School Finance

University of Virginia: Proving Me Right Since 1819

August 12, 2013
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The University of Virginia is no stranger to controversy. Just over a year ago, in June 2012, the school’s governing body, the Board of Visitors, voted to oust the president after less than two years at the helm.

The dethroned President Teresa Sullivan was popular among faculty and students; the ousters on the Board of Visitors, led by Virginia real estate mogul Helen Dragas, were less thrilled with her performance. Sullivan fell out of favor with the board, the Washington Post noted, “because of her perceived reluctance to approach the school with the bottom-line mentality of a corporate chief executive.” After students, faculty, and administrators turned out to defend Sullivan and criticize Dragas, the board reinstated Sullivan.

Flash forward to 2013. In April, Sullivan was at the forefront of the charge to increase the university’s tuitionby 3.8 percent and 4.8 percent for in-state and out-of-state students respectively. Last week, Sullivan was one of the chief supporters of a plan to cut back on the AccessUVa program, the school’s financial aid commitment to low- and moderate-income students that began in 2004. Whereas previously the school covered all costs for students from families making up to twice the federal poverty line (about $47,000 per year for a family of four), the school will now only cover part of the cost, with the student needing to borrow the remaining amount.

The proposal to raise tuition eventually passed the Board of Visitors in a 14-2 vote, as did the proposal to scale back financial aid. The main dissenter in both cases? Helen Dragas.

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I’m not normally in favor of a person selectively picking examples that support a pre-existing position, but in this case I am the one doing it so I am willing to make an exception.

A short while ago, I argued in The Atlanticthat the high-tuition, high-aid model was not working. Facing too many funding priorities, it was difficult for schools to keep aid in line with tuition when aid is an easy target for cuts. This parallels closely to the world of social insurance, in which means tested programs for the poor fail to have the same widespread level of support that universal benefit programs do.

The recent decisions at UVA showcase this theory in practice. An article about the April tuition hikes made the point clearly: “In its current form, AccessUVa is diverting a widening stream of university money from other priorities the university is trying to fund, such as faculty salaries, which increasingly lag behind competing schools’.”

This adds further confirmation to the idea that in many cases, even at elite public universities, financial aid and tuition will not rise together. A more likely situation is that tuition will rise and financial aid will fall, putting the burden on low-income students to either not enroll or take on more debt. In either case, the ability for low-income students to maintain access to higher education decreases. Unlike some schools – in which the “other priorities” that take away support for low-income students include funding for ‘merit aid’ and new buildings – UVA’s problems are not so cut and dry. But the problem with high-tuition, high-aid still remains.

In some ways, the financial aid program at UVA is a victim of its own successes: it has worked well enough to attract and enroll low-income students that the school says it now costs too much money. Previously, UVA was able to keep its financial aid costs low because it enrolled extremely few low-income students: in 2004, a mere 8.7 percent of students received federal Pell Grants, a number that actually decreased through 2007. While the share is still very low today relatively to other elite institutions – only 12-13 percent of the undergraduate student body receives Pell Grants – the almost 50 percent increase in the number of low-income students, likely due both to AccessUVa and the impact of the recession, has made the budget pressures of the program more apparent.

This is not to put the blame squarely on the shoulders of the university (or, perhaps, we probably shouldn’t be blaming anyone at all). As UVA is quick to note, it receives lower state appropriations for higher education than many other flagships. The state’s southern neighbor, North Carolina, provides nearly three times as much funding per full time student at the University of North Carolina Chapel Hill than Virginia does for its flagship campus. UVA provides this handy chartto show that it receives less funding per in-state student than its competitors. Of course, this chart handpicks which schools it wants to compare to UVA and leaves out other prominent public schools like University of Texas at Austin, which receive less state appropriations than UVA. When I selectively choose examples to help prove my point it’s acceptable, but when other people do it’s far less enjoyable.

