SlideShare una empresa de Scribd logo
1 de 19
Compressed Budgets & Shifting Revenues
A Primer on Policy Alternatives and Options


              Gordon M. Groat, M.Sc., R.C.P.




                  University of Arizona
2



                                            Introduction
       The phenomenon of dramatic tuition increases has far reaching ramifications in the field

of Higher Education. Analysis of seminal literature highlights the cyclical nature of the funding

mechanisms and the policies, which actuarially control the revenue streams that are critical to the

ongoing operations necessary to fund the institutions as we have come to know them. In 1990,

The Pew Higher Education Research Program on Policy Perspectives (June, 1990) discussed

former Secretary of Education William Bennett’s angst over the public discussions concerning the

costs and prices of Higher Education.

       The focus in 1990 had shifted from price to expenditure--from what students and their

families pay, to what colleges and universities spend. In the tradition of an economic cycle of

inflation and recession, the most recent discussions on this topic have noticeably returned to the

concern over the out-of-pocket costs imposed upon students and their families. Over the past five

years, the tuition at our countries public colleges has risen at an annual rate of slightly greater

than 4 percent. However, for 2002-2003, many of the public colleges are projecting increases

double digits in the (Morgan, 2002). College Board’s data (www.collegeboard.com) depicts the

following increases in tuition and fees:

          At 4-year private institutions, tuition and fees average $18,273 ($1,001 more than last
           year’s $3,725 – a 5.8% increase)

          At 4-year public institutions, tuition and fees average $4,081 ($356 more than last
           years $3,725 – a 9.6% increase)

          At 2-year private institutions, tuition and fees average $9,890 ($690 more than last
           year’s $9,200 – a 7.5% increase)

          At 2-year public institutions, tuition and fees average $1,735 ($127 more than last
           year’s $1,608 –a 7.9% increase)
3


       These trends have a dramatic impact on the image of Higher Education administration’s

ability to control costs, growth and revenue. It is the intent of this paper to investigate the policies

currently in place at the University of Arizona in an effort to ascertain potential modifications or

changes that may be necessary to minimize the historical cycle of these tuition increases and gain

greater control of our own destiny.

       A thorough review of both historical and current literature shall provide us with a broad

spectrum of policy modifications and enhancements, which have been implemented to minimize

the volatility and dependence upon state governments and their constituents. Through this

assortment of alternatives, it is our intent to provide a detailed recommendation of the current

policies and regulations as they relate to the University of Arizona, and the tuition dilemma that

we currently face.

                                          Problem Formulation
       Tuition increases have been a part of the education landscape for over thirty years

(Ehrenberg, 1999). Tuition levels have been rising, on average, by 2 to 3 percent more than the

rate of inflation ever since the turn of the century. Ehrenberg (1999) cites that a number of forces

continue to place upward pressure on tuition costs. “These include the aspirations of academic

institutions, our “winner take all” society, the shared system of governance that exists in academic

institutions, recent federal government policies, the role of external actors such as alumni, local

government, the environmental movement and historic preservationists, periodicals that rank

academic institutions, and how universities are organized for budgetary purposes and select and

reward their deans.”

       In order to gain a better understanding of the “costs” of higher education it is critical that
4


we have a working understanding of the definitions associated with this topic. According to the

definitions stated by the National Commission on Costs in Higher Education (1998), terminology

used in this paper means the following:

          Cost per student: The average amount spend annually to provide education and
           related services to each full-time student equivalent (FTSE)

          Sticker Price: The tuition and fees that institutions charge

          Net Price: What students pay after financial aid is subtracted from the total price of
           attendance. Financial aid comes in the form of grants, loans, work study

          General Subsidy: The difference between the cost to the institution of providing an
           education (cost/student) and the tuition and fees charged to students (sticker price)

   For students currently attending, or prospective students and their families, the rising cost of

education leads to an endless number of debates and discussions. Is it cost prohibitive to attend

the University of Arizona as an out-of-state student? Will the tuition in my home state increase

faster than an out-of-state school such as the University of Arizona? How do the tuition increases

compare to the increases amongst peer institutions? What value does an education from the

University of Arizona carry?

   In order to address these concerns, our investigation of the pricing policies and strategies shall

delve into the actions taken by institutions and states, which have the greatest investment into our

own Universities supply base. It is our goal to investigate the critical policies affecting the rapid

cost increases and develop options for controlling these costs in an effort to develop a concise

strategy and positioning statement with respect to the University of Arizona’s tuition dilemma.
5



                                            Criteria Selection
       Six specific alternatives have been selected from a multitude of both historical and current

topical literature. These alternatives each represent potential methods to reduce the dependence

on State revenues and follow the principle of, “Resource Dependence Theory” (Slaughter, Leslie,

1997). “Resource dependence theory suggests that as unrestricted moneys for higher education

constrict, institutions with a national system will change their resource-seeking patterns to

compete for new, more competitively based funds. To respond to new opportunities, institutions

will have to shift away from basic research toward more applied science and technology. Further,

they will likely increase tuition and become more active in expanding sales and services while

lowering labor costs”. The alternatives, which appear to have the most viable opportunity to

allow the University to regain control of their financial solvency are as follows:



