Personalities and Policies

If there’s a formula to generate infighting among colleges and universities for scarce state dollars, it would probably look a lot like the situation in Ohio.

Start with one of the country’s most populous states. Divide it into regions that have distinct political interests and a history of strong local control. Add 14 universities, 24 branch campuses and 23 community colleges that historically operated without much in the way of centralized state governance. After the 2010 election, subtract a governor who had made higher education a top priority and created a new centralized authority, and add one who showed antipathy toward the sector before stepping into the role. Zero out the state's chief higher education administrator.

Then multiply those issues by giving significant authority to one of the country’s most high-profile and politically adept presidents, who represents an institution that dominates the state.

The result could have been disaster. But state higher education officials say the past two years in Ohio have been almost the opposite.

In the absence of a formal system of public higher education governance, and with a state chancellor for higher education marginalized by political differences and illness, Ohio Governor John Kasich has relied on a set of consensus-generating committees of higher education leaders to determine funding and set policy for the state’s colleges and universities. Those processes produced a roughly $350 million capital-funding plan and revamped the state’s funding formula for higher education, resting 50 percent of operating funds on graduation rates -- the highest percentage in the nation. Ohio officials say the process helped bring some order to a state where policy making has been erratic and the structure has been constantly shifting.

“It’s remarkable that they were able to come together,” said John Carey, who became chancellor of the Ohio Board of Regents in April, after the two commissions completed their work. “If each university went on its own, you would have Cleveland legislators fighting for Cleveland higher education institutions and Cincinnati legislators fighting for Cincinnati institutions. It could be a short-term gain, but it would ultimately be a long-term loss.”

Chairing both efforts was Ohio State University's then-president, E. Gordon Gee. Gee’s prominence in the process is partly the result of Ohio State’s extensive influence in the state, its proximity to the capitol and Gee’s commanding personality. But it is also partly attributable to a unique relationship between Gee and Kasich that dates to Gee’s first tenure at Ohio State in the 1990s. At that time, Kasich was a member of the U.S. House of Representatives from the district that included part of Columbus.

According to those involved in the commissions, Kasich's trust in Gee made the process possible. Without that trust, they said, the governor might not have believed the higher education administrators could put aside self-interest or come to a consensus agreement, and he likely would not have given them so much freedom. Gee also had a credibility among the state's other college and university presidents, who believed he would be able to put aside the interest of his own campus for the benefit of all. That credibility also twice allowed him to coax the other administrators to a final consensus.

Critics say Gee’s role in the performance-funding commission also led the panel to place greater emphasis on graduation rates than on other potential criteria, with the resulting formula likely to benefit selective institutions like Ohio State more than “access” institutions. Supporters and outside observers say the state was likely to head in that direction regardless of Gee's involvement.

While there has been some discontent over the outcome of the two commissions, Ohio officials are generally optimistic that they have found a policy-setting process that will prove to be more productive than the various structures attempted in the past. They also argue that their model could be an example for other states, particularly as competition for scarce state dollars increases.

The Ohio experience raises the question of whether it was the structure of the process or the personalities of those involved that made the two commissions successful. In recent years several states – including Connecticut, Wisconsin, Oregon, California and even Ohio – have debated restructuring their higher-education governance systems, under the belief that a new structure will lead to better outcomes. Other administrators and scholars have argued that, particularly when it comes to collaboration, that force of personality and individual leadership can matter as much, if not more, than structure.

Gee’s abrupt retirement July 1 following a series of controversial remarks now provides an opportunity to test that debate. Ohio higher education administrators are optimistic that they have found a new model under which to set long-term policy goals, but several also wonder whether the process that has come to define policy-making in the past two years can endure without its figurehead. And if the process can’t be successful without Gee, some worry that the state will fall back into its long pattern of intense competition among universities.

A State of ‘Hand-to-Hand Combat’         

Ohio has long struggled to find a way to structure its state colleges and universities (it has lacked any sort of real "system") to grant public institutions the autonomy they desire while holding them accountable to public policy goals. For the past several decades the state has oscillated between eras of strong central control and times of near-independence and competition.

Multiple people interviewed for this story said the geographic, population and political distribution of the state, which they all referred to as a “city-state” model, made the kind of statewide governing board seen in states like North Carolina or New York difficult. At the same time, leaving it up to the legislature to determine funding levels for the state’s higher education institutions was also problematic, they said, with institutions’ fates rising and falling with their political representation in Columbus.

“Ohio is generally a local control state,” Carey said. “Almost all areas of policy are strong with local control.”

