The National Governors Association lobbied hard against the "maintenance of effort" provision included in the recent Higher Education Act reauthorization. It should come as no surprise then that the NGA has already asked for an across-the-board waiver, citing the recent economic crisis and expected state government shortfall. The law does include a waiver provision for, "a natural disaster or a precipitous and unforeseen decline in the financial resources of a State or State educational agency," but a recession does not exactly count as unforeseen, and nowhere is the plural used, meaning all states cannot be granted one en masse. Besides, not all states are experiencing budget shortfalls; energy-intensive states are actually doing well ($).
What's really important to understand is the federalism at play here in higher education finance. The maintenance of effort provision applies only to public institutions, so let's stick with a discussion of them. Public sector tuition gets set in different ways depending on the state. Some states let institutions set tuition rates either outright or by default. Some have governor-appointed boards do the rate-setting, and some state legislatures even do it themselves. The point is that legislatures and governors have a lot of say in tuition policy, even if they prefer to play the part of unwilling accomplice. In my home state of Iowa, we have a Board of Regents that is governor-appointed. They set tuition policies for the three state universities. They end up caught in the middle of a constant push and pull for power by the universities and the legislature. The legislature thinks the Regents coddle the universities, while campus officials cry out that the Regents are in the bag for the legislature.
These things matter when it comes to something like the maintenance of effort provision, because state governors and legislatures are crying bloody murder that the feds are having too much of a role in higher education. See the NGA's press releases opposing the provision before it became law here, here, here, here, and here. Their opposition almost killed it entirely, and they are certainly the reason it became almost entirely toothless. The law always had a provision allowing states to use five-year rolling averages in its calculation (so states, your budget cuts of the early 2000s actually lower that average now), but it got tied to such a tiny tiny sum of money that it became effectively meaningless. The total money at stake for 2008 is $66 million, a drop in the bucket when you consider that we spend 242 times that, $16 billion, on the federal Pell Grant program. State governments spend much more than that.
Governors and legislatures are the willing victims in this instance. States would like federal policymakers to believe they've done their share in funding higher education. And it's partly true. An unreported fact is that states provide almost exactly the same revenue per full-time equivalent student that they did in 1980 (in constant 2007 dollars). Of course, this does not account for rapidly expanding costs in other areas, especially health care, but the problem isn't just state spending, as is commonly reported elsewhere. The real problem is tuition.
While states have managed to hold the line on state expenditures, they have been unable to hold back tuition at public colleges and universities. According to the states' own numbers, from 1982 to 2007 tuition increased 190% over inflation. Much as we'd like to blame institutions for coddling undergraduates with fancy dorms and expensive perks like chefs and new-age gyms, state governments have been complicit as well. Their desire to compete with private institutions has caused them to ignore equity concerns and spend scarce funds on ever-increasing merit aid, which quadrupled from 1996 to 2006.
Enter the feds. The federal government has no role in setting tuition whatsoever. Its role in higher education is limited to providing financial aid for needy students, getting dollars into the hands of researchers, and providing tax breaks for donations to non-profit foundations that are more and more essential to higher education. But they feel the pressure of rising tuition costs nonetheless. They feel it from parents during election time, but they also feel it from organizations like the NGA, which is critical of how little a percentage of tuition Pell Grants now cover.
The meager maintenance of effort provision is a good start. Secretary Spellings should quickly dismiss this latest attempt to skirt responsibility.
1 comment:
After years of neglecting, to disastrous effect, the fact that states and institutions are the primary actors in college pricing, Congress in 2008 finally attempted to link federal aid to what it considered better pricing policies. But the mechanism Congress chose was ill-suited, even silly. When it fails, there is a danger that Congress will give up with a "we tried that but it didn't work" reaction. Better that the law be changed as soon as possible to reform and fund workable kinds of programs, long since accepted by states and institutions, to leverage the behavior of those setting net price. The cooperative federalism models of the Campus Based programs and SSIG (now LEAP), established in 1965 and 1972 respectively, have been available for decades to steer states and institutions toward complementing, rather than undoing, federal student aid efforts. Congress needs to put into place as soon as possible more realistic tools of fiscal federalism to get states and institutions away from their obsession with higher tuition, merit aid to increase rankings, and student loans pushed onto the needy to pay for it.
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