          Establish income threshold

          Increase aid: low tuition/low aid, high tuition/high aid

          Decrease burden imposed by state and federal administrative requirements

          Change or alter state constitution

          Limit number of incoming students through academic thresholds

          Advocate tiered plans: incoming freshmen pay more than existing students, varies by

           degree, ranking…etc
6


          (Table 1)




                                                                        Decrease Admin.
       Alternatives       Establish income                                                                             Alter State
                                                  Increase Aid         Burden imposed by        Tiered Plans                                Increase Selectivity
         Criteria            threshold                                                                                 Constitution
                                                                       states and agencies




                                               Favors low income                                                                               Increase due to
                                                                                                 Increased by
                             Favors low       students, has been on                                                                          inferred increase in
     Cost to Students                                                  No cost to students     program or year            No Cost
                           income students     decrease for last 30                                                                              quality thru
                                                                                              entering University
                                                     years *                                                                                      selectivity
                                                                                               Increased lattice
                                                                                               cost due to non-                               Lose revenue in
                                                                                                                    Possibly significant
                              Increased       Decrease institutional                            standardization                                aggregate but
    Institutional costs                                                   Direct Benefit                            indirect costs due to
                               Revenue         discretionary funds                               with obvious                                 increase on per
                                                                                                                      lobbying efforts
                                                                                               implications for                                student basis
                                                                                              increased revenue

                                               Potential benefit to     May shift current          Revenue              Potential to         Must be combined
  Public Svc. Community   Maintain low SES
                                                maintain existing       admin. Efforts to         redirection           maintain or             with income
         Outreach         category students
                                                   programs             outreach projects        opportunities       increase outreach       threshold program

                                                                                              Additional revenue     Potential to boost
                                              Academic Capitalism        Should decrease                                                    More strategic, focus
                                                                                              streams // possible    research budgets
        Research           Not Applicable     // Aid should enhance        direct cost of                                                      on science &
                                                                                                  redirection         through tuition
                                                     research           research activities                                                     technology
                                                                                                 opportunities          redirection
                              Relative
                          percentage equal                                                        Potential                                   Place increased
                                              Maintain the integrity    Graduate research                             Opportunity to
                           across graduate                                                    disaggregation of                             emphasis on graduate
   Grad vs Undergrad                           of commitment to         may be positively                            enhance graduate
                                 and                                                          graduate program                               students and their
                                               graduate students            impacted                                   subsidization
                            undergraduate                                                          tuitions                                      research
                              programs




       Income thresholds fall within the scope of key groups that shall continue to have

significant priority with our nation’s educators. The emerging groups that will meet with the

political favor are students coming from low-income families and underserved groups. This

strategy leverages the argument for equity while seeking to support traditionally underserved

groups. A peer institution, the University of Texas, has proposed as series of policies which

provide significant protection for this group. Or, according to (Potter, 2003), “The University of

Texas System’s Board of Regents last month proposed free tuition for all Texas students from

families with annual incomes below the state’s median income of $40,860 in 2001.” The

proposal by Texas, called the “Texas Compact” proposes that lawmakers’ relinquish their tuition

setting power to colleges. The University of Arizona has spoken to these issues and the Arizona

Board of Regents currently supports the same policies.
7


      Increasing aid is a consequence of the trend in decreasing state government support as

administrators increasingly feel that tuition hikes are the only way to regain lost money; however,

they also feel that increasing tuition will also have the effect of making education more accessible

to financially disadvantaged students. According to University of Arizona Provost George Davis,

as a result of the 2003/2004 tuition increase, “there will be an $11 million increase in financial aid

for undergraduates and a $2.6 million increase in financial aid for graduate students in the drafted

proposal (Raz, 2003, ¶. 9)..” This shifting of tuition revenue to support low income students has

some literature to support the idea. “The Targeted Subsidy Model” (Hearn and Longanecker,

1985) can be interpreted to state that, rather than waste financial resources subsidizing every

student, even the ones that could and would pay to attend the same university with a substantially

larger tuition than the one they currently pay, to the detriment to the university; by using this

strategy, increasing tuition substantially is more efficient in assisting low-income students. An

increase in tuition that affluent students can afford to pay can be used to subsidize financially

disadvantaged students. Hence, from this perspective, financial assistance is “targeted” to those

that actually need it and can therefore more effectively help them because more funds are now

available to do so.

       Reduction of the Administrative Lattice will reverse a trend that resulted in the increase

of administrative personnel. The more discretionary income an institution generated, the greater

the investment in additional administrative personnel. The tendency to solve problems by adding

to the administrative lattice further supported the increased growth and cost burden associated

with this strategic business unit. As the lattice of administrative function at our nation’s

universities have experienced significant growth during the years 1975 and 1985, academic

support personnel increased 60 percent while faculty numbers only increased by an average of
8


less than 6 percent (Pew, 1990). Several phenomenon have contributed to the expanding lattice

and the increased costs associated with the growing administrative functions.

          Increased regulation and external micromanagement: These two phenomenon have
           resulted in increased burden upon the institutions attempts to comply with the addition
           of alternative revenue streams.

          Consensus Management: Increased participation by quality circles has resulted in
           decreased accountability and productivity. This managerial strategy oftentimes
           protects the organizational status quo.

