How to Do More With Less

November 24, 2009

The underlying thesis of the Lumina Foundation for Education's Making Opportunity Affordable initiative is that as colleges, states and the country strive to get more people into and out of postsecondary education with a meaningful credential (the "big goal" embraced by President Obama), they will have to do so without significant new public funds.

As a result, Lumina argues, college leaders, with the help (or at the prodding) of policy makers, must figure out how to do more with less. That's not a terribly appealing message, and many of the words that one might use to describe how you get from here to there -- with increased "productivity," "efficiency," "savings" and the like -- inevitably raise the specter of lost jobs and diminished quality.

Yet lost jobs and diminished quality are arguably what colleges and state leaders are producing right now, as they turn to their traditional method of trying to cost-cut their way out of bad economic times. Wouldn't it be better, Making Opportunity Affordable posits, if states brought together the key people and came up with smarter, more strategic ways of spending their money -- ways that were more aligned with their top agenda item: increasing college completion.

It is with that goal in mind that Lumina is today announcing a total of up to $9.1 million in grants to help seven states (Arizona, Indiana, Maryland, Montana, Ohio, Tennessee and Texas) realign their spending on higher education -- through a mix of cost savings, new modes of delivering education, and different state financial incentives for colleges and students -- "to better serve undergraduate students," said Jamie Merisotis, Lumina's president. The four-year grants require renewal each year based on states' progress toward meeting concrete goals.

The seven states, which were chosen from among a total of 11 that had won an earlier round of planning grants, all take somewhat different approaches to the particular problems and situations in their political, economic and social environments (descriptions of each state's approach appear below). But Lumina chose the successful states, in part, because their strategies were seen as having a "high degree of replicability, broadly within those states as well as across states," toward building the sort of national movement that Lumina and others covet, Merisotis said.

The plans developed by the states also share some several common elements, which Lumina spotlighted in an accompanying "guide for policy makers" that it hopes could point the way for states to follow in the footsteps of the grant winners. The changes that Lumina urges state leaders to adopt include:

  • Rewarding institutions that focus on students completing quality programs, not just attempting them. Florida has led the way in this regard, but among the grantees, Ohio has put in place three new funding formulas that reward institutions for course/degree completion and students' reaching other educational benchmarks, and Lumina's grant to Texas is designed to help build public and political support for a future change in state funding formulas.
  • Rewarding students for completing courses and degree or certificate programs. Lumina spotlights financial aid and tuition setting practices in Oklahoma and Louisiana as models on this score, but notes that among its new crop of grantees, Arizona plans to develop a student-level funding system that will reward transfer from community colleges to four-year colleges, and Texas has experimented with incentives to complete college in the lowest cost way possible.
  • Expanding and strengthening lower cost, nontraditional education options through modified regulations. Many states have credit granting and other regulatory policies that discourage the creation or spread of online, out of state, and for-profit institutions that might offer lower-cost or otherwise competing forms of education to residents, Lumina asserts, citing Western Governors University, Rio Salado College, and Kaplan University among the innovators. "Given the current economic climate and the president’s call for increased degree attainment and completion, it is critical to examine these barriers at the state level and address the challenges that nonprofit and for-profit institutions face when trying to expand higher education opportunities into multiple states," the foundation said.
  • Investing in institutions that demonstrate the results of adopting good business practices. Lumina offers a gentle prod to state leaders to more critically review underperforming academic, athletics, and other programs and a firmer exhortation to policy makers and university leaders to engage in group purchasing, back-office collaboration, rational benefits policies and other "good business practices" that will allow them to reallocate money toward educational purposes. Lumina credits Making Opportunity Affordable grantees Maryland and Ohio for, respectively, their "energy and efficiency" and group pharmaceutical purchasing initiatives, both of which have saved tens of millions of dollars and allowed states to freeze tuition.

"In today’s challenging economic climate, when enrollment is rising and budgets are shrinking, governors, legislators, state agencies, businesses and institutions of higher learning can do more to drive improvements in degree and postsecondary certificate completion within existing resources and without sacrificing quality," Lumina argues. "Through existing budget development and appropriations processes, state policy makers can create a virtuous cycle of investment, savings and reinvestment to stimulate increased undergraduate degree completion."

