Higher Education and the Public GoodVirginia’s Experience with University Restructuring

SHEEO Professional DevelopmentConferenceAugust 15, 2007

2

Goal of higher education restructuring legislation To provide public colleges

and universities with more operational and administrative autonomy in exchange for a renewed commitment to their public missions.

3

Summary of legislation

• Operational autonomy for all institutions

• Commitment to “state ask”• Performance measures and

financial incentives• Opportunity for greater

institutional autonomy, including “management agreement”

4

History and context

• General fund budget cuts• Tuition controls• Heightened political

environment• Lack of effective

coordination of higher education system

• Some experience with decentralized authority

5

The case for change

Institutional concerns+Need for reform+Fortuitous alignment

Restructuring

6

Institutional concerns

• Lack of predictability in funding, inability to plan

• Inability to use “market strength” to meet institutional goals

• Perception of undue administrative burdens

7

Need for reform

• Global economic change and increased competition

• Profound changes in population and economy

• Regional and socio-economic disparities in educational achievement

• Scarcity of resources• Redefinition of accountability –

results, not inputs

8

Fortuitous alignment

• Businessman governor• Legislative support• Stronger boards, including

reemerging SCHEV• Institutional leadership

and desire

9

Restructuring legislation• Outlines a public agenda• Provides institutions with more

administrative and financial autonomy in exchange for a commitment to the public agenda (the “contract”)

• Establishes an integrated six-year planning process

• Ties financial incentives to institutional performance

• Establishes process by which institutions can gain greater autonomy over time (three levels)

• http://leg1.state.va.us/cgi-bin/legp504.exe?051+ful+CHAP0945

10

The public agenda – “state ask”• Student access, including underrepresented

populations• Affordable education, regardless of family

income• Broad range of academic programs• High academic standards• Student retention and progress toward a

degree• Uniform articulation agreements between

two-year and four-year institutions• Economic development• Externally funded research• K-12 education and student achievement• Six-Year Plans• Financial and administrative standards• Campus Safety

11

Operational autonomy

• Dispose of surplus property locally• Contract with local building officials for

building code review• Acquire or convey easements• Enter into operating lease for academic

uses• Make information technology purchases

without prior approval of state CIO• Designate administrative and

professional faculty locally• Certify SWAM vendors and authorize

sole-source procurements locally• No change in tuition policy

12

What’s off the table

• Retirement – college and university classified employees remain in the state retirement system (faculty still have options)

• Health insurance – all employees remain in state health plan

• Workers compensation – all employees remain eligible for state program

13

Mechanics

• Board commitment to goals and transfer of authority for operational functions

• Submission of six-year plans• Development of performance

measures and respective institutional benchmarks

• Assessment and certification of progress toward state goals and identification of gaps

14

Six-year plans

• Enrollment– Enrollment targets negotiated between the

state and institution– Based on statewide enrollment demand

estimates• Academic

– Institutional plans to expand and improve instructional programs and student services

• Financial– Resources needed to meet enrollment

targets and academic plans– Derived from state appropriations, tuition

revenue, and other institutional sources– Gives policy makers glimpse of anticipated

tuition increases given enrollment demands and academic priorities

15

Management agreements• Highest level of operational autonomy• Limited to institutions with

demonstrated operational competence and high credit rating

• With freedom comes greater responsibility for state goals (economic development, working with public schools, articulation and transfer, student financial aid)

• Cannot be done in isolation – must be done in concert with other institutions and with state goals

• http://leg1.state.va.us/cgi-bin/legp504.exe?061+ful+HB1502ER

16

Going forward

• Importance of coordinating function• Ensure that the new reporting

requirements are not more onerous than the administrative functions from which institutions have been freed

• Periodic review by policy leaders of state goals and performance gaps

• Involvement of business community in supporting state goals and institutional performance

17

Final thought

Ask not what the state can do for colleges and universities, but what colleges and universities can do for the state

18

19

Mechanics

• Board commitment to goals and transfer of authority for operational functions

• Submission of six-year plans• Development of performance

measures and respective institutional benchmarks

• Assessment and certification of progress toward state goals and identification of gaps

20

Implementation

• Spring 2005 – Restructuring Act signed into law

• August 2005 – BOVs formally commit to state goals

• September 2005 – SCHEV proposes Institutional Performance Standards (IPS)

• October 2005 – First Six-Year Plans Submitted

• Spring 2006 – GA adopts IPS• November 2006 – SCHEV and institutions

set targets for each IPS• May 2007 – SCHEV completes first

certification• May 2007 – SCHEV approves statewide

Strategic Plan

21

Interrelated Elements of Restructuring Act

SCHEV Statewide

Strategic Plan

Performance Standards

Six-Year Academic and Financial Plan

22

Six-Year Plans

• Institutional Narrative• Academic Plan• Financial Plan – two

scenarios of additional General Fund support– No additional GF– Full GF based on guidelines