          Expansion of Administrative Entrepreneurialism: Higher Education has not
           demonstrated the ability to apply the principle of growth by substitution. Many new
           problems are investigated separately: new groups are formed, new administrative
           functions defined.

       Tiered tuition in the State of Arizona has been the topic of some discussions designed to

capitalize on the demand surplus for certain programs. This would effectively price certain

programs at a higher rate than others. A second form of this strategy that is being implemented is

tiering the tuition by charging incoming students more than returning students. The higher price

is imposed on each new class, so that after four years, students in all four classes will be paying

the new, higher rate (Morgan, 2002). This policy is designed to lessen the impact upon current

students yet retain the increased earnings of higher tuition rates for entering freshmen. Several

major institutions have initiated these programs including The Ohio State University, University

of Illinois, Purdue, and Texas A&M (Hebel, 2002). Indiana and Penn State Universities have also

pursued this policy and many institutions with tiered tuition policies have offered various forms

of financial aid to alleviate the difference in tuition to those students unable to pay the difference.

       Initial plans at the University of Arizona include exploration of tiered tuition based on

program demand while gradual tuition increases will be implemented throughout the university

students, those enrolled and those entering. Support for students unable to pay the increased
9


tuition has been pledged by the University of Arizona’s President. The Arizona Board of Regents

has given permission to the University to explore these options and also to recommend that tuition

be raised.

       Constitutional change to permit tuition hikes in the State of Arizona have also been the

subject of significant debate. Some argue that because the Constitution of the State of Arizona

mandates regarding education provides that “the instruction furnished shall be as nearly free as

possible” (Arizona Constitution, 2003). The tuition increases being explored in the late 1990s

drew the attention of lawmakers who asked if the Arizona Board of Regents, in fact, may have

violated the constitution’s promise of “nearly free” tuition. The Attorney General ruled in favor of

the Arizona Board of Regents statutory authority to raise tuition in 1999. The Attorney General

in 1999 was Janet Napolitano, the same Janet Napolitano who is now the sitting Governor of the

State of Arizona. Changing the constitution is an arduous process that is not likely to receive

neither legislative nor gubernatorial support in the short term.

       An identical dispute concerning constitutional guarantee is being debated by the Board of

Governors of the University of North Carolina system. Despite a Constitutional guarantee of free

tuition “as far as practicable”, the Board has agreed to raise in-state tuition 8% next year, and will

allow the states 16 campuses to impose additional increases that range from $100 to $400

(Morgan, 2002). The majority of the additional revenues will be directed to pay for the 5,800

additional students expected in the fall.

       Increasing the selectivity of the University of Arizona through a reduction in the number

of students accepted into an institution of higher education necessitates a delicate balance of

several factors. A decision on size-its total enrollment-will influence non-tuition income per

student (Winston, Yen, 1995). An example of this is that by restricting an institutions student
10


       body, it will protect its per-student endowment income; if it had twice as many students,

other things being equal, it would have half as much endowment income per student. Winston

further elaborates on the issue of demand in his 1999 article titled Subsidies, Heirarchy and Peers:

The Awkward Economics of Higher Education. In this article Winston states “colleges exercise

control over whom they sell to by generating excess demand and then selecting the students with

the characteristics they most desire from the queue.”

       In relation to the U of A’s current budget problem, one policy alternative to remedy its

decreasing finances can be seen in terms of cutting costs by becoming more academically

selective. This could potentially help the U of A reduce its costs because it would arguably give

the administration more control over some of the factors that contribute to its costs. Support for

this proposition can be interpreted from the ABC Bulletin #3 in regards to President Likins

“Focused Excellence” plan. According to it, the relatively open admissions standards that the

university has established resulted in shortages of classes, residence hall rooms, and lab space.

The current policy demonstrates very little discretion in quality control, and we find ourselves

admitting students whose academic profile almost guarantees frustration and failure in this

academic environment (ABC Bulletin #3, 2002)

       By becoming more academically selective, the University of Arizona will be able to exert

greater control of its costs by admitting fewer, academically superior students who would then be

in a better position to graduate. A second benefit would be the reduced impact on limited

resources such as faculty and facilities.

       Lastly, the increased selectivity will bolster the University of Arizona’s reputation as a

center of excellence. Selectivity, as applied to higher education focuses on the ratio of applicants

to admissions, test scores, and high school grades is one of the most significant and sought-after
11


descriptions of a institution of higher educations quality. Excess demand occurs when the

demand from students is significant at a given price relative to supply (Winston, 1999).

Therefore, selectivity requires the simultaneous generation of demand and the restriction of

supply. This could also significantly help the U of A in the future as it could attract even better

students, and having an increase in supply of better students could give the U of A more power in

increasing its tuition via revenue.

                                      Policy Recommendation

       A thorough review of the historic literature demonstrates since the middle 1980’s, federal

and state government financial support for higher education has seen a significant decline

(McPherson & Shapiro, 1998). In order to gain control of this negative cycle it is imperative that

the University of Arizona takes several critical steps that address both the short and long term

financial requirements as defined by the State of Arizona Constitution. As cited, several states

have challenged the constitutionality of “free tuition” to mean within reason and not completely

free of charges. In light of the dramatic reduction in our state’s revenues, as a result of the

extended economic downturn, it seems logical to suggest a dual-pronged policy that shall address

both the short term and long-term requirements to eliminate the economic cycle, as well as reduce

our dependence on state resource dependency.

