Episode 84 - Enrollment, Tuition, and State Support

Sophia Laderman from the State Higher Education Executive Offices Association joins the podcast this week to discuss the funding of higher education and how it has impacted tuition over the years.

Full Transcript

Steve Meredith: Hi again everyone, and welcome to Solutions for Higher Education, a podcast featuring Scott L Wyatt, the president of Southern Utah University in Cedar City, Utah. I'm your host, Steve Meredith, and I'm joined, as I always am, by President Wyatt. Scott, it's good to see you again.

Scott Wyatt: It's good to see you, Steve. These are really enjoyable conversations that we get to have.

Meredith: I'm enjoying them as well. And, speaking of the conversations we're having, we were spurred by a special report from The Chronicle of Higher Education called "The Looming Enrollment Crisis" to dedicate this series of podcasts, really, for this spring semester of 2020 to the upcoming challenges that will be facing higher education generally and SUU specifically, of course. And there are a number of organizations that are outside higher education or related to higher education that help—they help us to analyze, they help us to forecast, they help us to see where we are and where we may be. We've interviewed people from investor's services and other organizations and we have a representative of yet another organization that looks at and analyzes higher education, particularly in this case from a funding standpoint, and why don't you introduce our guest?

Wyatt: Yeah, it is our privilege to have with us today Sophia Laderman, a Senior Policy Analyst from the State Higher Education Executive Officers Association. Welcome Sophia, thank you for joining us.

Sophia Laderman: Thank you so much for having me, I'm looking forward to this conversation.

Wyatt: So, how are things in Boulder, Colorado today?

Laderman: Good. We have a nice, sunny day and some good weather, so that's always nice.

Meredith: In January, that's the best you can hope for in either Cedar City or Boulder, I think.

Laderman: Yes, that's true. Yeah.

Wyatt: Yeah, well Boulder is such a beautiful place, you're fortunate to be able to live and work there.

Laderman: Yep, I absolutely agree.

Wyatt: We're totally in love with Cedar City but this whole intermountain, Rocky Mountain region is such a delightful place to be. So beautiful and the out of doors and people and everything. It's really pretty neat.

Meredith: That's right.

Wyatt: Well, tell us about SHEEO, State Higher Education Executive Offices Association. Before we get going on this conversation, why don't you give us just a little bit of background about SHEEO and your background with SHEEO?

Laderman: Sure. So, yes, SHEEO is the State Higher Education Executive Offices Association. We are a member organization for essentially whoever is the most senior person in charge of higher education in every state, and then as well as the agency that they work with. And that varies from state to state, so if you're in Colorado, we have the Department of Higher Education, so the person who heads up that department is one of our members, as is their whole agency. And our purpose is really to help convene people from all of the different states and help them work together, learn best practices from each other, talk about problems that they may be facing across the country. We also do a fair amount of policy research. We collect a lot of data and report on a number of different areas and my area with SHEEO is finance. So, I've been at SHEEO for about four and a half year and this whole time I've been working on the State of Higher Education finance report, which we collect data from 72 different agencies across the states and try to and try to get both a state level and the national picture for how state funding and tuition is changing across the states over time. So, we have a data set at this point that goes back to 1980, so this is really one of the most rich data sources to understand how we're funding our public institutions.

Wyatt: What are the trends that are most noteworthy right now that are occurring nationally?

Laderman: So, I think the main trend is this long-term disinvestment of state funding for higher education. So, if we go all the way back to 1980, funding was a lot higher, several thousand dollars per student higher. So, that means your average student at a public institution was getting a lot more state money for their education. And so, as state funding has gone down, tuition revenue has gone up and I think that's what ends up in the news most often is increases in tuition rates that affect students, and so now we have this whole affordability crisis, student loan crisis. And a lot of that, I think, can be traced back to states reducing their commitment to higher education over time.

Wyatt: Several thousand dollars reduced from the 1980s until the present per-student. Is that a combination of increasing enrollments and declining state investments? Or is it primarily one or the other? How do you see that?