Presidents said the process of securing funding in the past has been extremely contentious. “It was really hand-to-hand combat,” Gee said. “There were times when the University of Cincinnati would want something and I would try my hardest to make sure they didn’t get it, even if I wasn’t going to get it either. It was not one of my greater moments as a university president.”

"I would try my hardest to make sure they didn’t get it, even if I wasn’t going to get it either."
--Gordon Gee, on competition between Ohio State and Cincinnati in the 1990s

During his time as governor from 2007-11, Democrat Ted Strickland moved to centralize governance of the state’s universities, removing the Board of Regents’ power to appoint the state’s chancellor of higher education and giving himself that power. With his appointee Chancellor Eric Fingerhut, Strickland set off on a 10-year strategic plan to hold down costs, eliminate duplicative curricula and increase graduation rates. The two also devised a performance funding formula – one that would increase the amount of funding contingent on degree completion – that would be phased in over six years.

That plan had certain protections in place for colleges and universities that served “at risk” populations that were less likely to graduate, said Richard L. Petrick, who served in a variety of leadership roles for the Board of Regents over 20 years, including a stint as vice chancellor for finance and data. The six-year time frame was also designed to ease the transition to the new model.

Strickland and Fingerhut’s reforms received a mixed response. While presidents were happy with a governor advancing higher education as a policy goal, many feared the reforms were too prescriptive.

When Strickland lost the 2010 election to Republican John Kasich, there were major questions about whether Fingerhut would remain in the chancellor’s role and what would happen to his and Strickland’s joint direction. Fingerhut resigned shortly after Kasich took office.

A Leadership Vacuum

In Kasich’s first year as governor, higher education issues mostly took a back seat. He made it clear that his first priorities were generating jobs and managing the state’s financial problems, including an $8 billion budget shortfall in 2010-11.

In that first year Kasich pushed several cost-cutting measures that would have affected higher education, including a bill that would increase faculty teaching loads and one (which ended up going before voters as a ballot proposition) that would limit collective bargaining rights for public-sector employees, including university faculty. Both ended up failing, but they generated resentment among faculty members.

Kasich’s other major higher education move was to appoint former Ohio Attorney General Jim Petro to the chancellor’s office following Fingerhut’s resignation. Ohio officials said Petro’s selection was something of a surprise.

In 2011, Kasich and Petro pushed an “Enterprise University Plan” that would grant state universities more autonomy on administrative and financial measures if they met particular performance benchmarks regarding graduation and retention rates, science and engineering degree production and affordability. Kasich had not mentioned such a plan during the 2010 campaign, and many Ohio officials said they believed the idea was driven by Petro. But some Ohio administrators said private disagreements between Petro and Kasich about the overall shape of the plan kept it from getting off the ground. 

“Chancellor Petro had different priorities and a slightly different agenda,” Petrick said. “He and Kasich were never truly aligned.” In the most recent budget, lawmakers removed most of that plan.

Health issues sidelined Petro for much of 2012, and for much of that time higher education reform stagnated. In December 2012, Petro announced his retirement, which became effective in February.

‘A Personal Relationship’

Into the void stepped Gee, who stepped across town to talk with Kasich.

Everyone interviewed for this article -- including Gee himself -- said the relationship between Kasich and Gee has been different from what one would expect between a governor and a university president. They note that in addition to a highly productive professional relationship, the two have a personal affinity for one another.

“Governor Kasich and I have been longstanding friends,” Gee said. “There is a personal chemistry, a personal relationship.”

“The governor really appreciates President Gee,” Carey said.

“Governor Kasich always thought highly of President Gee,” Petrick said. “I know nothing of their personal relationship, but they each spoke highly of each other publicly.”

“In terms of the policy formation process and the role that presidents play in policy formation, this was unprecedented.”
--Ronald M. Berkman, president of Cleveland State University

Officials chalked up the special relationship to the proximity between Ohio State and the governor’s office, the two officials’ parallel career paths, and how long they have known each other. But they also said Gee and Kasich had similar personalities, particularly in the way that they were willing to take strong stances and move quickly on issues. Both are also fairly outspoken and enjoy the spotlight.

“These are two unique characters,” said Bruce Johnson, president of the Inter-University Council of Ohio. “Gordon’s personality is much bigger than most, but he has a match in Kasich. Kasich sees Gordon as an incredibly competent guy, and he’s decided that you don’t fight that. You get your egos out of the way.”