       Short term (2003 – 2004): The immediate crisis requires that the University of

Arizona and the Board of Regents develop and implement a policy that fulfills two critical

objectives. First, the Universities in Arizona need to raise new tuition revenues to support both

existing and the new students expected to enroll in the fall of 2004. Secondly, the simplicity of

the program (see Table 2) clearly demonstrates to the general public that our states universities
12


are in desperate need of financial revitalization. Previous single-digit rate increases have neither

reduced demand nor alerted the public of the impending financial shortfall.

       Long term (2004 – 2009): This multiple year policy must provide a more comprehensive,

cohesive strategy that expands beyond simply increasing revenue. The long term plan must focus

on both price and expenditure and will have long reaching implications concerning the overall

viability of the University of Arizona and the states higher education system. Based on these

criteria, it is suggested that several of the recommended alternatives are incorporated to produce a

policy that takes into consideration the complex nature of the public they are seeking to serve.

       i.      Establishment of an income threshold.

       ii.     Decrease administrative burden associated with grants and research and ensure a

               commensurate decrease in the administrative lattice.

       iii.    Initiate tiered tuition programs beginning 2004/2005.

       iv.     Increase selectivity commensurate with peer institutions.

       The development of the multi-faceted approach to our recurrent financial situation

employs several states “Best Practice” policies and programs. It is critical that a public education

program is instituted concurrent with the introduction of this policy. Public sentiment must

understand and support the strategy both prior to its introduction and throughout its life cycle.



                                                Constraints

       The Arizona Board of Regents has raised tuition and it is critical to note that the largest

percentage increase in 2003/2004 tuition will be shouldered by Arizona residents with the largest

burden falling to resident graduate students. The real price, however, has not been significantly

increased in dollars. A comparative analysis of tuition levels with the listed peer institutions from
13


the states where the University of Arizona draws the highest number of out of state students

reveals some data comparisons. The leading states where Arizona drew the Fall 2002 incoming

class are California, Illinois, Texas, and Washington.
(figure 1)




                    Source: University of Arizona Decision and Planning Support (DAPS)

             Prior to the 2003/2004 tuition levels, the University of Arizona was highly competitive

with the peer institutions from those states where the University of Arizona incoming class

emanated from. In the case of Berkeley, it was only a few hundred dollars more for tuition at the

University of Arizona and hence, a comparison of external economic factors might be a large

factor. Factors such as the cost of living would be a component of these factors. In some other

cases, it was actually less expensive for a student from Illinois to pay out of state tuition than to

pay their own in state tuition. This difference is compounded for those students selecting high
14


        demand programs at institutions with tiered tuition, such as is the case in both Washington

and Illinois.
                    (TABLE 2) 2002 / 2003 Entering Freshman Tuition at the University of Arizona and Selected Peer Institutions

                                                                         Public or
                        In State              Out of State                                                Name
                                                                          Private
                        $1,802.00               $6,187.00                  Public                University of Arizona


                         $5,502                  $13,009                   Public                   U. Cal. Berkeley


                         $5,055                  $16,124                   Public             * University of Washington


                         $6,748                  $15,352                   Public                 * University of Illinois
                  Source: collegecosts.org                                                         * Tiered Tuition Rates Apply




        Once the University of Arizona raises the tuition to the expected levels for 2003/2004 –

these differential gaps will be narrowed, and all else being equal, this policy may shift the

perceived economic value of enrolling as an out of state student in a negative manner.



                                       (Table 3) Arizona Board of Regents Planned Tuition for 2003-2004

                                                ASU/NAU                                                        UA


    Undergraduate                Increase             Total tuition & fees                 Increase                  Total tuition & fees

    Resident                 $1,000 (39.9%)                   $3,593                    $1,000 (39.9%)                       $3,593

    Nonresident               $1,000 (9.1%)                  $12,113                    $1,250 (11.3%)                       $12,363

    Graduate

    Resident                 $1,200 (47.8%)                   $3,793                    $1,250 (49.8%)                       $3,843

    Nonresident              $1,200 (10.9%)                  $12,313                    $1,500 (13.6%)                       $12,613
                                                                                                             Source – Arizona Board of Regents




The prospect of the addition of tiered tuition at the University of Arizona could further narrow

differential gaps and effect cost changes that could negatively impact the willingness of out of

state students to leave their state as the cost savings could narrow or disappear altogether. The

narrowing financial incentive must be offset by both cost of living differentials as well as ongoing
15


value through policies of increased selectivity and those designed to have a positive effect upon

rankings.

       Reduction of the administrative lattice poses a second constraint to improving the overall

efficiency of our institution. Reduction of staff and services when accompanied by increased

tuition has the potential to present the image of a poorly run institution. The reversal of this 30-

year trend must be well strategically implemented thru a cost-benefit analysis to ensure maximum

savings concurrent with the least interruption in services.

