Higher ed economics – cost down, prices up

Higher ed economics – cost down, prices up

Posted: Wednesday, December 21, 2011 7:03 pm
By: John Morgan, Special to The Press

Higher ed economics - cost down, prices up

John Morgan
It’s time to emphasize an important point about public higher education in Tennessee: While price is going up, cost has gone down.  
Then why is tuition increasing? The answer is simple: the state over time has reduced the amount it allocates for public higher education, forcing students to pay a higher price. State funding for our public colleges, universities and technology centers decreased by some 30 percent for the 46 Tennessee Board of Regents institutions since 2008, shifting more of the funding burden to our students.
The Board of Regents institutions have become more efficient and effective in delivering services. On average, the cost (outlay of expenses) per student at our universities in 2011 was 4 percent less than in 2008.  The impact at our community colleges was even greater, averaging almost 9 percent less than in 2008. And those numbers don’t include the pressures of inflation.
Despite our efficiencies, the share of the cost paid by students has increased.  If this trend continues, it will be detrimental for all Tennesseans.
Our state leaders have rightfully emphasized the need for a better-educated citizenry.
In 2010, the Tennessee General Assembly enacted the Complete College Tennessee Act, arguably the boldest attempt by any state to focus the energies and resources of its public higher education enterprise on meeting the state’s development needs. Together with the First to the Top and Race to the Top initiatives, our state enacted measures designed to improve Tennessee’s education pipeline. The central idea of the Complete College Tennessee Act, advanced by the prior administration and readily embraced by Gov. Bill Haslam, is that in order for Tennessee to thrive in the global economy, the education and skill levels of Tennesseans must improve significantly.
An analysis published last year by the Georgetown University Center on Education and the Workforce forecasts that “By 2018, … the [U.S.] economy will create 46.8 million openings … some 63 percent will require workers with at least some college education. About 34 percent will require a Bachelor’s degree or better, while 30 percent will require at least some college or a two-year Associate’s degree.  Only 36 percent of total jobs will require workers with just a high school diploma or less, and these will be clustered toward the low end of the wage scale.” In Tennessee, jobs requiring postsecondary education and training should grow by 516,000.
These findings are consistent with what high-skill, high-wage manufacturing employers like Volkswagen, Hemlock and Wacker, among others say.
Our Governor has articulated his desire to increase the educational attainment of Tennesseans. Unless we can make progress toward that goal, in the future those high wage jobs are likely to move to, or be created in, the states with the best prepared workforce.  
To meet this challenge, the Complete College Tennessee Act included important elements aimed at transforming our public higher education system into a more efficient, effective and outcome-oriented enterprise. Both the UT and TBR systems were directed to implement a transfer policy that ensures community college students can readily transfer credits to public universities. The TBR was instructed to evolve our community colleges into a “comprehensive system,” enhancing their statewide role. We are making these things happen.
Most important, the Complete College Tennessee Act called for a formula to fund public higher education based on outcomes like increasing degrees, diplomas and certificates awarded. The outcome-based formula has created a strong incentive for our institutions to focus on strategies that contribute to student success and to align financial resources with those strategies. Implicit in the CCTA and the outcome formula approach is that if we can improve our results, funding will follow.    
Our hope is that the state will make the investment and fund the educational outcomes that are achieved. If not, the price of a higher education will continue to rise, and our goal of making Tennessee competitive in the world economy will be beyond our reach.
That is the ultimate point.
Editor’s note: John Morgan is chancellor of the Tennessee Board of Regents, the nation’s sixth largest higher education system. The TBR governs six regional universities (Austin Peay, Middle Tennessee State, East Tennessee State, Tennessee State, Tennessee Tech and University of Memphis) and all 13 community colleges and 27 technology centers across the state.

WCP 12.20.11


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