Strapped States Give Less, Expect More From Colleges

By Ben Pokross

Randy Lyhus for The Chronicle

States have responded in very different ways to the economic pressures of the past year, with some of them contemplating drastic action to reduce higher-education costs and others pushing to expand faculties. As state colleges and universities attempt to rebound from several difficult years, leaders in many states are looking to higher education to boost the economy.

Total state support for higher education dropped by 7.6 percent from the 2011 to 2012 fiscal years, and the amount spent per student by states and localities reached the lowest point in a quarter century last year, according to an annual report from the Grapevine Project, at Illinois State University, and the State Higher Education Executive Officers, an association of governing-board officials.

State support has only slowly started to recover as tax revenues have stabilized, but most states are still far away from returning to the levels of allocation for colleges that they provided before the recession,, which officially began in late 2007. “While still very much austere on the state funding front for higher education, by and large things have evened out,” said Daniel J. Hurley, director of state relations and policy analysis at the American Association of State Colleges and Universities.

In response to last year’s cuts, college officials in many states have taken measures to reduce expenses and raise tuition. In January the State University System of Georgia approved a plan to merge eight campuses into four. In June, New Jersey lawmakers passed a bill that calls for parts of the state’s three largest universities to break up and merge. Gov. Chris Christie, a Republican, has yet to sign the legislation, which also needs to be approved by Rutgers University’s two governing bodies.

Tough economic conditions have also led many colleges and universities to recruit out-of-state students—who pay higher tuition—more aggressively than in the past. As the number of high-school graduates subsides in the Northeast and much of the Midwest, colleges in affected states will have to recruit a wider geographic mix of students.

California is the state suffering some of the most severe economic difficulties. State appropriations for the University of California have fallen by 20 percent in each of the past two years; the system receives less from the state in 2012 than it did in 1998, when it served 75,000 fewer students, according to system figures.

Whether state funds for 2013 will remain at their current level is contingent upon voters’ passage of a ballot initiative to raise income and sales taxes in November. If the initiative fails, it will trigger an automatic cut of close to $1-billion in support for California’s three higher-education systems.

A Return for the States

Some other state systems have avoided such austerity. The University of Connecticut, for example, has said it will create almost 300 new tenure-track positions in the next four years. Most of those jobs will be in research-based fields, especially biotechnology, in an attempt to bolster the state’s flagging health-care industry. Other states, like Minnesota and Iowa, have also been able to find the money for new faculty hiring in the coming years.

One of the ideas foremost on legislative agendas in the past year has been improving college completion. To do that, lawmakers and educators are crafting incentives to encourage people to finish college degrees on time. The efforts focus on working adults and other students who are at high risk of not graduating. Some states have capped the number of credit hours needed for a diploma, and others have created programs to encourage adults to return to college to complete their studies.

Many states are also linking financing with institutional achievement, by appropriating money on the basis of completion and retention rates rather than enrollment numbers alone. This “performance based” financing is designed to ensure that the state gets the most out of its investment in higher education. “People have come to realize that if you provide money by the number of students, you provide an incentive to enroll students who are not likely to finish,” said Paul E. Lingenfelter, director of the State Higher Education Executive Officers.

Across the country, lawmakers are considering not only the levels of support but also what kind of programs they pay for. A new emphasis is being placed on programs and policies that will directly benefit state economies by supplying the work force with qualified professionals. As a postsecondary degree becomes the workplace standard, states have an interest in encouraging their residents to graduate.

States are especially interested in paying for programs focused in high-growth areas like health care and fields in science, technology, engineering, and mathematics, says Travis J. Reindl, the program director who oversees postsecondary education at the National Governors Association. “This is a question about each state getting what it needs, especially in terms of economic necessities,” he says.

Demand to Prove Value

States’ new expectations also require colleges and universities to provide more-thorough data about how their students are faring. As part of the federal stimulus package, states received $250-million to help them gather information at all levels of education.

But colleges across the country and even within the same state sometimes have different definitions of what a degree-seeking student is and what the difference is between part and full time, making it difficult to compare data.

While financial concerns have dominated discussion in state legislatures in recent years, states are also beginning to refocus high-school curricula to ensure that students are ready for college-level work when they enroll. By instituting more rigorous national high-school benchmarks, like those defined by the state-led Common Core State Standards Initiative, educators hope that students will be better prepared for college and be more likely to graduate on time.

At the same time that states are reorganizing their physical campuses, they are thinking more and more about the role that online education can play in their offerings. Especially in states with large rural areas, distance education provides an opportunity to benefit an underserved portion of the population. Several organizations, including the Presidents’ Forum and the Council of State Governments, have proposed the creation of a reciprocity agreement, in which program certification in one state would be recognized in another, which would make it easier for online institutions to offer classes in different states.

But questions have also been raised about the practices of one sector that has been a leader in online learning: for-profit colleges. In 2011, legislators in 23 states introduced bills aimed at increasing control over for-profit colleges, curbing the amount of student financial aid that the institutions receive from the state and forcing them to disclose more information about their students.

This year the issues have come to a head in California, where Gov. Jerry Brown, a Democrat, pushed through a budget that slashes by 60 percent the amount of state scholarship money that can be awarded to students attending proprietary colleges. For-profit colleges also will not be able to participate in the scholarship program, known as Cal Grants, if they do not meet new criteria regarding graduation and loan-default rates.