Many of the ideas and buzzwords that dot the Making Opportunity Affordable documents are of the sort that make the hair stand up on the back of the necks of faculty members and, when it comes to state regulation and oversight, even some college presidents who fear incursion into their independence. But while some of the ideas that individual states might pursue through their Lumina grants could well anger institutional leaders and professors, the program is set up to encourage their direct involvement in shaping the state plans, said Kristin Conklin, whose HCM Strategists is consulting with Lumina on the Making Opportunity Affordable effort.

Grantees' applications were judged, in part, based on state leaders' plans to engage faculty members and other relevant parties, said Conklin. Focus groups the foundation has done during the "learning year" leading up to its selection of the seven grant winners has persuaded its officials that while many professors bristle when state and institutional leaders bat round concepts like "productivity" and "efficiency," they get the need to focus campus funds on improving student completion. "They recognize that it's about fulfilling their public mission better," Conklin said.

The Lumina grantee states and their approaches follow.

Arizona, $1.5 million. The cash-strapped state will use its grant to expand and create new "no frills" higher education offerings, including existing community college/four-year partnerships. Arizona also plans to redesign its financial aid model to provide incentives to students to complete their educations, and form a presidents' council charged with "identifying and eliminating unnecessary duplication in academic programming and administrative services."

Indiana, $831,000. Indiana's business leaders have been intimately involved in the state's education reform efforts, and they will be active players in its Lumina grant, too. The Indiana Chamber of Commerce was awarded the grant along with the state's Commission on Higher Education, and the two groups will put much of their grant money toward bolstering support among legislators, business leaders and others for the state's new performance funding model. The two entities will also collaborate on a review of whether regional public colleges in the state can benefit from consolidating academic programs and joint purchasing arrangements. While such involvement of businesses might raise eyebrows in some states, it's not an "out of left field idea" in Indiana, said Merisotis of Lumina.

Maryland, $1.032 million. Maryland has been out in front of other states in using cost cutting efforts to win legislative support and redirect money to academic purposes, and in redesigning lower-level courses to try to move more students through them. The big innovation in its Lumina grant, which separates it from the other recipients, is its plan to involve private nonprofit colleges in both of those efforts. The University System of Maryland will work with other groups, including the Maryland Association of Community Colleges and the Maryland Independent College Association, to try to expand the university system's Effectiveness and Efficiency initiative across the higher education sectors, and the state will redesign 24 general education courses at public and private colleges to try to improve student learning and reduce per-course costs.

"Our push for productivity in higher education is not just about public higher education," said Merisotis, who added that the country can't reach President Obama's goal without help from all sectors.

Montana, $1.77 million. Lumina's money in this state will focus intensely on community colleges, building on the state's goal of ensuring that "more Montana residents value a community/technical education and pursue it first," said Conklin. Under the state's plan, each two-year college will become a higher education "hub" in its part of the vast state, and Montana will by next fall create a virtual community college to fill the gaps. The virtual institution will be designed with a "shared, focused set of courses that will allow students to transfer from two-year colleges to state universities without losing credits," according to the Montana University System. In addition, two-year institutions will work together to coordinate and consolidate their student support services and other information systems.

Ohio, $950,000. Ohio has already made significant changes in its funding formulas and other productivity systems; its Lumina grant focuses almost exclusively on producing administrative savings that can be reinvested into student aid and other purposes. The University System of Ohio will focus on combining "back office" functions such as human resources and payroll and increasing joint purchasing, with the goal of saving as much as $100 million a year.

Tennessee, $1.2 million. Tennessee was early out of the gate in embracing performance-based funding, but state leaders are contemplating a freshening of the financing system to align it with today's emerging college completion goals. The Tennessee Higher Education Commission will use its Lumina grant to work with Gov. Phil Bredesen to revise the incentive-based funding program, as well as to begin a statewide effort aimed at getting adults to return to college to get a degree, with a focus on three to five community colleges.

Texas, $1.8 million. State leaders will use their Lumina grant for multiple purposes, including carrying out Gov. Rick Perry's call for a comprehensive review of potential cost savings and expanding Texas' "transfer compact" in mechanical engineering to other disciplines. But the money will also be used to help build support among state legislators and others for a proposed change in the funding formula so that institutions get credit when students finish a semester in college rather than start one. That idea failed to gain traction in this year's legislative session, but the Lumina money is designed to lay the groundwork for such a change in 2011.

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