University Contract University Contract StudyStudy

CEPRI Presentation to the CEPRI Presentation to the Board of Governors Board of Governors

December 3, 2003December 3, 2003

University ContractsUniversity Contracts

• UF/FSU proposed a 5-year contract UF/FSU proposed a 5-year contract between the Legislature and them between the Legislature and them during the 2003 Sessionduring the 2003 Session

• In response, the 2003 Legislature In response, the 2003 Legislature directed CEPRI to study the feasibility directed CEPRI to study the feasibility of 5-year contracts between the State of 5-year contracts between the State and public universitiesand public universities

Conceptual Analysis and Conceptual Analysis and DevelopmentDevelopment

• Input from University systemInput from University system

• Analysis of needs and dataAnalysis of needs and data

• Growth of conceptGrowth of concept

From Concept to From Concept to InnovationInnovation

• A contractual approach could A contractual approach could provide the opportunity to:provide the opportunity to:– Have a cohesive plan for the Have a cohesive plan for the

university systemuniversity system– Define the mission of each Define the mission of each

universityuniversity– Ensure regional and state Ensure regional and state

priorities are being metpriorities are being met– Directly link performance with Directly link performance with

fundingfunding

Finding: A Binding Contract Finding: A Binding Contract with Legislature Is Not with Legislature Is Not

FeasibleFeasible

• Legalities of Multi-Year Contracts:Legalities of Multi-Year Contracts:

– One legislature can not bind future One legislature can not bind future

legislaturelegislature

– Executive branch can not bind Executive branch can not bind

legislaturelegislature

– Funding contingency statement Funding contingency statement

neededneeded

Recommendation: Board of Recommendation: Board of Governors Should Be Party to the Governors Should Be Party to the

ContractContract

• Board of Governors would be appropriate Board of Governors would be appropriate party to contract with the universitiesparty to contract with the universities– Article IX, Section 7, of the Constitution Article IX, Section 7, of the Constitution

gives the Board of Governors the gives the Board of Governors the responsibility for defining “the responsibility for defining “the distinctive mission of each constituent distinctive mission of each constituent university and ... ensuring the well-university and ... ensuring the well-planned coordination and operation of planned coordination and operation of the system, and avoiding wasteful the system, and avoiding wasteful duplication of facilities or programs.” duplication of facilities or programs.”

– The contract would provide the Board The contract would provide the Board of Governors with a link between of Governors with a link between tuition flexibility, funding expectations, tuition flexibility, funding expectations, and performance expectationsand performance expectations

Recommendations Regarding Recommendations Regarding Process for ContractingProcess for Contracting

• Process for contractingProcess for contracting– Legislature would determine frameworkLegislature would determine framework– Governor would approveGovernor would approve– Board of Governors would develop Board of Governors would develop

process within Legislative frameworkprocess within Legislative framework– Universities would develop proposals, Universities would develop proposals,

including objectives, measures and including objectives, measures and standardsstandards

– Board of Governors and universities Board of Governors and universities would negotiate and implement contractwould negotiate and implement contract

– CEPRI would review after two yearsCEPRI would review after two years

Recommendation: Each Recommendation: Each University Should Sign a University Should Sign a

ContractContract

• ContractContract– Signed by chairs of BoardsSigned by chairs of Boards

– Three-year contract, with Three-year contract, with annual renewalsannual renewals

– Contract Specifications would Contract Specifications would have some measures in have some measures in common; others would vary common; others would vary according to mission. according to mission.

Recommendations Regarding Recommendations Regarding Performance ExpectationsPerformance Expectations

• Performance Expectations would Performance Expectations would address:address:– Priorities of the StatePriorities of the State– Assisting students to stay on track Assisting students to stay on track

and reduce time to degreeand reduce time to degree– Student access and graduationStudent access and graduation– Containing student costsContaining student costs– Feedback from students and Feedback from students and

employersemployers– Maintaining accreditationMaintaining accreditation

Recommendations Regarding Recommendations Regarding Incentives and PenaltiesIncentives and Penalties

• Ability to set tuition should be the Ability to set tuition should be the reward for performance.reward for performance. This authority This authority must be tied to maintaining access to must be tied to maintaining access to quality education for all high-performing quality education for all high-performing students regardless of financial statusstudents regardless of financial status

