Connecting the dots… between $$$ and institutional sustainability Jane Wellman WASC Commission on Colleges ARC Meeting April 22, 2010
Dec 07, 2014
Connecting the dots…between $$$ and institutional
sustainability Jane Wellman
WASC Commission on CollegesARC MeetingApril 22, 2010
2
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
Bachelor's
Associate
Additional Degrees Needed to Reach 60%
Current production v. increases needed to meet 60% goal
The challenge: Increasing educational attainment to be best in the world…
}+4%/year
Current and projected levels of degree production with no change in performance
Need +8 million more AA/or BA or credentials
3
% Changes in state and local appropriations for higher education 1960 – 2006
Can we break the “Iron triangle” Access
4
QualityFunding
The conditions as they exist: contrary propositions we must try to reconcile
5
• Professed goal to increase educational attainment• Privatization of resources• Growing financial stratification between institutions and
sectors• Spending cuts following recessions occurring primarily in
instructional areas• Public revenues not likely to return past 2006 levels any time
in the next decade• Public opinion skeptical of need for new investments• Weak evidence about the relation between spending and
results• Poor use of evidence about spending within the academy
Conventional wisdoms that get in the way of change
6
Public policy perceptions…
American higher education is the richest in the world = we have the money, we just need to spend it better
• True: According to OECD, US spending per capita $19,746/student – compared to OECD average of $8,415
• False: OECD countries exclude benefits, and US figures include private colleges.
7
OECD, Education at a Glance 2009, Table B.1., annual expenditure per studentFor core educational services only (excludes research and organized activities).
Private Research
Private Bach
elor's
Private M
aster's
Public Research
Public M
aster's
Community Coll..
.$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000Enrollment vs. spending, 2008
Edu
catio
n an
d R
elat
ed S
pend
ing
per
FTE
stud
ent
Total H
eadcount Enrolm
ent (fall)
Source: Delta Cost Project IPEDS Database, 1987-2008; 10-year matched set.
Economic stratification in US postsecondary educationNATIONAL: WHERE THE MONEY GOES, WHERE THE STUDENTS ARE ENROLLED: E&R
SPENDING PER FTE STUDENT/ENROLLMENTS
8
Public policy perceptions…
Institutions can substitute private resources for public funds
• True: private funding increased hugely in institutions in the 1990’s through around 2006, although an unstable source – State revenues now a minority of funds in some public
institutions –mostly research universities, in east • Not so true: private revenues are not going to core
academic functions– And public revenues still a majority $ for most
comprehensives and community colleges 9
*Note: In private institutions, investment returns include unrealized gains/losses.All data are in 2008 dollars.Source: Delta Cost Project IPEDS Database, 1987-2008, 11-year matched set.
1998 2003 2007 2008 1998 2003 2007 2008 1998 2003 2007 2008 1998 2003 2007 2008 1998 2003 2007 2008 1998 2003 2007 2008Public Research Public Master's Community Colleges Private Research Private Master's Private Bachelor's
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Total Revenues per FTE Student, AY1998-2008
Net tuition State and local appropriationsFederal appropriations and federal, state, and local grants and contracts Auxiliary enterprises, hospitals, independent operations, and other sourcesPrivate and affiliated gifts, investment returns, and endowment income*
2000 2004 2007 2008 2000 2004 2007 2008 2000 2004 2007 2008 2000 2004 2007 2008 2000 2004 2007 2008 2000 2004 2007 2008Public Research Public Master's Community Colleges Private Research Private Master's Private Bachelor's
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000Total operating expenses per FTE student by category (in 2008 $)
Education and related expensesSponsored research, public service, and net scholarships & fellowshipsAuxiliary enterprises, hospitals, independent operations, and other expenses
Source: Delta Cost Project IPEDS Database, 1987-2008; 10-year matched set.
…where the money goes by major functional area
Public policy perceptions… • Tuitions are going up because of out of control
spending• True: tuitions are increasing faster than almost any
other commodity• 1998-2008 spending up 3% year each year over
inflation/enrollment in private research universities• But actual spending per student didn’t increase much
at all in public institutions – barely above 1% in research universities and flat or declining in community colleges
• What has happened is a subsidy shift – costs are flat, but prices are going up 12
Sources: College Board, “Trends in College Pricing, 2008”; Bureau of Labor Statistics, 2009, www.bls.gov ; U.S. Census, Current Population Study-ASEC, 2008.
