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Formula will work best by demoting institutions

Drowned out by all of the cheering concerning a standstill higher education budget in Louisiana passed last month was these dollars continue to flow in a way that props up an inefficient delivery system, perpetuating waste of taxpayer dollars in a tight budgetary environment that by law is becoming harder to justify.

The issue came to the surface at the latest Board of Regents meeting, where community colleges complained that state money continues disproportionately to go to baccalaureate-and-above schools, and to certain ones of those. The Board has a funding formula that details how much of this money should go to institutions, based largely on enrollment but also in recent years’ performance. But it also has a provision called “stop-loss” that attenuates the impact of the formula the lower the state subsidy goes, which means fewer dollars are subtracted than the formula would indicate the lower enrollment goes for an institution.

This has been to the disadvantage of community colleges because their enrollments have been growing. In essence, because as a result the portion of money they receive through tuition and fees continues to rise, this is used to supplant part of what they would get from the state, which then is transferred to weaker four-year institutions that have been losing students (ironically, those institutions have kvetched about proceeds from tuition hikes substituting for reductions in taxpayer subsidization). Generally speaking, with a shift to stronger entrance requirements at senior institutions and continuing increases in tuition that may price out some baccalaureate-and-above students and intended students, the proportion of students attending junior institutions in Louisiana has been on the climb over the past several years.

In 2009, 65.3 percent of all students attended senior institutions in Louisiana, which by 2014 had fallen to 63.1 percent. At the same time, funding has weighed more heavily towards institutions such as the Southern University System’s senior universities and postgraduate school, which were down 13 percent in enrollment, and, with the exception of the University of Louisiana-Lafayette and Louisiana Tech University, the schools of the University of Louisiana System, down minus ULL and Tech over 7 percent. In essence, community colleges have been subsidizing the Southern system and all but the two most prominent UL schools.

They are growing discontent at that, as was expressed at that meeting, and serves as another reminder of the overbuilt nature of Louisiana higher education where it ranks ninth fewest in population per institution (with every state below either significantly smaller in population except for Georgia). That wouldn’t be so bad if it was because of a larger community college headcount, but at 37.9 percent and ranking 36th among the states, compared to a national average of 51.1 percent, senior institutions are overweighed. This means for underclassmen instruction higher costs than necessary are being paid just to place, in the words of Louisiana Community and Technical College System President Monte Sullivan, “a priority on keeping doors open at institutions, as opposed to serving students.”

The Regents need to address this inequity because R.S. 17:3192.2 requires that just after the new governor and Legislature are sworn in next year to report to certain legislative committees a proposed outcomes-based formula for higher education that distributes money in an “equitable” fashion, the criteria for which has no room for stop-loss (although there is a provision mandating in formula compilation funding maintenance in case of a “sudden” change in a school’s fortunes). And given Louisiana’s relatively low level of competence of high school graduates, who score near the bottom on national standardized tests, senior institutions will have a more difficult time in meeting the standards than if more students went first to community colleges, where a premium is put on instruction of generally less capable students that costs less.

This should mean one essential thing to meet the goal of institutional success under the new formula: demoting certain senior institutions to junior status to reap cost savings (and combining others would complement this). To do so requires a long term plan, and starting soon. Yet we’ve heard nothing from the Regents that would indicate their willingness to take this step; they didn’t address any of the LCTCS complaint at that meeting. Indeed, during this year’s legislative session there only was talk about finding more money to keep doors open and offering a false dichotomy of the sole alternative being the closing of some of these institutions that would save little money in the near term.

A change in status of any institution needs supermajority legislative approval, and that will be a hard pull given the political environment of legislators around the affected institutions that sees a demotion as negative to their districts. Still, the Regents owe this kind of plan as a corollary to the new formula, and if legislators refuse to go along and institutions generally suffer on outcomes as the years go by, at least the Regents did their constitutional duty and voters know who to blame and punish in 2019.

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