Additionally, the school emphasizes that it needs to pay its faculty more to stay competitive – which it cannot do given the increasing amount of money it is using for financial aid. The UVA budget claims that it wants to move its compensation ranking higher on the list produced by the Association of American Universities (AAU). This premise means, however, that UVA is competing with both public and private universities. If fair compensation has to match that of private elite universities, it is not surprising that UVA falls behind. A quick comparison with other large, top-tier public schools based on AAUP data shows that UVA’s faculty compensation, while behind UC-Berkeley and Michigan, is similar to that of Texas and Maryland. So while the concerns about adequate faculty pay are legitimate, it is important to keep in mind how the school defines the competition.

Thus, the pressures facing UVA, while perhaps overstated, are indeed real – and the state’s low level of funding has been a primary contributor to UVA’s funding woes. However, it would also be wrong to let UVA completely off the hook. As Kevin Carey pointed out last year, UVA has an endowment of $5 billion, making it the wealthiest public school per capita in the country. And part of the reason it is struggling is because previously it enrolled very few low-income students. If the school’s distribution of students was unequal before, the best response to an increase in low-income students cannot be to try to make them go away by making college more expensive. By moving further toward a high-tuition, high-aid model, the school has exposed itself to a greater possibility that access for low-income students will continue to fall away.

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The third part of a trilogy is always difficult to judge ahead of time, and we may well have to wait until next summer before the third installment of the Dragas-Sullivan showdown occurs. There is an equal chance that it will be a positive development (think: Return of the King) or a negative one (think: Spider-Man 3).

Without knowing more about the internal deliberations and perspectives of each player in this saga, it would be unfair to cast Sullivan’s decisions as a pure embrace of corporate bottom line strategies. But they will certainly make it more difficult for students to afford college, both deterring potential students from enrolling and adding to the student debts of those who do. As Dragas pointed out in the Washington Post, “This goes against our mission of affordable excellence and undermines [university founder Thomas] Jefferson’s insistence that excellence and access were both essential to perpetuating a democracy.”

For those who watched last year’s ouster with a combination of confusion and horror, to view Dragas as the crusader for low-tuition and more access feels a bit strange. And given the many concerns that Dragas voicedabout the state of the budget during the saga, it is unclear what other cuts she would favor to help make up the shortfall. For all we know, it could involve gutting huge swaths of certain departments, which, too, would conflict with a vision of academic excellence.

The policymakers and administrators watching, though, should take note: the combination of decreased state funding, adverse economic conditions, increasing numbers of high-achieving low-income students, and the systemic problems of the high-tuition high-aid model has shifted more of the costs of higher education onto the backs of low- and moderate-income students. This is not just a problem at UVA: all of the incentives in the higher education system are designed to continually push out low- and moderate-income studentsin favor of the rich. As a leading institution, hopefully next summer will see UVA: Episode III in which the school – and state – leads the charge to make quality public higher education available to students of all backgrounds.

Joshua Freedman is a Policy Analyst for the Economic Growth Program at the New America Foundation

Storify: House 'No Child Left Behind' Debate

July 22, 2013
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This post also appeared on our sister blog, Ed Money Watch.

On July 18 and 19, members of the U.S. House of Representatives took to the floor for a heated debate on a proposed reauthorization of the No Child Left Behind Act of 2001. Rep. John Kline's (R-MN) bill, the Student Success Act, passed 221-207, but the Senate is not expected to take up the measure. We put together this Storify as a quick catch-up on the House debate.

Syllabus: Week of July 8, 2013

July 12, 2013
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Welcome to the Syllabus, a guide that provides insight into what’s happening in higher education.
 
Read:
 
By Steve Kolowich, The Chronicle of Higher Education
 
Colorado State University (CSU)-Global Campus made news last year when it became the first college in the U.S.

Storify: House Ed & Workforce Committee ESEA Markup

June 19, 2013

On Wednesday, the House Education & Workforce Committee convened to debate Chairman John Kline's (R-MN) proposed Elementary and Secondary Education Act reauthorization. Ranking Member George Miller (D-CA) also proposed his own version of the bill. ICYMI, here's the play-by-play.

Click here for the Storify of last week's Senate HELP Committee markup.

