In The New York Times, Tamar Lewin writes about how tuition payments are exceeding state appropriations, and some of the possible consequences foreseen by higher education professionals. Examples in this article focus on California and South Caroline.

Scott Pattison, executive director of the National Association of State Budget Officers:

“The difference between this downturn and others in the past is that this time I don’t think higher education will be able to recover the ground it’s lost,” said Scott Pattison, executive director of the National Association of State Budget Officers. “I hope I’m wrong, but I don’t see that money coming back. And with tuition already out of reach for many folks, I don’t think there’s much ability to keep raising it.”

Mark Yudoff, president of the University of California system:

“If approved, this budget will mean that for the first time in our long history, tuition paid by University of California students and their families will exceed the state’s contribution to the core fund,” Mark Yudof, the president of the University of California system, told the Board of Regents. “For those who believe what we provide is a public good, not a private one, this is a sad threshold to cross.”

We have seen a considerable flurry of recent reports indicating some serious cutbacks in higher education budgets in some states. According to a new SHEEO/CSEP report that is being released today, states are spending $79B on higher ed in 2011, down only .7% from last year. But those cuts are not evenly spread. Texas, California, and Arizona, for example, are imposing more severe cuts. This is a summary from Inside Higher Ed's Scott Jaschik, who was able to peruse an early copy of the report. Here is a report from The Chronicle of Higher Education's Eric Kelderman. From Jaschik:

Notably, however, there were six states where the percentage losses were in double digits: Missouri (down 13.5 percent); Delaware (12.4 percent); Iowa (12.2 percent); Minnesota (11.7 percent); Arizona (11.6 percent) and Oregon (10.8 percent). Only one state reported a double-digit increase: Wyoming (up 24.7 percent).

While states use different financial procedures to support higher education, the Illinois State-SHEEO study is considered the definitive source on state appropriations, with consistent rules for what is counted (state funds for operating support and student aid) and what's not (funds for building projects and tuition revenue). Federal research grants (a significant budget line for research universities) aren't counted, but the federal stimulus "stabilization" funds -- which were intended to support the operations of public schools and colleges -- are included because they support the same purposes as general state appropriations for higher ed.

The state of Arizona proposes to cut community college funding by 50%. Texas is cutting also, and closing four campuses.

No, this is not a larger-scale Walnut College Case Study; it's real-world 2011.

"Dean Dad" asks you, what would you cut if you were a community college CFO in Arizona?

To get a sense of just how bad this is, you could reduce every salary at the college by 25 percent, and still not make up the gap. (That's because labor isn't the only cost.) Alternately, you could lay off 25 percent of the employees and still not make up the gap.

The 'squishy' things would be the first to go. That means travel, professional development, and food for college functions. This adds up to well under 1 percent.

Obviously, any new full-time hiring for non-unique positions is out of the question. Normal attrition, unreplaced on the staff side and adjuncted-out on the faculty side, might get you another percentage or two.

Fast Company has published a new article and resource from Anya Kamanetz (author of DIY-U). Reacting to a grant of $100M from Facebook founder Mark Zuckerberg to the city of Newark, NJ, she thinks the money is being spent the wrong way. "Is it possible to craft an education platform that's as participatory, offers as much opportunity for self-expression, and is as magnetic to young people as Facebook itself? That would be a theory of change worth testing."

Attached to Kamenetz' essay are 13 "Radical Ideas" from a variety of education leaders. They are short, but some are provocative. SCUPers will especially like Radical Idea #13: Build a Better Classroom. The focus of all is on K–12, but here is a Blog U post with suggestions for higher education. 

This Business Officer document is blurbed, "Stimulus funds for university research can be a mixed blessing, causing an institution’s facilities and administration rate to shrink. A case study presents strategies to keep rates in check."

The American Reinvestment and Recovery Act (ARRA) presented higher education institutions with an unprecedented level of funding to expand and improve their research opportunities. Since ARRA's creation in February 2009, however, the government and academic community have debated the best approach to accounting for the additional funding and capturing its effect on facilities and administration (F&A) rates—the amount of overhead, or indirect costs, associated with federally funded research that universities can recoup.

The government, understandably, wants justification of every ARRA dollar awarded; ARRA grants come with a host of documentation and reporting requirements. Equally understandably, universities with increasingly tight budgets seek to recover from the government a significant percentage of their overhead costs. These costs have escalated with ARRA's administrative requirements, as universities must devote more staff time to gathering and submitting the required data. Given the government's regulations and stance in F&A rate negotiations, university leaders now question whether they'll be picking up more of the research tab—and, if so, just how much it could cost them.

