Tuesday, September 16, 2014

Federal stimulus funds under the ARRA did not protect state student financial aid, further eroding higher education affordability.

Today greater effort is required for families to send a student to college in the U.S. than ever before. College is both more expensive and a larger burden for the average American family today than at any point in the previous four decades. In 1984, at public four-year colleges and universities, average tuition (the instructional price charged to students) was 5.5 percent of median family income and the average cost of attendance  was16.4 percent of median family income. By 2011 these had increased to 15.4 percent and 33.5 percent, respectively. Between 1982-83 and 2012-13, tuition and fees at public four-year institutions increased by 357 percent.  Institutions of higher education are also becoming more reliant on tuition dollars, compared to federal funding. In 1987, total educational revenues were $11,085 per full time equivalent (FTE) student, with tuition accounting for approximately 23 percent of the total. In 2012, total educational revenues were also $11,085, but tuition revenues accounted for approximately 47 percent of the total.

In recent research, I examine the role of the Obama Administration’s 2009 American Recovery and Reinvestment Act (ARRA) in reversing the trend of falling affordability of higher education. I find that while the federal matching of state funds did not lead to states cutting their general appropriations for higher education, many states cut student aid, on average, by 12 cents for every dollar received in federal stimulus.

State student financial aid is intended to increase affordability, by providing students with funds that can be used toward tuition and fee prices. Although overall dollars spent on state student aid programs have gone up, increases in state student aid have not kept pace with increases in tuition levels, leading to a decline in purchasing power for students and families. State grants per FTE increased from $598 in 2000-2001 to $660 in 2010-11– an increase of approximately 10 percent. These trends have shifted the balance between tuition and aid, such that higher education has become less affordable.

In recent years, few policies have reversed or tempered the trend of declining affordability for higher education. One exception is the American Recovery and Reinvestment Act (ARRA) of 2009. Under ARRA law, federal funds were provided to incentivize state spending on higher education. ARRA contained a “maintenance of effort provision” that required states to maintain certain levels of spending such that federal funds would not be substituted for state funds. With ARRA funds, governors were instructed “to provide, in each of fiscal years 2009, 2010, and 2011, the amount of funds to public institutions of higher education in the State that is needed to restore State support for such institutions (excluding tuition and fees paid by students) to the greater of the fiscal year 2008 or fiscal year 2009 level”. Although little has been written on ARRA to date, some claim that federal stimulus funds with the “maintenance of effort provision” have tempered the severity of cuts to public higher education in the states, and, as a result, have promoted college affordability. On average, states spent $21.4 million dollars of federal ARRA funds on higher education between 2009 and 2011.

I aimed to answer two questions. First, did ARRA help to maintain state spending on general appropriations for higher education? Second, did ARRA help to maintain state spending on student financial aid – a category of state spending not specifically mentioned in the “maintenance of effort provision” of ARRA? To investigate, I compiled a dataset spanning 2003-2011, a period that includes six years prior to ARRA and all three years of ARRA spending (2009-2011). With 9 years and 50 states, the dataset includes 450 observations and four different measures of state spending on higher education.

My results indicate that federal matching funds through ARRA worked as intended. States respected the maintenance of effort provision and did not cut general appropriations to higher education beyond the requirements in the law. On the other hand, states appear to have reduced student aid — a category of spending not specified in the legislation. My results show that for every dollar received in federal stimulus funds, states reduced spending on student financial aid by approximately 12 cents, on average. This finding suggests that state investment in institutions was protected through ARRA funds, but students were not protected as seen in the reductions in student financial aid. More investigation of this finding and other potential unintended consequences is needed as more data on ARRA become available.

Although federal matching funds are a promising policy approach for incentivizing state support of higher education, the details of how the matching funds are shaped are important. Recent Congressional testimony asked for “maintenance of effort provisions” in new legislation, suggesting that at least some national higher education organizations recognize that the “maintenance of effort provision” served to temper state cuts to higher education. This also indicates concern about the U.S. states’ ability to continue to support higher education without federal incentives. Future federal matching fund programs should consider all types of state spending for higher education if these programs are going to work to promote affordability in higher education. Policy levers for improving college affordability are too often considered separately by policymakers. In fact, the most meaningful improvements in college affordability will likely be derived when state general appropriations, student financial aid, tuition, and changes in median family income are considered simultaneously. 