Laderman: That's a very good question and a good point. I would say the…there are three different things happening with the decline in state funding. The first is just that the states aren't able to keep up with the inflation. As inflation continues, a state can't actually increase their funding, assuming everything else is constant. That would look like and effectively be a decrease over time. And then the other piece is the enrollment piece. So, as enrollment increases, states either need to increase their funding to match that and states can't really do that. So, I think it's a combination of those two things and then the third thing would be actual cuts in state funding which in a number of states we've seen that happen. Sometimes leadership will come into a state and not think that higher education should be publicly funded or there are other budgetary issues in the state and higher education is an easy spot to cut because there is another revenue source. So, it's kind of a combination of all of these different factors: the inflation, enrollment, and actual cuts to higher education funding. And the extent of each of those pieces is different in every state.

Wyatt: I think in Utah, the percent of the state budget that goes to higher education is about 18% so that's quite a big percent when you take public ed and higher education together, well over 50% and that leaves not as much money for parks and roads and prisons and courts. Just all of the other things that state government's in the middle of. All of the entitlements with Medicare and Medicaid matches and mental health…just everything. There's a lot of demands of state governments today.

Laderman: Right, exactly. And like I said, higher education is an easy place to cut if you need to. States need to balance their budgets, and as other demands increase like Medicaid or K-12 education, or if tax revenues decline, states have to do something. So, while I'm obviously an advocate for funding higher education, it also…states kind of do what they can and I don't think that there's malicious intent behind a lot of this, it's just that other costs have increased and higher education does have another revenue source.

Wyatt: Yeah, we hear that all the time. "You have another revenue source," which is tuition. I think in Utah, at least our school, it used to be that the state covered about 70% of our cost and now it's under 50% of the cost which…

Meredith: Still is pretty good.

Wyatt: Is pretty good.

Meredith: Yeah.

Wyatt: Compared to a lot of places.

Laderman: Yeah, I think that's better than…across the U.S. if you're looking at universities in particular, I think roughly your average community college is probably about 70%, 60%-70% funded by the state still and your average four-year institution is maybe like 30%-40% funded by the state. Here in Colorado, we are one of the lowest states for state funding. So, SHEEO is located right next to University of Colorado Boulder and they get less than 10% of their funding from state.

Meredith: Wow.

Wyatt: Wow, less than 10%. And then what we hear a lot of times is, as you've already mentioned, but, "Why is tuition going up?" And of course, that's a complicated answer. I mean, there's a lot of complications in that, but as the state's share goes down, tuition goes up to meet that gap.

Laderman: Right, exactly. Institutions need revenue from somewhere. And there are a lot of different hypotheses for why tuition goes up, and I think all of those different hypotheses probably have some part of truth. I believe that research shows the largest portion of tuition rate increases is due to declines in state funding, but there are also other components and I think one that's not talked about a lot is it's possible that education is actually just more expensive now. Or at least we're not able to have an economy of scale to the same extent. We don't really want to increase classroom sizes or move all education online. I don't think there's enough information about how that works yet. So, unlike most manufacturing and things like that, we can't really get more and more efficient, and then at the same time, there's all of these increased technology costs, there's increased cost for buildings and maintenance as a lot of colleges and universities get older and have a lot of different maintenance issues. There are whole populations of students that we're educating now that have different needs and might need more support services. There's this whole other piece of that as well.

Wyatt: Well, and it seemed to me that one of the reasons why the costs have gone up, one of the contributing factors—I would be interested in your reactions to this—but we went back and did a flow chart of all of the services provided at our university, at Southern Utah University, and went back a hundred years. When did the first Title IX office open? When did the first advising office open? When did the first mental health counselor show up?

Meredith: And the first university police station.

Wyatt: Police department.

Meredith: Right.

Wyatt: And it seems like 50 years ago, we were an organization that taught students. [Laughs] And today, we're an organization that is like a small country because we just…

Laderman: Yeah, absolutely.

