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Higher Education in TexasPresentation for:

Senate Subcommittee on Higher Educationand

Senate Subcommittee on Higher Education Finance

March 24, 2008

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Higher Education in Texas

Closing the Gaps by 2015

Financial Aid

Higher Education Funding

• Funding Operations

• Funding Facilities

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By 2015, Close the Gaps in:By 2015, Close the Gaps in:

Participation

Success

Excellence

Research

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Close the Gaps in ParticipationClose the Gaps in Participation

By 2015, close the gaps in enrollment rates across Texas to add 630,000more students.

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Texas’ participation rate has improved, but Texas’ participation rate has improved, but remains lower than other statesremains lower than other states

Participation Rate of Total Population Rate of Total Population --20052005 (2000)(2000)

4.4%

4.7%

4.9%

5.4%

5.6%

6.0%

6.2%

6.5%

6.6%

5.4%

0.0% 2.0% 4.0% 6.0% 8.0%Source: U.S.DOE, IPEDS, and Census Bureau

California Illinois

Michigan New York

PennsylvaniaTEXAS

OhioFlorida

Georgia New Jersey

(6.6%)

(6.0%)

(5.7%)

(5.5%)

(5.0%)

(4.9%)(4.8%)

(4.4%)

(4.2%)

(4.0%)

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Enrollment increase is close to a quarter million

0

200

400

600

800

2000 2005 2010 2015

Thou

sand

s

Target Actual

235,466

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Percent of public high school graduates Percent of public high school graduates entering Texas higher education is increasingentering Texas higher education is increasing

48.5% 48.5% 48.6% 49.8% 50.4%

0%

20%

40%

60%

80%

100%

2002 2003 2004 2005 2006

Approximately 240,000 graduates annually

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Hispanic enrollment growth is substantial

(Increase Fall 2000 - Fall 2007)

50,946

103,915

34,762

0

20,000

40,000

60,000

80,000

100,000

120,000

White Hispanic African Am

10.5%

49%

38.3%

Note: Asian Americans are not targeted in the plan.

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Participation Summary

235,000 more students are enrolled

Hispanic enrollment growth is substantial

More students are entering directly from high school

On track to meet Participation goals, but challenges persist.

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Close the Gaps in Success

By 2015, award 210,000 undergraduate degrees, certificates and other identifiable student successes from high quality programs.

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2010 target is to award 171,000 bachelor’s, 2010 target is to award 171,000 bachelor’s, associate’s, and certificates annuallyassociate’s, and certificates annually

74,906

93,032

25,50537,613

21,06415,824

0

40,000

80,000

120,000

2000 2007

Bachelor's Associate's Certificates

Total 151,709Total 116,235

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Significant percentage increases in Significant percentage increases in undergraduate awards undergraduate awards

0

20,000

40,000

60,000

80,000

White African Am Hispanic Other

Fall 2000 Fall 2007+18.8%

+44.1%

+65.7%

+65.7%

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Close the Gaps in Close the Gaps in ExcellenceExcellence

By 2015, By 2015, substantially increasethe number of nationally recognized the number of nationally recognized programs or services at colleges programs or services at colleges and universities in Texas.and universities in Texas.

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Texas needs to develop more leading research universities

AAU Members Public Private Total

California 6

2

2

2

1

0

2

2

2

Total in United States 34 26 60

3 9

New York 5 7

Pennsylvania 2 4

Texas 1 3

Illinois 2 3

Massachusetts 3 3

Indiana 0 2

Iowa 0 2

Michigan 0 2

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Texas needs to develop more leading research universities

AAU Membership Public Private TotalCalifornia 6

2

Total in United States 34 26 60

3 9

Texas 1 3

Public Universities

Total Offering Doctorates

California 33 10

Texas 2435

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UCUC--Berkeley has more National Academy Berkeley has more National Academy members than all Texas institutionsmembers than all Texas institutions

Science Engineering Medicine TotalUT Austin 10 48 1 59TAMU/TAMUSHSC 5 18 1 24Rice U 2 12 1 15UT Med Cntr-Dallas 17 0 21 38U of Houston 3 5 0 8Baylor CO Medicine 4 0 12 16UTHSC-San Antonio 0 0 3 3UTHSC Houston 2 0 5 7UT Med Br-Galveston 0 0 4 4

Other (SMU, MDA, UNT, UTSA, TTU) 2 3 2 7

UT Dallas 1 3 0 4

State of Texas Total 46 89 50 185UC-Berkeley 126 71 7 209

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Access to excellent undergraduate education is critical

81% of all public university students are undergraduates

91% of all public college and university students are undergraduates

43% of all public college and university students are freshmen

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Close the Gaps in Research

By 2015, increase the level of federal science and engineering research funding to Texas institutions to 6.5% of obligations to higher education.