• Enrollment Projections

23

Interrelated Elements of Restructuring Act

SCHEV Statewide

Strategic Plan

Performance Standards

Six-Year Academic and Financial Plan

24

Statewide Goals• Education related

– Student access, including underrepresented populations

– Affordable education, regardless of family income

– Broad range of academic programs– High academic standards– Student retention and progress toward a

degree– Uniform articulation agreements between

two-year and four-year institutions– Economic development– Externally funded research– K-12 education and student achievement– Campus Safety

• Financial and administrative standards

25

IPS – Examples

Education related (11 goals - 19 performance standards)

• Institution establishes mutually acceptable annual targets for need-based borrowing that reflect institutional commitment to limit the average borrowing of in-state students with established financial need, and the percentage of those students who borrow, to a level that maintains or increases access while not compromising affordability.

• Institution maintains acceptable progress towards an agreed upon target for the total number and percentage of graduates in high-need areas, as identified by the State Council of Higher Education.

• Institution maintains or improves the average annual retention and progression rates of degree-seeking undergraduate students.

• Institution increases the number of undergraduate programs or schools for which it has established a uniform articulation agreement by program or school for associate degree graduates transferring from all colleges of the Virginia Community College System and Richard Bland College consistent with a target agreed to by the institution, the Virginia Community College System, and the State Council of Higher Education for Virginia.

26

IPS – Examples

Financial/Administrative (1 goal - 11 performance standards)

– An unqualified opinion from the APA– No significant audit deficiencies– Substantial compliance with all financial

reporting standards – Substantial attainment of accounts receivable

standards – Substantial attainment of accounts payable

standards – Institution complies with a debt management

policy approved by its governing board– Achieve the classified staff turnover rate goal

established by the institution– Substantially comply with the annual approved

SWAM plan– Make no less than 75% of dollar purchases

through eVA – Complete capital projects and major IT projects

(with an individual cost of over $1,000,000) within the original budget and schedules.

27

Interrelated Elements of Restructuring Act

SCHEV Statewide

Strategic Plan

Performance Standards

Six-Year Academic and Financial Plan

28

Statewide Strategic Plan - GoalsSection I: ACCESS

1. Enhance Access Through P-16 Curricular Alignment2. Enhance Access Through Improved Coordination of

Information3. Enhance Affordability Through Financial Aid Advocacy4. Enhance Affordability Through Education and Investment

IncentivesSection II: ALIGNMENT

5. Improve College Readiness Through Strengthened P-16 Cooperation and Communication

6. Strengthen P-16 Coordination Through Expanded Data Collection and Analysis

7. Support State Workforce Needs Through Strengthened Participation in Post-Secondary Education

8. Conduct a Comprehensive Economic Impact Study of Higher Education

9. Improve Alignment Between Higher Education and the Commonwealth’s Workforce Needs

10. Strengthen Academic Program Quality and Accountability Through Assessment

Section III: INVESTMENT11. Enhance Research Through Investment in Targeted

Consortia12. Enhance Research Through Investment in Infrastructure

29

What Does an Institution Get with Certification?• Interest on the tuition and fees and other

nongeneral fund E&G revenues deposited into the State Treasury

• Any unexpended appropriations at the close of the fiscal year, which shall be reappropriated and allotted for expenditure in the immediately following fiscal year

• A pro rata amount of the rebate due to the Commonwealth on credit card purchases of $5,000 or less made during the fiscal year

• A rebate of any transaction fees for sole source procurements for using a vendor who is not registered with "eVA"

30

Levels of operational authority

Areas: CO, IT, HR, Procurement• Level 3 – Management

Agreement covering all areas (UVA, VT, CWM)

• Skip Level 2 and seek Level 3 authority

• Seek Level 2 authority in one or more areas, but not all

• Would just as well not participate

31

• Strategic Plan gives direction to development of Six-Year Plans

• Work with institutions to develop measures for new goals

• Institutions submit Six-Year Plans – October 1, 2007

• SCHEV reviews Six-Year Plans• 2008-09 certification May 2008

Next Steps

32

• How the six-year plans are utilized by the institutions, the governor, and the General Assembly

• How strenuously the performance indicators and benchmarks are set and enforced

• How SCHEV’s recommendations are weighed, utilized, and implemented

• Achievement of cost savings through less bureaucracy and/or better ability to plan

• Establishment of multi-year business plans for public institutions

• Creation of tuition-and-fee predictability for students and parents

• Demonstration of additional agility in areas of increased autonomy, e.g., human resources, capital outlay, procurement

• Development of acceptable balance between institutional autonomy and accountability

• Demonstration of measurable success on performance indicators and benchmarks related to state goals

What will Constitute “Success”?

Discussion

34