Wyatt: Because the kinds of things that we're expected to do today far exceed what was expected a long time ago. We're the number one organization responsible for economic development in our region, we're the #1 group responsible for mental health. We have more mental health counselors at our university than in the community. We've got our police department and…

Meredith: Really within probably 300 miles of southern Utah we have the most mental health, yeah. It's a real…we are a real center. In a way that we used to be just a center for education we're now a center for…

Wyatt: Regional services and everything.

Meredith: Yeah, regional services.

Wyatt: It's a contributor.

Laderman: Yeah, right?

Wyatt: How much are you seeing that being a force nationally? Do you have a way of…

Laderman: I don't have numbers on that necessarily, but I do think that's a contributing factor to the rising cost of education. I have seen some research on federal regulations and reporting burdens and all of the data collection requirements and those kinds of things and that has increased the number of administrators that you need and things like that. But I also think that other point you just made about all of the different services you provide the community is really interesting and not talked about quite as much. And I think that's also a pretty good argument for continuing to publicly fund higher education. We know that there are all of these huge benefits and they can be really hard to measure. It's hard to measure how much the existence of your institution increases civic engagement or increases volunteering in the community. All of those different kinds of benefits that we sort of know anecdotally are there, but those things are really hard to measure and that makes it also really hard to argue for additional funding.

Wyatt: Yeah, I wish that we could recognize some of these funding pieces. For example, is it the university's responsibility to have a police force? Well, actually it's the city or the county or the state, but because our local city can't afford to take care of law enforcement for our university, we take that over. So, that's kind of a shifting of costs from state and local governments into higher education. And for mental health, we've got a huge office full of mental health counselors and that's really a state mental health issue but…or the private sector, so those are what it seems like shifting of expenses from the state, the local mental health authorities into higher education. And just a lot of those kinds of things. So, when I see that in Utah as an example that 18% of the budget goes to higher education, I actually think that it's less than 18% because a portion of that amount of money is taking care of services that other parts of state government should have been taking care of. And we're happy to do it because we want our students to be successful.

Meredith: But it's...

Wyatt: But it's a cost.

Meredith: Not wrong to realize that it actually is there and is a cost.

Wyatt: Yeah, that's right. And we're super happy to be an economic engine in our area where 100 years ago, nobody thought that was what we were supposed to do. Well, those are interesting trends. What do you see relative to tuition? What's happening with tuition around the country? Not just going up, but…

Laderman: Yeah. So, actually in the last two years, tuition rates have not really increased beyond the rate of inflation, yet we still have this narrative of increasing tuition rates and increasing tuition revenue. I do want to clarify, sometimes I say "tuition revenue" versus "rate." Tuition revenue would just be all of the tuition dollars that an institution receives, and that can go up if an institution pulls up more out-of-state students, increases graduate enrollment, has more international students or if they increase tuition rates. So, the tuition revenue number kind of captures all of these different potential strategies to increase total funding for the institution, but tuition revenue also hasn't gone up in the last two years. So, I think that's probably got something to do with all of the increasing pressure to keep college affordable that's much more in the national fear of media and that's something that people are very aware of and talking about. So, I think it's possible that we've gotten to a point where tuition has increased kind of as much as it can and there's so much pressure to keep it from going up even more that we might really be limited in that area. But over time, like since the 1980s, tuition has gone up over 300% if you don't consider inflation, and more moderately if you do consider inflation, but tuition certainly has increased a lot. College used to be… if not almost free, something that you could easily work a part-time job and pay for and that hasn't been true for maybe 15 years, but I do think that the tuition increases we've seen have really slowed down if not stopped in the last few years.

Wyatt: Yeah, in Utah, the tuition has gone up since 2000, 216% while general inflation has only risen by about 48%. So, we're four times…more than four times inflation just in the last 20 years.

Meredith: But we as an institution have…we chose to not raise tuition this past year and have since you've been here, not raised the…what's the right way to say it? There were involuntary tuition raises that were sort of foisted on us by the state in past budget cycles and then there were optional tuition raises that universities could make to cover certain expenses or start new programs and so forth and you've…

Wyatt: We haven't done any of those.

