institutionalfinance

Sluggish Recovery of State Funding for Public Colleges

State funding for public higher education has increased in the five years since the recession. However, those increases are not keeping pace with inflation. Just two states -- Utah and Massachusetts -- have had operating-fund support for public higher education that matched or surpassed the rate of inflation in each of those five years, according to a new report from the University of Alabama's Education Policy Center. Five states failed to hit the inflation rate a single time.

Tuition hikes have continued due to state disinvestment, found the report, which was based on a survey of state-level leaders of community colleges in 49 states. Tuition rates are expected to top this year's 2.1 percent inflation rate (from the Higher Education Price Index) for community college students in 25 states, regional university students in 28 states and flagship university students in 26 states, according to the report. State-based student aid also is not keeping up with inflation.

The report's coauthors are Stephen Katsinas, the center's director, Mark D'Amico, associate professor of education leadership at the University of North Carolina at Charlotte, Janice Friedel, associate professor of education at Iowa State University, and three researchers at the University of Alabama.

Report: Colleges Reduce Emissions

Colleges and universities reduced their emissions by 13 percent per square foot between 2007 and 2014, according to a report released Wednesday.

Yet institutions made less progress in curbing energy use, which was down just 2 percent per square foot during the same period. The reason? Because most of the sustainability strides made by colleges in recent years have come from switching from coal and oil to natural gas, not from curbing overall usage.

These figures come from a report by Sightlines and the University of New Hampshire Sustainability Institute, which studied 343 colleges and universities with a combined 1.5 billion square feet of campus facilities across 44 states.

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Trinity Lutheran College Will Close

Trinity Lutheran College, a small Christian institution in Washington State, announced Tuesday that it will shut down in May. "After prayer, discernment and a careful and thorough study of all the resources and options available to us, the Board of Directors of Trinity Lutheran College has come to the conclusion that any efforts to increase enrollment at Trinity will no longer sustain the college," said a letter released by Reverend Kevin Bates, board chair. "I want all of you to know that this decision was not made lightly. To the contrary, it was made with deep deliberation and much prayer. As the final vote was cast, there wasn’t a dry eye in the room -- board members, members of the foundation and administrators alike carry the weight of this closure heavily on our hearts. It was a very sad decision for us to make."

The college enrolls 192 undergraduates.

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Supreme Court Rejects Student Loan Bankruptcy Case

The U.S. Supreme Court on Monday declined to hear a case on whether people declaring bankruptcy should have an easier time erasing student loan debt in the process, The Wall Street Journal reported. The case was brought by a Wisconsin man with more than $260,000 in student loan debt from business and law school. He twice failed the bar exam. The man argues that lower courts should have allowed him to discharge his debt through bankruptcy. Generally, federal courts have made it difficult to do so, although a few courts have been more lenient.

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Bill Focuses on Wealthy Colleges' Endowment Income

U.S. Representative Tom Reed, a New York Republican who has been critical of the financial policies of colleges and universities with large endowments, has drafted legislation to act on his concerns. Bloomberg reported that his draft bill would require colleges with endowments greater than $1 billion to spend at least 25 percent of endowment income on financial aid or risk losing their tax-exempt status. There are currently nearly 100 colleges and universities that would be covered by the legislation. Higher education leaders have generally opposed regulation of their endowments, and Reed told Bloomberg he expected lobbying efforts against his bill to intensify.

Proposed Funding Increases for California Colleges and Students

California Governor Jerry Brown on Monday proposed $1 billion in new funding for the state's public institutions, an increase of 3.4 percent. (Roughly $590 million of that amount would come from the state's general fund.) The total of $30 billion in state support for higher education would be an increase of 30 percent since 2012, when California emerged from years of deep, recession-driven budget cuts. Brown warned, however, that the salad days tend not to last long.

"The state’s short periods of balanced budgets have been followed by massive budget shortfalls. In fact, the sum of all the deficits during this period is seven times greater than the sum of all the surpluses," the budget proposal said.

The budget is structured so the University of California and California State University systems could keep their tuition levels flat for another year. Last year Brown struck a deal with UC to prevent tuition hikes.

UC, which is the most selective of the state's three systems, would receive the largest increase under the proposal -- $174 million, or 5.4 percent. Cal State would get $152 million, or 4.6 percent, in new funding. The state's community colleges would see an increase of $376 million, or 4.4 percent.

Brice Harris, the community college system's chancellor, said the proposed money would increase access to community college for almost 50,000 new students.

