financing the future of higher education thursday, november 15, 2012 warwick a. arden provost and...

Financing the Future of Higher Education

Thursday, November 15, 2012

Warwick A. ArdenProvost and Executive Vice Chancellor

European Model of Higher Ed

14th century illustration by Laurentius de Voltolina showing a lecture at the University of Bologna, established in 1088 and often recognized as the first university in the western world. http://www.eng.unibo.it/PortaleEn/University/Our+History/default.htm

Signing of the Morrill Act - 1862

Details about the Morrill Act and it’s impact on American higher education: http://www.aplu.org/page.aspx?pid=2185

The fundamental idea was to offer an opportunity in every State for a liberal and larger education to larger numbers, not merely to those destined to sedentary professions, but to those much needing higher instruction for the world’s business, for the industrial pursuits and professions of life.”

Justin Morrill speaking on the Morrill Act before the Vermont Legislature in 1888

“

The Morrill Act & Land-Grant Colleges

American higher education transformedNC State’s Land Grant Timeline: http://historicalstate.lib.ncsu.edu/timelines/nc-state-s-land-grant

Freshman Class of 1889

Freshman Class of 2012

NC State Enrollment History18

8918

9218

9518

9819

0119

0419

0719

1019

1319

1619

1919

2219

2519

2819

3119

3419

3719

4019

4319

4619

4919

5219

5519

5819

6119

6419

6719

7019

7319

7619

7919

8219

8519

8819

9119

9419

9720

0020

0320

0620

09

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Year

To

tal E

nro

llme

nt

Fall 2012 Total: 34,340Undergraduate: 24,833

Graduate: 9,507

Source: http://www2.acs.ncsu.edu/UPA/enrollmentdata/history/history1889-present.htm

Public FTE Enrollment, Educational Appropriations and Total Educational Revenue per FTE,

United States -- Fiscal 1986-2011

http://www.sheeo.org/finance/shef/SHEF_FY11.pdf or http://www.sheeo.org/finance/shef/shef_data11.htm

Public FTE Enrollment, Educational Appropriations and Total Educational Revenue per FTE,North Carolina -- Fiscal 1986-2011

http://www.sheeo.org/finance/shef/shef_data11.htm

Public FTE Enrollment, Educational Appropriations and Total Educational Revenue per FTE,

California -- Fiscal 1986-2011

http://www.sheeo.org/finance/shef/shef_data11.htm

Higher Education Finance Indicators (Constant Adjusted 2011 Dollars in Millions)

http://www.sheeo.org/finance/shef/SHEF_FY11.pdf or http://www.sheeo.org/finance/shef/shef_data11.htm

State of North Carolina Appropriated Budget2003-04 vs. 2012-13

38%

4%

11%

2%

12%

9%

10%2% 10% 2%

2003-04

Public Schools Community Colleges University of North CarolinaGeneral Government Health & Human Services - MEDICAID Health & Human Services - All OtherJustice & Public Safety Natural & Economic Resources Capital Improvements & Debt ServiceReserves & Adjustments

37%

5%

13%

2%

15%

8%

12%2%

4% 3%

2012-13

Source: North Carolina Office of State Budget and Management

State of North Carolina Appropriated Budget2003-04 to 2012-13

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

Public Schools

Community Colleges

University of North Carolina

General Government

Health & Human Services - MEDICAID

Health & Human Services - All Other

Justice & Public Safety

Natural & Economic Resources

Capital Improvements & Debt Service

Reserves & Adjustments

Mill

ions

Source: North Carolina Office of State Budget and Management

California

*Other includes: Business, Transportation and Housing, State and Consumer Services, Tax Relief, and Environmental Protection Agency (each less than 1 percent of General Fund).

http://www.sco.ca.gov/state_finances_101_state_spending.html

California

http://www.cacs.org/ca/article/44

California

http://www.cacs.org/ca/article/44

The United States• 5% of the world’s population• 25% of the world’s prison population• Incarcerates more people, in absolute numbers and per

capita, than any other nation including China (2nd) and Russia (3rd)

Total annual state spending• More than $44 billion (2007) on incarceration and

related expenses, a 127% jump from 1987• Over the same period, spending on higher education

rose just 21%

Sources: ACLU https://www.aclu.org/files/assets/massincarceration_problems.pdf Pew Center on the States http://www.pewstates.org/research/reports/one-in-100-85899374411

US vs. International Trends in Higher Education

• U.S. ranks 14th in the world in the percentage of 25-34 year-olds with higher education (42%)

• Odds that a young person in the U.S. will be in higher education if his or her parents do not have an upper secondary education: 29%

• Percentage of expenditures on higher education – Across all OECD countries, 30% comes from private sources – In the U.S., 62% comes from private sources

From Organisation for Economic Co-operation and Development (OECD), Education at a Glance 2012 – Country Note United States http://www.oecd.org/education/bycountry/unitedstates/

Source: OECD www.oecd.org/edu/eag2012

Source: OECD www.oecd.org/edu/eag2012

Source: OECD www.oecd.org/edu/eag2012

Source: OECD www.oecd.org/edu/eag2012

Percentage Increases in Total Full-Time Equivalent (FTE) Enrollment in Public Degree‑Granting