Meredith: We haven't taken any of those optional things because we're…we agree with you that tuition may have, at least in our market, it may have risen as much as we can afford to have it rise and still be seen as affordable for our constituents in our area and around the world.

Wyatt: We compare our…

Laderman: Well, and that…

Wyatt: Oh, please go ahead, sorry.

Laderman: So, you touched a little bit on state involvement in setting tuition and I think that's another really interesting area because states vary so much and some states, it's really just the institutions get to set and…propose and set their own tuition rates and have kind of full control over that. In other states, there is some involvement with the state coordinating board or with the legislature and they can limit tuition increases or completely freeze them. And so, you end up with certain states like Florida and Missouri have really long standing tuition freezes, so institutions haven't been able to raise tuition which I think at first sounds great, but at least in Missouri, they're now in a situation where they have very little overall funding because of state funding cuts and an inability to raise tuition. So, it really puts institutions in a bad place and I think the model that you're describing where there are sometimes optional tuition increases that an institution can make if they need to, that seems like that makes a lot of sense and that it's left to you and that you can determine year to year whether you need those increases or not.

Wyatt: Yeah. Our governor this year has requested a tuition freeze at all institutions until we can define what affordability is. What really is affordable for people to go to college and that makes a lot of sense in a lot of ways, but then also, every institution is different. Some institutions may be charging too much, some might be emerging. We have a couple schools in Utah that have changed from community colleges to universities just recently and they're still transitioning from being a community college to being a university—we've got two of those—and so, their tuition may be catching up with university rates. Anyway, it's more complicated than it is at first glance.

Laderman: And I think the other piece there too is the financial aid component. The difference between a sticker price or the published price of tuition and the price that most students are actually paying can be pretty big, but it varies a lot. And I think that can be confusing for students, especially if they're the first in their family to college or come from a low-income family. It can be really frightening to see the $40,000 sticker price of an institution and not realize that, depending on your own financial situation, you might be paying a lot less than that. And that is an area, actually, that states have been doing really well at in terms of increasing their commitment to student financial aid. So, while overall funding has gone down over time, financial aid has actually increased a fair amount since about 2000 when we started tracking that. And that also kind of signifies that commitment to affordability. I think that states are trying to put money where they can most directly help the students that are going to have the hardest time with tuition increases.

Meredith: This may be outside of your comfort zone just a little bit but I'm…since we're all three in and around higher ed, I've always been interested in this sticker price versus actual price conversation that you just brought up. What do you think are some possible solutions or that in terms of either more clearly stating what the actual price of something is or to say, "Your price may vary and here are some of the ways in which your price may vary." It just seems like going to college is very much like taking a flight. There may be somebody on there that's paying full freight and there may be somebody on there that's traveling free for miles and there may be somebody on there that's...there's just such an incredibly wide range of amounts of money that people spend to go to a college or university. Is it impossible to answer these in any sort of "one size fits all" way? Or are there things that universities and colleges could do to better inform students, especially those, as you've suggested, that are first time attenders or the first in their family to go or that have that kind of a situation where it could be confusing?

Laderman: Yeah. That's a good question and I don't know if there is one single solution, but I do think that increased transparency and upfront information would be really helpful for students. One area that can be really challenging is that students often don't know their financial aid award until long after they have been admitted and potentially after they need to make a decision about where they're attending. And so, getting those financial aid award letters out early and also being very clear in those, what each type of funding is. And I think that we've gotten better at that, at distinguishing "this is a loan that you'll need to pay" versus "this is a grant that you don't need to repay." But I think just clear and upfront information and that's challenging to do because there are thousands of institutions and each one needs to kind of come up with their own solution for that. I've seen some cost calculators that are great, but again, that kind of requires the student to know enough to realize that the sticker price isn't what they might actually pay and to go on the website and find that information. And depending on where the student's coming from, that might not be realistic. If they don't have people in their family or community or high school counselors encouraging them to find that, they might just see that sticker price and think that college isn't something they can do. And then in a way, I think free college promise type programs have a potential to overcome that because it is just this universal idea of "College will be free." And it's never really that simple, but I wonder if rather than trying to have each institution come up with solutions to help potential students see their cost, maybe it is kind of this broader scale thing of something like "Free college" or "Get free college." It seems like the idea of a promise that students won't have to pay for college, or even a promise that they won't need to go into debt for college, that could be really powerful.

