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French Lick, Indiana August 7, 2011

Preliminary Report from Task Force on New Financial Models for Higher Education John Applegate Craig Brater John Graham Karen Hanson MaryFrances McCourt Larry Singell Daniel Smith Neil Theobald, chair Rebecca Lee-Garcia, staff. French Lick, Indiana August 7, 2011.

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French Lick, Indiana August 7, 2011

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  1. Preliminary Report from Task Force on New Financial Models for Higher EducationJohn ApplegateCraig BraterJohn GrahamKaren HansonMaryFrances McCourtLarry SingellDaniel SmithNeil Theobald, chairRebecca Lee-Garcia, staff French Lick, Indiana August 7, 2011

  2. Is privatization simply a shorthand description of the diminished will and capacity of state government, or does the concept suggest a broader, deeper transformation in the culture of public research universities and the society in which they function? Stanley Ikenberry President Emeritus University of Illinois

  3. Road Map • Overview of report • Why has this issue reached prominence at this time? • Case studies of institutional responses • Institution level • School level • Program level • Overarching themes • Recommendations forthcoming • Discussion: What IU should do

  4. Why now?

  5. Road Map • Overview of report • Why has this issue reached prominence at this time? • Case studies of institutional responses • Institution level • School level • Program level • Overarching themes • Recommendations forthcoming • Discussion: What IU should do

  6. Institution levelOregon Issues • UO next-to-last in state funding per student • UO treated as state agency—unbudgeted or unspent revenue reverted to state Effective January 1, 2012 • Tuition control shifts from legislature to State Board of Higher Education • University System no longer state agency • State funding will be tied to state goals and accountability

  7. Institution levelColorado Issues • CU last in state funding per student • Extensive state regulation: cap on non-resident enrollment, legislature set tuition and approved capital projects, regardless of funding source Changes made • CU-B set floor on % of Colo. h.s. grads enrolled • In-state tuition cap of 9% • Non-state funded capital projects reported

  8. School levelPenn State Hershey Medical Center Issues • Last in state funding per student in U.S. Effective July 1, 2006 • State eliminated all funding • PSHMC equalizing tuition and increasing NR • Medical Center provides substantial financial support to Medical School (Dean of Medical School is CEO of Medical Center)

  9. School levelUniv. of Virginia School of LawDarden School of Business Issues • Rapid decline in state funding (28% to 8%) • Extensive state control (tuition, HR, IT, capital) Effective July 1, 2005 • Forfeited state funding in return for peer-level tuition rates • Autonomy in return for extensive planning and accountability metrics targeted to state needs • Remain under UVa policies/rules

  10. School levelUCLA Anderson School of Management Issues • Rapid decline in state funding • Campus approval needed for new classes and programs Change proposed • ASM would forfeit $6 million state funding in return for peer-level tuition rates • Use own resources to “respond more nimbly” • ASM would remain under UCLA policies/rules

  11. Program levelKelley Executive Partners Issues • KSB receives minimal state funding • Campus approval needed for new classes and programs Response • KSB created nonprofit organization (KEP) with any profit handed over to KSB • KEP has greater flexibility in use of resources and response time to market changes

  12. Road Map • Overview of report • Why has this issue reached prominence at this time? • Case studies of institutional responses • Institution level • School level • Program level • Overarching themes • Recommendations forthcoming • Discussion: What IU should do

  13. Overarching Themes • HE seeks financial stability--and states seek low-cost productivity--by trading (a) state funding/control for (b) autonomy tied to accountability for meeting state goals. • At the present time, though, states need great research universities more than ever. Can they relinquish control of their most precious asset? • As the workforce changes, almost all parents want their children to go to college. How will these changes impact student access to HE?

  14. Overarching Themes(continued) • State goals evolve in the short-run. What are the cost and mission implications for HE in agreeing to pursue ever-changing priorities? • Regardless of how state goals change, what are the HE mission implications of substituting market control for state control?

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