• Development of plans for corrective Development of plans for corrective action are required when performance action are required when performance standards are not metstandards are not met

• Authority to set fees is lost if Authority to set fees is lost if performance does not meet standards performance does not meet standards on critical measures in one yearon critical measures in one year

Limitations on Tuition Limitations on Tuition FlexibilityFlexibility

• The university must provide and preserve The university must provide and preserve eligibility by students who qualify for need-eligibility by students who qualify for need-based aid and by part-time students based aid and by part-time students

• Maximum incremental increases are subject Maximum incremental increases are subject to the policies adopted by the Legislatureto the policies adopted by the Legislature

• Within Legislative guidelines, the Board of Within Legislative guidelines, the Board of Governors provides annual review and Governors provides annual review and control over tuition and access through the control over tuition and access through the contract negotiated with the universitycontract negotiated with the university

The Need for Coherent The Need for Coherent Funding PoliciesFunding Policies

Dennis Jones in Dennis Jones in Financing in Sync: Aligning Financing in Sync: Aligning Fiscal Policy with State ObjectivesFiscal Policy with State Objectives (2003) (2003) notes that when funding policies are not notes that when funding policies are not aligned, important goals of higher education aligned, important goals of higher education are not realized:are not realized:

– Students find higher education becoming Students find higher education becoming unaffordable and opt out;unaffordable and opt out;

– Taxpayers pay more than their fair share; Taxpayers pay more than their fair share; oror

– Institutions fail to acquire the resources Institutions fail to acquire the resources needed to adequately fulfill their missions.needed to adequately fulfill their missions.

$-

$5,000.00

$10,000.00

$15,000.00

$20,000.00

$25,000.00

Student Fees

State Support

The Taxpayers Share: Florida Tuition & Tax The Taxpayers Share: Florida Tuition & Tax Revenue in Comparison to Top 5 Public Revenue in Comparison to Top 5 Public

UniversitiesUniversities

Student Access: consequences of a low tuition/low need-based aid strategy

• It shifts costs from students and parents to It shifts costs from students and parents to taxpayers taxpayers

• It benefits students who would have gone to It benefits students who would have gone to college anywaycollege anyway

• It reduces the price of attendance for students It reduces the price of attendance for students who could have afforded to pay more who could have afforded to pay more

• It discourages excellence by limiting financial It discourages excellence by limiting financial resources regardless of relative market-place resources regardless of relative market-place value of education value of education

• It is unlikely to substantially improve either It is unlikely to substantially improve either participation or affordabilityparticipation or affordability

Access by Children From Low Access by Children From Low income Families: Florida vs. Ten income Families: Florida vs. Ten

States with Highest TuitionStates with Highest Tuition

State Amount Rank

Vermont 8,994 1 6Pennsylvania 8,382 2 8New Hampshire 8,130 3 7

Michigan1 7,485 4 20New Jersey 7,308 5 4Illinois 6,704 6 16Massachusetts 6,482 7 10

Minnesota1 6,280 8 14Connecticut 6,154 9 24Rhode Island 5,854 10 15

U.S. Avg. 4,675 Florida 2,581 49 29

Resident Undergraduate Fees Rank on Access by Children From Low Income Families*

*Source: *Source: June 2003 June 2003 issue of issue of PostsecondaPostsecondary Education ry Education OpportunityOpportunity. .

Expanding Public BenefitsExpanding Public Benefits

• Tuition increases would be used to:Tuition increases would be used to:– Make the State University System of Make the State University System of

Florida a nationally recognized leaderFlorida a nationally recognized leader

– Increase production of graduates to Increase production of graduates to meet state employment needsmeet state employment needs

– Increase research in support of Increase research in support of economic developmenteconomic development

– Increase financial aid to qualified Increase financial aid to qualified students who otherwise could not students who otherwise could not afford quality educationafford quality education

Using Tuition Revenue as a Using Tuition Revenue as a Tool for Providing AccessTool for Providing Access

• Reducing Time to DegreeReducing Time to Degree– Block Tuition Schedule to Encourage Block Tuition Schedule to Encourage

Larger Course LoadsLarger Course Loads– Use of Tuition Revenues to Expand Use of Tuition Revenues to Expand