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Texas ranks 5Texas ranks 5thth in the percent of federal funds in the percent of federal funds to colleges and universitiesto colleges and universities

2.1%

2.4%

3.0%

3.0%

3.7%

4.1%

5.8%

6.0%

8.2%

14.2%

5.6%

0.0% 5.0% 10.0% 15.0%

GeorgiaFlorida

MichiganOhio

IllinoisNorth Carolina

TexasMaryland

PennsylvaniaNew YorkCalifornia

$25 Billion Total in Federal Funds FY 2005

Source: National Science Foundation

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Top institutions in federal research & development Top institutions in federal research & development expenditures for science and engineering expenditures for science and engineering

FY 2005FY 2005

SOURCE: National Science Foundation

1 John Hopkins

2 University of Michigan

3 University of Wisconsin

4 UC Los Angeles

5 UC San Francisco

6 UC San Diego

7 Stanford

15 UC Berkeley

25 Texas A&M

26 Baylor College of Medicine

32 UT Austin

46 UT Southwestern

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Accomplishments 2000 - 2007

Recommended High School program is the default program and starting in 2008 will be required for admissions to a public university.

New College Readiness Standards developed

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Accomplishments 2000 - 2007

By fall 2007, more than 230,000 additional students enrolled.

956,000 additional undergraduate degrees awarded. 143,000 more than if it had remained constant.

By 2007, awarded 4,256 more Nursing graduates than in 2000.

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Financial Aid in Texas

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Texas students are more Texas students are more reliant on loansreliant on loans

Loan49%

Work-Study1%

Grant50%Loan

61%

Work-Study1%

Grant38%

NationalTexas

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The majority of student financial aid in Texas and nationally comes from

federal sources

Federal 76%

State11%

Inst7%

Other6%

Federal66%

Inst20%

Other8%

State6%

Texas National

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Profile of Grant and Loan Distributionin Texas

0%

20%

40%

60%

80%

100%

$0-9,999 $10,000-19,999

$20,000-29,999

$30,000-39,999

$40,000-49,999

$50,000-59,999

$60,000 &Above

Grants Loans

Family Adjusted Gross Income

Per

cen

t of

Fin

anci

al A

id

Rec

ipie

nts

Source: FADB

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TEXAS Grant Funding

In the current biennium TEXAS Grant estimates --• 90,500 students will receive grants• 90,800 eligible students will not receive grants• To fund all eligible students with financial

need would cost $897 million for the current biennium (an additional $469 million)

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Texas Educational Opportunity Grant (TEOG) (two year college program)

At current funding levels for TEOG we estimate -• 6,000 students will receive grants• 160,000 eligible students will not receive

grants• To fund all eligible students would cost $447

million in the current biennium (an additional $433 million)

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Nationally, Texas has gone from 15th to 6th in providing grant aid

Since 2000

Source: 2006 NASSGAP Report

$201

$221

$257

$383

$412

$418

$465

$758

$900

$400

$0 $200 $400 $600 $800 $1,000

Michigan

Ohio

New Jersey

Illinois

TEXAS

Pennsylvania

Florida

Georgia

California

New York

(in millions)

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Funding Higher Education in Texas

Funding Operations• Formulas

• Special Items

Funding Facilities• Tuition Revenue Bonds

• Capital Funding Work Group Recommendations

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Institutions receive funds from a variety of sources

Appropriated Funds

Formula Funds

Special Items

HEAF

Research Development

Fund

State Endowments

Local Funds

Statutory Tuition*

Some Fees*

__________

*For Com. Colleges – non-appropriated

Available University Fund (PUF)

Tobacco Settlement

Funds

General Revenue

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Non-appropriated funds vary by sector

Community CollegesCommunity Colleges•• Local taxesLocal taxes•• Tuition and feesTuition and fees

HealthHealth--related related InstitutionsInstitutions•• Practice plan revenuePractice plan revenue•• Designated tuitionDesignated tuition•• Incidental fees Incidental fees •• Research grantsResearch grants

•• UniversitiesUniversities-- Designated tuitionDesignated tuition-- BoardBoard--authorized authorized

