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Friday, 22 June 2012 11:18

Biz leaders: Higher ed needs state funds to fill talent gap

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WEST MICHIGAN — For the first time in recent memory, the state of Michigan is actually adding money back to its higher education budget.

The Business Leaders for Michigan thinks the $36 million reinvestment is a step in the right direction, but they say it is not enough to help the state stave off a looming talent shortage, which could reach 1 million workers with at least two-year degrees by 2025, according to a report from the Lumina Foundation.

Doug Rothwell, president and CEO of Business Leaders for Michigan, said that when the state’s economy dipped, lawmakers slashed funding to the state’s universities because making those cuts were easy decisions. After all, the schools could always raise tuition and tap their endowments for funds.
“The problem is now, after a 10-year period of cuts, we’ve unbundled the partnership we once had (between) higher ed. and the state,” Rothwell said. “It’s going to take some time to rebuild that trust.”

The group’s analysis found the state cut appropriations for higher education about $4,000 per student while the average resident tuition increased about $3,500, making it tougher for poorer students to get degrees.

Business Leaders for Michigan is proposing the state adopt a performance-based re-investment strategy in its higher education system. The plan would make available a pool of $1 billion — $100 million per year for a decade — that would be available to the schools that perform well in comparison to their peer organizations across the country.

The schools would be evaluated based on graduation rates, retention rates, degree completions, operational efficiency, tuition costs, the number of Pell grant recipients and total research and development expenditures.

Rothwell said rather than write a blank check to the universities, the state should base the additional funding on those performance metrics to ensure the money rewards schools that are doing good work already.

“If we turn out the money, we don’t want 15 average institutions. We want to see 15 terrific institutions,” he said.

For example, an analysis from the Anderson Economic Group found Michigan universities have lower administrative costs than their peers in other states. The schools spent $2,019 per student on institutional support compared to $2,460 per student at institutions in peer states.

“We want to incent all 15 to be the best they possibly can be. Some are at the top of their game, and we want to make sure they’re not penalized for that,” Rothwell said.

Tom Haas, president of Grand Valley State University, said he supported the idea to have a performance-based system to fund higher education in the state. GVSU, typically at the low end of base funding in the state and nation, would likely do well in securing funds under the system, he said.The university also tracks and publishes its performance metrics annually. Haas “fully embraces” the concept.

“I have no problem at all being held accountable to use taxpayer dollars as efficiently and effectively as I can,” Haas said. “The Business Leaders’ approach is quite elegant. If you want to compare me to top-notch regional campuses across the country, as they say in Texas hold ’em, I’m all in.”

The Business Leaders for Michigan plan also calls for an online dashboard with about two dozen metrics that reflect performance, administrative and operational efficiencies compared to peers, and best practices.

“$100 million per year is a manageable number,” Rothwell said. “If we agree that higher education needs to be a top priority of state government, it becomes easier to get a budget together than if we don’t have that shared goal.”

The proposal speaks to funding for the state’s public four-year institutions, and not community colleges, because funding to four-year schools has been cut more over the last decade than funding to the “extremely important” community colleges, Rothwell said.

While more funding will help the schools prepare more students and, ideally, keep tuition affordable, Rothwell is also candid that the Michigan demographics suggest that the state simply lacks a big enough pool of potential students to fill the 1 million-worker gap by 2025. That means the schools need to do a better job of attracting out-of-state and foreign students.

The Anderson Economic Group analysis found 11 of the state’s 15 universities fall below their peer average for the percentage of out-of-state students they enroll.

“They had been growing for years and years, and they did not have to look out of state,” Rothwell said. “There was a feeling by many that they would be ostracized for doing so. They took their responsibility to the state very seriously and thought that if they went out of state too much, the legislature would get annoyed. And they probably were right. But now, it’s a different situation. We can make the economic case … because there are not enough in-state young people.”

Read 1741 times Last modified on Sunday, 29 July 2012 22:39

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