Gee did not contribute financially to Kasich’s gubernatorial campaign in 2010, according to state data. His political contributions have been fairly evenly distributed between Republicans and Democrats, particularly both parties’ leadership in the legislature.

In Ohio, the legislature writes and passes operating budgets to run on bienniums that start in even-numbered years. Capital budgets run on bienniums starting in odd-numbered years. Because of the financial challenges in the post-recession years, the state zeroed out the capital bill that would have covered the 2011-12 biennium, meaning it had been several years since Ohio's public institutions received state money for new buildings and maintenance.

Like institutions in other states, Ohio universities face a significant backlog of maintenance projects and are also struggling to meet demands for increased enrollment. Under that pressure, university leaders began to agitate for Kasich to begin a capital spending push.

“We had a conversation about this one day, he and I, about a reform agenda for higher education,” Gee said about Kasich. “And he came back and said, ‘You guys are smarter than we are when it comes to this stuff. Why don’t you try to solve the problem?’ ”

Several presidents said they did not know exactly where the idea for the capital funding commission originated, but Gee credited Kasich with the idea.

The money allocated for higher education capital projects was previously divvied up by a formula that incorporated a college or university’s facilities, its enrollment numbers and the amount of infrastructure it needed to maintain. “The old formula ensured that there was a fair and predictable distribution of funds, but it was also viewed as being less responsive to the needs of the state,” the capital funding report states.

Kasich wanted a more flexible allocation of dollars – particularly to fund programs that would align with his job-creation agenda – so instead of working through the old formula he outlined a set of his own priorities in December 2011 and tasked a group of college and university presidents with devising a way to divvy up about $400 million.

“It’s our belief that the current formula doesn’t strategically allocate resources in the most-effective, efficient manner,” State Budget Director Tim Keen told The Columbus Dispatch at the time.

The figure was less than the 2009-10 level, but several presidents said they were excited by the prospect of getting any capital spending at all. “I’m just glad there is going to be a capital budget,” David Harrison, president of Columbus State Community College, said at the time.

Kasich asked Gee to chair the committee that would determine how to allocate the money. Gee was joined on the commission by the presidents of Lakeland Community College, Zane State College, Miami University and the University of Toledo, as well as the head of the Ohio Association of Community colleges and the head of the Inter-University Council.

Several officials said the commission structure was a good political move for Kasich. If the commission succeeded, Kasich could take credit for establishing the process and facilitating it. If it failed at either the commission or legislative levels, then the burden would fall on the college and university presidents who shaped the proposal.

Administrators said the design of the capital funding plan and the possibility of new funding were strong motivating factors in producing consensus, but the four-year college presidents credit Gee with bringing the plan to completion.

“Gee really excelled in reaching out and facilitating discussions that led to a consensus,” said Roderick J. McDavis, president of Ohio University, which ended up receiving about $19 million in the final proposal. “Gordon personally called and sought my feedback and the feedback of the other four-year presidents in the state.”

Campus administrators said the process was a significant departure from what they were used to in that it provided much more opportunity for their voices to be heard. “In the past it primarily occurred through the Board of Regents,” McDavis said. “It wasn’t bad, but this is the first time we’ve had the opportunity to have input and make the final recommendations on behalf of our institutions.”

“In terms of the policy formation process and the role that presidents play in policy formation, this was unprecedented,” said Ronald M. Berkman, president of Cleveland State University, which received about $13 million in the capital plan.

By the February 2012 deadline, Gee had gotten the presidents of all 37 public colleges and universities to sign off on a plan that would provide at least some funding for all of the state’s public institutions and branch campuses. That plan received legislative approval with only minor changes.

Funding levels ranged widely. At the low end were several of the branch campuses of Ohio State and the other four-year universities and community colleges. Ohio State's main campus made out the best, receiving almost $70 million, more than twice the second-largest recipient, the University of Cincinnati, which received $31 million. The bulk of OSU’s money -- $50 million – is directed to one project, a chemical and biomolecular engineering building. That project was funded under the goal of “interdisciplinary approaches,” meaning it might not have been funded under the old formula. In fact three of the six largest line item projects were funded under that goal.

Several administrators said that it makes perfect sense that OSU, as the state’s largest university and as a major research university with a health science center, would receive an outsized share of the funding. Such funding was in line with what it has seen in past capital plans. In the 2009-10 recommendations, Ohio State was given about $79 million of the total $400 million. In 2007-08 it was recommended that Ohio State receive $83 million out of the total $445 million.

Few presidents mentioned much dissatisfaction with the final result of the capital funding collaborative.