       The third significant constraint to the successful implementation of our long-term strategy

focuses on the competitive nature of higher education in the United States. Competing

institutions are in nearly identical situations and are making many of the same policy changes as

are being proposed in this paper. Therefore, in order to differentiate the University of Arizona, it

is critical that we present ourselves as a highly selective school so as to negate minor differences

in tuition and living expenses. Also, the University of Arizona may also feel constrained by the

Carnegie Classification where it enjoys status as both a Doctoral/Research University –

Extensive, and the status of being a Research 1 institute according to the classifications. Loss of

the status of either one of these prestigious rankings may not be acceptable to the leadership of the

University of Arizona and may not be well received by the Arizona Legislature and Governor.

                                 Implementation and Evaluation

       With the analysis complete, it is time to turn our attention to the development of strategic

marketing programs. Crucial to the success of these policy changes is the communication to the

appropriate target audiences (Armstrong & Kotler, 2003). While not all-encompassing, the steps

noted below shall serve as key tools by which to evaluate both the implementation and

performance of our strategy.
16


          Phase One: Identification of specific target groups is the first phase of

           implementation. Key audiences include tax payers, parents of students, state and local

           politicians, students and parents of prospective students.

          Phase Two: Develop the desired message that is to be communicated to each target

           audience. For example: Parents of prospective students will be interested on the

           institutional rankings and the return on their investment as indicated through career

           placement measurements.

          Phase Three: Identify channels by which to communicate the messages to the

           selected targets. Once again, parents can be reached via direct mail campaigns while

           students can be efficiently channeled thru mass media ranging from campus press to

           university radio/tv programming.

          Phase Four: Once these programs have been instituted, it is imperative that ongoing

           measurement and evaluation takes place. Key measurement parameters must focus on

           number of in-state and out-of-state applications, test scores of applicants, acceptance

           rate from each key state, rate increases amongst neighboring and peer institutions and

           institutional rankings.

          Phase Five: The introduction of these policies shall require that corrective action be

           taken to adjust the implementation strategy with the on-going dynamics of a

           competitive, dynamic market environment.

                                               Conclusion

       Several years ago Larry Leslie posed a question to our higher education finance class. His

question was whom would we want as a decision maker at the University of Arizona in the event

of a budget crisis? Following a lengthy debate, it was decided that an individual with a
17


background in finance or economics would be extremely valuable. Dr. Leslie calmly contradicted

our recommendation and stated that a person with a background in the history of higher education

budgets and finance would be especially important. This individual could share past events and

teach us of the repercussions from previous actions. Simply stated, avoid past mistakes and

improve on earlier successes.

       The cyclical nature of revenue shortfalls at our nation’s higher education facilities

provides a vast array of literature, perspectives and history. Vast amounts of research must be

gathered as an institution prepares for a tuition increase in order to ascertain the relative impact on

key publics and constituencies. Clearly the University of Arizona must balance the need for

additional revenue against the actions being taken by both peer and competitor institutions.

Failure to account for such strategic positioning can have dramatic repercussions in terms of

decreasing enrollment, loss of revenue, and potential loss of taxpayer support.

       The Arizona state legislature has served notice to the states higher education institutions of

their reluctance to support the current mission of higher education. Based upon this directive, the

suggested policy modifications account for two distinct phases in order to both survive and

become more financially independent during this economic crisis. In the short term, it is critical

to increase revenue realized through tuition. The benefit of increased autonomy from the states

support will allow the University of Arizona to establish their independence and forge a future

destiny.

       The long-term policy strategy calls for the introduction of several, albeit intertwined

strategic policies aimed to reposition the University of Arizona during the early stages of the

twenty-first century. Increasing selectivity concurrent with the establishment of income threshold

policies will simultaneously improve the value of our output and preserve a basic tenet in terms of
18


maintaining access to lower income students. Critical to the success of these policies is the

inherent flexibility in response to competitor’s own strategic decisions.

       It must be realized that the future success of our states institutions of higher education

cannot be guaranteed through adherence to these proposed policies. When this stage of the

economic cycle concludes and state coffers return to a time of surplus revenues, it is critical that

the University of Arizona maintains a budgeting and expenditure philosophy that prepares in

advance for the next economic downturn. The true test of these policies will be in their ability to

overcome the long history of economic crisis and forge their own destiny in the face of other

institutions reactive programs and strategies.
19


                                                      References

Arizona State Constitution. Article 11 Section 6. Admission of students of both sexes to state educational institutions;
    tuition; common school system. Retrieved April 23, 2003 from http://www.azleg.state.az.us/const/const.htm

Armstrong, G. , & Kotler, P. (2003). Marketing. New Jersey: Prentice-Hall.

Ehrenberg, Ronald G. (1999). Why can’t colleges control their costs? Cornell Higher
    Education Institute Working Paper #3 (PDF File).

Hearn, James, C. & Longanecker, David. (1985). Enrollment effects of alternative
    postsecondary pricing policies.” Journal of Higher Education 56-(5), 485-508.

Hebel, Sara (2002). Skyrocketing public-college tuition renews calls for better policies.
   Chronicle of Higher Education, 49, 20-27, 9.

Likins, Peter, ABC Bulletin #3, (2002) Focused excellence 5. Retrieved April 18, 2003 from
http://infocenter.ccit.arizona.edu/~pacs/printinggraphics/3DS/2002/September/ABC%20Bulletin.txt

McPherson & Shapiro. (1998). The student aid game: meeting and rewarding talent in American higher education.
   Princeton, New Jersey: Princeton University Press.

