Senators Are Urged to Help Protect State Money for Higher Education

September 13, 2012

A panel of higher-education leaders outlined for a U.S. Senate committee the ways that states and public colleges are trying to hold down costs and produce a greater number of graduates. At the same time, they asked senators to strengthen the federal government's role in forcing states to preserve appropriations for public colleges and student financial aid.

The comments came Thursday during a hearing of the U.S. Senate's Committee on Health, Education, Labor and Pensions.

"Students, families, states, and the federal government all take part in funding a college education," U.S. Sen. Tom Harkin, Democrat of Iowa and the committee's chairman, said in his opening remarks. But over the past 30 years, he said, the burden of paying for college has shifted, as the cost of tuition has increased and the state appropriations have decreased.

"States are contributing less while students and their families are shouldering a heavier burden, financed largely through the federal government's financial-aid programs,"Senator Harkin said.

In their testimony to the committee, the panelists focused largely on state appropriation formulas that reward colleges for performance measures like graduation rates rather than the number of students they enroll—a concept known as "performance-based funding."

Tennessee has become a leader in this regard, passing a law in 2010 that bases nearly all of the state's public higher-education dollars on several benchmarks, including the number of graduates from each college, and giving credit to institutions that serve a larger number of low-income students or those who require more remedial education.

The performance-based approach has given colleges a strong incentive to dedicate more of their resources to helping students earn their degrees, which reduces the time and cost of attending college, said John G. Morgan, chancellor of the Tennessee Board of Regents.

In Oregon, the state has committed to improving elementary and secondary education so that colleges bear less burden of remediation, said Camille Preus, commissioner of the Oregon Department of Community Colleges and Workforce Development. The state also calculates how public college costs should be shared among students, their families, the state, and the federal government. A 2007 law put in place a new formula for state aid meant to ensure that all parties pay a fair share of college costs, Ms. Preus told the committee.

But the panelists' strongest statements came during the question and answer period, when they urged senators to attach more strings to federal aid as a way to leverage state appropriations.

David A. Longanecker, executive director of the Western Interstate Commission for Higher Education, said the federal government provides too much help to states for higher education without requiring anything in return. For example, the federal government should do more to penalize colleges with high default rates on student loans, he said, and reward states and institutions that succeed in improving degree-completion rates.

Although some state governments might resist the additional strings attached to the money, Mr. Longanecker said that it would be at the cost of their own residents and the state economy. "If they don't want to go along with it, to hell with them," he said.

Muriel A. Howard, president of the American Association of State Colleges and Universities, said Congress should strengthen a federal "maintenance of effort" rule that require states to provide consistent levels of appropriations in order to receive certain federal funds.

That suggestion brought a strong response from U.S. Sen. Lamar Alexander, Republican of Tennessee, who said the states were already overburdened by the cost-sharing requirements of Medicaid, the health insurance plan for disabled and low-income citizens. And he blamed Medicaid for states' declining support for higher education: "This has gotten higher education into the mess it's in today."

Later in the hearing, Senator Harkin said states had gotten themselves into problems by cutting taxes and relying too heavily on dollars from lotteries and casinos to pay for higher education.

"I hope we're not trying to pit poor kids against college students," said Senator Harkin.