Title: Funding Trends in Higher Education
1Funding Trends in Higher Education
Office of Planning Services and Professional
Development (PSPD) University of Rhode
Island October 2004
2Current Financial Issues
- Drastic decline in state funding across the board
(Seligo, 2003 Gose, 2002, Gose, 2003 Zemsky,
2003) - Many schools currently acquire only 10-20 of
their funding from state appropriations - This has put a financial crunch schools budgets,
leading them to seek new funding opportunities - Increasingly, higher education is seen as a means
of personal enhancement, and not as a public good
(Zemsky, 2003 Selingo, 2003) - It is important to link higher education to
economic development, in order to facilitate
funding increases.
3Political Plans Perceptions
- Very little emphasis placed on higher education
by President Bush (Burd, 2004) - No Child Left Behind Act
- Tax cuts
- They want high access, low tuition, top quality,
and no tax increases to pay for it Lyall, U
Wisconsin (Selingo, 2003) - Want more federal control of colleges and
missions, not less (Hartle, 2004) - College Affordability and Accountability Act
(Tierney, 2004)
4Priorities The View from Congress, 1990 vs.
2003
- Connection The Journal of the New England Board
of Higher Education conducted a survey of New
Englands congressional delegation showing that
funding for higher education has some strong
competition, though it has made a small gain.
Presented is a comparison of regional, national,
and educational priorities by rank.
5Priorities The View from Congress, 1990 vs.
2003
- Funding for higher education has made a small
jump in priority from third to second place from
1990 to 2003, but in relation to other regional
and national issues, it is barely on the radar.
6What are the trends?
- Privatization
- Responsibility-Centered Management (RCM)
- Accountability for less bureaucracy
- Increased emphasis on fundraising and endowments
- State donor ratios
- Voucher programs
- Raising tuition and fees
- Increasing enrollment (especially out-of-state)
- Increased emphasis on grants and research
7Privatization
- With state appropriations on the decline, many
schools are relying more on external funding
(Levine Shifting Ground Selingo, 2003 Zemsky,
2003) - Pros
- Schools have more autonomy
- They can invest the money where they see fit
- Better capable of meeting needs of students as
enrollment increases - Cons
- Concerns about losing sight of schools missions
- Knowledge may lose its intrinsic value
- Private donors and corporations will have control
of where money goes
8Privatization
- Despite privatization concerns, many believe that
a public private school can still keep the
public good in mind (Zemsky, 2003) - Feeling the financial crunch, many schools have
increased privatization, with positive results
9Examples of Privatization
- University of Michigan- auxiliary enterprises
University Hospital - University of Oregon- contracts for services,
retain interest from private donations - South Carolina- radical privatization, governor
proposing to make schools independent non-profits - Virginia (U of V, VTech, Wm Mary)- states allow
increased autonomy with decreased appropriations.
Chartering proposed, making these schools public
corporations. - U of V is also breaking off its business and law
schools, leaving more money for rest of school.
10Dimensions of Publicness and Privateness
Source D. Bruce Johnstone Privatization in and
of Higher Education in the US
11Responsibility-Centered Management
- What is RCM (RCB, VCM)?
- RCM is a system based on decentralizing a
schools budget to each departmental unit, thus
allowing them increased autonomy
12Basic Principles of RCM
- Academic units gain
- control of costs and income they generate
- incentives to increase revenue and decrease costs
by controlling their own plans and budgets - control of decision-making regarding tuition fees
and enrollment - less specific, more global budgets
- clearer understanding and control of service and
administrative costs
Source Daniel W. Lang, A Primer on
Responsibility Centre Budgeting and
Responsibility Centre Management
13Which institutions use RCM?
- University of New Hampshire
- Indiana University
- University of Minnesota
- University of Illinois - Urbana-Champaign
- Ohio state University
- Southern Illinois State University
- University of Idaho
- University of South Carolina
- Brandeis University
- University of North Texas
- University of Pennsylvania
- Okanagan University College (British Columbia)
- University of Michigan
- Marquette University
- Mercer University
- Texas AM University
- CalTech University
- Vanderbilt University
- Duke University
- Auburn University
- Clarkson University (considering)
- Purdue University
- Temple University
- University of Oregon
- University of Pennsylvania
- University of Southern California
- University of Toronto
- West Chester University (PA)
14Which institutions use RCM?Contd
- Central Michigan University
- University of Iowa
- University of Alaska
- University of Connecticut
- McGill University
- Florida International University
- Renssalear Polytechnic Institute
- American University
- University of California at Los Angeles (UCLA)
- Clemson University
- Harvard University
- Washington University of St. Louis
- Indiana University of Pennsylvania
- Cornell University
- Worcester Polytechnic University
15Accountability
- Performance contracts trade accountability for
increased autonomy to set tuition levels and fees
(Breneman, 2004) - Accountability may be in a variety of areas
including graduation rates, increased enrollment,
or meeting state educational needs - Benefits include predictability, improved
management, clarity of expectations, recognition
of varying missions - Colorado, Florida, Texas, Washington, Mass
College of Art - South Carolina- entire higher ed budget is based
on performance
16Fundraising and Endowments
- Schools are strengthening capital campaigns,
though some see it as an unstable means of
funding (Gose, 2002) - U. of Michigan Ann Arbor increased ten fold in
1990s- 200 million to 3.4 billion - U. of Texas at College Station fundraising
increased from 212 million in 1990 to 725
million in 2002 - U. California Berkeley, U. of Virginia- 1.3
billion each in recent campaigns UCLA- 2
million - U. of Minnesota, as a part of RCM, has allowed
each dept. to appoint its own gift officer
17Matching Donors
- Matching donor programs call for states to match
a certain ratio of funds raised by schools (i.e.
