Our Universities: State Funding

Effective institutional leadership puts a clearly focused mission at the center of every funding decision.  And in every organization that seeks to serve people, resources are directed toward that mission. Higher education is opportunity capitalized through thoughtful, rewarded-when-successful risk in service to people.

“Those that perform well get a lot. Those that don’t get nothing.”

Steve Egan, Higher Education Funding Council for England, quoted in Governing


Last week the American Association of State Colleges and Universities (AASCU) produced a fiscal projection for 2014 and 2015. The report indicates that Gross Domestic Product growth rate averages 3.2% annually. The 2015 forecast varies depending on the agency but ranges from 3.0% according to the International Monetary Fund to 3.5% forecast by the Organization for Economic Co-operation and Development.   Another positive note — the U.S. Bureau of Labor Statistics says unemployment is improving markedly in some states, while others are still plagued by joblessness.

State investment in higher education increased 5.7% for fiscal year 2014 nationally, an encouraging economic sign.  Forty-nine states have passed budgets for fiscal year 2015 and 43 of those chalked up gains for higher education. Some were significant. For example, New Hampshire had a 21% increase in higher education support while Colorado and Utah both had 11%. Additionally in the six states where funding has been reduced, the decrease was minimal according to AASCU’s analysis.  Correctly, the AASCU study indicates that as state support for higher education increases hikes in tuition and fees tend to level off.

All of this positive economic news is music to the ears of university leaders.  However, the impact of gains in funding is diminished by increasing costs of university attendance for students – and by the expensive intransigence of university administrators and faculty to change the means of instruction and their unwillingness to ask hard questions about what is taught to whom, under what conditions, and to what purpose. Increases in state funding should be seen as seed corn for innovative leadership, not a panacea for slothfulness in spending and foggy focus, both too prevalent in higher education.

Some states are seizing opportunity through risk:  Tennessee and Oregon favor community college attendance by lowering, or even eliminating, tuition at community colleges. Lower cost two-year schools make important and considerable contribution to cost reductions: 70% off in the first two years.  The threadbare arguments about comparable quality at universities are just that in most cases…threadbare.  Louisiana’s WISE plan ties incentives to institutions that produce graduates in “high-need sectors of the state economy,” according to the AASCU study.

Additionally, campus and legislative leaders should find ways to magnify the power and benefit of a thoughtful performance-funding model.  Shortsightedness cavalierly dismisses suggestions that accountability, measurement, focus, and clear performance targets don’t provide value to students and families. When correctly configured, they do. Sloppiness in higher education effectiveness and efficiency, no matter the economic times or challenges, falls at the feet of leadership and benefits neither public nor student.

Missing from an otherwise thoughtful AASCU analysis and forecast are a few items important to universities.

Charitable giving saw a 9% increase last year, according to AASCU and the Council for Aid to Education.  Increased ingenuity to provide incentives to encourage individual and corporate giving and support to all institutions, not just the flagships and prestigious private schools, is required. Such actions might encourage healthy entrepreneurship from leadership.  In addition, scholarship, research, and service activity at educational institutions from community colleges to national research universities provide the opportunity for both academic excellence and a means to offset the cost of attendance through assistantships, work-study, and scholarships. Decreasing reliance on tuition and fees while simultaneously increasing academic prowess is a powerful one-two punch.

For our universities, the improving economic picture is encouraging but only as a means to expand both opportunity and effectiveness.  Otherwise, it is but seed sown on hard, shallow, and/or thorny ground if forward-looking academic leadership does not till the soil and exercise opportunity through risk to attain the core mission of service to student and state.

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