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Inside the higher education numbers

Posted on January 28, 2014

By Jan Moller and David Gray

The good news from Gov. Bobby Jindal’s executive budget is that the bleeding has finally stopped in higher education. After five straight years of deep cuts to public colleges and universities — one of the few areas of the state budget that are unprotected by state law or the Constitution — the proposed budget for 2014-15 actually calls for a slight funding increase. The newspaper headlines said public colleges will get an extra $142 million next year, an increase of more than 6 percent over current levels.

But when we unpack the numbers, there is actually less there than meets the eye.

For starters, $88 million is not really state spending at all; it’s money colleges expect to get by raising tuition. While some of that will be covered by the state through TOPS (more on that later), the costs are mostly being borne by students and parents.

Another $40 million is going to colleges for training in high-demand fields, but only if they can come up with a 20 percent match. Moreover, the fine print of a letter sent last week to the governor by higher education leaders shows that this money would simply replace a $40 million appropriation for “operations and maintenance support” that is in the current-year budget.

The $40 million was added to the current-year budget in the waning moments of the 2013 session at the insistence of the Louisiana Legislative Black Caucus.

When you take away those two things — tuition money being paid largely by students and parents, and $40 million in new funding that’s actually just replacing current funding — that leaves about $14 million in actual new financing for the $2.6 billion enterprise that is higher education in Louisiana.  According to The Advocate, this is money that’s been “set aside for various projects,” meaning it’s not money that campuses can spend as they see fit.  

Still, it’s a lot better than getting cut, which has been the story in higher education since the Great Recession and two unaffordable income-tax cuts collapsed the state revenue base and forced colleges through an unprecedented retrenchment.

But just how bad has it been?  

Coincidentally, last week Illinois State University released its annual “Grapevine” study, which tracks higher education spending in every state over time. It’s an invaluable resource for anyone wishing to understand how Louisiana stacks up against its peers.

According to the latest figures, no fewer than 40 states saw fit to increase spending on higher education in the current fiscal year. But not Louisiana, where the current budget reflects a 4.7 percent cut from last year (only two states — West Virginia and Wyoming  — cut more on a percentage basis than Louisiana).

Looking at the trend over time, things get even worse. That’s where we learn that no state has cut more money from higher education than Louisiana — a state where strong investment in postsecondary training could pay lasting dividends, as thousands of good factory jobs await those who can get the right training.

The Pelican State has chopped almost 35 percent from higher education over the past five years, worst in the country by a wide margin.
Five-year changes in state fiscal support for higher education
Why are these trends important? Because Louisiana is competing with other states — and the rest of the world — to develop a strong, educated workforce that can attract the top employers. And if other states are re-investing new dollars in education at a time when our leaders are only treading water, then we are in fact falling farther behind.  

Alas, there is one area of higher education where Louisiana continues to spend more money each year: The TOPS program, the state’s generous “merit based” program that pays full in-state tuition to any Louisiana high school graduate that finishes with at least a 2.5 grade-point average and scores at or above the state average on the ACT.

This program, where 40 percent of recipients come from households with incomes above $100,000, has nearly doubled in cost since 2008 (mainly because of increases in tuition).

Tops over time

And while Louisiana is hardly alone in offering merit-based college scholarships — most Southern states have similar programs — Louisiana’s appears to be among the most generous in that it pays full tuition and comes with relatively low eligibility requirements.

By contrast, other states that have low eligibility standards, such as Kentucky and Arkansas, generally have caps on tuition that allow for cost controls. And states that have no cap, such as West Virginia, have stricter eligibility standards.

While TOPS continues to grow, the state’s need-based program for college students who can’t afford the cost of higher education has mostly languished since its launch in 2004. Called Go-Grants, this program functions much like the federal Pell Grant program and is available to students who demonstrate financial need. As the cost of a college education in Louisiana has escalated in recent years, the Go Grant program has remained flat – meaning that low-income students have actually lost ground while their well-heeled peers continue to be insulated from tuition hikes.

The Go Grant program got a nice funding boost — from $15 million to $24.2 million — in 2008, but since then the funding has failed to keep up with rising costs:
Go Grants over time

Unfortunately, this pattern shows no sign of abating in next year’s budget. Go Grant funding is once again flat, while TOPS continues to escalate. Affluent students of average ability (and who can still attend a four-year school in Louisiana at much less cost than an out-of-state school) will continue to get full rides through college, courtesy of the taxpayer, while the students in most need will continues to lose ground.

This debate is not just about fairness; it’s also about the best return on the state’s investment. Studies show that low-income college students are much more likely to stay in school if most of their financial needs are met. A 2011 report by the Noel-Levitz consulting firm found that students who had at least 60 percent of their financial needs met through grant programs were much more likely to stay in school (70 percent retention rate) than those who had less than 30 percent of their needs met (46 percent retention rate).

In other words, financial concerns are a major reason why students drop out of college. In a state like Louisiana, which struggles with low college completion rates, investing more money in need-based aid seems like a sure-fire way to get more graduates ready for the workforce

The most obvious way for the Legislature to fix this imbalance would be to restore most of the funding that’s been cut over the last five years. Money is not the only solution to the state’s higher education shortcomings, but it’s impossible to move forward without adequate investment.

Beyond that, there is the need for better balance between TOPS and Go Grants. Moving forward, legislators should consider some common-sense fixes:

Raise the academic standards for TOPS. Year after year, well-meaning legislators have tried to hold down costs by capping the scholarship awards — to no avail. A more practical solution would be to raise the academic standards to ensure that merit-based scholarships go to students with true merit.

The current standards allow students with at least a 2.5 GPA (equivalent to a C+ average) and an ACT score of 20 to get a full scholarship. The standards should be raised to a minimum of 3.0 and, say, a 25 on the ACT. That would ensure that only the top 20 percent of high school graduates — the ones most likely to be recruited away by out-of-state schools — get scholarships

Increase Go Grants and index for tuition. If need-based financial aid is the key to making sure low-income students stay in school and graduate, the very least the state should do is make sure that the Go Grant program grows at the same rate as tuition, so that students don’t lose financial ground over time.

Beyond that, the state should set a long-term goal of making sure that at least 60 percent of a student’s financial need is met for everyone enrolled full-time in a two- or four-year college. This would be easier to accomplish in Louisiana than in most other states, since in-state tuition levels are well below the national and Southern average despite the recent increases.

After five years of nothing but cuts, the governor deserves credit for recognizing that investing in higher education is the key to a successful workforce that can compete against the world. After all, the states with the best-educated workers also tend to have the highest median wages. But the executive budget is only a start- and a meager one at that. Much more is needed if Louisiana is ever to fulfill its economic potential.

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