A Formula for Success?

Administrators said the success of the capital funding collaborative provided the impetus for a more ambitious project: revamping the state’s funding formula, a process that began in fall 2012. The formula would build on what Strickland pushed, particularly basing more funding on graduation rates rather than enrollments.

"We all know that we can all do better on graduation rates and there's been some movement on creating a new formula," Kasich said at the time, according to the Plain Dealer. "We hope we can speed up the process so that we can fund higher education based on graduation rather than based on enrollment."

"He made it clear that if we didn’t play well with each other, the consequences could not be pleasant."
--Gee, on Kasich's goals for the performance-funding plan

Like he did with the the capital funding collaborative, Kasich outlined a set of priorities and tasked a group of university leaders with establishing a new policy – hopefully with consensus -- that would be submitted to lawmakers. Again he put Gee in charge of the committee.

Kasich dangled in front of university officials the prospect of increased funding in the next budget cycle if they could agree on an approach. And he warned that the state would be moving toward a new funding scheme – one that presidents might not like – even if the presidents did not agree on an approach.

“He said, ‘Let me give you the responsibility, along with a carrot and a stick,’ ” Gee said of Kasich. “And he made it clear that if we didn’t play well with each other, the consequences could not be pleasant. That was helpful motivation.”

The commission to develop the performance-funding plan adopted seven “guiding principles” that would shape the overall process. Those priorities included improving graduation rates and overall numbers; encouraging institutions to attract, prepare and graduate nontraditional and at-risk students; and ensuring that college is affordable. Attracting and retaining out-of-state students – a criterion that could also benefit Ohio State -- also became a consideration.

“In both cases, broad principles were articulated by the governor, and I think that was a great way to start,” Berkman said. “I’m going to give you three or four principles around which you could build a policy for capital funding or performance, but you make the choices.”

But while Berkman, Gee and other presidents credited Kasich with the overall goals, other administrators said Gee had just as large a role – if not a larger one – in shaping the principles and formula.

Gee said the idea of revamping funding in a way that encourages completion and other goals is a longstanding interest of his. Beginning in 2011, Gee chaired a national commission designed to improve college retention and attainment that hit on many of these topics. “The question that’s always in the room is: How does one increase quality and decrease cost?” Gee said. “And how does one reinvent the funding of higher education in a way that addresses that?”

The debates over the structure of the formula played out mostly behind closed doors, and there was very little public discussion about where the formula was going or whether there was disagreement. But Ohio higher education officials said the debates over the performance funding plan were more contentious than for the capital plan.

Ohio is not alone in having fierce debates about performance funding, with fights popping up in several states in recent years. Performance formulas tend to reward institutions that have higher levels of selectivity and educate more affluent and well-prepared students, who are more likely to progress and graduate.

Institutions with more open admissions policies tend to take a hit and ask for special protections. But lawmakers and other institutions push back, arguing that too many protections will minimize the overall effect of the policy goal, which is to increase graduation rates over time.

“If one were to look at it from the socioeconomic make-up of the campus, what you’re going to find is that institutions that are primarily focused on students who come from less qualified backgrounds, and are therefore less qualified, less capable, less prepared and have the lowest graduation rates,” said David O. Dabney, who recently retired as chief financial officer and vice president for finance at the University of Toledo, an institution that serves a higher percentage of low-income students and has a lower graduation rate than Ohio State. “And therefore they’re the ones who are going to be most affected.”

“What happens with these formulas is that people will always attach riders to those, and as a result the formula becomes the exception rather than the rule,” Gee said. “They also don’t work unless they’re fully funded, and in recent years we have not funded the formula to any extent whatsoever.”

The formula commission published its recommendations in November. Among the changes was the decision to base 50 percent of state funding for four-year institutions on degree completion, up from 20 percent in the last formula. The formula will reward universities based on overall graduation rates -- rather than improvement in those rates as some states have done -- while weighting differently students who are less likely to graduate and students graduates in high-demand science and engineering fields.The percentage of funding based on course completion would drop from 61 percent to 30 percent. Historical set-asides would be essentially eliminated. 

And the reforms would be phased in over just a biennium, a quicker timeline than what Strickland had proposed several years earlier.

For community colleges, funding for enrollments – now almost 80 percent of the criteria – would be reduced to only 50 percent of the formula for the first year. “Success points” and course completions would be increased to 25 percent of the formula each. For the second year, the community colleges were tasked with making a recommendation for another formula about how to allocate funds that would not include enrollment.