(graduate) tuition(graduate) tuition-- Incidental feesIncidental fees-- Research Indirect cost Research Indirect cost

recoveryrecovery

Examples

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Students are paying a larger share of the cost of education

22%

40%24%

14%

27%

13%

26%34%

StateStudentsInstitutionsFederal Gov

FY 2003 FY 2007

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There are big differences among institutions

25%

32%21%

22%

22%

16%

14%

48%

StateStudentsInstitutionsFederal Gov

UT El Paso University of North Texas

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Public Universities(per FTSE)

$4,170$4,689

$5,034 $5,283

$3,881$4,040$3,881$4,036

$5,605

$4,070

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

2003 2004 2005 2006 2007

Formula Funding Tuition & Mandatory Fees

Increased costs are being paid by students instead of general revenue

NOTE: In Constant Dollars, CPI-U

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Special Items and Debt Service funding is taking a larger piece of the appropriations

9%4%

87% 82%

7%

11%

2002-03 2008-09

Special ItemTRB Debt SrvFormula

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State support is below national averageState Appropriations for General Operating Expenses

FY 2006

$6,595

$5,641

$5,640

$4,454

$7,057

$5,301

$5,493

$5,353

$4,945

$4,352

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000

North Carolina

New York

Florida

Nation

California

Pennsylvania

Texas

Illinois

Michigan

Ohio

Per Full Time Equivalent Student

Source: State Higher Education Executive Officers

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Formulas equitably allocate - not budget - available funds among institutions.

Appropriations are made on a “lump-sum” basis, rather than by line item.

Except for a few items like debt service and benefit pay, institutions may spend their appropriated funds for any legal purpose without regard to the method by which the amount of funding was generated.

Formulas are used for allocating - not budgeting - a base amount of funds

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October-JanuaryFormula Advisory Committees meet

and make recommendations to Commissioner

Feb-MarchStaff works thru

the numbers with CB internal

leadership and Board

Committees

April 17, 2008CB Adopts

Formula recs.

No later than 6/1Staff forwards

formula recommendations

to LBB/GOBP

Nov/DecLBB runs formulas

using Spring, Summer, Fall 2008 numbers (surrogate

base year)

Summer Session 2008

Official base year begins

Timeline for Formula/Appropriations Process Fall 2007 through Fall 2008

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One formula

• Instruction and Administration

Covers Academic and Technical programs

Based on annual cost study of 26 disciplines

Community Colleges Formula

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Two formulas• Instruction and Operations (provides funding for faculty

salaries, departmental operating expense, library, instructionaladministration, research enhancement, student services, and institutional support)

• Infrastructure (facility maintenance and operations, utilities)

Two Supplements• Teaching Experience (currently 10 percent premium added to

all undergraduate semester credit hours taught by tenured or tenure-track faculty)

• Small Institution (for universities with fewer than 5,000 students)

General Academic Formulas

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Two formulas• Instruction and Operations – Allocation based on contact hour

rates established from cost study with Community Colleges.(provides funding for faculty salaries, departmental operating expense, library, instructional administration, research enhancement, student services, and institutional support)

• Infrastructure – Allocation calculated from space model (facility maintenance and operations, utilities)

One Supplement• Small Institution (each campus with fewer than 5,000

students)

State and Technical College Formulas

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Five formulas• Instruction and Operations (provides funding for faculty

salaries, departmental operating expense, library, instructionaladministration, research enhancement, student services, and institutional support)

• Infrastructure (facility maintenance and operations, utilities)

• Research Enhancement (based on each institution’s research expenditures)

• Graduate Medical Education (provides funding based on each institution’s residents)

• Mission Specific (for M.D. Anderson and UT Health Center at Tyler)

Health-Related Institution Formulas

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Draft Formula Funding Recommendations

2010-2011

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Draft Recommendations Community and Technical Colleges

Advisory CommitteeFund the formula at 100% of the median cost level less tuition and fees collected – based on attemptedcontact hours

Continue the 10% premium in the critical fields

Provide for a 10% premium for developmental education courses

Provide funding for alternative teacher certification programs

Provide small institution supplement funding for all Colleges with less than three million annual contact hours

CommissionerFund the formula at 100% of the median cost level less tuition and fees collected – based on completedcontact hours

Provide incentive funding to reward increased effort in the critical fields

Provide for $40 million in trusteed funds for developmental education

Provide funding for alternative teacher certification programs

Provide small institution supplement funding for Colleges with less than one million annual contact hours.