"The governor’s plan also includes a commitment to improve and expand our efforts to build a stronger workforce to meet the demands of our state’s economy, improve remedial education and help close achievement gaps," he said, in a written statement.

New Jersey higher ed is doing just fine, thank you (essay)

While one interpretation of recent IPEDS data (by Matt Reed in Inside Higher Ed's “Confessions of a Community College Dean” blog) might “suggest that more young people want out of New Jersey than want in,” a closer look at the numbers indicates that New Jersey is retaining just about as many of its students as it can. We are also making investments in facilities to maintain -- and, we hope, expand -- our ability to serve the state's students, who in turn will build the backbone of our workforce.

The high net outmigration of first-time degree-seeking undergraduates is an old story in New Jersey. The New Jersey Higher Education Task Force, chaired by former Governor Tom Kean, wrote in its December 2010 report:

In part because of a lack of college capacity, New Jersey has a too-long history of losing more college-bound students than attend in state. In fact, New Jersey has the dubious distinction of leading the nation in net outmigration of college-bound students, earning New Jersey the nickname of the “cuckoo bird” state, since the cuckoo bird lays its eggs in other birds’ nests.

We could note that the roadrunner is a species of cuckoo, so it’s no wonder so many students quickly leave New Jersey. But a closer and more serious look at the IPEDS data shows that New Jersey’s institutions strongly attract -- and well serve -- New Jersey’s students.

The College Board’s "Trends in College Pricing" report for 2015 indicated that 93 percent of first-time students at public four-year colleges in New Jersey were residents of New Jersey. We have been at that level for at least 10 years. In fact, New Jersey attracts a higher percentage of its own students to stay for college than any state in the U.S. other than Alaska (we are tied at 93 percent) and Texas (94 percent). More recent data being compiled by the New Jersey Association of State Colleges and Universities (NJASCU) indicate that the figure is even higher for the eight member institutions of NJASCU, which I head.

As the Kean Commission noted, capacity is the key to understanding enrollment in New Jersey. Simply put, our institutions are nearly full. It has been estimated that our institutions would need to expand by 44 percent to accommodate every student in New Jersey.

For decades, New Jersey shortsightedly underinvested in higher education infrastructure. New Jersey provided no capital funding for higher education between fiscal year 2003 and fiscal year 2014, and was one of only seven states that failed to invest in higher education capital needs between 2012 and 2014.

We are slowly reversing that trend. In 2012, New Jersey’s voters -- with a strong yes vote of 63 percent -- approved a $750 million bond issue for higher education construction, the first state-backed financing for higher education in New Jersey since 1988. Also in 2012, New Jersey renewed over $560 million in revenue bonds for projects targeting capital improvements, technology and equipment.

The results of that investment are coming into view. Buildings for programs in engineering; environmental, health and other sciences; business; and nursing are all underway or completed.

The investment trend in capital needs continues in the right direction and is answering the call of the Kean Commission, which wrote, “The future of the state … depends on retaining good students who wish to stay in New Jersey but who are squeezed out by New Jersey’s lack of capacity.” Another $180 million in bond funds has recently become available, and our institutions are working to meet the Jan. 16 deadline for applications.

Public-private partnerships are another important way in which our institutions are constructing facilities to benefit students and the campus communities. Projects providing classroom and retail space, bookstores and student apartments, campus-altering residence halls, and even brand-new campuses are being built with private financing to help our institutions stretch their resources.

New Jersey’s overall investment in the operation of its public four-year institutions, however, is falling, and is a cause for concern. In fiscal 2016, appropriations for operating expenses at New Jersey’s senior public colleges and universities were cut over $34 million, with the state colleges and universities suffering a 7.3 percent loss and the public research institutions enduring a 4.65 percent reduction.

These cuts are part of an unfortunate trend in New Jersey. Between 1994 and 2014, educational appropriations per full-time-equivalent student at public institutions in New Jersey dropped over 46 percent, according to data from the State Higher Education Executive Officers.

Under the direction of autonomous boards of trustees and presidents, our institutions have deftly handled the reduction in state operating support. Over the past five years, the public four-year institutions in New Jersey were tied for the fourth-lowest percentage increase in in-state tuition and required fees, at 4 percent.

Despite the capacity crunch and the financing challenges, New Jersey’s public institutions are serving more students than ever. Between 2003 and 2013, New Jersey had the sixth-highest increase in FTE enrollment at public institutions, at 22 percent.