Institutions Between Fall 2000 and Fall 2010, by State

SOURCE: The College Board, Trends in College Pricing 2012, Figure 23. trends.collegeboard.org/sites/default/files/college-pricing-2012-full-report_0.pdf

State Appropriations for Higher Education: Total Appropriations in 2011 Dollars (in Billions),

Appropriations per Public FTE Student in 2011 Dollars, and Public FTE Enrollment (in Millions), 1981-82 to 2011-

12

SOURCE: The College Board, Trends in College Pricing 2012, Figure 12B. trends.collegeboard.org/sites/default/files/college-pricing-2012-full-report_0.pdf

Average State Appropriations for Higher Education per $1,000 in Personal Income, 1989-90 to 2011-12

SOURCE: The College Board, Trends in College Pricing 2012, Figure 13A. trends.collegeboard.org/sites/default/files/college-pricing-2012-full-report_0.pdf

State Appropriations for Higher Education per $1,000 in Personal Income, 2011-12 and 5-Year Change from 2006-

07 to 2011-12

SOURCE: The College Board, Trends in College Pricing 2012, Figure 13B. trends.collegeboard.org/sites/default/files/college-pricing-2012-full-report_0.pdf

Inflation-Adjusted Published Tuition and Fees Relative to 1982‑83, 1982‑83 to 2012‑13 (1982‑83 =

100)

SOURCE: The College Board, Trends in College Pricing 2012, Figure 5. trends.collegeboard.org/sites/default/files/college-pricing-2012-full-report_0.pdf

Average In-State Tuition and Fees at Public Four-Year and

Two-Year Institutions, by State, 2012-13 and 5-Year Percentage Change in Inflation-Adjusted Tuition and

Fees, 2007-08 to 2012-13

SOURCE: The College Board, Trends in College Pricing 2012, Figure 7. trends.collegeboard.org/sites/default/files/college-pricing-2012-full-report_0.pdf

Annual Percentage Change in State Appropriations for Higher Education per Full-Time Equivalent (FTE) Student and Percentage Change in Inflation-Adjusted Tuition and Fees at Public Four-Year Institutions, 1981-82 to 2011-12

SOURCE: The College Board, Trends in College Pricing 2012, Figure 12A. trends.collegeboard.org/sites/default/files/college-pricing-2012-full-report_0.pdf

Average Aid per Full-Time Equivalent (FTE) Undergraduate Student in 2011 Dollars, 1996-97 to

2011-12

SOURCE: The College Board, Trends in Student Aid 2012, Figure 3A. http://trends.collegeboard.org/sites/default/files/student-aid-2012-full-report.pdf

Average Aid per Full-Time Equivalent (FTE) Graduate Student

in 2011 Dollars, 1996-97 to 2011-12

SOURCE: The College Board, Trends in Student Aid 2012, Figure 3B. http://trends.collegeboard.org/sites/default/files/student-aid-2012-full-report.pdf

% of Students Who Received Need-Based Scholarship or Grant Aid

Universi

ty of M

arylan

d--Colle

ge Park

Pennsyl

vania

State

Universi

ty--U

niversi

ty Park

Universi

ty of W

isconsin

--Mad

ison

Purdue U

niversi

ty--W

est La

fayett

e

Virginia

Tech

Michiga

n State

Universi

ty

Colorado St

ate Unive

rsity

Universi

ty of Il

linois-

-Urb

ana-C

hampaig

n

Texa

s A&M Unive

rsity-

-College

Stati

on

Universi

ty of F

lorida

Rutgers,

the S

tate U

niversi

ty of N

ew Je

rsey--

New Bru

nswick

Georgi

a Insti

tute of T

echnology

Ohio State

Universi

ty--Columbus

Universi

ty of A

rizona

North Caro

lina S

tate U

niversi

ty--Rale

igh

Iowa Stat

e Unive

rsity

Universi

ty of C

aliforn

ia--D

avis

0

10

20

30

40

50

60

70

27.1 27.9 28.9 30.5 30.8 33.1 34.9 36.0 36.3 37.9 38.2 39.1 40.644.7 45.8

55.363.1

Source: US News 2013 Edition published in 2012 based on data collected by USN&WR.

Average Student Indebtedness

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$16

,841

$17

,317

$18

,386

$19

,523

$21

,247

$22

,716

$22

,975

$23

,299

$23

,320

$23

,725

$24

,140

$24

,180

$24

,320

$24

,840

$27

,286

$29

,455

$33

,530

Source: US News 2013 Edition published in 2012 based on data collected by USN&WR.

NC State University Revenue Budget History2003-04 to 2012-13

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13$0

$100,000,000

$200,000,000

$300,000,000

$400,000,000

$500,000,000

$600,000,000

Tuition & Fees Federal Appropriations State AppropriationsContracts & Grants Sales & Services Gifts & Other Sources

Fall 2012:34,340

Fall 2007:31,802

Fall 2003 enrollment:29,854

Source: NCSU Division of Finance and Resource Management.

