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Latest request dispels myth of LA higher education doom

Observers and participants got an early view of a big part of the fiscal 2015 budget to be proposed by Gov. Bobby Jindal tomorrow when earlier this week he laid out plans for higher education. If what is expected comes to fruition, what passes in the legislatively-approved budget will end an exceptionally misunderstood budgetary era regarding funding this state government function leaving Louisiana with a different, and healthier, system of higher education going forward.

Jindal announced that not only does he want to boost higher education with an additional $14 million in state general fund money, the first boost in half a decade, but he also wants schools to take advantage of tuition increases that are projected to draw an additional $88 million and be able to tap into a $40 million fund that rewards on the basis of program expansion in areas of study identified as high need. It continues a pattern over his terms in office of reshaping higher education delivery based upon results largely shaped by his budgetary choices ratified by the Legislature.

A mythology, largely driven by disgruntled higher education employees and Jindal critics, formed over his years in office asserting that in this time period higher education suffered nothing less than catastrophe. They point to the $2.814 billion budget, just about half of which was funded directly by state government in the last budget before Jindal’s arrival, as compared to the current fiscal year’s budget that contains only about $525 million in that general fund financing, feeding the narrative of cataclysm.

But even a cursory look at the data reveal such an interpretation to be at the very least overwrought and at the most deliberately distorted. This year’s budget allocates $2.629 billion total to higher education spending, and among the preceding years topped $3 billion twice; in fact, after that first year they were consistently in the $2.9 billion-$3 billion range until last year, as a consequence of American Recovery and Restoration Act spending from the federal government expiring. If we add in the figures Jindal mentioned, it puts the FY 2015 budget only about $45 million lower that of FY 2008 prior to his assuming the state’s top spot. The overall amount spent hardly has changed, with the only changes internally happening to the mix of funds: again using his numbers, Jindal will propose that tuition and fees comprise $1.367 billion, up from the FY 2008 amount of $741 million. That is, the two sources essentially have swapped places, and with the removal of ARRA funds with the difference made up in statutory dedications for the most part.

This means the seven-year change in total financing is down only 1.6 percent. However, it is more informative to use a metric measuring per student spending. In the fall of 2008, with 207,760 enrollees, per student spending was $13,544 each, while in the fall of 2012 (the latest data available, so we’ll assume even enrollment with the fall of 2013, a good assumption with increased admission standards kicking in) with 221,831 enrolled past the resignation date, spending was $11,851. But whereas 2008 featured a student population 28.6 percent in community and technical colleges, that proportion was 32.6 percent by 2012. Assuming the education of a baccalaureate-and-above student is one-third greater in cost than that of others, then the adjusted change in per student support over this time period was a decrease of 11.5 percent.

That’s not the trivial overall change number, but neither was it a disastrous reduction. And a pretty good case can be made that it was a reduction that more than affecting core operations instead in the main got rid of inefficiency. Just before this period (2006), in per capita state spending Louisiana ranked 10th highest in the country. After four years (latest data available) passed, the state still ranked 18th – falling relatively even though it actually had increased spending on higher education by about $400 million in the interim. To restate, Louisiana spends more per student than does the average state yet has some of the most dismal results when looking at metrics of degree completion and retention. Together, these indicate that an inefficient process is at work, likely a consequence of having an overbuilt system of higher education (the state continues to rank in the top ten of states in number of institutions and in institutions per capita.)

Two objections could be raised to this analysis. One is that the inefficiency of the process is a consequence of the relatively low-skilled product coming from high schools (ranked 40th nationally on the American College Test), which means more money must be spent per student to bring them up to speed. However, this disregards the fact that Louisiana ranked 15th highest in proportion of students going to baccalaureate institutions; if the state has a lower-skilled set of incoming students, then more should be going to the institutions of remediation, community colleges, than are, which actually have lower per student costs. It also ignores that colleges simply should not be admitting the least capable, thus least likely to succeed and most costly, of students that currently are enrolling, but this obvious solution is anathema to the overbuilt system that scrambles to lay it hands on every student it can get so that no institutions must shut their doors and the community and technical college components can continue to expand.

The other one is that the shift from taxpayer to service user resources for funding reduces access, especially in a “poor” state. Yet this rationale also relies more on myth than fact. Even after a couple of years of tuition increases, Louisiana ranked 47th among the states in average tuition and fees paid, and even assuming 10 percent increases over the next three years to bring us to the present and assuming other states did not raise theirs, the state would have moved up exactly one place – and this doesn’t even count that one-fifth of all full-time students have their tuition paid for through the Taylor Opportunity Program for Students. Nor is this low figure even out of line with the relative wealth of the state’s people: Louisiana ranked 39th overall in per capita income. Bluntly, low tuition levels are a product of a populist era that put burdens on the backs of a relative few to spread out benefits to many and have been an impediment to funding higher education rationally.

In short, should these Jindal recommendations come to pass, over seven years Louisiana higher education only would be marginally worse off in terms of dollars being spent by student, and those missing dollars mainly represented efficiency gains. Further, by shifting funding emphasis away from open-ended taxpayer subsidization based upon inputs and more towards user-driven financing that increases incentives for schools to use their resources more efficiently, this sets up Louisiana higher education to make future significant improvements in retention and completion.

Therefore, the false narrative of doom and destruction of Louisiana higher education – which equates larger amounts of taxpayer money as system inputs with a healthier system – needs replacement by the reality that the budget decisions of the past few years have transformed the system to make it a better servant of the people, judged by the proper metric of results. In the next few years, we should begin to see the payoff from this rough, but needed, period of transition.

1 comment:

Anonymous said...

You deliberately left out the part where faculty insurance premiums are going to be raised also - there are no present numbers on how the premium hikes will compare with salary raises, and my guess is that they will be about equal. This is another one of Jindal's de facto tax raises, as is raising tuition. Through this, Jindal will continue to brag that he's "never raised taxes."
The excuses you make for Jindal are incredible.