Rebooting finance in public higher education

1. Rebooting finance in public higher education Jane Wellman AASCU Annual Meeting Charleston, SC November 22, 2010

3. Outside inside: the fractured dialogue about college costs and the road ahead Source: John Immewahr, Villanova University, based on research for Public Agenda.

4. The problem of multiple –and sometimes conflicting – truths

5. 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 • Not so true: OECD countries exclude benefits, and US figures include private colleges. OECD, Education at a Glance 2009, Table B.1., annual expenditure per student For core educational services only (excludes research and organized activities).

6. Economic stratification in US postsecondary educationWHERE THE MONEY GOES, WHERE THE STUDENTS ARE ENROLLED Source: Delta Cost Project IPEDS Database, 1987-2008; 10-year matched set.

7. Tuitions are going up because of out of control spending • True: tuitions are increasing faster than almost any other commodity • And before the recession spending per student did go up 3% 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 masters’ institutions and community colleges

8. Sources: College Board, “Trends in College Pricing, 2008”; Bureau of Labor Statistics, 2009, www.bls.gov ; U.S. Census, Current Population Study-ASEC, 2008.

9. …where the money goes by major functional area

10. Changes in subsidy share of costs Source: Delta Cost Project IPEDS Database, 1987-2008; 10-year matched set.

11. The primary driver of costs is faculty salaries – which can’t be reduced because of tenure True: spending on faculty is the largest single spending area False: faculty are not the majority of employees • Spending on faculty is declining relative to other areas • And most increases in compensation are going to benefits

12. In 2009, 46% of all employees in public and private non-profit institutions have faculty status • Compared to 23% in for-profit institutions • Of these, the percent with tenure or on track: • Public four-year: 70% • Private four-year: 61% • For profit: 0.4% • % of instructional titles with part-time status: • 52%

13. % Changes in faculty compensation, 1979 – 2008(in 2009 constant dollars)

14. National averages, spending per FTE student in 2008-9

15. States can save money by shifting students to community colleges • True: cost per student in the community colleges on average is 14% less than in public masters’, and 34% less than public research costs • BUT the state share of costs is higher – in many states subsidy costs are higher than in masters’ institutions • AND cost per degree is actually higher in CCs

16. Spending and subsidies per Student – national averages

17. Spending per Degree and Completion, AY1998-2008 (in 2008 $) Source: Delta Cost Project IPEDS Database, 1987-2008, 11-year matched set.

18. Spending is going up because of under-prepared students… and the costs of remediation • True: Underprepared students are less likely to succeed, and we DON’T have a good track record with success in remedial/developmental • Education • BUT: we don’t know what we spend on remediation – on a per student basis • Remedial education is cheap – as is most ld/ug education – in public institutions, likely a net revenue-producer

19. The reality of cross-subsidies Data from 2002-2007 for Ohio, Florida and Illinois public four-year institutions; and 1995 – 2004 for SUNY. Report available at http://www.sheeo.org/finance/SHEEO_Cost%20Study%20Report_2010.pdf

20. For more information, go to: Delta Cost Project http://www.deltacostproject.org http://tcson-line.org