Primary Revenue Streams: FY 2009-10FTE

StudentsTuition and fees after deducting discounts and

allowances State appropriations Sum of 2 Sources of Revenue

Institution Name Value Value $ per FTE % of Total Revenue Value $ per FTE % of Total

Revenue Value $ per FTE

NC State 32,198 $170,813,363 $5,305 27% $466,082,224 $14,475 73% $636,895,587 $19,780

Univ. of Florida 51,367 $245,369,000 $4,776 31% $552,200,000 $10,750 69% $797,569,000 $ 15,526

Univ. of California-Davis 49,542 $312,233,000 $6,302 41% $451,146,000 $9,106 59% $763,379,000 $ 15,408

Texas A & M 45,267 $352,744,895 $7,792 43% $466,330,297 $10,301 57% $819,075,192 $18,094

Georgia Tech 24,888 $177,483,251 $7,131 46% $207,583,762 $8,340 54% $385,067,013 $15,471

Univ. of Wisconsin 39,067 $353,705,684 $9,053 47% $399,110,702 $10,216 53% $752,816,386 $19,269

Iowa State 27,185 $210,024,453 $7,725 47% $236,859,958 $8,712 53% $446,884,411 $16,438

Univ. of Arizona 37,617 $329,586,000 $8,761 48% $350,399,000 $9,314 52% $679,985,000 $18,076

Univ. of Maryland 34,404 $360,693,065 $10,484 51% $352,724,815 $10,252 49% $713,417,880 $20,736

Rutgers 38,438 $549,293,000 $14,290 55% $444,009,000 $11,551 45% $993,302,000 $25,841

Virginia Tech 32,732 $285,135,238 $8,711 56% $224,798,431 $6,867 44% $509,933,669 $15,579

Ohio State 93,549 $624,175,569 $6,672 60% $415,211,095 $4,438 40% $1,039,386,664 $11,110

Michigan State Univ. 47,116 $542,389,357 $11,511 60% $355,537,600 $7,546 40% $897,926,957 $19,057

Purdue Univ. 42,517 $494,607,814 $11,633 62% $304,717,108 $7,166 38% $799,324,922 $18,800

Univ. of Illinois at Urbana 50,955 $538,279,363 $10,563 68% $257,231,744 $5,048 32% $795,511,107 $15,612

Colorado State 26,124 $224,350,885 $ 8,587 97% 6,300,000 $241 3% $230,650,885 $8,829

Source: Integrated Postsecondary Education Database System (IPEDS) and BD 701 Budget Reports for UNC System CampusesHighlighted columns used to create graph on the next slide.

$- $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

Colorado State

Univ. of IllinoisPurdue Michigan State

Ohio State

Virginia Tech

Rutgers Univ.

Univ. of Maryland

Univ. of Arizona

Iowa State Univ. of Wisconsin

Georgia TechTexas A & M

UC Davis ‐

Univ. of FloridaNC State

State Appropriations per FTE Student

Ne

t T

uit

ion

& F

ee

s p

er

FT

E S

tud

en

t

Comparison of Revenues from State Appropriations per FTE Student, to Revenues from Tuition per FTE Student, FY 2009-10

Source: Integrated Postsecondary Education Database System (IPEDS) and BD 701 Budget Reports for UNC System Campuses.

Diversify Funding

Tuition & Fees $248 M 18%

Federal Appropriations $20 M 2%

State Appropriations $499 M 37%

Contracts & Grants $299 M 22%

Sales & Services $195 M 15%

Gifts & Other Sources $86 M 6%

2012-13 Revenue Budget $1,347 M

Source: NCSU Division of Finance and Resource Management.

Public Investment in Higher Education

• Advocate for continued strong public investment in higher education

• Societal benefit – not just a personal benefit

Tuition & Fees

• Likely to become more important source of funds

• Need to maintain access and affordability

Grow Endowment

$$ $$$ $$$$ $$$$$

Endowment Per StudentNC State & Peers (2010-11)

As of 6/30/12, NC State’s endowment per student totaled $18,264

Source: Voluntary Support of Education (VSE) survey by Council for Aid to Education

• Grow faculty• Improve and add

infrastructure• Critical to graduate

and undergraduate education

Enhance & Grow Research Expenditures

Organizational Excellence

An excellent university is pervasively excellent ... But excellence is not a static target. Achieving excellence requires constant attention, self-assessment, inclusion, and the courage to change and adapt.”

“

The Pathway to the Future: NC State’s 2011-2020 Strategic Plan

Realignment Recommendations

Administrative ConsolidationConsolidate Equity and Diversity Offices

Discontinue Office of Extension, Engagement and Economic Development

Merge Undergraduate Academic Programs and Student Affairs

Business ServicesModify Reporting Lines• Create Business Operations Centers

= completed

Academic ProgramsReview Summer EducationReview Distance EducationReview Academic Science Programs• Review Academic Program Efficiency and

EffectivenessModify Academic Planning Process

Organizational BureaucracyReview Administrative Processes for

EfficiencyReview Policies, Regulations and Rules

Moving Forward

• Multifactorial approach

• Clear vision and strategic priorities

• Not a time for timid leadership