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Higher Education Experts Cite Stimulus Funding Shortcomings

WASHINGTON, D.C. – Despite stated public policy goals meant to help low-income and first-generation college students go to college, certain policies hurt the very students they were meant to help because of the way they are implemented.

That was one of the key points made Thursday at the New America Foundation during a panel discussion titled “Funding Public Higher Education Post-Stimulus.”

The criticism wasn’t an indictment of the Obama administration’s American Recovery and Reinvestment Act of 2009, which provided some $8.3 billion over three years to higher education institutions throughout the country.

Rather, the criticism was more directed at the flexibility the federal government granted to states under the Recovery Act that was used in ways that had side effects, which adversely impacted those who need help the most.

As a case in point, panelist Dr. Stephen Jordan, president of Metropolitan State College of Denver, told of how the state of Colorado—upon receiving Recovery Act funds—dropped down funding to institutions of higher learning to 2005-2006 levels as federally allowed without regard to enrollment levels at various institutions.

Jordan said that decision hurt institutions such as Metropolitan State College of Denver, which had higher levels of enrollment at the time, due almost, if not entirely, to greater enrollment among low-income students of color, while other institutions had lower enrollment and thus ended up with more money per student.

“The very institutions where we ought to be making investments to achieve our stated public goals, we’re actually disadvantaging them compared to research universities,” Jordan said.

He noted that, as a regional comprehensive university, Metropolitan State College of Denver attracts one out of four Latino college students in Colorado and one out of every three African-American college students in the state. Roughly 70 percent of State College’s students are low-income students, and two-thirds of those students are Pell Grant eligible, he said.

“It’s not like we can raise tuition,” Jordan said of his college, which he said remains in the bottom quartile throughout the nation in tuition charged at $2,416.86 per semester, according to the college’s website.

“For us, the tuition strategy is not a viable long-term strategy,” Jordan said. “It is a short-term strategy to try and make up for the reductions that we’ve had.”

Jordan said he wishes the federal government should have required that that funding be required to maintain certain levels of support per student instead of allowing states to fund institutions at 2005-2006 levels and then use Recovery Act funds to fill the gaps without regard to student enrollment.

As his institution continues to struggle with issues of finance, Jordan said he has been charged with the duty of “right-sizing” the institution and finding ways to streamline services and cut costs. In one case, it involved digitizing student records—a process that cut the per-person staff time required to retrieve a student transcript from one day to three minutes since the records were previously stored off-campus.

He also has hired junior faculty to replace outgoing faculty who agree to give up tenure and leave within two years as they spend time creating “legacy” or “capstone” projects that leave a lasting impact on the university.

Still, he said, the university is staring at more reductions in the coming fiscal year.

Such is the case at institutions throughout the nation as the Recovery Act funding meant for education has been exhausted.

“This funding was viable for several years, and the states that availed themselves of it are now facing a funding cliff,” observed Jason Delisle, director of the Federal Education Budget Project at the New America Foundation.

Jennifer Cohen, senior policy analyst with the Education Policy Program at the foundation, said that an “unprecedented” $100 billion went to education through the Recovery Act and that, of that amount, some $39 billion went to State Fiscal Stabilization Funds in the area of education.

Of that $39 million, 78.9 percent went to K-12 education, and the remaining 21.2 percent—or $8.3 billion—was spent on higher education. The pattern pretty much mirrors how states divvy up funds between K-12 and higher education, she said.

“This is a huge investment,” Cohen said of the $8.3 billion that went to higher education. “So it makes you wonder what happened with those dollars.”

However, there is variability among states, and trying to get a grasp on what exactly happened with the $8.3 billion in Recovery Act funds that went to higher education is a huge and complex undertaking, complicated even more by the fact that state budgets vary based on state law.

Some states spent all their Recovery Act money on higher education. They include Colorado, Cohen said, because the state’s K-12 funds are legally protected and cannot be cut. Other states, she said, put all their Recovery Act money in K-12 as per state legislative action.

Cohen has authored a series of papers on State Fiscal Stabilization Funds. Among other things, her papers found that many states “did not protect higher education from budget cuts during the economic downturn” and that is still clear that the stabilization funds helped keep higher education budgets afloat in many states.

Other panelists included Dr. Paul Lingenfelter, president of the State Higher Education Executive Officers, or SHEEO, who joined Jordan in saying that the nation has “misguided public policies” that hurt the socially and economically disadvantaged.

“We are not putting resources behind our top priorities,” Lingenfelter said. Among other things, he criticized the shift toward merit aid for students, which he said “does not have very much educational return.”

He also criticized the delivery system of higher education, particularly in community colleges, that he said emphasizes “episodic, part-time enrollment” and in which students end up using Pell Grants to pay living expenses and don’t make educational progress.

Lingenfelter predicted continual increases in tuition and stressed the need for higher education leaders to ask what does the public need, where can investments be made to help meet those needs, and what can they do better with the money they have now.

Panelist Nick Johnson, Vice President for State Fiscal Policy at the Center on Budget and Policy Priorities, said questions remain about whether the nation will see economic restoration or retrenchment in the coming years—a question all the more relevant in a presidential election year that follows a particularly contentious partisanship that has permeated the latest Congress.

“The economy is looking up,” Johnson said. “But I think we face some political threats that will really shape higher education into the future.”

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