A good review, in University Business magazine by Ann McClure, of a surprising number of initiatives underway to bolster the community college mission. Each of the following is described in a short summary:

• The White House Summit on Community Colleges
• Department of Veteran's Affairs
• The Brookings Institute
• Lumina's 'Adult Degree Completion Commitment'
• The American Association of Colleges and Universities' 'Roadmap Project'
• The Aspen Prize for Community College Excellence
• The Gates Foundation's 'Completion by Design' Program

As one example, regarding veterans:

Helping veterans accomplish education and employment goals was one breakout session topic community colleges are already tackling. The robust program at Coastline Community College (Calif.), which has served active military since the 1970s, earned Jocelyn Groot, dean of military and contract education, a summit invitation. “What I took from our session is veterans are a different community with different needs,” Groot says. “What emerged was the disconnect between the Department of Education, Department of Labor, and Veterans Affairs.” Having Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, in the session assured Groot the message would be heard. She says an exciting aspect of the summit was that it felt like a normal meeting until she realized there were people at the table who could actually make a difference.

A challenge she sees is in getting information about veterans’ support programs out to community college students and the public. For example, many people are unaware of the Student Veterans of America support clubs on many campuses.

This working paper is attracting interest for its examination of an area seen by many as difficult to examine: productivity (or not) and its causes. With the need for more productivity that is currently highlighted by federal and state governments, and by large philanthropies affiliated with higher education, this is a topic that promises to be in our top ten for the next few years.

The entire 50-page document can be downloaded here (PDF). A discussion of it, titled "Unconventional Wisdom," can be found here. And a very nice blog post, titled "Cst-Effectiveness, or Cost?," examining the discussion of it can be found here. Its abstract reads:

Productivity in academic degrees granted by American colleges and universities is declining. While there is some evidence this is caused by an uncontrollable cost disease, we examine two additional explanations. First, few popular programs and strategies in higher education are cost-effective, and those that are may be underutilized. Second, a lack of rigorous evidence about both the costs and effects of higher education practices intersects with a lack of incentive to use cost-effectiveness as a way to guide decision-making. Rather than simply a cost disease, we argue that the problem is more a system disease—one that is partly curable.

"Dean Dad" says you can—maybe—use reserves to fix shortfalls (after some caveats): "The relevant question is whether the shortfall is fleeting or structural. If it’s fleeting, then spend away. If it’s structural, then make the changes that need to be made."

The starter for this blog post is a specific situation at SUNY New Paltz, but that's just the excuse to examine what reserves really are, whether they are useable or not in the first place, and when it might be okay to use them to patch up budgetary shortfalls:

I’ve written before on public college reserves, and how they differ from ‘endowments’ as usually understood. The short version is that endowments are supposed to produce income which can be used for various reasons, but reserves are supposed to be liquid and available either for capital projects (buildings) or short-term budget gaps. Reserves aren’t about generating income, even though it’s nice when they do; they’re there for emergencies and opportunities. Of course, that refers only to general college reserves.

Ivy Tech's president, Thomas J. Snyder, shares in University Business magazine a brief summary of his institution's implementation of one of the four key strategies in its strategic plan: outsourcing bookstore management; a statewide agreement with Dell; similar consolidation of copiers and services; an outsourced, statewide prospective student calling center; consolidation of furniture purchases; and a guaranteed energy savings contract. 

Overall, since 2008, Ivy Tech has improved purchasing practices to create nearly $19 million of one-time savings, plus $12 million in recurring annual savings. Even more important than these bottom-line savings are what they enable: We recently hired nearly 300 faculty and staff to accommodate our growing enrollment—and we did so without adding to our budget. The new employees aren’t administrators; they’re faculty and staff who work directly with students.

Our trustees understand this connection between cost savings and growth. Ivy Tech also recognizes that its role as the state’s largest workforce development provider means that state support represents an investment in Indiana’s future, and we’re confident we offer an unparalleled rate of return.

Ivy Tech's strategic plan is titled Accelerating Greatness.

Observation

Like the proverbial deer in the headlights, institutions around the world are coping with reduced funding and often using similar tactics for cost containment and revenue enhancement.

• Publicly supported institutions understand that reduced state budgets will affect them for many years into the future. Thirty-five states are assuming reduced fiscal resources will be available in 2010, while 42 states were forced to reduce their previously enacted 2009 budgets.

• Community colleges have been hit the hardest and been very creative about when they offer courses (all night long) and even who pays for them (anyone who is willing to donate to support a course).

• Space management is becoming a key area of concern, as no one wants the continuing operational costs of new construction. Likewise, energy management is high on everyone’s list.

Our Thoughts

The Higher Education Price Index (HEPI), as well as tuition, continues to outpace the Consumer Price Index (CPI), even though it dropped from 5 percent to 2.3 percent. Some are asking if higher education will be the next ‘bubble’ to burst.

• The highest percentage increase came in administrative salaries at 5.4 percent, up from 5 percent the year before. Virtually all the other components of the index had lower increases this fiscal year than last.

• According to the National Center for Public Policy and Higher Education, over the past 25 years, average college tuition and fees have risen by 440 percent—more than four times the rate of inflation and almost twice the rate of health care costs.

• Tuition and fees at private colleges rose at the lowest rate in 37 years (4.3 percent), but still higher than the CPI, which was 3.8 percent in 2008.