1988198919901991199219931994199519961997199819992000200120022003200420052006200720080%
50%
100%
150%
200%
250%
300%
350%
The Rising Cost of College, 1988-2008 (based on increases in current dol-lar amounts)
Public Four-YearPrivate Four-YearPublic Two-YearMedian Family IncomeCPI-UPrescription DrugsHousehold EnergyNew Vehicle
Cum
ulati
ve g
row
th si
nce
1988
Changes in subsidy share of costs – public institutions 1998-2008
2000 2004 2007 2008 2000 2004 2007 2008 2000 2004 2007 2008Public Research Public Master's Community Colleges
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$5,342$6,565 $7,411 $7,563
$4,014$4,975 $5,492 $5,607
$2,303 $2,767 $3,003 $3,060
$9021
$7,756 $8,055
$7,414 $6,279$6,347 $6,578
$7,980 $6,957$7,473 $7,579
Public Institutions: Average Education and Related spending per FTE student, by net tuition and subsidies (in 2008$)
Net tuition (student share of costs) Average Subsidy
(38.5%) (23.6%) (30.7%)(30.8%)(30.2%)(46.9%)(47.4%)(45.0%)(35.8%)(50.5%)(51.0%)(48.6%)
$7491
$14363
$15,618
Source: Delta Cost Project IPEDS Database, 1987-2008; 10-year matched set.
1998 2003 2007 2008 1998 2003 2007 2008 1998 2003 2007 2008Public Research Public Master's Community Colleges
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$5,195 $6,036 $7,411 $7,563$3,999 $4,507 $5,492 $5,607
$2,201 $2,576 $2,982 $2,992
$8,726 $8,183 $7,756 $8,055
$6,886 $6,884 $6,347 $6,578$7,568 $7,018 $7,258 $7,398
Average Education and Related Spending per FTE Student, by Net Tuition and Subsidy, AY 1998-2008
1998 2003 2007 2008 1998 2003 2007 2008 1998 2003 2007 2008Private Research Private Master's Private Bachelor's
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$16,343 $18,203 $19,586 $19,836
$11,837 $13,025 $14,208 $14,320$10,751 $12,253 $13,297 $13,515
$10,718$12,500
$14,116 $14,496
$2,460 $2,429 $2,102 $2,135 $7,159$7,452 $7,110 $7,292
Net tuition Average SubsidyAll data are in 2008 dollars.Source: Delta Cost Project IPEDS Database, 1987-2008, 11-year matched set.
Cost v price 1998 2008 – National by Carnegie sector
16
• Research universities: Cost + 8%, Price up 41%• Masters’ universities: Cost + 6%, Price up 40%• Community colleges: Cost + 3%, Price up 32%
Sector Cost Price
Public research 8% 41%
Public masters’ 6% 40%
Community Colleges
3% 32%
Private research 27% 21%
Private masters 15% 21%
Private bacc 15% 15%
Conventional wisdoms inside the academy
Costs inevitably increase because of the non profit ‘cost disease’
• And because the primary driver of costs is faculty
True: costs do rise to meet revenue – and competition drives spending upward
False: faculty are not the primary cost driver within institutions, spending on faculty has been declining relative to increases elsewhere
17
1998 2003 2007 2008 1998 2003 2007 2008 1998 2003 2007 2008Public Research Public Master's Community Colleges
$0
$5,000
$10,000
$15,000
$20,000
Spending within E&R – instruction, student services, administration/general support and maintenance
Instruction Student Services Admin/Support and Maintenance
62.8% 50.2%50.2%51.2%52.0%51.5%51.6%52.6%53.2%61.7%62.0%63.5%
All data are in 2008 dollars.Source: Delta Cost Project IPEDS Database, 1987-2008, 11-year matched set.