Wyatt: Yeah, we…everybody likes free.

Laderman: Yeah.

Meredith: That's a price everyone can understand.

Laderman: Yeah. And I'm actually not necessarily advocating for national or statewide free college, but I do think that kind of marketing piece works really well and is really interesting. Just in getting people to think that this is something that they can do and that they can afford.

Wyatt: Yeah. You're working with all of the head executives of higher education through all of the states. Ours is a commissioner of higher education, Dave Woolstenhulme serving kind of as an interim.

Meredith: That's right.

Wyatt: Because we're redesigning some of the structures in the Utah system. It looks like we may consolidate the Utah System of Higher Education with the Utah System of Technical Colleges into one, that's going to happen in the coming legislative session maybe.

Meredith: Yeah.

Wyatt: There's recommendations and seems to be momentum towards doing that. But…and that will change quite a bit how we do things here. But what do you see in the world of finances and business models and all of that, what keeps these state executives up at night?

Laderman: That's probably a different answer for many of them. There are so many different issues that they're trying to tackle, and I think in most cases they don't have the funding to tackle those things. Some of the more current issues that we've been hearing a lot about are rural students and the challenges that they face that I think have largely been ignored for a long time. Also incarcerated students and they're currently not able to get a lot of financial aid and there are a lot of issues with if you are incarcerated, you might be moved in the middle of a term and can't complete. I think student loan debt and affordability are probably some of the top concerns. And then, this is a little depressing, but if you look towards the future, the outlook doesn't really seem great for funding for higher education. Every time we have an economic recession, funding goes down so much for higher education and that happens at the same time that a lot of students are coming back because they've lost their job and so they come back to school, so you have these sort of dual effects of a state doesn't have the revenue it expected due to the recession, but also there are so many more students that need to be educated and so you see these huge, steep declines in funding for students. And one of the issues is that we never really seem to recover from those. So, we had the Tech Bust in the early 2000s and funding for higher education declined and then there were only three years before the Great Recession in 2008-2009 where funding declined to the lowest levels we've ever seen and since that time, states have actually been slowly—on average, not all states—but some states have been slowly increasing their funding trying to get back to prior levels, but we're only halfway back to where we were in 2008 and even farther from where we were in 2000-2001. So, it does seem concerning that…you know, there's all this talk of a recession coming up, so with the next recession, it looks like funding will probably decline even further and that's definitely concerning because, as we talked about, we might be at the point where we can't really raise tuition anymore without pricing students out of the market and so it seems like there's a big crunch coming up for the financing of higher education.

Wyatt: I was first made a college president in 2007. August of 2007.

Meredith: Good timing buddy. [All laugh]

Wyatt: Yeah, and I had a wonderful year. [All laugh]

Meredith: One wonderful honeymoon year and then…

Wyatt: I had one wonderful year. Funding was great and life was good, the future was bright…

Meredith: Whammo.

Wyatt: And we've been worried about it ever since.

Meredith: Yeah.

Wyatt: Anyway, that's what I always stay awake worrying about. I stay awake worrying about what's going to happen in a recession. And recessions affect different institutions differently depending on the percent of their budgets are dependent on tuition versus state appropriations and whether they're in urban or rural places and we're definitely…when you talked about all of these issues about funding and rural students, we're a rural school.

Meredith: By far the smallest population center for any of the universities in the state of Utah.

Wyatt: Yeah. So, we're a school of about 12,500 students in a city of about 30,000 residents.

Meredith: And we feel exposed when these types of issues come up that we might be the place where the rubber first meets the road in terms of enrollment declines and people deciding to stay home in the case of a big economic downturn and so forth. Because they have to travel…if you want to go to SUU, we hardly have any population in the three county area that we serve.

Wyatt: Well, and even in the three county area they have to move here.