Morgan, Richard. (2002). Students at Public Colleges Brace for Large Tuition Increases. [Electronic Version].
   Chronicle of Higher Education.

National Commission on Costs in Higher Education (1998). Straight talk about college
    costs and prices. Phoenix: Oryx Press. Pp1-18.

Pew, (1990). The Lattice and the ratchet. Higher Education Research Program Policy Perspectives. 2(4) June.

Potter, Will. (2003). North Carolina and Texas try to buck trend of tuition increases. Chronicle of Higher Education,
    49, 23-26, 24.

Slaughter, S. & Leslie, L. (1997). Academic capitalism: politics, policies, and the entrepreneurial university.
    Maryland: The John Hopkins University Press.

The College Board: $90 billion available in student financial scholarship growth outpacing loan growth. Retrieved
    April, 23 from http://collegeboard.com/press/cost02html /cost02a.html

University of Illinois, Tuition and fees schedule, tiered tuition tables. Illinois. Retrieved April, 23 from
    http://www.oar.uiuc.edu/current/tuittableFUnew.html

University of Washington, Tuition and fees schedule, tiered tuition tables. Student Fiscal Services. Retrieved April,
    23 From http://www.washington.edu/students/sfs/sao/ Tuition/pro03.html

Winston, G. & Yen, I. (1995). Costs, prices, subsidies, and aid in u.s. higher education Williams Project on the
   Economics of Higher Education, Discussion Paper #32.

Winston, G. (1999). Subsidies, hierarchy and peers: the awkward economics of higher education. The Journal of
   Economic Perspectives, 13, 13-36.

Más contenido relacionado

Destacado

Microscópio eletrônico de varredura mev
Microscópio eletrônico de varredura mevMicroscópio eletrônico de varredura mev
Microscópio eletrônico de varredura mev
Crislyz
 

Destacado (13)

Mohd Riyad CV1
Mohd Riyad CV1Mohd Riyad CV1
Mohd Riyad CV1
 
Ansel adams
Ansel adamsAnsel adams
Ansel adams
 
Marles - INVERNO 2017
Marles - INVERNO 2017Marles - INVERNO 2017
Marles - INVERNO 2017
 
Lista de-exercicios-04-nomenclatura-de-compostos-organicos-oxigenados-e-nitro...
Lista de-exercicios-04-nomenclatura-de-compostos-organicos-oxigenados-e-nitro...Lista de-exercicios-04-nomenclatura-de-compostos-organicos-oxigenados-e-nitro...
Lista de-exercicios-04-nomenclatura-de-compostos-organicos-oxigenados-e-nitro...
 
La mejor solución para tu futuro
La mejor solución para tu futuroLa mejor solución para tu futuro
La mejor solución para tu futuro
 
Promo Umroh Direct Madinah VIP 29 April 2015 di Jakarta
Promo Umroh Direct Madinah VIP 29 April 2015 di JakartaPromo Umroh Direct Madinah VIP 29 April 2015 di Jakarta
Promo Umroh Direct Madinah VIP 29 April 2015 di Jakarta
 
Eletromicrografia
EletromicrografiaEletromicrografia
Eletromicrografia
 
Programa Mercados para la Mashua Negra 2016
Programa Mercados para la Mashua Negra 2016Programa Mercados para la Mashua Negra 2016
Programa Mercados para la Mashua Negra 2016
 
Como hacer negocios con China-2016
Como hacer negocios con China-2016Como hacer negocios con China-2016
Como hacer negocios con China-2016
 
Desenvolvimento de Coleção - A Noiva Cadáver
Desenvolvimento de Coleção - A Noiva CadáverDesenvolvimento de Coleção - A Noiva Cadáver
Desenvolvimento de Coleção - A Noiva Cadáver
 
Microscópio eletrônico de varredura mev
Microscópio eletrônico de varredura mevMicroscópio eletrônico de varredura mev
Microscópio eletrônico de varredura mev
 
Curso de serigrafia
Curso de serigrafiaCurso de serigrafia
Curso de serigrafia
 
Microscópio Óptico
Microscópio Óptico Microscópio Óptico
Microscópio Óptico
 

Similar a Policy Sample

Enrollment management as a fiscal strategy final
Enrollment management as a fiscal strategy  finalEnrollment management as a fiscal strategy  final
Enrollment management as a fiscal strategy final
Sukhwant Jhaj
 
The Effect of Educational Factors on Graduate Earnings
The Effect of Educational Factors on Graduate EarningsThe Effect of Educational Factors on Graduate Earnings
The Effect of Educational Factors on Graduate Earnings
Gregory Pimentel
 
Provost Advisory Committee for Students Board of Regents Recommendation
Provost Advisory Committee for Students Board of Regents RecommendationProvost Advisory Committee for Students Board of Regents Recommendation
Provost Advisory Committee for Students Board of Regents Recommendation
Elizabeth Pring
 
Pathways-to-Universal-Access-2015
Pathways-to-Universal-Access-2015Pathways-to-Universal-Access-2015
Pathways-to-Universal-Access-2015
Patrick Snider
 