every 2 raised by the school, the state will
match it with 1) and have been very successful - Problem- some campaigns are working too well, and
states do not have the money to match the
schools fundraising efforts (Potter, 2003) - Language is important- if donors are told their
funds are eligible for matched funding, fewer
problems emerge - Reverse matching donor- Utah- colleges must match
state funds with private money
18Which states/institutions use matching donor
programs?
- Nearly half of states have these programs in
place (Potter, 2003) - Louisiana schools- pay for program using states
oil interest, not state appropriations, in order
to keep it more stable - Alabama, Connecticut, North Carolina, University
of Massachusetts all have this program in place
19Vouchers
- Colorado, in a response to a tuition and fee
limit, has implemented a voucher/student stipend
system. Students are allotted money from a
statewide fund to use at the school they choose
(Selingo, 2003 Breneman, 2004) - This is supplemented with need-based financial
aid - Colorado also has role and mission block grants
available, and a performance contract in place
20Raising Tuition and Fees
- Tuition across the country is increasing very
quickly to make up for a lack of state funding,
an average of 6 per year (Loomis Hubbell
Lapovsky, 2004) - Many, including politicians, find this to be a
problem, claiming that it violates states
missions to serve the public- especially
low-income students who are finding it more and
more difficult to pay for college - Schools are dealing with this in a variety of ways
21Tuition Schools Responses
- Many schools are raising tuition, but allowing
some increased revenue to go directly into
financial aid (Loomis Hubbell Labovsky, 2004
Gose 2002) - Miami U. at Ohio- increased tuition to 18,000
for in-state and out-of-state, and supplements
students with financial aid - U. Michigan Ann Arbor- increased out-of-state
tuition to private levels of 21,645, while
keeping in-state tuition manageable at 6,935
22Increasing Enrollment
- While many schools are finding increasing
enrollment to be a problem due to a lack of
resources, some find that increased enrollment,
especially by non-residents, can help make up for
a lack of state appropriations - U. of Michigan Ann Arbor- changed ratio of
students, allowing for more out-of-state students
to enroll without increasing in-state tuition
(Duderstadt, 2003)
23Grants and Research
- Grants and research are increasingly being used
to help fund schools - Some even suggest using a new faculty payment
formula that would encourage faculty to engage in
research, thus helping fund both the professor
and the university - XYZ funding model (Zappia, 2000)
- X university guaranteed salary
- Y income generated by the professor (largest
portion) - Z yearly bonus based on performance
24References
- American Council on Education, The Futures
Project. Shifting ground Autonomy,
accountability, and privatization in higher
education. May, 2004 - Breneman, D. W. Are the states and public higher
education striking a new bargain? Association of
Governing Boards of Universities and Colleges
Public Policy Paper Series, 04-02. - Burd, S. Election 2004 Where they stand on
higher education. Chronicle of Higher Education
Online, September 17th, 2004 - Duderstadt, J. University in the new millennium.
Paper presented at University of Washington,
November 29th, 2002. - Gose, B. The fall of the flagships. Chronicle
of Higher Education Online, Jly 5th, 2002 - Gose, B. Belt-tightening by the bay. Chronicle
of Higher Education Online, April 4th, 2003.
25References
- Hartle, T. Simmons, C. Billing cycle How
will New England fair under new federal higher
education legislation? Connection Journal of New
England Board of Higher Education, Winter 2004,
p. 13-14. - Indiana University Bloomington, Report of the RCM
review committee responsibility Centered
Management at Indiana University Bloomington,
October, 1996. - Johnstone, D. B. Privatization in and of higher
education in the U.S. - Kennedy, E. M. Educational security for all.
Connection Journal of New England Board of
Higher Education, Winter 2004, p. 15-17. - Lang, D. W. A primer on responsibility centre
budgeting and responsibility centre management,
The Canadian Society for the Study of Higher
Education, Winter 1999, 17. - Loomis Hubbell, L. Lapovsky, L. Widening the
higher education gateway. NACUBO Business
Officer, September, 2004, p. 21-29. - Nelson, K. R. Scoby, J. L. Implementing
decentralized responsibility centered management
with budget restructuring and cutting edge
technologies, paper presented at EDUCAUSE
Conference, 1998.
26References
- Potter, W. Breaking a promise. Chronicle of
Higher Education Online, October 31st, 2003. - Seligo, J. The disappearing state in public
higher education. Chronicle of Higher Education
Online, February 28th, 2003. - Tierny, J. F. Toward college affordability.
Connection Journal of New England Board of
Higher Education, Winter 2004, p. 19-21. - University of New Hampshire website
http//www.unh.edu/rcm/ - Zappia, C. A. The private sector and higher
education. Perspectives American Historical
Association, May, 2000. - Zemsky, R. Have we lost the public in higher
education? Chronicle of Higher Education Online,
May 30th, 2003.