SPECIAL REPORT: Bernero & Snyder Strategies for Universities

SPECIAL REPORT: Bernero & Snyder Strategies for Universities

October 21, 2010/By The Center for Michigan


By Jo Mathis


As executive director of the Presidents Council State Universities of Michigan, Mike Boulus keeps waiting for Michigan’s gubernatorial candidates to talk at length about their plans to fund higher education.


He thought it might happen in their recent debate.


It didn’t.


Acknowledging that the task ahead is a huge one, Boulus hopes the next governor and legislators will recognize higher education as the backbone of economic development, and reverse what he calls a frightening trend.


“It’s been a legacy of dismantling higher ed over the last decade,” he said. “And that’s after we spent 50 years building it up – to the envy of the country.”


The candidates’ emphasis on the state’s dismal economy may have overshadowed an antidote to the problem — a better educated workforce.


With the collapse of the auto industry, it is clear once and for all that Michigan residents can no longer leave high school – with or without a diploma – and find a good-paying factory job.


In fact, by 2018, 62 percent of Michigan jobs will require post-secondary education, according to the Lumina Foundation for Education. Between now and 2018, Michigan will need to fill about 1.3 million vacancies resulting from job creation or retirements and other factors. Of those 1.3 million openings, 836,000 will require post-secondary credentials while only about 491,000 are expected to be filled by high school graduates or dropouts, the foundation says.


Just when Michigan needs more highly trained workers than ever, higher education has borne a disproportionate share of state budget cuts as it was slashed nearly 14 percent in the last 10 years.


Meanwhile, enrollment and graduation numbers have increased, universities are collaborating and cutting costs and programs, and families are forced to take on higher and higher tuition payments and – frequently – interest-bearing loans to pay for them.


“What does it say that we’re one of only four states that spends more on corrections than on higher education?” Boulus asked. “It’s simply not healthy.”


Republican gubernatorial candidate Rick Snyder, who taught at the University of Michigan Business School for three years as an adjunct assistant professor of accounting starting at the age of 24, has said that as Michigan families have grown poorer, Lansing has failed to sustain funding for education.


“Much of the blame for this unfortunate trend falls at the feet of career politicians who could not make structural reforms and plan for the future,” he writes on his web site. “Lip service has been paid to creating a knowledge-based economy, but that transition has been delayed by cuts in funding for higher education — arguably one of the few institutions that attract talent and investment to Michigan — and a poor business climate brought on by irrational tax and regulatory policies.”


His campaign spokesman, Bill Nowling, said the current way of financing education is a “very ineffective way to budget, and almost guaranteed to get bad results in the end.”


“In Rick’s mind, everything is connected, from early childhood development through college and lifelong learning,” Nowling said. “We have to come back to changing the debate and the discussion. The old Lansing way is to talk about, Well, are we going to cut or increase funding? The Rick way is to talk about what are we going to get? What are the outcomes we want to achieve in higher education?”


At the same time, Snyder believes universities must be more accountable to students and to taxpayers.


“The Number One priority for higher education is to educate Michigan’s young students and to provide the education they need to become lifelong learners, and also productive members of society,” said Nowling. “Rick thinks one way to do that is to create more transparency in how the taxpayer funding process works once the money goes to the universities. Right now, because the universities are autonomous to a certain degree, there’s really no accountability once they get the money to see what that money gets spent on.”


Snyder supports increased coordination between community colleges and universities to facilitate course credit transfers, opportunity learning, private sector collaboration, and early course offerings for high school students.


He believes that opportunities exist in emerging fields such as life-sciences research, biomedicine, information technology, and renewable energy, and that the state needs to create the business-friendly environment, offer the quality of life, and provide the talent pipeline to sustain and expand these industries.


Bernero’s Approach


“Education is economic development,” Democrat Virg Bernero often says.


On his web site, Bernero says that in this tough economy, the financial situation of families shouldn’t dictate who does and who doesn’t get ahead by getting a college education. He also promises to work with universities and community college to increase collaboration to prevent tuition increases.


“Governor Bernero’s pledge to universities will be this: the Administration will work to provide a fair, stable, and predictable revenue stream, if universities can demonstrate they are aggressively pursuing operational efficiencies and freeze their
tuition rates. Increasing partnerships between universities and the state government can also be a boon to our economy. We must do more to assist and expedite the technology transfer between university research labs and the marketplace. We must help students and faculty identify business and commercialization opportunities in Michigan while the research is taking place so that we can keep the products of that innovation and ingenuity right here in Michigan.”


In a recent Michigan Public Radio interview, Bernero said he would redirect dollars to restore the Michigan Promise scholarship, which had provided up to $4,000 to Michigan students before it was eliminated by lawmakers last year.


“I’m going to do an audit of every department,” he said. “I’m going to find every dollar I can. I’m going to go to the federal government; I’m going to get help there.”


Snyder has said he’d treat the scholarship as the promise it was, but would restore it on a needs basis, with the same standards applied to Michigan tuition grants at private colleges.


Bernero told MPR radio that the state could be taxing Internet sales for added revenue of around $300 million a year. And he said that if Michigan wants to stop its brain drain, it needs more economic opportunity for young people, and a better economic climate that benefits everyone.


Universities need to deliver a good product for the dollar, he said.


“I will be working with them and challenging them to show where they have done efficiencies and eliminated duplications,” he said. “Every university does not need to be all things to all people.”