Storify: House Ed & Workforce Committee ESEA Markup

June 19, 2013

Click here for the Storify of last week's Senate HELP Committee markup.

Update: A New NCLB Reauthorization Cheat Sheet

June 19, 2013

After the partisan markup in the Senate Health, Education, Labor, and Pensions Committee, it is the House of Representatives' turn to debate reauthorization of No Child Left Behind. The Student Success Act, offered by Rep. John Kline (R-MN), is set for a markup Wednesday morning in the House Education and Workforce Committee. Accordingly, we’ve updated our Senate markup cheat sheet to provide a comprehensive, side-by-side comparison of current law, the Obama administration’s waiver policy, and the current legislative proposals in the Senate and House. You can download the new cheat sheet here.

Here are a few of the highlights from the Kline proposal:

  • The Student Success Act would eliminate over 70 programs and consolidate many stand-alone programs (for instance, Title III for English Language Learners) into Title I, with flexibility for states and districts to shift money between them. The bill would also eliminate maintenance of effort requirements, meaning states and local school districts would not be penalized for spending less on required education programs.
  • Kline would not require states to adopt college- and career-ready standards, but they would have to maintain academic content standards – and aligned assessments – in reading, math, and science. And the bill includes really specific language, over and above the Alexander proposal, to prohibit the federal government from promoting participation in the Common Core State Standards initiative in any way.
  • The bill, similar to the Alexander proposal, would allow states to design whatever school accountability and improvement systems they want, including setting performance targets (if any). Kline would also clamp down on the Secretary of Education’s authority to offer waivers to states and districts in exchange for external conditions.
  • Kline, however, would be more prescriptive than either Harkin or Alexander in one area: teacher evaluations, with states required not only to develop them, but also to use the results to make personnel decisions.
  • Kline would not allow Title I funding to follow the child to other public or private schools, but there is speculation that a backpack funding provision could be added to the Student Success Act at a later point. House Majority Leader Eric Cantor (R-VA), for example, has expressed an interest in some sort of portability provision.

Stay tuned to Ed Money Watch and Early Ed Watch for continuing coverage of these bills and the markup, as well as any alternative proposal from Rep. George Miller (D-CA), the Ranking Member on the House committee. And be sure to follow the markup on Twitter with me, @afhyslop, and my colleagues @LauraBornfreund and @ConorPWilliams

Storify: Senate HELP Committee ESEA Markup

June 13, 2013

Tuesday and Wednesday, the Senate HELP Committee convened to mark up Chairman Tom Harkin's (D-IA) bill to reauthorize the Elementary and Secondary Education Act. @NewAmericaEd's Anne Hyslop and Conor Williams live-Tweeted, and we've collected some of the main takeaways here, ICYMI.

Storify: Senate HELP Committee ESEA Markup

June 12, 2013

Harkin Title I Reforms Readjust Funding Allocations

June 7, 2013

This week, chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee Tom Harkin (D-IA) released a new draft bill to reauthorize the Elementary and Secondary Education Act (ESEA). The bill, called the Strengthening America’s Schools Act, makes a lot of changes – you can read more about those here and here. Among those changes are some tweaks to Title I, the $14.5 billion program that provides funding to low-income children and high-poverty schools.

States’ Distribution to School Districts

The Harkin bill would require states to modify how they provide funds to school districts by adding a new provision. The new requirement would mean that the lowest-performing school districts, the neediest districts, and those that prove the “strongest commitment” to evidence-based reforms that improve student performance get first priority. Any additional funds would be diverted to districts that don’t meet these criteria.But districts would receive at least as much funding as they did last year; the change would only apply to a percentage of funds over the existing appropriation.

The lowest-performing districts are defined elsewhere in the bill as “priority” and “focus” schools. Focus schools are the 10 percent of schools with the biggest achievement gap, and the 10 percent of high schools with the biggest graduation rate gap, among student subgroups as compared to the statewide average. Priority schools are the lowest-performing 5 percent of schools, high schools with graduation rates below 60 percent, and any school that has been a focus school for 6 consecutive years. The idea of priority and focus schools is co-opted from the No Child Left Behind waivers the Department of Education has already issued to 35+ states.