This article is based on the paper The Role of State Policy in Promoting College Affordability’, in The Annals of the American Academy of Political and Social Science.

Thursday, August 21, 2014

Birds of a Feather Flock Together: ECI’s Very Partisan ‘Bi-Partisan’ Policy Advisory Board

Educational Choice Illinois (ECI) is “a 501c3 public charity, dedicated to advancing public policy that expands quality educational options for Illinois children in need” that recently released an announcement celebrating the creation of its “bipartisanPolicy Advisory Board.  Their board, 31 members in total, is tasked with “[assisting] ECI in setting its policy agenda” in addition to meeting with community leaders, legislators, participating in outreach, etc.

What is especially interesting about the Board is its composition.  While ECI reports that the Board is “bipartisan,” it is clear that those who sit on the Board are far from bipartisan when it comes to educational policy.  Of the 31 members, at least 23 work for organizations/think-tanks that are overtly in favor of pro-privatization education reforms (e.g., charter schools, vouchers, etc.), and none are known skeptics.  Of the other 8 members, their history or current position on reform cannot be readily ascertained.  Though, as a lobbyist, Vince Williams – who is among the 8 – is likely to advocate for the majority opinion of the Advisory Board – which, in this case, is predominately comprised of pro-privatization ideologues.  Thus, given the history of pro-privatization activities from the members of this Board, one must ask if it was their disposition — as opposed to, say, expertise on the issue — that was ultimately the litmus test for their participation.

In ECI’s promotional video, Myles Mendoza (Executive Director) states that, “[ECI] is a group that really thinks very, very differently about education.  What we care about most are the interests of children, plain and simple.”  Given the composition of its Advisory Board, it becomes clear that ECI does not think “very, very differently” among itself since almost all of its members have a history of advocating for pro-privatization reforms.  In their video, Lisa Graham Keegan (ECI Board member and Chair of the National Association of Charter School Authorizers) states, “I’m a big fan of watching how geese fly because they fly in formation and they take that one goose out in front who takes the brunt and to let that goose in front take them where they need to go, it’s very clear to me that Illinois is head goose here.  And you’re going to hear a lot of honking from a lot of places but you’re going to take us where the rest of the country is going to go.”

In the case of ECI, the goose out front is its new Policy Director Joshua Dwyer.  Dwyer, in his former role at the free-market oriented Illinois Policy Institute, advocated for lifting the charter school cap, increasing online learning, and expanding school vouchers.  Operating under the assumption that market-based school reforms are the panacea of the supposed “crisis” in public education, Dwyer — with masters degrees in public policy and journalism — purported that “the main goal of any reforms should be to allow students in Chicago’s lowest-performing elementary and high schools to leave their schools immediately.”  That is, education reform ought not attempt at mending areas of public schooling that need to be addressed; rather, the goal of any reform ought to lead to an abandoning of local public schools – as opposed to addressing the school-based or systemic issues that cause poor performance.

The assumption that schools fail due to a lack of competition and thereby create a dichotomy of “good” schools where students succeed and “bad” schools where students fall behind is the typical ideology and rhetoric of pro-privatization reformers.  Though, on the face of it, it is hypocritical to suggest that injecting market-competition reforms into schools will somehow create level playing fields and equitable outcomes.  By definition, competition requires winners and losers.

Thus, the “honking” that we will likely hear from ECI’s new Policy Advisory Board will all sound the same as they fly in formation towards privatizing education by promoting more charters and more vouchers – all of which “flies” in the face of real evidence.

Tuesday, August 19, 2014

Unlocking the Interlocking Relationship Between International Student Enrollment in Public Universities and Declining State Appropriations Operations Revenue

“The interlocking relationship between public institutions, tuition and fee policies, and state appropriations is an area that seems to be pervasively misunderstood by taxpayers and policymakers” (Alexander, 2011).

