Cut apron strings to improve LA higher education delivery

Despite the tepid reception received by legislators, Louisiana higher education officials have a point and ought to be allowed to have far more flexibility over tuition charged – but only if combined with a couple of needed policy changes.

The Joint Legislative Committee on Education heard a plea from Commissioner of Higher Education Jim Purcell to back some familiar ideas that he said would promote efficient delivery. One addresses the long-standing bane of state higher education: capping tuition at 12 hours paid even if a student takes more than that. This leads to overstaffing as some students deliberately load up and then drop classes in which they are doing the weakest, and makes for free education typically for 20 percent of a student’s career (most programs are designed to require 120 hours to graduate, meaning 15 hours taken a regular semester, and often financial aid pays for 12 hours only) and thereby unpaid-for use of resources. At the very least, any such limit should be raised to 15 hours.

Purcell also broached the idea of charging higher tuition for programs more in demand. This might be a double-edged sword, however; higher rates may discourage students from entering these programs and, worst of all, drive them to proprietary schools that disproportionately offer these kinds of programs. He counts on the relative inelasticity of demand for these at state schools, but that may be a miscalculation which bears further investigation.

Finally, he also stumped for ending the state’s status as the only one where the Legislature must approve of tuition increases. This desire for politician control partly comes as a populist legacy, especially in a political culture where for times of political convenience tuition hikes are equated with tax increases, but also has become structural in that the Taylor Opportunity Program for Scholars entitlement program, where an entirely average standardized test score and inflated high school grade point average wins students a free tuition ride to a state university, siphons out of the budget a figure headed to $150 million a year (although increasingly it is relying less upon general fund expenditures as more of it is coming out of an education trust fund) that only heads higher as tuition rises.

Certainly Purcell has a point when he argues that freedom to set tuition works better in a higher education marketplace becoming increasingly privatized, where market pressures can be responded to in more optimal fashion. But legislators cautious of that move also have a point when they argue efficiency and effectiveness gains still remain available before perhaps turning it over to higher education – signaling wariness that higher education would pursue these further if given the keys to the vault.

Consider a summary of facts: in total state funds, which is taxpayer support plus tuition, since 2004 Louisiana has gone from over $2.3 billion to over $3 billion annually in higher education spending while the number of students enrolled has increased just from around 214,000 to about 222,000. In per student terms, this means the cost has gone up roughly 20 percent, and while tuition increases have accounted for much of this, the per student cost still has gone up 7.4 percent in money coming from the state over this span.

And while Purcell and others may bemoan reductions since 2008, which the Board of Regents asserts have totaled $625 million offset by only $331 million in tuition increases, the fact is the overall numbers show an increase of $34 million spent over that period, and on a per student basis a decrease of only 5.6 percent. Presently, the state pays $7,781 per student while tuition averages out to $5,296 gathered per student.

There has been minor retrenchment, but surely more can be done – especially since Louisiana ranks 8^th highest among the states in per capita higher education costs. The main reason for this, however, is the overbuilt higher education system among baccalaureate-and-above institutions and technical colleges and stubborn insistence on multiple, duplicative governance boards. Money that could go to campuses doesn’t, and too many mouths to feed means none specifically gets fed all that well.

While legislators such as state Rep. Dee Richard recognize mergers and closures should be in order, unfortunately, these kinds of sensible strategic changes, in contrast to the tactical ones offered by Purcell, have proven too bold for required legislative supermajorities to form to enact them, so we’ll have to do with tactics. And they should get implemented with two modifications.

First, TOPS reform must occur to make it a true scholarship program, where the state promises for above-average performance a base amount aligned with the lowest tuition from a baccalaureate-and-above school (or for its award designed for two-year and below schools, the lowest there), and, as performance prior to college increases, offers higher amounts so that a really high achiever gets tuition at the state’s most expensive school (no doubt Louisiana State University Baton Rouge) paid. This would encourage students in high school to work harder, discourage students marginally interested in higher education from wasting their time and taxpayer dollars from enrolling, and better align resources.

Of course, this change brings these advantages much reduced, if even there, if schools can do whatever they want with tuition, but that can be solved with the grant to allow them to charge whatever tuition they want – except that it be subject to a formula that slices away a portion of state support for every penny tuition increases. This would provide incentives to continue searching for efficient delivery without subsidizing practices of the opposite, encourage more efficient pricing by creating a reward for that through the “extra” state money retained, and, in the search for more enrollees and more retained enrollees to gain more revenue over costs, spur schools to meet market demands of programs.

Cutting many apron strings in all ways – not just in legislators’ control over pricing, but also in subsidizing – can help Louisiana higher education become that more efficient and effective deliverer despite its overbuilt structure featuring maldistribution of resources. It’s a natural extension of the GRAD Act philosophy of swapping control for better performance, and is a trade both politicians and academicians should welcome.