A separate ESEA reauthorization bill authored by Sen. Alexander (R-TN) goes much further – and in the opposite direction. Under that bill, states could elect to allocate funding by the number of Title I-eligible children per district. Effectively, then, the funds would follow a child to any public school within a district. (A Romney campaign proposal would have allowed funds to follow children into private schools or other school districts. This is less extreme – and less of a logistical nightmare – than that proposal would have been.)

School Districts’ Distribution to Schools

The Harkin bill also revises how funds awarded to school districts are distributed to schools. Currently, school districts that receive Title I funds are required to rank all “school attendance areas” in the district. The district must serve all areas with more than 75 percent of its children living in poverty, in rank order, and then may serve schools below 75 percent poverty with any remaining funds.

The rankings are calculated by one of a few measures: Census poverty data, the number of students in the free and reduced priced lunch program, the number of children in families that receive Temporary Assistance for Needy Families benefits, or the number of children eligible for Medicaid assistance are all allowable metrics. Under the new plan, high schools could instead use a “feeder” pattern to calculate poverty rankings. That would calculate the number of low-income students by measuring the average percentage of low-income families in the elementary schools that will later attend the high school.

And under the Harkin bill, that split would be different for high schools than for elementary and middle schools. Districts would still have to serve elementary and middle schools with more than 75 percent of children living in poverty, but now any high school with over 50 percent poverty would also be served. Elementary and middle schools that received funding last year, but are now out-ranked by high schools at more than 50 percent poverty, could be protected by the district, though.

One last note on school attendance areas: Districts would be allowed to provide funds for early childhood education in eligible areas, even before they provide funds to high schools in eligible areas.

Title I Teacher Comparability

The Harkin bill does try to correct one loophole in Title I: comparability. Under current law, school districts are required to distribute funds to their Title I and non-Title I schools equally. The amount of funding provided to Title I schools cannot be more than 10 percent below that of non-Title I schools.

But that metric can mask a major inequity: teachers in non-Title I schools tend to be more experienced and better paid, so high-income schools typically receive more state and local funding for teacher pay than low-income schools do. School districts that compare student-teacher ratios between Title I and non-Title I schools to prove compliance with teacher comparability are obscuring the variation in teacher pay.

Harkin included a provision in the 2011 reauthorization draft he produced closing the loophole, and it’s back in the current draft. As of the 2015-2016 school year, districts will have to demonstrate comparability using per-pupil expenditures from both state and local funding, including actual expenditures on teacher salaries and benefits. They’ll be measuring actual funding in individual schools, not less valid measures like teacher-student ratios or district salary schedules. And Title I schools would receive equal funding to non-Title I schools, rather than a measure that’s within 10 percent.

Title I Funding Formulas

Title I is one of the largest federal education programs. It serves about 23 million low-income PreK-12 students nationwide across most school districts, because any district with at least a couple of low-income students is eligible. Funds are distributed through four complicated funding formulas, which have several flaws that do little to rebalance inequities. The Harkin bill doesn’t touch the formulas themselves, in spite of arguments that the formulas don’t target high-poverty schools very well.  But it does make some adjustments around the edges that could help prevent some inequities.

We’ll have a lot more on the Harkin bill, and other ESEA reauthorization progress, in the coming weeks. Check back with Ed Money Watch for more details.

Student Loan Debt May Put Young Adults in Financially Precarious Standing

May 13, 2013
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Student loan debt has been in the news a lot these days. In the last week, a number of news outlets wrote about mounting student loan debt and the delaying of life events by their borrowers (see ABC News, the Chronicle of Higher Education, CNN Money, the NY Times [here and here], and the Wall Street Journal, to name a few). The article in the NY Times provides a great example of this, "Consider Shane Gill, a 33-year-old high-school teacher in New York City. He does not have a car. He does not own a home. He is not married. And he is no anomaly: like hundreds of thousands of others in his generation, he has put off such major purchases or decisions in part because of his debts."

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