International student enrollment within U.S. higher education has experienced significant growth since 2007 (Institute of International Education, 2013).  The growth of this demographic in public institutions has gained increased media attention (e.g. Chicago Tribune, Crain’s Detroit Business,  and The New York Times).   Generally, these reports are not favorable to the universities as the media often focus on increases of international student enrollments then jumps to conclusions toward how this affects the in-state domestic students’ chances of entering into these universities.    Commonly, there is minimal reporting that specifically links international student enrollment increases to declining state appropriations operations revenue.  For example, one report extensively stated, “During a decade of declining state funding, the additional revenue by non-resident freshmen is budget friendly” and another superficially reported that, “But disapproval seems to have quieted in recent years with the decline in state funding to U.I. and public institutions, and the recognition that full-tuition-paying international students help the bottom line.”   In media reports full of numbers, they often seem to fail to report some of the numbers that may help the public better understand why enrollments of international students are increasing. 

For decades, state appropriations for large, research universities, have been in decline (The College Board).   As appropriations decline, legislatures expect that universities will generate institution-controlled revenue to bridge funding gaps (Hovey, 1999).   Reacting to an eroding financial relationship with the states, universities have been forced away from the public good paradigm toward a privatized, revenue generating paradigm where institutions are now “seeking to generate revenue from their core educational, research and services functions…” (Slaughter and Rhoades, 2004).  One market identified as a viable source of revenue are international undergraduate students, hence the recent significant enrollment increases of this demographic.   In fact, the revenue generated from this demographic has turned into big business as international students supply $17b in tuition and fees, an overall $24b to the U.S. economy, and is responsible for the creation of roughly 300,000 jobs.    Essentially, international student enrollment supports more U.S. jobs than Apple, Amazon, Facebook, and Google combined.

The table below displays the annual average decline in state appropriations from 2007-2012 and shows the relationship between inflation adjusted state appropriations and undergraduate full-time international student [UG FTI] enrollment.   The numbers are based on my original research using IPEDS reported data and focuses on the public universities of the Big Ten, many of which hold top spots in national enrollment of international students.  The table shows that each university, sans Maryland, has experienced state appropriations operations revenue declines, some of which are more profound than others.  It also suggests that for most of these universities there are correlations between losses in inflation adjusted state appropriations and UG FTI enrollment.   Essentially, for every million dollars removed in inflation adjusted appropriations, the universities are expected to enroll more UG FTI students.  The exact numbers per individual university are found within the table.

The bar graphic shows 2007-2012 trends of inflation adjusted state appropriations and collected international student and fees (estimated via base tuition), projected to the year 2020.   The forecasts suggest that aggregate estimated international student enrollment tuition and fees will soon overcome aggregate state appropriations.  By 2020, the total estimated international student tuition and fees should exceed $3 billion for just these 13 universities, with seven universities projected collect more revenue in international student tuition than they do in state appropriations. 

This data signals that state legislatures’ facilitation of declines in appropriations holds influence on enrollment of UG FTI student enrollment.  Basically, through decreased financial support, state legislatures are positioning the universities to act as privatized entities.  This argument is often lost in public media outlets because the decreased financial commitment from states to universities is not deeply reported on, especially within articles that explore international student enrollments.   See the throwaway sentences cited earlier. 

Before I finish, I wish to make my personal position explicitly clear.  My stance on international student enrollment in U.S. institutions is one of inclusion.  I believe these students are an asset to our universities as they subsidize domestic tuition and fees and bring unique perspectives to our classrooms. 

Fundamentally, I believe the problem is not within the practice of enrollment international students, but instead is with international students’ ability to remain in the U.S. post-graduation.  Specifically, I believe that the federal H-1B work visa and citizenship policies are too limiting.  These restrictive laws are an issue because almost 50% of international students indicate a desire to stay and work within the U.S. beyond graduation, but are forced to leave.    As higher education institutions use this demographic to generate revenue, whether by choice or through reactions to legislatures’ actions, I believe it is their ethical duty to influence modification of these restrictive policies.   

Yet, that is the topic for a forthcoming blog.