Course AvailabilityCourse Availability• Use of Tuition Revenues for Need Based Use of Tuition Revenues for Need Based

AidAid• Expand Cooperative Education Expand Cooperative Education

OpportunitiesOpportunities• Improved Counseling and career PlanningImproved Counseling and career Planning

Four Year Graduation Rate Four Year Graduation Rate of All FTIC Studentsof All FTIC Students

11stst Yr Yr SUSSUS UFUF FSUFSU USFUSF UCFUCF FIUFIU

19901990 26.13%26.13% 29.49%29.49% 37.63%37.63% 17.92%17.92% 20.91%20.91% 18.70%18.70%

19911991 25.89%25.89% 28.90%28.90% 38.95%38.95% 19.75%19.75% 20.14%20.14% 17.69%17.69%

19921992 27.61%27.61% 30.69%30.69% 38.47%38.47% 20.04%20.04% 23.32%23.32% 16.10%16.10%

19931993 28.26%28.26% 33.69%33.69% 39.61%39.61% 20.42%20.42% 21.80%21.80% 15.38%15.38%

19941994 28.87%28.87% 37.95%37.95% 39.81%39.81% 19.23%19.23% 23.98%23.98% 14.28%14.28%

19951995 31.29%31.29% 42.90%42.90% 39.56%39.56% 19.17%19.17% 26.17%26.17% 14.66%14.66%

19961996 32.51%32.51% 50.04%50.04% 39.54%39.54% 18.79%18.79% 24.95%24.95% 15.71%15.71%

19971997 32.99%32.99% 49.01%49.01% 39.86%39.86% 21.41%21.41% 26.91%26.91% 16.45%16.45%

Tuition Isn't the Main Cost of Tuition Isn't the Main Cost of CollegeCollege

Three years of 10% Increases is a Three years of 10% Increases is a 3.4% Increase in Total cost3.4% Increase in Total cost

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

No Annual FeeIncreases

10% Annual FeeIncreases

Tuition

Personal/HealthInsuranceClothing

Transportation

Computer

Meals

Housing

Books/Supplies

$46,380 $47,958

+3.4% Increase

4 4 Year Year CostCost

Additional Cost of Extra 1 ½ Additional Cost of Extra 1 ½ Years to Degree with No Fee Years to Degree with No Fee

IncreaseIncrease

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

4 Year Cost with120 SCH & No

Annual FeeIncreases

5 & 1/ 2 year Costwith 132 SCH &No Fee Increases

Tuition

Personal/HealthInsuranceClothing

Transportation

Computer

Meals

Housing

Books/Supplies

4 Year Cost: $46,380

5 & 1/ 2 Year Cost: $60,022

25% 25% IncreasIncreas

ee

Findings RegardingFindings RegardingTuition FlexibilityTuition Flexibility

• In most states, but not in Florida, the In most states, but not in Florida, the authority to raise tuition and out-of-state authority to raise tuition and out-of-state fees is given to university governing boardsfees is given to university governing boards

• In difficult financial cycles, tuition increases In difficult financial cycles, tuition increases are used in these states to fund access to are used in these states to fund access to courses and programs that would otherwise courses and programs that would otherwise be reduced through budget reductionsbe reduced through budget reductions

Impact and Recommendations Impact and Recommendations Regarding Financial Aid Regarding Financial Aid

ProgramsPrograms

• Programs such as Bright Futures and Programs such as Bright Futures and Prepaid Tuition are not eliminated by the Prepaid Tuition are not eliminated by the contract approachcontract approach

• All aid programs should be regularly All aid programs should be regularly reviewed and modified to accommodate reviewed and modified to accommodate innovations such as block fees or innovations such as block fees or differential fees by location or time of day differential fees by location or time of day that are determined by the Board of that are determined by the Board of Governors to assist in maintaining access Governors to assist in maintaining access and encouraging student behavior that and encouraging student behavior that improves the chances of successimproves the chances of success

ConclusionConclusion

• Contract approach would close the Contract approach would close the gap between mission, performance, gap between mission, performance, and fundingand funding

• Florida could become a model for Florida could become a model for other statesother states

• Council strongly believes this Council strongly believes this approach should be embraced and approach should be embraced and utilizedutilized