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Fiscal and State Policies Impacting Public Higher Education Daniel J. Hurley Director, State Relations and Policy Analys

State Outlook. Fiscal and State Policies Impacting Public Higher Education Daniel J. Hurley Director, State Relations and Policy Analysis American Association of State Colleges and Universities Washington, D.C. / March 23, 2012. Agenda. Economic and employment conditions

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Fiscal and State Policies Impacting Public Higher Education Daniel J. Hurley Director, State Relations and Policy Analys

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  1. State Outlook Fiscal and State Policies Impacting Public Higher Education Daniel J. Hurley Director, State Relations and Policy Analysis American Association of State Colleges and Universities Washington, D.C. / March 23, 2012

  2. Agenda • Economic and employment conditions • State budget conditions • Higher education funding • State policy priorities and actions in 2012 • AASCU higher education advocacy initiatives

  3. U.S. Economy: Stabilizing Trajectory U.S. GDP Growth Rate Percent Change in Gross Domestic Product / Adjusted for Inflation Sources: Tradingeconomics.com; Bureau of Economic Analysis; U.S. Department of Commerce

  4. U.S. Unemployment: Positive Trajectory U.S. Unemployment Rate Percentage of the Labor Force Source: The Economist, Briefing on the American Economy, March 17, 2012

  5. Unemployment: Slow Improvement Jobs CreatedUE Rate Feb: 227,000 8.3% Jan: 284,000 8.3% Dec: 223,000 8.5% Nov: 100,000 8.6% Oct: 80,000 9.0%

  6. State Revenues on the Rebound • State tax revenue increases 8 consecutive quarters – after 5 consecutive quarters of losses (longest on record) • 4th Quarter of 2011: +2.7% compared to 4Q 2010 • +4.4% when excluding CA & IL • FY 2011: Overall, up 8.4% (strongest since 2005) • Only NH witnessed lower revenues in FY 2011 • Overall revenues still 7.8% lower than in 2008 • Continued weak growth expected for balance of FY 2012 • Future implications? – State sales tax collection by online retailers? Revenue data source: Nelson A. Rockefeller Institute of Government, University at Albany, SUNY, and U.S. Census Bureau

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  11. State Budget Pressures • States’ Medicaid costs: up 29% in FY 12 alone • State obligations: Medicaid, pension programs, unemployment insurance, employee health care, K-12 • State/public priorities: K-12, health care, public safety • Diminishing legislative capacity to affect state policy agenda through the state budget • Budget pressures • Spending obligations • Spending restrictions • Interference by the courts • Anti-spending public sentiment Help!

  12. State Higher Education Funding • Fiscal Year 2012 Funding – Grapevine Study • Largest year-over-year cuts in a half century • Overall reduction of 7.5% • CA’s $1.5 billion reduction=26% of the $5.8 billion national decline in state higher ed funding • 41 states cut funding; 9 increased funding • Largest cut: New Hampshire (-41%) • Largest increase: North Dakota (+10%) • FY 2012 state higher ed funding: $72.5B Grapevine Project, Illinois State University, January, 2012

  13. State Higher Education Funding • Fiscal Year 2011 Funding – SHEEO SHEF study • 25-Year Low: Average state support per student ($6,290) • State/local funding per FTE student fell $242 while net tuition revenue per FTE increased $225 • All Time High: Tuition revenues per student (43.3%) as percentage of educational revenues SHEEO, State Higher Education Finance, FY 2011, March, 2012

  14. State Higher Education Funding Total FTE Appropriations at 1996 Levels SHEEO, State Higher Education Finance, FY 2011, March, 2012

  15. State Higher Education Funding • State appropriations per full-time student • 1980s +6% • 1990s +5% • 2000s -23% • 2010 alone -7% • 2011 alone -4% Sources: Delta Project, and SHEEO, State Higher Education Finance, FY 2011, March, 2012

  16. State Higher Education Funding State-to-Student Cost Shift in Who Pays for a Public College Education 19852011 % Paid by State 75% 57% % Paid by Student 25% 43%

  17. State Higher Education Funding Fiscal Year 2012 • Executive budget recommendations: Range from -20% (PA) to +8% (ID) • Strong focus on Performance-Based Funding

  18. 2012 State Higher Education Policy Issues in the Mix Overarching theme: Affordability State operating support for higher education Productivity Governance restructuring and regulatory reform College completion Performance-based funding Tuition policy State student grant program funding College readiness Veterans Education Immigration policy

  19. 2012 Notable Policy Actions to Date • Immigration: GA (ban on enrollment) • MD (referendum) • Guns on campus: CO-Court strikes down ban Activity in AZ, NH & OR • Mergers/Proposals: GA, NJ • State Grant Aid Program (cuts, “reform”):CA • State oversight of for-profits: CO • Governance: OR, WA

  20. 2012 Gubernatorial Higher Education Priorities 1) Role of higher education in economic and workforce development (CO, DE, FL, GA, ID, IL, IN, KY, ME, MD, MA, MN, MO, MS, NE, NH, NY OH, OK, PA, RI, SC, SD, TN, UT, WA, WV, WY) Partnerships with the private sector(GA, ID, IL, MD, MO, NE, NH, RI, SD, WV, WY) 3) Recognition of community and technicalcolleges (GA, ID, IL, KY, ME, MA, MS, OH, PA, SC, WY) 4) College readiness (AK, HI, IA, ME, MI, NH, NM, OK, UT) State operating support/funding(ID, MA, MN, NH, PA, TN, VA, VT, WA) 6) Degree attainment(IL, MN, MO, OK, OR, TN, UT) 7) Early college/dual enrollment(IN, KY, MS, MO, VA, VT) 8) State financial aid(AK, CO, GA, IL, MO, TN) 9) Higher education performance(OH, OR, PA, SC, VA) 10)College affordability(MD, MO, TN, WA)

  21. Higher Education Advocacy • AASCU Innovations Exchange • AASCU Perceptions and Policy Priorities Project • AASCU/APLU Messaging Initiative

  22. AASCU Innovations Exchange • Online resource showcasing successful initiatives across a range of issue areas (programs, policies, practices) • Advocacy, Accountability, State Funding and Regulatory Reform – among the categories featured • Proprietary (password protected) produced by, and for, AASCU member institutions • Focus on outcomes, replicability • Concise and uniform presentation • 110+ case illustrations to date

  23. The Perceptions and Policy Priorities Project: Understanding and Responding to Public Higher Education Perceptions and Policy Priorities Among State Political Leaders • Goal: increase our under understanding of decline in state political and funding support for higher education • Explore disconnect between policymakers’ understanding of the higher ed—economic development connection, against their policy/funding priorities and other perceptions • Task Force-led project • Chaired by Bill Sederburg, Utah higher ed commissioner • Outcomes: Published report to include • Framework for responding to the disconnect • Messages, strategies, tools for responding to the disconnect

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