition. In the real world, the “posted
price” of tuition or fees is rarely what is paid by low income students,
while those from upper-income families could afford to pay considerably more
than the actual fee charged by public
institutions.[7]
Choice. Students should
have a wide variety of educational opportunities in terms of choosing among the
sectors, institutions, programs, and delivery systems. This policy has
resulted in an extensive dispersion of public campuses and a major commitment to
student financial aid that reduces financial barriers for attending a private
institution.
Quality.
Californians are committed to maintaining a system of higher education at a
level of quality in teaching, research, and public service second to none.
Traditionally, the higher education community itself has defined quality
in terms of dollars available, recruitment and retention of quality faculty,
selectivity of good students, or the national prestige of institutions.
Recently, quality has become more multi-faceted, including measures of
educational outcomes, “value added” from the standpoint of learning,
the priority to maintain currency with curricular shifts, and opinions of higher
education’s “customers,” including students and the businesses
that hire graduates. Under all definitions of quality, financial
resources play a substantial
role.
Efficiency. The
system of state finance should promote the conservation of resources, their
judicious use, and creative approaches to offering programs. The efficiency goal
should be for state government to provide the same or an even higher quality of
education at a reduced cost to taxpayers and students. In the past, the
primary way that the state has fostered “efficiencies” has been
through underfunding of certain budget categories and lower appropriations
during times of fiscal stringency. Under arrangements where a certain level of
government support is expected, the segments and campuses have had to translate
millions of dollars of cuts into programmatic reductions and changes. These,
they contend, represent
efficiencies.[8]
Cooperation.
The state’s finance approach should provide incentives for cooperative
links among the segments of higher education and with K-12. For years, these
links have consisted mainly of policies dealing with transfer students, joint
degrees between universities, and articulation of courses. Recent state
budgets have provided millions of dollars, especially to the public universities
for K-12 links.[9] Recently, shared
facilities and regional cooperation among institutions have emerged as
priorities and state government should encourage these through fiscal
incentives. Beyond these appropriations, the state’s goal should be that
these links are systemic and intrinsic to the institutions of higher education,
and a priority for their regular operations, rather than simply opportunities
based solely on additional funding.
Accountability. The
state should provide a clear statement of standards and expectations for the
institutions, define what measures will be used to assess progress, and
establish fiscal consequences for their achievement or lack thereof. It is
especially important that state government define what should be measured, how,
when, and by whom. In this regard, the “Partnership” approach for
the UC and CSU, which establishes certain annual levels of state funding in
return for specific and often quantified results, is a good beginning for a
comprehensive accountability framework. When fully developed, this framework
should (a) include outcomes that measure some of the “value added”
by the postsecondary enterprise, (b) include incentives and rewards for
exceeding expectations as well as penalties for falling short, and (c) be
subject to adjustment as circumstances change.
Shared Responsibility.
California’s system of higher education is one of the most respected
in the nation and around the world, in large measure because of its commitment
to access, quality, affordability, and choice. However, the expense of fully
meeting all these goals, during times of strong enrollment demand and
fluctuating tax revenues, is more than the state government can meet alone.
Realistically, the fiscal responsibility for providing broad access to high
quality postsecondary education has to be shared by state government, local
communities, students and their families, and the businesses that employ college
graduates.
Our working group identified three challenges
that pose the most serious threats to achieving these goals.
Current unmet needs:
California’s system of higher education has substantial needs in funding
current operations and capital construction, which must be met just to maintain
the current institutions. This comes, in part, from a gradual decline of state
support for colleges and
universities.
During the 1970’s,
higher education received between 16.5% and 17.5% of the state’s general
fund appropriations for current operations, despite the fact that the Community
Colleges relied heavily on property taxes that decade. Today, the state
appropriates barely 12% of its general funds to higher
education.[10] The reasons for this
decline have been the priority placed on funding other sectors, such as K-12
education, the rapid growth of workload in other state-funded institutions, such
as the penal system, and higher education cuts that were replaced in part with
student fee revenues.
If it is not
possible for the state government to meet all these financial needs each fiscal
year, the state should take a leadership role in identifying the magnitude of
these needs and in forging partnerships to meet them. This means providing
incentives to expand other revenue sources and encouraging innovative approaches
to increasing capacity through joint efforts among institutions and educational
technology, and ensuring ample student financial aid that encourages a choice
among educational sectors.
Growth in
enrollment demand: The challenge of financing higher education, however,
extends beyond current needs. More than 700,000 additional students, or an
increase of 35%, will seek to enroll in California higher education between 1998
and 2010.[11] During those years,
the rate of growth among California’s 18 to 24 year olds, those who attend
college most heavily, will be double the growth of the population as a
whole.[12] Three-fourths of the
additional demand will result from demographic growth and increasing class sizes
of high schools, while the remaining one-fourth will come from improved college
participation rates.
Indeed, the
working group suggests that the state set its sights of access even
beyond those of traditional age in “Tidal Wave II.” The state
should find more spaces for older adults who wish to re-enter to complete their
college degree, more encouragement for those who wish to pursue an advanced
degree after several years of employment, and more opportunities for those who
need continuing education.
It is vital
for the state’s economic and social future that the projected numbers of
additional students be enrolled in higher education. However, unless the
long-term decline of state appropriations support is reversed, it is hard to
imagine how the full extent of enrollment demand in Tidal Wave II and that of
older adults can be accommodated. In the face of such demand, the choices will
be to limit access to college, reduce the quality of public
institutions, limit choices available to students, or raise student fees
beyond the affordability of many
Californians.
Over the past five years,
many credible studies have reached this conclusion and have offered concrete
recommendations on the best ways to accomplish this
reversal.[13] Taken altogether,
they provide a wide range of creative options, from better preparation that
reduces time in postsecondary education, to expansion of electronic technology,
to more use of private institutions, to more intensive use of traditional sites,
off-campus centers, and joint-use facilities. These studies represent an
important resource for the legislature in considering alternatives, and our
report contains many of the same
recommendations.
The lack of a
long-term, comprehensive, and realistic approach to state finance of higher
education: Abrupt changes in major state finance patterns or
policies damage the ability of California’s public segments and private
institutions to achieve public policy goals, and often disrupt the educational
plans of students. Over the past decade, the state government has changed
signals with regard to calculating the adequacy of financing for public
institutions, student charges in public segments, and its commitment to student
financial aid. In good times, the state provides large increases in
appropriations to public institutions, reduces student fees, accepts
responsibility for ambitious initiatives, and directs more financial aid to
students in private institutions. When hard times arrive, state government
reverses these actions, deeply cuts its appropriations to higher education and
abandons, or suspends, many of its commitments to institutions and students.
These swings of support extend beyond
the normal ebb and flow of state revenues. They occur partly because most
appropriations to higher education are annual and discretionary--that is they
are neither constitutionally required nor protected under existing
statutes[14]--and partly because the
state has lacked realistic planning and constructive discipline.
| Table of Contents | |||
| Summary | Introduction | Recommendations | |
| Appendices | References | Members | |