Similar to the four-year sector, historical set-asides for campuses would be eliminated. Special weight would be given to completions of degrees, certificates and transfers.

Winners and Losers

Higher education officials in Ohio say that the plan’s emphasis on graduation rates will almost certainly benefit the state’s more selective institutions – particularly Ohio State and Miami University. Both have four-year graduation rates of more than 50 percent and six-year graduation rates of about 80 percent.

“There’s clearly acceptance that Ohio States and Miamis of the world, where students show up successful at the front door and are more likely to complete, are going to be benefitting in the long run,” Petrick said.

University of Toledo President Lloyd Jacobs, while praising the idea of moving toward a more performance-based formula, said he had some reservations about the current formula, like many performance funding plans, not doing enough to take into account historical differences between institutions and the differences in their missions.

Dabney expressed some criticism of the process and its outcome. He argued that the formula places too much emphasis on graduation rates at the expense of other goals that could benefit institutions like his in the long run.

He did his own calculation of what per-campus funding might look like if the formula increased the weight of some of the other factors, such as enrolling low-income students or offering low tuition prices.

“Gordon and the commission focused on one of the major objectives, and that was degree completion,” he said. “What I wanted to get them to do was also focus on the point that the governor had made about making higher education more affordable. If you look at that, then Cleveland State, Shawnee State, Wright State and even [Toledo] see more benefit.”

"Ohio States and Miamis of the world, where students show up successful at the front door and are more likely to complete are going to be benefiting in the long run."
--Richard Petrick, former Board of Regents staff member

Places like Ohio State, Kent State and Ohio University have the benefit of branch campuses where they can enroll potentially riskier students without direct harm to the bottom lines of their main campuses, he said. He said the new formula could drive institutions like Toledo, which lacks a branch campus, to push “risky” students off on community colleges.

Other administrators, even those at institutions that would likely see a hit initially, were more positive about the outcome. “If you looked at the formula, there’s a good job of recognizing that there are different institutions in the system with different challenges,” Berkman said. His institution, Cleveland State, had a six-year graduation rate of about 30 percent in 2011, placing it among the lowest in the state.

Other administrators and outside observers said Ohio – like many other states – was already moving in the direction of tying more performance funding to graduation rates over other performance metrics. They note that graduation-based funding was what the governor and lawmakers wanted. Too much pushback or reluctance from campuses that currently have low graduation rates could have doomed the project.

“The changes proposed by the panel didn’t so much change the state’s overall direction in terms of performance funding, but it did speed it up significantly,” Petrick said.

Even with some dissatisfaction, Gee said all of the presidents signed on to the plan and none of the presidents made an end-run around the commission to get the legislature to change some component of it.

Modest changes were made to the formula as it made its way through the legislature, but none of them dramatically altered the shape and scope of the formula. In late June, state lawmakers approved the budget bill that included the funding formula, and Kasich signed off on it. 

Continuing the Discussion

With Gee now stepping away from his role at Ohio State, many in the state wonder whether the process will continue to be successful. None of the other campus presidents carry the same clout with the governor or the other university presidents, so any future success is dependent on the structure, rather than personalities.  

“I think it will be a bit more challenging going forward. Gordon was the rare mixture of personality and competence and statesmanship,” Johnson of the Inter-University Council said. “And a lot of this boils down to trust. Gordon was able to have the confidence of the governor to drive a process like this. But I think the governor is developing confidence in the process.”

For the most part, presidents are optimistic that the governor will continue to convene such groups and that the process will continue to produce results. ”Everything we’ve heard has been a go-ahead message,” Berkman said.

“I think that we’re going to continue to see that kind of cooperation between higher education institutions and not only continue with budget issues, but also with other issues that are going to come about,” Carey said. “Higher education by its nature is collaborative on lots of issues.” Carey said.

He said there are several topics that will be addressed in the next few years where he could see the collaboration model revived, including the next capital funding bill. Institutions are now tasked with coming up with plans to improve completion, and he said he could see collaboration on that front. The state is also trying to inventory workforce-training programs and align them with executive agencies, and collaboration could be involved there as well.

“Now that the system has been set, a lot of other presidents will be involved,” Carey said. “The process wasn’t dependent on Gee alone.”

Gee said he is willing to continue his facilitator role if the governor wants him to, but others noted that could be a challenging position as Ohio State selects a new president, who will want to accomplish his own goals and not live under Gee’s shadow.

And, at least in John Kasich’s Ohio, Gee’s shadow looms large.