Running Head WEEK 4 DISCUSSION .docx
Running Head WEEK 4 DISCUSSION                                   .docxRunning Head WEEK 4 DISCUSSION                                   .docx
Running Head WEEK 4 DISCUSSION .docx
rtodd599
 
The Future Is Not What It Used To Be
The Future Is Not What It Used To BeThe Future Is Not What It Used To Be
The Future Is Not What It Used To Be
Payam Pakravan
 
An Increasing Cost of Higher Education...
An Increasing Cost of Higher Education...An Increasing Cost of Higher Education...
An Increasing Cost of Higher Education...
Nupur Srivastava
 
Ability and willingness to pay for university education in calabar, nigeria
Ability and willingness to pay for university education in calabar, nigeriaAbility and willingness to pay for university education in calabar, nigeria
Ability and willingness to pay for university education in calabar, nigeria
Alexander Decker
 
Understanding the U.S. News & World Report “Best Colleges” 2007
Understanding the U.S. News & World Report “Best Colleges” 2007Understanding the U.S. News & World Report “Best Colleges” 2007
Understanding the U.S. News & World Report “Best Colleges” 2007
Matthew Hendrickson
 
4Discussion 3 Higher Education Institution Policy Propo.docx
4Discussion 3 Higher Education Institution Policy Propo.docx4Discussion 3 Higher Education Institution Policy Propo.docx
4Discussion 3 Higher Education Institution Policy Propo.docx
blondellchancy
 

Similar a Policy Sample (20)

Tuition rising - why college costs so much (by ronald ehrenberg of cornell u...
Tuition rising  - why college costs so much (by ronald ehrenberg of cornell u...Tuition rising  - why college costs so much (by ronald ehrenberg of cornell u...
Tuition rising - why college costs so much (by ronald ehrenberg of cornell u...
 
Enrollment management as a fiscal strategy final
Enrollment management as a fiscal strategy  finalEnrollment management as a fiscal strategy  final
Enrollment management as a fiscal strategy final
 
The Effect of Educational Factors on Graduate Earnings
The Effect of Educational Factors on Graduate EarningsThe Effect of Educational Factors on Graduate Earnings
The Effect of Educational Factors on Graduate Earnings
 
Price Competition and Course-Level Choice in K-12 Education
Price Competition and Course-Level Choice in K-12 EducationPrice Competition and Course-Level Choice in K-12 Education
Price Competition and Course-Level Choice in K-12 Education
 
Provost Advisory Committee for Students Board of Regents Recommendation
Provost Advisory Committee for Students Board of Regents RecommendationProvost Advisory Committee for Students Board of Regents Recommendation
Provost Advisory Committee for Students Board of Regents Recommendation
 
Better cheaper faster board-ceo partnership for change
Better cheaper faster   board-ceo partnership for changeBetter cheaper faster   board-ceo partnership for change
Better cheaper faster board-ceo partnership for change
 
Missouri 100 Gary Forsee
Missouri 100 Gary ForseeMissouri 100 Gary Forsee
Missouri 100 Gary Forsee
 
Pathways-to-Universal-Access-2015
Pathways-to-Universal-Access-2015Pathways-to-Universal-Access-2015
Pathways-to-Universal-Access-2015
 
Running Head WEEK 4 DISCUSSION .docx
Running Head WEEK 4 DISCUSSION                                   .docxRunning Head WEEK 4 DISCUSSION                                   .docx
Running Head WEEK 4 DISCUSSION .docx
 
Evaluating YourDiscount Rate
Evaluating YourDiscount RateEvaluating YourDiscount Rate
Evaluating YourDiscount Rate
 
The Future Is Not What It Used To Be
The Future Is Not What It Used To BeThe Future Is Not What It Used To Be
The Future Is Not What It Used To Be
 
An Increasing Cost of Higher Education...
An Increasing Cost of Higher Education...An Increasing Cost of Higher Education...
An Increasing Cost of Higher Education...
 
Ability and willingness to pay for university education in calabar, nigeria
Ability and willingness to pay for university education in calabar, nigeriaAbility and willingness to pay for university education in calabar, nigeria
Ability and willingness to pay for university education in calabar, nigeria
 
Education tax credits
Education tax creditsEducation tax credits
Education tax credits
 
Understanding the U.S. News & World Report “Best Colleges” 2007
Understanding the U.S. News & World Report “Best Colleges” 2007Understanding the U.S. News & World Report “Best Colleges” 2007
Understanding the U.S. News & World Report “Best Colleges” 2007
 
Dr. Marguerite Roza weighted student funding presentation
Dr. Marguerite Roza weighted student funding presentationDr. Marguerite Roza weighted student funding presentation
Dr. Marguerite Roza weighted student funding presentation
 
Connecting the Dots between Financing and Sustainability
Connecting the Dots between Financing and SustainabilityConnecting the Dots between Financing and Sustainability
Connecting the Dots between Financing and Sustainability
 
A Review Of Instruments For Student Loans In Tertiary Education
A Review Of Instruments For Student Loans In Tertiary EducationA Review Of Instruments For Student Loans In Tertiary Education
A Review Of Instruments For Student Loans In Tertiary Education
 