Conventional wisdoms inside the academy …
Money = quality = performance
True: money = prestige, strong correlate with admissions selectivity, academic credentials, class size, research
False: money ≠ performance19
Productivity: Total Funding per Degree/Certificate(Weighted*, 2006-2007)
Public Only
slide 20
29,0
75
30,6
19
33,2
73
33,7
56
34,3
30
34,5
94
36,4
98
37,8
23
38,3
64
38,3
65
39,5
16
39,5
16
39,9
18
42,1
77
42,1
98
42,4
08
42,6
93
42,8
47
42,8
73
42,9
48
43,8
20
44,2
72
44,3
71
45,8
33
45,9
04
46,5
22
46,8
80
47,4
53
47,6
72
47,7
49
48,6
11
49,8
94
52,4
91
52,5
72
52,8
88
53,5
35
54,5
53
56,0
90
56,2
80
56,8
88
56,9
60
59,4
20
59,4
65
63,8
22
64,9
34
65,9
75
66,6
23
72,8
46
75,7
44
79,7
94
86,0
09
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
FloridaColoradoW
ashingtonUtahNorth DakotaO
klahoma
West Virginia
Montana
South DakotaKansasGeorgiaLouisianaW
isconsinIdahoNew
Hampshire
IllinoisM
ississippiArizonaArkansasM
innesotaO
regonKentuckyIow
aVirginiaM
issouriNationO
hioIndianaNebraskaTexasSouth CarolinaNorth CarolinaM
ichiganTennesseeNew
Mexico
CaliforniaM
ainePennsylvaniaAlabam
aNew
YorkNevadaM
arylandVerm
ontNew
JerseyM
assachusettsHaw
aiiConnecticutRhode IslandDelaw
areW
yoming
Alaska
Tuition and FeesState and Local
Sources: SHEEO State Higher Education Finance Survey 2008; NCES, IPEDS Completions Survey; U.S. Census Bureau, American Community Survey (Public Use MicrodataSamples)
*Adjusted for value of degrees in the state employment market (median earnings by degree type and level)
Total Funding per FTE (2006-07)
Performance (2006-07) AL
AZ
AR
CA
CO
CT
DE
FL
GAHI
I D
I L
I N
I AKS
KY
LA
ME
MD
MAMI
MN
MS
MO
MT
NE
NV
NHNJ
NM
NY
NC
ND
OH
OK
ORPA
RI
SC
SD
TN
TX
UT
VT
VA
WA
WV
WIWY
US
15
18
21
24
27
5,000 10,000 15,000 20,000 25,000 30,000 35,000
Performance Relative to Funding: Bachelors Degrees Awarded per 100 FTE Undergraduates
(Public Research Institutions)
slide 21Source: NCES, IPEDS
Total Funding per FTE (2006-07)
Performance (2006-07)
AL
AK
AZ AR
CA
CO
CT
DE
FL
GA
HI
I D
I L
I N
I AKS
KY
LA
MEMD
MAMIMN
MSMO
MT
NE
NV
NH
NJ
NM
NY
NCND
OH
OK
OR
PA
RISC
SD
TN
TX
UT
VT
VA
WA
WV
WI US
5
10
15
20
25
30
2,000 5,000 8,000 11,000 14,000 17,000 20,000
Performance Relative to Funding: Bachelors Degrees Awarded per 100 FTE Undergraduates
(Public Bachelors and Masters)
slide 22Source: NCES, IPEDS
Total Funding per FTE (2006-07)
Performance (2006-07)
Performance Relative to Funding: All Credentials Awarded per 100 FTE Undergraduates(Public Two-Year Institutions)
slide 23Source: NCES, IPEDS
4,000 6,000 8,000 10,000 12,000 14,000 16,0008
16
24
32
40
48
US WY
WI
WA
VA
VTUT
TXTN
SD
SC
RI
PAOR
OKOH
ND
NC
NYNM
NJ
NH
NV
NE
MT
MO
MS
MN
MI
MA
MD
ME
LA
KY
KSIA
IN
ILID
HI
GA
FL
DE
CT
CO
CA
AR
AZ
AK
AL
Tentative conclusions from research on money and effectiveness
Intentionality matters as much or more than money alone
Spending on instruction and student services pays off in learning, retention and graduation
Student aid programs are generally not designed with the goal of student learning or degree attainment
Excess units cost institutions money, cost students time and money, and do not get students to the finish line
24
Spending is going up because of under-prepared students… and the
costs of remediation
25
• True: Underprepared students are less likely to succeed, and we DON’T have a good track record with success in remedial/developmental
Education
• BUT: Remedial education is cheap – as is most ld/ug education – in public 4-yrs
Institutions, likely a net revenue-producer
The reality of cross-subsidies Level of instruction SCH generated as a
percentage of total SCHInstructional spending as a percentage of all instructional spending
Lower division 35% 21%
Upper Division 45% 45%
Graduate 20% 34%
26
Data from 2002-2007 for Ohio, Florida and Illinois public four-year institutions; and1995 – 2004 for SUNY. Report available at http://www.sheeo.org/finance/SHEEO_Cost%20Study%20Report_2010.pdf
• http://www.deltacostproject.org • Insitution-level data using Delta metrics: http://www.tcs-online.org
Contact:Jane Wellman,Delta Cost Project1250 H Street, NWSuite 700Washington DC [email protected]
27
Estimates of attainment goals/gaps from NCHEMS. Data on state revenue trends from Doyle and Delaney. Measures of spending against degree attainment from Patrick Kelly, “The Dread P Word.” All other data are from Delta
Cost Project spending data base.