Questions of State Support, Efficiency


Boulus said most people don’t understand that higher education has just two primary funding sources for the general fund: state revenue and tuition. Fundraising is usually earmarked for projects, scholarships, endowments, etc.


Thirty years ago, the state paid 75 percent of a student’s college education. Today, it pays just 30 percent, with the rest paid by tuition.


“We have a wonderful reputation in terms of the collective we have here in Michigan among all 15 of our universities,” said Boulus, “but if we continue down this path of declining state support and higher tuition, I think it’s unsustainable. It’s an unsustainable formula to continue tuition increases at the pace we have and the cuts we’ve seen in state support.”


Michigan Chamber of Commerce President Richard Studley said the business community is very supportive of higher education, but is also concerned about priorities, overlap, and duplication.


“Some college presidents get it and others don’t,” he said. “There’s discussion in southeast Michigan about whether we should create a new state university in Macomb County. Is that really necessary? Do we still need three state universities in the sparsely populated Upper Peninsula?”


He said members also wonder why Michigan trains so many teachers who then must leave the state to find work. They also question the number of law schools and medical schools, and wonder why are there so many English and political science departments and not enough programs training engineers, nurses, physician’s assistants, and pharmacists.


He said Michigan wastes millions of dollars every year at the community college and university level putting freshmen in remedial courses in math and English.


“On Nov. 2 Michigan voters will elect a new governor, a new lieutenant governor, a new House and a new Senate. At the Michigan Chamber, it’s our hope and expectation that the new administration and new lawmakers will take a long hard look at the state budget and commit or recommit themselves to a bold, dramatic restructuring of of state and local government. That should include a careful examination of our entire educational system.”


It also means acknowledging that a four-year degree is not the right path for everyone, he said. Many people working in skilled trades will retire in the coming 10 years or so, which means there is a need for workers with an associate’s degree, license, certificate, or apprenticeship.


“If we’re going to return to greatness – and I believe we will – Michigan has to be a state where we grow things and make things,” he said. “And we have to have a balanced focus on this return on investment.”


And what about the cost of higher education?


“Some of the universities get it – and work very hard to hold the line on tuition and to improve the return on investment,” he said. “Other state universities seem to exhibit almost a sense of entitlement, and want to solve the problem with tax increases.”


A strong, growing economy is the only way to guarantee there will be adequate revenue for higher education, he said.


“So now is not the time to impose a general tax increase on Michigan’s working families or job providers,” he said. “That is exactly the wrong medicine.”


Investing in the Future


Michigan lawmakers recently approved a 2.8 percent cut to the state’s 15 public universities and 28 community colleges. That cut was slightly less than had been expected for the fiscal year that began Oct. 1.


Governor Jennifer Granholm had hoped to cut the need-based tuition grants for private college students rather than to cut funding for public institutions. Instead, legislators shifted the money back into financial aid and scholarship programs.


States with the most college graduates are the most prosperous, studies show. Michigan residents with a bachelor’s degree earn nearly twice as much on average as high school graduates, and have lower rates of unemployment; and volunteer and vote at much higher rates.


More than 35 percent of the state’s 5.3 million working-age adults (25-64 years old) hold at least a two-year degree, according to 2008 census data. The national average is around 38 percent.


The Institute for Higher Education Policy in 2008 presented an independent study of specific concerns about postsecondary education in selected Michigan communities. It recommends that the state:


• Establish a state higher education agency or statewide board of regents with the authority to design policies and initiates to increase college enrollment and degree attainment rates across the state. Michigan lacks a board of regents or a higher education commission that can serve as a central hub for higher education data and that has authority over the state’s higher education policies.


• Establish better working relationships among and new roles for the state’s two- and four-year postsecondary institutions.


• Establish or expand health care and medical training programs to position Michigan as a leader in the health care industry by expanding investment in health care and medical training. This could include more funding for nursing programs at community colleges; using closed auto factories as facilities for vocational degree training in health care fields; and major medical school’s establishment of a satellite campus in an under-served area of the state specializing in community medicine.


• Develop better public transportation systems in areas where residents must travel to reach a post-secondary institution.


• Support passage of proposed legislation to create “Promise Zones” in areas of the state with high youth poverty. In these zones, high school graduates would be guaranteed last-dollar scholarships to in-state institutions funded by a combination of public and private dollars.


• Help the major four-year institutions in the state, especially Michigan State University, develop more branch or satellite campuses.


• Work with the Michigan Department of Education to develop policies that support college access for high school students, including offering more opportunities for Advanced Placement, dual-enrollment, and middle college programs that allow students to experience college-level work while still in high school.


The authors concluded: “For serious changes to occur, however, considerable political and financial commitment must be made by the state and its communities. The road to increased higher education access and higher baccalaureate degree attainment rates will be a long one, but investments now will pay off in a more educated workforce and sustainable economic prosperity.”


Boulus said legislators need to look at a total restructuring of taxes and find a revenue source for higher education that is sustainable, such as taxes from services, goods, and commodities that are growing.


Otherwise, he said, tuition will continue to climb, making higher education more of a private good than a public good.


“It’s generally acknowledged that our universities are our most important economic development tool we have if we want to return to prosperity,” said Boulus. “We need them to be our strongest institutions or we’re going to doom ourselves to third world status.”