Return to Governor's Task Force on Higher Education Recommendations

EXECUTIVE SUMMARY

GOVERNOR'S TASK FORCE ON HIGHER EDUCATION
MINORITY REPORT

• State government must make a dual commitment to higher education funding sufficient to meet future needs and to reforms that increase the productivity of our current system.
  

• In the 1995-97 biennium, the Legislature demonstrated its ability to meet demands for increased access to higher education within the framework of Initiative 601. While significant funding challenges lay ahead, these challenges can be met within the present budgeting system.
  

• An effective long-term approach to higher education policy should be guided by the following goals and principles:
  
  1. Recognition of the need for increased access to postsecondary education, as projected by population trends and documented needs of the state's economy.
     

  2. Higher education funding practices that respect the will of the people for fiscal policy that is consistent with the intent of Initiative 601.
     

  3. An emphasis on higher education as a student-centered rather than an institution-centered system.
     

  4. Tuition policy that recognizes the shared responsibility of the student and the state for the cost of obtaining a higher education, coupled with financial aid policy that provides more assistance to middle-income students.
     

  5. Continued state funding for workforce training, with incentives for employers to share in those costs.
     

  6. Maximization of institutional capacity to serve more students through revision of program offerings, redistribution of delivery resources, improved coordination between the two-year and four-year systems, expanded use of technology, and other reforms.
     

  7. Greater collaboration between the K-12 and higher education systems to increase access to postsecondary educational opportunities.
     

• The "dedicated fund proposal" does not adequately meet the higher education goals and principles set out above, and is inconsistent with principles of sound fiscal policy.
  

• Experts on state finances strongly criticize the use of earmarked revenues and dedicated funds to support major state budget programs. The National Conference of State Legislatures states that such practices reduce needed flexibility in both budget and revenue policy, cause misallocation of resources, and reduce legislative oversight of state programs.
  

• The dedicated fund proposal offered to this task force would:
  
  1. Significantly diminish the ability of the Legislature to make budget policy, hindering it from its essential task of allocating available state resources among competing needs and priorities,
     

  2. Cause expenditures for higher education to be determined by available earmarked revenues, thus risking both overfunding and underfunding of this budget function;
     

  3. Risk harm to other important state programs and services, some of which will also be affected by severe demographic pressures in the years ahead;
     

  4. Reduce legislative oversight of higher education by removing it from the normal budget process, and so reduce incentives for greater efficiency, productivity and accountability in higher education ;
     

  5. Reduce the ability of the state to make needed changes in revenue policy by earmarking a set portion of state tax revenue to higher education;
     

  6. Take a major step toward the dismantling the spending limit approved by the voters in 1993 by removing a major budget function from the state general fund.
     

• The dedicated fund proposal also raises important concerns with regard to higher education policy:
  
  1. Its funding plan begins from an assumption of need for access based on targeted "participation rates," a population-based measure that bears insufficient relation to the needs of our economy or the demands of our citizens for postsecondary educational services, and that gives little direction as to the mix of services that will be required.
     

  2. Indexing base budgets and tuition to inflation obstructs any reform of the present tuition and financial aid systems to (1) bring tuitions more closely in line with those of peer institutions; (2) shift more of the state's higher education subsidy to lower- and middle-income students, or (3) relate education costs more closely to the markets for education services.
     

  3. The Task Force has not sufficiently explored the capacity of the state's present higher education system to expand access to postsecondary educational services through institutional reforms and better coordination among the components of that system. The dedicated fund proposal gives little attention to ways in which more students can be served, at lower cost, by improving the productivity of the system.
     

  4. The dedicated fund proposal sets targets for obtaining operating efficiencies over time, and includes measures intended to increase the accountability of the system. While these are commendable goals, its core provisions for dedicated funding and automatic, inflation-based increases in tuition and institutional base budgets are almost certain to act as disincentives to the efficiency, accountability and productivity that it seeks.