Demand remains strong. Some of our member institutions are reporting increases of 4 to 5 percent -- and even higher -- in applications over this time last year for regular decision.

After they enroll, our students do well in their studies. They persist from year to year, and then graduate, near the top of national charts. Almost 85 percent of first-time college freshmen at senior public institutions in New Jersey return for their second year, sixth highest in the nation. The six-year graduation rate for members of the Class of 2014 at New Jersey’s four-year public institutions was 61 percent, also sixth highest in the U.S.

Once they receive their diplomas, students from the state colleges and universities tend to stay here in New Jersey. Out of over 518,000 alumni from our NJASCU institutions, more than two-thirds (363,000) reside in New Jersey.

It is critically important to our state’s future that our graduates stay and work in New Jersey. New Jersey’s workforce, more and more, demands workers with an advanced education. Jobs requiring a postsecondary education in New Jersey will increase from 62 percent in 2010 to 68 percent in 2020, according to the Georgetown University Center on Education and the Workforce. The percentage of jobs in New Jersey requiring a bachelor’s degree will be the highest of any state in 2020, at 29 percent. The member institutions of NJASCU produced over 63 percent of the bachelor’s degrees in New Jersey in 2014, making us the engine that will help drive the state’s workforce.

It has been said that “Unless you’re from New Jersey, you can’t understand New Jersey.” Looking at only one IPEDS statistic obscures the view of the high demand and high quality of public higher education in New Jersey. Our story is worth explaining.

Michael W. Klein is the executive director of the New Jersey Association of State Colleges and Universities.

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How States Fare in Their Support of Public Higher Ed

Young Invincibles released report cards today that grade states on their support of public higher education. The results weren't great, and only one state -- Wyoming, the least populated state in the U.S., got an A (seven states received a B).

In its report, Young Invincibles, a think tank that advocates on behalf of jobs, health care and education for young adults, considered factors like a state's growth or decline in public higher education support since the recession, how states compared to other states in terms of support, a state's support to disadvantaged students, and whether states offer aid on the basis of need or merit.

The report notes that the share of college a family pays has increased since the recession as well, growing from 36 percent in 2008 to around 50 percent in 2014. Families were left with the largest burden in Maine, at 82 percent, and the lowest cost share in Wyoming, at 15 percent.

Among the more than 40 factors Young Invincibles considered when grading states is how much tuition at public four- and two-year colleges has risen since the recession. In Arizona, which received an F from the group, tuition rose 72 percent from 2008 to 2014 (Georgia and Louisiana followed close behind, with increases of 68 and 66 percent, respectively). Meanwhile, Maine, Maryland, Missouri and Montana each had tuition increases below 10 percent during that time.

The report also found that just two states spend as much on higher education as they did before the recession (Alaska and North Dakota). As of 2014, Louisiana spent 41 percent less on public higher education than it did in 2008. Seven states kept investment decreases below 10 percent during that time.

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AGB to Begin Consulting Colleges on Financial Health

An organization that works with college and university governing boards and conducts presidential and executive searches is now branching out and beginning a consultancy for what is perhaps the most scrutinized area of higher education: colleges' financial well-being.

The Association of Governing Boards is launching AGB Institutional Strategies, which will advise colleges and universities on revenue and cost models during an era in which Moody's credit rating agency predicts a doubling of college closures.

AGB's leader, Richard Legon, said in a press release that 80 percent of AGB's member presidents report that colleges and universities need help in addressing their business models. "AGB Institutional Strategies was created to help our members with both cost and revenue challenges and to be a resource regarding new business models," he said. While it's the newest firm to the scene, the AGB consultancy is far from the only firm that aims to advise colleges on their business models.

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Two Georgia Colleges Merge

Georgia State University, a four-year university with an urban campus in Atlanta, and Georgia Perimeter College, a community college in the city's suburbs, are officially merged.

The merged institution will keep the GSU name and have a combined enrollment of upward of 45,000 students. The merger is the latest of many for the University System of Georgia, which has consolidated 12 institutions into six and is now comprised of 29 colleges and universities. The system's governing board approved this latest merger on Wednesday, nearly a year after the consolidation was first proposed.

“This is not only a historic day for Georgia State University and Georgia Perimeter College; it is also an important day for the students of Georgia,” said Georgia State University President Mark Becker. “We look forward to helping thousands more students graduate with the support of our nationally recognized programs aimed at ensuring student success.”

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