State funding cuts and tuition hikes increase demand for student financial aid

When the state is forced to cut higher education funding it often allows institutions to raise tuition sharply to make up for part of the cut. Sharp tuition increases create a need for higher financial aid appropriations – to mitigate the effect of the tuition increases for the state’s neediest students.

The HECB estimates another $120 million will be needed in the next biennium to provide State Need Grants to all eligible Washington students who want them, Don Bennett, HECB Executive Director, recently told the Senate Higher Education & Workforce Development Committee.

Under current eligibility rules, a family of four with one student in college can have an annual income of no more than $54,000.

The Governor’s proposed 2011-13 state budget includes $91.6 million to offset the impact of proposed tuition increases on students who receive State Need Grants (SNG). However, that additional allocation wouldn’t help eligible students who don’t receive any grant money. Last year, nearly 22,000 eligible students were not served by the SNG program because demand for the first-come, first-served grants exceeded available dollars.

Given the state’s fiscal crisis, many SNG-eligible students may face similarly grim prospects this year. With aid applications expected to rise another 22 percent, many lower-income students who would like to go to college with the help of SNG may be forced to abandon or alter their academic plans.      

Bennett discussed financial aid issues with the Senate committee while explaining the HECB’s higher education budget proposal for the 2011-13 biennium. Reviewing institutional budget proposals and making recommendations on operating and capital budgets to the Governor and Legislature are among the HECB’s statutory responsibilities.

In light of the state’s ongoing fiscal problems, the Board recommended a higher education budget amounting to about 10 percent of the state General Fund, or about $3.3 billion.  The HECB proposal did not specify the amount that might come from tuition increases.

The proposal would provide about the same level of appropriation that was provided for the 2009-11 biennium before the cuts of the last two years. It is important to note that the proposed budget does not make up for the cuts of this biennium. It simply would allow institutions to operate at their current funded service levels. 

“We don’t try to recover lost ground, we just try to hold the line where we are, to offer the same level of services that we are at the current depressed level,” Bennett said.

In an attempt to balance many competing state needs, the Governor offered a budget proposal that includes an even lower appropriation for higher education than the “survival level” budget proposed by the HECB. The Governor recommended a little over $3 billion for higher education, including $2.7 billion from state funds and $330,000 million from tuition increases.

Higher education’s share if the state General Fund has averaged about 12 percent since 1991.  As the state’s fiscal crisis has worsened, tuition has provided an increasing share of operating revenue. Under the Governor’s proposal, only about 8.3 percent of the higher education budget would come from the General Fund. “It represents a low point in terms of the state’s commitment of resources,” Bennett said.

Reductions in state funding have placed a growing burden on students and financial aid programs. In recent presentations, the HECB has tried to emphasize the interconnected relationship between the levels of state appropriations, tuition and financial aid.  As state appropriations decline and tuition costs rise, the need for student financial aid grows.

There is general agreement it is very unlikely state appropriations for higher education will increase in the coming biennium. The HECB’s 10 percent of General Fund proposal simply holds the line. And, as noted, the Governor’s proposed budget would not even come up to that level.

Still, to maintain perspective about what could be accomplished if funding levels were higher, the HECB developed three alternative funding scenarios based on higher education receiving incrementally greater shares of General Fund revenues: 11, 11.5 and 12 percent.

Each of these options would enable the state to serve 18,000 more students through the State Need Grant program. The HECB’s base recommendation would serve an additional 4,400. The Governor’s proposal would not expand the number of students being served.

In addition, the HECB’s alternate funding scenarios would enable institutions to increase annual degree production by 1,000, a central goal of the Strategic Master Plan.

Bennett said past and projected future budget cuts are having an impact on the effort to achieve the state goal of significantly increasing degree production, which has been deemed essential to providing enough educated workers to meet demand in the economy.

Senate committee hears report on Complete to Compete

Unemployment rates would almost certainly be lower in this country if higher education could produce more graduates with the skills needed for today’s economy, Travis Reindl, program director in the Education Division of the National Governor’s Association (NGA), told the Senate Higher Education & Workforce Development Committee on Monday.

“We have some emerging industries for which we have shortages, and some where we’ve had chronic shortages,” said Reindl, who cited healthcare as an example of one industry that has seen serious skilled-labor shortages.

Producing the college graduates needed to fill those workforce gaps will require boosting college-success rates among non-traditional categories of students, including low income persons, citizens of color, and working adults.

To do that, states need common performance measures to better gauge what is working in higher education and what is not working so well, Reindl said.

That is the rationale for the NGA’s Complete to Compete Initiative, an effort to get states to develop comparable and reliable metrics that enable them to make better decisions on where to focus limited higher education resources to meet the workforce needs of the economy.

At the state and national level, Complete to Compete is a major initiative of Gov. Chris Gregoire, who is serving as chair of the NGA this year. Within the state, the initiative also has been endorsed by the Governor’s Higher Education Funding Task Force.

The task force recommended Washington take steps to strengthen accountability and performance by public higher education institutions, including adoption of certain Complete to Compete measurements.  The task force also recommended a new incentive fund to reward campuses that achieve measureable goals that help more students complete degrees.

The Governor’s office reportedly is working on draft legislation to implement parts of the task force report.

A National Governor’s Association workgroup developed the education metrics proposed for adoption by the states under the Complete to Compete initiative. A National Governor’s Association overview of the initiative presented to the Senate committee on Monday says higher education data at the state and institutional levels too often are limited and inconsistent, particularly with respect to performance. 

The NGA proposes states compile measurements in two broad categories: outcome and progress.  Outcome metrics include degrees awarded, graduation rates, transfer rates, and time and credits to degree.  Progress metrics include enrollment in remediation education, success in remedial education, success in first-year college courses, credit accumulation, retention rates, and course completion. Technical definitions for the metrics are being prepared.

HECB Executive Director Don Bennett told the Senate Committee that performance and accountability have been among Washington’s strategic goals in higher education for a number of years. He said the NGA initiative is “very much in alignment” with those goals.