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Draft Recommendations Draft Recommendations Community and Technical CollegesCommunity and Technical Colleges

(Increase over 2008(Increase over 2008--2009 biennium)2009 biennium)

Recommendation Advisory Committee Commissioner

Formula Funds

Developmental Ed 0 $40 million

$884.2 million

Developmental Ed Premium $30.1 million 0

Total Formula Increase $874.3 million $590.0 million

Trusteed Funds

Total Trusteed Increase $17.3 million $149.28 million

Student Success Not Specified $100 million

Alternative Teacher Cert. $4.5 million $4.5 million

Dramatic Enrollment Growth Not Specified ($.02 million)

Small Institution Supplement $12.8 million $4.8 million

Total Increase $891.6 million $672 million

Increase in Formula $590.0 million

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State, Local, and Student Revenue per Full State, Local, and Student Revenue per Full Time Equivalent Two Year StudentTime Equivalent Two Year Student

52% 54% 47% 44% 40% 40% 39%

25% 26%28% 29% 30% 30% 32%

24% 21% 26% 27% 29% 30% 29%

0%

20%

40%

60%

80%

100%

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

State General Revenue Local Revenue Tuition and Fees

Data Source: Southern Regional Education Board

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Draft Recommendations General Academic Institutions

Advisory CommitteeFund Attempted Semester Credit Hours

Continue to fund 10% premium for undergraduate courses taught with tenure or tenure track faculty

Implement final phase of cost based formula

Phase out the small institution supplement between 5,000 and 7,500 students using a three average.

CommissionerFund Completed Semester Credit Hours

Replace teaching supplement with success funding

Implement final phase of cost based formula

Phase out of small institutions supplement between 4,000 to 6,000 students using a three year average.

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Draft Recommendations General Academic Institutions

(Increase over 2008(Increase over 2008--2009 biennium)2009 biennium)

Recommendation Advisory Committee Commissioner

Formula Funds

Trusteed Funds

Increase in Formula $478.0 million $300.0 million

Infrastructure $248.5 million $242.8 million

Student Success Not Specified $178 million

Small Institution $3.9 million ($1.79 million)

Dramatic Enrollment Not Specified $3.5 million

Total Formula Increase $726.5 million $542.8 million

Total Trusteed Increase $3.9 million $179.71 million

Total $730.4 million $722.01 million

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Recommendation Advisory Committee Commissioner

Formula Funds

Mission Specific Formula $5.6 million $5.6 million

Total $90.2 million $107.0 million

Nursing Shortage (All Sectors Eligible) Not specified $10.3 million

Total Formula Increase $90.2 million $90.2 million

Trusteed Funds

Total Trusteed Increase 0 million $16.8 million

Instruction & Operations Formula $22.3 million $22.3 million

Research Enhancement $17.7 million $17.7 million

Graduate Medical Ed Not specified $16.5 million

Infrastructure $50.2 million $50.2 million

Multi-campus adjustment 0 ~ .3 million

Draft Recommendations Health-Related Institutions (Increase over 2008(Increase over 2008--2009 biennium)2009 biennium)

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HEAF structure should be fully funded as called for in existing legislation.

Request that corpus target be raised to $4.5 billion; and,

Restrict Permanent Higher Education Fund distributions to capital and renovation and repair projects.

Increase the maturity period to 20 years to allow the institutions to use the funds for more capital projects.

Allow institutions to pledge up to 75% of the funds.

Capital Funding Work GroupRecommendations

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State Matching Set Aside Fund for maintenance and repair projects

Evaluate methods of financing capital projects other than Tuition Revenue Bonds that allow:

• Long-term planning for capital projects

• Reduces the amount of debt service being carried by the systems

Capital Funding Work GroupRecommendations

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Economic Benefits of Achieving the Goals of Closing the Gaps

By 2030:By 2030:•• For every $1 the state invests in higher For every $1 the state invests in higher

education, it receives approximately $8 in education, it receives approximately $8 in return.return.

•• Annual gains (in 2006 dollars) of: Annual gains (in 2006 dollars) of: $489.6 billion in total spending$489.6 billion in total spending$194.5 billion increase in gross state product$194.5 billion increase in gross state product$121.9 billion increase in personal income$121.9 billion increase in personal income1,023,281 increase in permanent jobs1,023,281 increase in permanent jobs

Source: The Perryman Group, “A Tale of Two States”

http://www.thecb.state.tx.us/reports/PDF/1345.PDF