Expand TOPS to voucher to stay an entitlement

Last week, Louisiana’s Commissioner of Higher Education Joseph Rallo echoed a remark investigated on several occasions in this space and which provides an alternative formulation in how to deal with the state’s schizophrenic Taylor Opportunity Program for Students currently under budgetary fire.

TOPS, with its extraordinarily mediocre standards, does not operate as a true scholarship program because of that but instead mimics an entitlement. For that reason, it features a high default rate and uses taxpayer dollars inefficiently. Modest enrollment increases over the years since its institutionalization almost two decades ago and substantial tuition increases that brought up Louisiana from close to the bottom of senior institution average tuition among the states about a dozen places, although still lagging the national average by over $1,500 annually, have swelled TOPS’ cost, making it a target to cut in times of budgetary stress.

Democrat Gov. John Bel Edwards has proposed that – not as a sincere means to cut the cost of government but as a cudgel to scare lawmakers into a tax hike. As currently defined in statute, that reduction would have the effect of raising dramatically TOPS’ standards and, as touted in this space, would have the beneficial impact of making it a genuine scholarship program, eliminating most of its inefficiency in resource use.

But a fully funded TOPS existing as an entitlement could serve as a key mechanism moving the state’s higher education towards what Rallo mentioned in testimony to a legislative panel – virtual “privatization” of Louisiana’s colleges and universities. Actually more a complaint than a suggestion – Rallo’s attitude being that as he perceives state support declining so much higher education ought to go whole hog and just become private – his joins similar statements coming from other states over the past decade as a slow downward trend in state subsidy per student has occurred.

Of course, Rallo exaggerates considerably – currently higher education in Louisiana only generates about three-fifths of its revenues itself, and even the shock Edwards budget that would cut $46 million from higher education doesn’t raise this proportion that much. By contrast, many states get a lower proportion of their revenues from state appropriation with nine getting less than half the proportion Louisiana receives from its citizens. Obviously, compared to other states, Rallo’s remark that “Some of our institutions receive so little state funding, they should qualify as private” qualifies either as jest or as misleading.

But what if Louisiana wanted to go to real privatization? In that case, TOPS could act like a voucher; it practically already is, as its minimal standards for senior institutions mimics the entrance requirements for the lowest tier of the state’s public baccalaureate-and-above schools. Consider that at these schools this past fall the state enrolled a full-time equivalent of about 140,000 undergraduates, with an average tuition of almost $7,900 annually. This worked out to $1.1 billion

Before cuts this fiscal year, the three four-year systems (although including two community colleges and also graduate students) were to get around $712 million and then another $200 million or so in TOPS money. About 20,000 resident students attend full time the top-tier university (Louisiana State University Baton Rouge), around 22,500 one in the middle tier (Louisiana Tech, the University of Louisiana – Lafayette, and the University of New Orleans), and the schools in the lowest tier (all others) have 42,000 state residents taking a full load (a small portion of this total does not represent recent high school graduates eligible for TOPS).

Why not just say the state gets out of the business completely of subsidies and gives a voucher to every graduating high school student that qualifies for admission to the top-tier senior public institution worth $11,000, to the middle tier $9,000, and to the lowest tier $7,000, for a maximum of eight semesters (other terms such as summer school would be their responsibility)? Index this to urban inflation every year, get rid of the 12-hour cap on what a university can charge maximally, and give each institution (or system) complete financial control over its own operations including tuition and fees, while the state can retain authority over capital outlay. For community and technical colleges, make the voucher amount $5,000 to cover the 27,000 or so full-time in-state students akin to the state subsidies plus TOPS that at present go to these junior institutions.

So, if LSU wanted to charge $366.66 a credit hour for in-state full-time students, qualifiers could take as many as 15 hours and pay only fees and for books if needed. Part-timers would pay by the credit hour, perhaps at a discounted rate because the voucher includes state support for all students forecasted for enrollment (based upon present attendance levels), while graduate students and out-of-state students would pay much higher ones. Note that these suggested levels would equate to about the same amount TOPS and state funding would total under the revised Edwards budget.

However, arranged this way institutions would have far better prospects financially. Since everything would depend upon enrollments, they would have to allocate resources to emphasize areas of strength and degree demand while fulfilling state general education requirements that ensure broad education in important areas employing critical thinking skills. This induced efficiency would ease the alleged funding crisis affecting Louisiana higher education at present, which comes more from inefficient resource use, primarily in having too many institutions chasing too few students especially at the senior level, than from any lack of funding.

This arrangement also may sort out that overbuilt impediment. Schools that cannot compete adequately for students at a certain point will find themselves unable to deliver a quality education. The law should allow in that circumstance a takeover by the state to support financially the struggling school and the state can decide to whether change the institution’s level of degree offerings (if a senior institution), merge it into another, or phase it out to closure.

Over the long haul, this policy would produce better use of taxpayer dollars while simultaneously in the aggregate improve the quality of higher education delivery in the state. It also would constitute the only defensible argument to keep TOPS in its present entitlement form. Otherwise, the state should move towards making TOPS a genuine scholarship program.