National Center for Higher Education Management Systems3035 Center Green Drive, Suite 150Boulder, Colorado 80301

Higher Expectations and Fewer Resources:What’s a SHEEO to Do?

Dennis P. JonesSHEEO Annual Meeting

Santa Fe, NMJuly 17, 2009

The Expectation

“By 2020, America will once again have the highest proportion of college graduates in the world”

President Barack Obama, February 24, 2009

slide 2

slide 3

Current Annual Degree Production – 2,252,212

Additional Annual Degree Production Needed – 150,528 per Year

Associate and Bachelors Degrees Needed to Become the Most Educated Country by 2020

Increase in State and Local Funding at Current Cost per FTE

Note: Assumes private institutions will maintain current share

The “Gap” - Difference in Annual Degrees Currently Produced and Annual Degrees Needed to Meet

Benchmark

Source: U.S. Census Bureau, PUMS and Population Projections, IPEDS Completions Survey 2004-05

Accounting for MigrationU.S. = 781,301 (a 52.8% increase in the public sector)29,190

28,84628,582 25,227

24,87224,37423,77723,424

21,467 16,21415,34314,47714,45514,43414,14414,09013,67512,82612,07311,94310,78810,410

9,4658,811

6,9486,9416,054

4,2624,2323,7263,639

2,392

1,551 959950 411290

-719 -2,122-3,195-3,372-4,028 -8,768 -11,369

7698

-18,389

1,944

-20,000

-10,000

0

10,000

20,000

30,000

40,000

TexasC

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or th Caro lin a

TennesseeO

hi oN

evadaLouisi anaN

ew Jersey

Mi chiga n

KentuckyArkansasSout h C

ar oli naAlab am

aIndi anaW

a shingtonVir gi niaPennsyl vani aO

regonW

i sconsi nM

aryla ndIl lin oisM

i ssissi ppiO

kl ahoma

Mi ssour i

New

Mexico

We st V

i rgi niaIdahoAlaskaC

onne cti cutM

ai neH

awaii

Montana

Wyo m

i ngKansasD

el awar e

New

Ham

p shir eM

i nnesot aSout h D

akotaVer m

o nt131,749

94,162

140,533N

orth Dakota

Nebraska

Iowa

Rhode Island

Utah

New

York

Colorado

Massachusetts

slide 4

THE FISCAL REALITIES

slide 5

Expenditures on Tertiary Educational Institutions as a Percentage of GDP, by Source of Fund (2004)

*Some levels of education are included with others**Including public subsidies to households attributable for educational institutions, as well as including direct expenditure on

educational institutions from international sources.***Net of public subsidies attributable for educational institutions. Source: OECD.

Expenditures

slide 7

Annual % Budget Increase, Fiscal 1979 to Fiscal 2009

*32-year historical average rate of growth is 5.9 percent **Fiscal 09 numbers are estimated

***Fiscal 10 numbers are recommended Source: NASBO June 2009 Fiscal Survey of States

Combined Budget Gaps of $230B

slide 8

*Only 24 states have forecasted FY 2011 budget gaps to date

37 states

24 states

For most states – and for most public institutions – the stimulus package is not an

answer.• But it could slow the impact

• And it could buy enough time to adjust to substantially changed circumstances

slide 9

After stimulus wanes, gaps could approximate 4% of spending, or $70 billion, even under the “Low-Gap”

Scenario

Source: Don Boyd (Rockefeller Institute of Government), 2009slide 10

After stimulus wanes, gaps could approach 7% of spending or $120 billion under the “High-Gap”

scenario

Source: Don Boyd (Rockefeller Institute of Government), 2009slide 11

Projected State and Local Budget Surplus (Gap) as a Percent of Revenues, 2016

slide 12 Source: NCHEMS; Don Boyd (Rockefeller Institute of Government), 2009

State Tax Capacity and Effort—Indexed to U.S. Average

Source: State Higher Education Executive Officers (SHEEO)

AL

AK

AZ

AR

CACO

CT

DE

GA HI

IL

IN IA KS

KYLA

ME

MD

MA

MS

MT

NE

NV

NJ

NY

NC

ND

OH

OK

PARI

SC

SD

UT

VT

VA

WA

FL

IDMI

MN

MO

NH

NM

TNTX

WV

WI

WY

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

0.6 0.8 1.0 1.2 1.4

State Tax Capacity (Total Taxable Resources Per Capita)

State Tax Effort (Effective Tax Rate)

US

OR

Slide 13

THE DEMOGRAPHIC REALITIES

slide 14

The big population growth will be in students of color. In the main these will be individuals of

modest means.Therefore there are real limits as to how high tuition can

go before price affects participation and completion.

slide 15

Change in Population Age 25-44 By Race/Ethnicity, 2005-2025

Source: U.S. Census Bureau

slide 16

…2,689,700…1,044,516

Difference Between Whites and Next Largest Race/Ethnic Group in Percentage of Adults Age 25-

34 with an Associate Degree or Higher, 2000

35.8

19.3

1.4

0

10

20

30

40

Colorado

California

Connecticut

Nebraska

South D

akotaN

ew Y

orkM

assachusettsN

ew Jersey

Kansas

Rhode Island

TexasN

orth Dakota

Washington

Arizona

Alaska

Utah

IllinoisIow

aW

isconsinO

regonM

innesotaN

ew M

exicoIdahoV

irginiaN

evadaM

ontanaP

ennsylvaniaM

arylandW

yoming

Delaw

areU

nited States

Michigan

South C

arolinaN

ewN

orth Carolina

Mississippi

LouisianaG

eorgiaM

issouriO

hioA

labama

IndianaA

rkansasFloridaTennesseeK

entuckyV

ermont

Oklahom

aM

aineW

est Virginia

Haw

aii

Source: U.S. Census Bureau, PUMS (based on 2000 Census)

Family Incomes of Families with School Age Children

slide 18

Source: American Community Survey

Expectations

• Maintain access – serve an increasing number of students

• Maintain affordability to both students and the state

slide 19

Invest stimulus funds in:• Developing more cost-effective ways of

doing business• Paying for the transition

Short-Term Actions

• Reallocate faculty time to undergraduate courses and away from– Administrative and committee work and other activities

for which release time is granted– Undersubscribed graduate programs that cannot be

justified by regional labor market needs– Non-sponsored research

• Collaborate with other institutions – share– Academic programs– Administrative services

• Make sure that students are receiving all aid for which they’re eligible

slide 20

Longer Term Strategies – Mission Focus

Refocus on the institutional mission – serving state and student needs rather than institutional

aspirations– Eliminate small, non-core programs – close low-demand,

high-cost programs that aren’t distinguished and can’t be justified by labor market needs

– Re-think institutional aid – focus on removing barriers to attendance rather than competing for students whose college participation is not in question

slide 21

Longer Term Strategies

Make investments in more efficient administration and plant operations

– Retrofit building for energy efficiency– Reengineer business processes– Renegotiate relationships with the state (invest in a

Policy Audit with an eye toward restructuring state administrative and reporting requirements)

slide 22

Longer Term Strategies

Invest in reengineering curricula and delivery methods– Restructure general education

• Fewer options• More large enrollment courses• More courses that can be taught by faculty from multiple

disciplines– Invest in course redesign– Tackle developmental education on a statewide basis

• Common standards• Modularized• Technology enhanced

slide 23