Reform bill failure leaves inefficient LA higher education

The failure of state Sen. Conrad Appel’s SB 117 to become law invites another look into how financing of higher education in Louisiana occurs, the facts and myths surrounding it, and therefore how to proceed to reduce the inefficiency of the system while improving outcomes.

His bill would have created a commission to assign performance standards for schools, which subsequently would have been used to apportion state money to them on the basis of outcomes. In testimony, Appel said while the state lagged in support per student compared to southern state peers, the more important issue was performance and getting greater efficiency gains. Critics, and perhaps explaining why the measure failed, argued it was a lack of money in the system where its increase might get better performance.

However, the data largely validate the idea that higher education in Louisiana can be run more efficiently and does not suffer that much from lack of resources. Using the latest data available (2010), the state (of all of them plus the District of Columbia) ranks 18^th highest in per capita state appropriations, yet ranks close to the bottom both in degree completion (defined as those finished within six years) and in retention. But in total expenditures per capita, Louisiana is right in the middle, and ranked 32^nd in amount of spending per full-time equivalent student.

Explaining the difference is that other states’ expenditures are boosted by (in many cases by double or triple the size of) amount of tuition and fees charged. For baccalaureate institutions, the state ranked fourth-lowest, and second lowest in the southern region. In fact, in the region one could factor in 10 percent increases annually for the last three years, unrealistically assuming no other southern state increased its tuition, and in the ranking the state would rise exactly one place, so dramatically low is Louisiana’s in-state tuition. And this doesn’t even account for through its Taylor Opportunity for Scholars Program the state paying tuition for about a fifth of all students.

While some argue that low tuition is necessary because Louisiana is a “poor” state, in fact when comparing the percentage of tuition and fees charged to median household income, the state ranks 39^th. In other words, the state relatively undercharges students compared to other states, leading it to abstain from beefing up spending on higher education.

Regardless, that per capita or per student spending is relatively so high compared to outcomes shows the inherent inefficiency of the system. And in large part this can be traced back to the overbuilt nature of the system. The state ranks 39^th in population per baccalaureate institution, and 35^th in enrollment per baccalaureate institution, figures when including community college students decline a couple of places further, showing too few students are chasing too many institutions (the figures fall in rankings even further when including separate campuses instead of administrative units). Both this and low tuition are reflected in that Louisiana ranks 9^th in the proportion of full-time students of all; they predominantly attend baccalaureate universities and can afford to do so on a full-time basis.

That the state ranks as it does on these yet has such low completion and retention statistics indicates potential delivery problems but perhaps speaks more to the negligible admission standards that existed until this academic year. Hiking those will provide some better efficiency in that unprepared students will be steered to community colleges in greater proportions, but the low tuition rates and undemanding TOPS standards will continue to induce these kinds of students disproportionately to enter college and to weigh down retention and completer statistics.

One other, and often cited, statistic illustrates inefficiency in the system. Louisiana ranks 15^th in the proportion of students attending baccalaureate institutions. Especially given the relatively low level of college-readiness as indicated by comparatively low American College Test scores (40^th nationally for 2012), increasing the portion that attends community college, at least at first, can provide better readiness to move on and is cheaper.

To summarize, inefficiency comes from two sources. There is a systemic component, comprised of the overbuilt system that dilutes resources, imprecise matching of student capability to level of institution, and generous cost-sharing incentives (low to almost free tuition and fees) that cause oversupply of marginal students likelier to fail; and a process component that aims to take capable and motivated students and educate them to degree-earning status that perhaps can be improved with additional funding as long as that and other funding are being used in ways that best educates for society’s demands for the least dollars.

Thereby, to address these, systemic change is needed, which Appel’s bill didn’t address, and process change is needed also, which his bill tried to do. But it should be clear that this effort was just one part of the puzzle, to increase process efficiency, and addressing just the state money angle of that.

A comprehensive strategy, which would entail realigning resources that could lead to the sensible merging, downgrading, or even closing of institutions, increasing admissions and TOPS standards, and raising tuition and giving universities better means to control it such as by getting the Legislature out of the tuition approval business, allowing them to makes students drop classes earlier in a term and charge for a maximum of 15 instead of 12 hours, probably would have the biggest impact on increased efficiency in Louisiana higher education delivery. But SB 117 certainly would have started in the right direction to help ensure the structure, reformed or not, would spend more wisely what taxpayer dollars it would be receiving.