Leading a college or university today is more challenging — and more important — than ever. It's no exaggeration to say that the future of the American economy rests with how well our postsecondary system educates our young adults.
Severe shortfalls have meant that in nearly every state and college system, budgets are being stretched and cut in ways that few have seen before. The Bill & Melinda Gates Foundation can't fill those budget gaps, but we and our partners can spark the discussions and research necessary to help find the best way forward.
Today, Complete College America  (an effort supported by the Gates Foundation and four other national philanthropies) is inviting all governors to take the Completion Innovation Challenge. The 10 governors with the most innovative and inventive proposals to significantly boost college completion in their states each will receive a $1 million grant. The idea is to encourage state leaders to enact real change and lasting impact by helping them take on big ideas, like performance funding, revamping developmental education and exploring new delivery models – even in these tough economic times.
Some of you may be chuckling right about now. "Sure," I can hear you say. "We’ll focus on these things just as soon as we figure out how we’re going to keep the lights on."
Things are bad out there , it's true. California is poised to carve $1 billion out of the state university system, reducing its support to 1998 levels. Michigan is reducing student financial aid 61 percent. Even steady South Dakota, home to one of the lowest unemployment rates in the nation, was forced to hike tuition 4.6 percent to help cover its cuts. We understand that these are tough times. No one supports drastic reductions in education funding, especially when we know that education is the key to our nation’s long-term economic recovery. But that is also the primary reason completion is more important than ever. Because if not now, then when?
Forecasters predict that by 2018, at least 63 percent  of American jobs will require some sort of postsecondary credential or skill set. In terms of sheer numbers, employers over the next seven years will need to hire 22 million workers with college-level skills, yet the U.S. will produce just 19 million of them over that time – and that’s before these budget cuts are taken into consideration.
To simplify it further: if current trends continue, the education level of the average American worker is projected to decrease for the first time since 1940, when the Census first began tracking it.
The deficits governors and legislators are wrestling with are long-term problems disguised as a short-term crisis. It's true that the recession has exacerbated these shortfalls, and federal stimulus backfill is gone, leaving a gaping hole. But the root causes of this problem are structural. Many state spending plans have locked in substantial annual increases, and there is simply not enough economic growth in either the short or long term to maintain the status quo. Even when the economy recovers, the problems will persist because costs will continue to grow.
Higher education systems and campuses are going to have to be smarter with the resources they have. No more nibbling at the edges in an attempt to wring efficiencies out of a higher education model built in a different era. I believe we are nearing a watershed moment in American higher education. We can either keeping doing things the way we’ve always done them, with less money and diminishing success. Or, we can make the bigger structural reforms we need – strategically and smartly. Realistically, this is our best option for long-term success.
American postsecondary schools spend an estimated $2 billion on remedial programs  in which half the students don’t finish. Between 2003 and 2008, American taxpayers spent an estimated $9 billion  supporting first-year students at four-year colleges and universities who never returned as sophomores. When we’re spending billions on programs that don’t result in graduates, it’s easy to see how completion relates to our current budget issues.
When we talk about "completion" at the Gates Foundation , we're speaking about creating a postsecondary system that addresses fundamental issues by being smarter with its dollars and by offering programs that fit the lives and needs of today’s student. It’s a system where access and quality go hand in hand, where one is not sacrificed for the other.
Many higher education leaders already understand this. Valencia Community College , for example, posts graduation rates that are 15 percentage points above its peer institutions, despite receiving no more – and no fewer – resources. How do they do it? President Sandy Shugart says they stopped spending so much money and energy trying to get "butts in the seats" and instead began "seeing the college through the eyes of the student."
As a result, the leaner administrative processes allowed the college to invest far more of its resources into counseling and career services, which in turn helps get students to degrees and drive up completion rates.
When Melinda Gates launched our Completion by Design  initiative last fall, we asked for groups of reform-minded college presidents and postsecondary leaders to step forward. Scores of them did, despite the tough economic times and the fact that the project seeks nothing less than the total redesign of a community college system.
A total of 27 cohorts applied for Completion by Design, representing 139 colleges from nine states. Collectively, these institutions educate nearly 1 million full-time students, or about 23 percent of all enrollments at public two-year institutions.
In October, when we announced the first wave of digital Next Generation Learning Challenges , we were hoping $20 million in potential funding would energize entrepreneurs, technologists and educators to tackle high-enrollment, low-completion courses such as developmental education and "gatekeeper" courses. Again we were amazed by the response – 600 submissions to the initial RFP, representing well over 1,000 organizations.
These examples tell us that, especially in these lean budget times, there is a real thirst in higher education for new models, new thinking and smarter ideas. And that’s one reason why the foundation is excited to support Complete College America’s Completion Innovation Challenge. It provides those reform-minded governors and leaders another important avenue for resources and support.
Complete College America is a national organization whose sole mission is to work with states to increase the number of Americans with college degrees or certificates. They have both the policy expertise and campus-level experience to know the challenges you face and how you can mitigate or overcome them.
Dramatically improving the nation’s completion rate can seem daunting and impossible. It’s understandably hard to consider retrofitting the airplane you are flying when two of its engines are aflame. We hear you.
But there is a reason why necessity is the mother of invention. And higher education, if it’s going to meet the needs of students and the nation’s economy, is in need of innovation and invention.
Hilary Pennington is director of education, postsecondary success and special initiatives for the Bill & Melinda Gates Foundation.