The Need for Better Fiscal Planning
After decades of focusing on expansion and access, California’s institutions of higher education are now being handed a more difficult charge: to dramatically increase the number of college graduates with diminishing state funding. There is a growing consensus that the United States needs to ratchet up its production of college graduates to turn around the economy and remain competitive. California’s performance is vital to this national agenda. Experts warn that California needs to start on a steep upward climb—each year issuing about 16,000 college degrees more than the year before—until one million additional Californians have postsecondary degrees.
The standard approach that California’s policymakers take toward financing higher education is not up to this challenge. For decades, state leaders have been relatively content to leave the higher education system on autopilot, guided by a 1960 Master Plan that offers no guidance for dividing resources among the three systems to produce desired levels of education, for defining affordability, for determining whether students in different segments should pay different amounts or shares of cost, or for determining what quality education should cost in each segment. Fiscal planning is not well-informed by systematic analysis of spending and revenue patterns and is not guided by a vision of what outcomes are sought from postsecondary education and how resources can best be allocated to achieve them.
This project uses data from a national initiative to illustrate the kinds of analysis that could better inform fiscal planning. The Delta Project on Postsecondary Education Costs, Productivity, and Accountability is a national initiative designed to help decision makers adopt more rational funding approaches for higher education. We use their data to draw comparisons across California’s three public systems of higher education, explain noteworthy changes over time, and discuss how California compares to the rest of the nation. As data extend only to 2009, we cannot document the most recent trends, but the seven-year trends we document provide a useful context for future planning.
The report presents data about five fundamental questions: who attends? what do we spend? how do we spend it? Who pays? what do we get? Some highlights are provided here.
California relies more than most states on its public postsecondary sector, with 85% of postsecondary enrollments served by the University of California (UC), the California State University (CSU), or the California Community Colleges (CCC). Of the three, CCC and, to a lesser extent, CSU will need to contribute most of the needed growth in college degrees, as they serve broad sectors of the population (Figures 3, 4, 5).
The sector that serves the most disadvantaged students (CCC) spends the least, by far, on education and related (E&R) costs (see p. 7 definitions); UC spends over two-and-a-half times more than CCC on E&R per student—the largest such disparity in the nation (Figures 6, 9).
UC spending has risen by 4% despite shrinking revenues, while CSU and CCC spending has more closely tracked revenue trends (Figures 8, 24, 25).
Compared to national counterparts, UC and CSU spend more per student while CCC spends less, but the lower spending at CCC is due to collecting far less tuition revenue; state and local support for CCC is higher than the national average (Figures 9, 15, 19).
Among the three categories of E&R spending (instruction, student services, other general support) the higher expenditures at UC are due mostly to spending on instruction (Figures 10, 11, 12).
Students at UC and CSU are paying a much higher share of their educational costs due to steep tuition increases, but the higher tuition revenue has only partially offset the loss of state funds (Figures 16, 17, 22, 23).
All three segments are increasing the numbers of degrees produced annually and are reducing the cost per degree, but the improvements are far less than the magnitude of increase needed (Figures 26, 27, 28).
All three segments, but particularly CCC, spend more per degree than their national counterparts; CCC spends 30% more than the national average per degree and 40% per completion (degrees plus certificates) (Figure 29).