Follow the Money

U.S. Chamber of Commerce ranks public higher education in state-by-state report card that measures "return on investment." Good data and transparency are lacking among public colleges, group says.

June 20, 2012

WASHINGTON -- Public colleges must do a better job of measuring their efficiency and quality, said an affiliate of the U.S. Chamber of Commerce, which on Tuesday released a report that ranks states on the “bang for the buck” of their public higher education systems.

Several worrisome trends spurred the Institute for a Competitive Workforce, a group led by Margaret Spellings, a secretary of education in the George W. Bush Administration, to conduct the research behind the report, including college completion shortfalls, increasing tuition rates and concern about the rigor of a college education.

There is growing “skepticism among employers” about whether graduates of public institutions have the skills and knowledge necessary to contribute to the workforce, Spellings said at an event held here Tuesday. And contributors to the report cited the book Academically Adrift, which questioned the quality of learning on college campuses.

The report, dubbed "Leaders and Laggards," seeks to provide a detailed data analysis of performance of public higher education in each state. That was no easy task, said its authors. In fact, one of the report’s main findings is that good data on college finances is hard to get, said Andrew P. Kelly, a research fellow at the American Enterprise Institute and one of its primary researchers. For example, Kelly said they were not able to disaggregate college expenditures on undergraduate and graduate education.

Another “gaping hole” was labor market outcomes, said Kelly, noting that only four states publicly disclose employment data about college graduates at the institutional and academic program level. All other states lump employment outcomes in broader categories.

States were dinged in the report for lacking quality data or not being transparent. And the researchers also evaluated state policies, by trying to determine whether states foster student success and productivity. They scrutinized whether policymakers had encouraged “innovation,” such as online learning at public colleges or the entry of outside providers on online degree programs, whether for-profit or nonprofit.

Louisiana, Indiana, Ohio and Tennessee got good marks for their policy environments, while Hawaii and South Dakota did well in encouraging innovation, mostly for being open to outside providers. Some states may have been on the verge of fulfilling criteria in the report, its author said, like Virginia on labor market outcomes. But the report is "snapshot in time" with a cut-off date of April.

The report measures colleges on college completion and student success rates, factoring in how they stack up on serving disadvantaged student populations. It also rates the states on how efficient they are on degree production, tracking how much colleges spend to produce a degree. Finally, data were broken out separately for community colleges and four-year institutions.

Efficiency and cost-effectiveness of public higher education
Leaders Laggards
Four-Year Institutions Two-Year Institutions Four-Year Institutions Two-Year Institutions

















Researchers said they structured their methodology to reflect “return on investment,” rather than just student access.

“Institutions haven’t been rewarded for completions,” said Grover (Russ) Whitehurst, director of the Brown Center on Education Policy at the Brookings Institution and an expert on higher education data, who contributed to the report. “They’ve been rewarded for enrollments.”

M. Peter McPherson, president of the Association of Public and Land-Grant Universities, said he and his staff had not been able to thoroughly review the report yet. But he said its broad themes were familiar, and would likely be heard more often in the future by leaders of public institutions. Furthermore, many of the report’s recommendations are reasonable, he said, including its focus on completion, workforce outcomes and innovations like online course delivery.

McPherson quibbled with ranking higher education based on information states collect, noting that colleges in some cases publicly release more detailed information than states. For example, he pointed to the Voluntary System of Accountability, a search tool of information on public colleges for prospective students, which his group and the American Association of State Colleges and Universities created.

But more data are needed, said McPherson, such as on employment and wages of college graduates. “I’m all for making it available.”

No state dominated the final results. But Florida, Texas and Minnesota fared better than most. Those states earned plaudits in a few categories, and stayed out of the “Laggards” column. States also received grades on all six categories upon which they were measured. Florida and California were among only a few that didn’t get an F in any category. Both states have been hit hard by state budget cuts, but the report does not give a free pass to states that reduce funding.

“We want to be clear that our focus on efficiency is not a call to blindly slash higher education budgets in order to lower the public investments per degree,” the report said. “States that lower public investments and hike tuition, but leave an otherwise inefficient system in place, will quickly realize that such a strategy is likely to detract from other state goals around education attainment.”

McPherson said any measure of public higher education’s performance has to take into account the fact that public colleges have absorbed a 23-percent increase in students over the last decade -- a time of painful budget cuts in most states. As a result, public colleges are already thinking more about return on investment, because they have no other choice.

“When resources are tight, things tighten down,” McPherson said.

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Paul Fain

Paul Fain, Contributing Editor, came to Inside Higher Ed in September 2011, after a six-year stint covering leadership and finance for The Chronicle of Higher Education. Paul has also worked in higher ed P.R., with Widmeyer Communications, but couldn't stay away from reporting. A former staff writer for C-VILLE Weekly, a newspaper in Charlottesville, Va., Paul has written for The New York Times, Washington City Paper and Mother Jones. He's won a few journalism awards, including one for beat reporting from the Education Writers Association and the Dick Schaap Excellence in Sports Journalism Award. Paul got hooked on journalism while working too many hours at The Review, the student newspaper at the University of Delaware, where he earned a degree in political science in 1996. A native of Dayton, Ohio, and a long-suffering fan of the Cincinnati Bengals, Fain plays guitar in a band with more possible names than polished songs.

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