Meredith: That's right, and even then they have to move here. It's such a large geographical area.

Wyatt: I guess you could commute an hour and a half. Commute an hour or an hour and a half or something but it's a delightful place to live and learn.

Meredith: Yeah, it's a great place. But it is remote.

Wyatt: Yeah. Incarcerated students, that's an interesting issue to bring up in terms of how we're serving them. Elaborate on that, would you please Sophia?

Laderman: Yeah, and that's something that I probably never thought about before about two years ago, but we have…higher education has the potential to really help people who come out of prison integrate back into life and be successful and not end up back in prison. But our current system is really not set up well for that. A lot of institutions, particularly the community colleges, partner with prisons to offer classes, but there are so many logistical issues with that. So, the student is taking classes and is in a prison, they could be moved at any time, they could be released in the middle of the semester, so our semester system really doesn't work for that and they'll end up never completing those credits. And there are also those issues of K-12 education that you need to get through before you can really offer higher education, and then there's the cost. So, with the exception of a few institutions that are part of a pilot program, students can't receive a pell grant with just the federal financial aid if they're incarcerated. And so, that kind of makes it financially impossible because these students don't really have any money largely.

Wyatt: Right.

Laderman: And so, they can't take the classes. And so, I think there's a big potential there because we do have such a big prison population in the U.S., there's a real potential to help reduce recidivism and help all of those people kind of integrate back into society like I said. But I think we're just starting to think about that and the SHEEOs, so our members across the state, are starting to work with prison systems and kind of the equivalent head of a prison system to figure out how they can reduce some of those barriers and essentially serve more students that are incarcerated.

Wyatt: Our board chair is an entrepreneur and he is trying to work with prisons and building some programs for them and the one program that he is interested in, of course, is entrepreneurship and relative to those inmates who are violent offenders, he's constantly telling me that these are the perfect people to become entrepreneurs. They're comfortable with risk and they don't have the ability to get jobs, frankly. It's hard to get hired and entrepreneurs don't want to be hired, they want to have their flexibility. So, if you're trying to bring a program into a prison that the inmates will never be able to get employed in like being a high school teacher, that's not very productive. But there are other programs that would be extremely productive, perhaps. It's interesting to try to explore what we can do for those individuals.

Meredith: One of my very most satisfying teaching assignments…I was at a school, a two year school in Utah that had a nearby prison and I'm a music professor and so, I would go offer a jazz and contemporary rock music history type course that was a gen ed thing that would lead towards an associate's degree from the college where I work. And I remember quite distinctly I had to walk through 14 locked doors to get to my classroom, and you're right, Sophia. The challenges that are faced by the inmate population, particularly since their ability to attend class can be immediately curtailed, was a great challenge to me. And I eventually…I had a research paper that I had them write as part of the assignment and they said to me, "We don't have anything in the library available to us." And so, I essentially donated all of my books so that they would be able to…because they had no internet access and they had very limited library holdings and so offering a higher education degree program is expensive and it requires a real commitment on behalf of the institution that's offering it and a state that's willing to support it.

Wyatt: Well, these are interesting times. It will be…do you have a crystal ball over there in Boulder, Colorado that you can look five years ahead…

Laderman: I wish.

Wyatt: And tell us what's going to happen?

Laderman: I wish, that would be great. I would publish a report about it if I did. [All laugh]

Wyatt: Well, thank you so much for this conversation. We appreciate you spending some time with us and we're grateful for the service that you're providing to our system and other systems of higher education around the country. Thank you so very much.

Laderman: Yeah, thank you for having me.

Meredith: You've been listening to Solutions for Higher Education, a podcast featuring Scott L Wyatt, the president of Southern Utah University in Cedar City, Utah. We've had as our guest today Sophia Laderman, who is a Senior Policy Analyst at the State Higher Education Executive Officer Association. Sophia joined us by phone from her office in Boulder, Colorado and we were delighted that she was able to join us, and as always, we're delighted that you, our listeners, were able to join us today. We look forward to talking with you all again soon. Thanks for listening, bye bye.