4Discussion 3 Higher Education Institution Policy Propo.docx
4Discussion 3 Higher Education Institution Policy Propo.docx4Discussion 3 Higher Education Institution Policy Propo.docx
4Discussion 3 Higher Education Institution Policy Propo.docx
 
Dennis Pruitt, CBMI 2016 - Enrollment Management
Dennis Pruitt, CBMI 2016 - Enrollment ManagementDennis Pruitt, CBMI 2016 - Enrollment Management
Dennis Pruitt, CBMI 2016 - Enrollment Management
 

Más de Gordon M. Groat

Más de Gordon M. Groat (14)

Polar Political Economy, Climate Change, and the Arctic
Polar Political Economy, Climate Change, and the ArcticPolar Political Economy, Climate Change, and the Arctic
Polar Political Economy, Climate Change, and the Arctic
 
Leadership By The Numbers
Leadership By The NumbersLeadership By The Numbers
Leadership By The Numbers
 
Climate Change v 2012
Climate Change v 2012Climate Change v 2012
Climate Change v 2012
 
HSHP Research GRID co-linking
HSHP Research GRID co-linkingHSHP Research GRID co-linking
HSHP Research GRID co-linking
 
H2S
H2SH2S
H2S
 
Alberta Energy : The Business of Oil and Gas
Alberta Energy : The Business of Oil and GasAlberta Energy : The Business of Oil and Gas
Alberta Energy : The Business of Oil and Gas
 
Desk and Derrick 50th Anniversary Keynote Speech on Alberta Water
Desk and Derrick 50th Anniversary Keynote Speech on Alberta WaterDesk and Derrick 50th Anniversary Keynote Speech on Alberta Water
Desk and Derrick 50th Anniversary Keynote Speech on Alberta Water
 
Desk and Derrick Region VII Keynote Speech
Desk and Derrick Region VII Keynote SpeechDesk and Derrick Region VII Keynote Speech
Desk and Derrick Region VII Keynote Speech
 
Change Management
Change ManagementChange Management
Change Management
 
Harvesting CPU Cycles from the Academy
Harvesting CPU Cycles from the AcademyHarvesting CPU Cycles from the Academy
Harvesting CPU Cycles from the Academy
 
Social Media 100 A
Social Media 100 ASocial Media 100 A
Social Media 100 A
 
Outsourcing Theory
Outsourcing TheoryOutsourcing Theory
Outsourcing Theory
 
Adult learning
Adult learningAdult learning
Adult learning
 
Co2 and climate change
Co2 and climate changeCo2 and climate change
Co2 and climate change
 

Último

Activity 01 - Artificial Culture (1).pdf
Activity 01 - Artificial Culture (1).pdfActivity 01 - Artificial Culture (1).pdf
Activity 01 - Artificial Culture (1).pdf
ciinovamais
 
1029-Danh muc Sach Giao Khoa khoi 6.pdf
1029-Danh muc Sach Giao Khoa khoi  6.pdf1029-Danh muc Sach Giao Khoa khoi  6.pdf
1029-Danh muc Sach Giao Khoa khoi 6.pdf
QucHHunhnh
 
The basics of sentences session 2pptx copy.pptx
The basics of sentences session 2pptx copy.pptxThe basics of sentences session 2pptx copy.pptx
The basics of sentences session 2pptx copy.pptx
heathfieldcps1
 
Gardella_Mateo_IntellectualProperty.pdf.
Gardella_Mateo_IntellectualProperty.pdf.Gardella_Mateo_IntellectualProperty.pdf.
Gardella_Mateo_IntellectualProperty.pdf.
MateoGardella
 
Gardella_PRCampaignConclusion Pitch Letter
Gardella_PRCampaignConclusion Pitch LetterGardella_PRCampaignConclusion Pitch Letter
Gardella_PRCampaignConclusion Pitch Letter
MateoGardella
 

Último (20)

ICT Role in 21st Century Education & its Challenges.pptx
ICT Role in 21st Century Education & its Challenges.pptxICT Role in 21st Century Education & its Challenges.pptx
ICT Role in 21st Century Education & its Challenges.pptx
 
Activity 01 - Artificial Culture (1).pdf
Activity 01 - Artificial Culture (1).pdfActivity 01 - Artificial Culture (1).pdf
Activity 01 - Artificial Culture (1).pdf
 
Key note speaker Neum_Admir Softic_ENG.pdf
Key note speaker Neum_Admir Softic_ENG.pdfKey note speaker Neum_Admir Softic_ENG.pdf
Key note speaker Neum_Admir Softic_ENG.pdf
 
1029-Danh muc Sach Giao Khoa khoi 6.pdf
1029-Danh muc Sach Giao Khoa khoi  6.pdf1029-Danh muc Sach Giao Khoa khoi  6.pdf
1029-Danh muc Sach Giao Khoa khoi 6.pdf
 
INDIA QUIZ 2024 RLAC DELHI UNIVERSITY.pptx
INDIA QUIZ 2024 RLAC DELHI UNIVERSITY.pptxINDIA QUIZ 2024 RLAC DELHI UNIVERSITY.pptx
INDIA QUIZ 2024 RLAC DELHI UNIVERSITY.pptx
 
SOCIAL AND HISTORICAL CONTEXT - LFTVD.pptx
SOCIAL AND HISTORICAL CONTEXT - LFTVD.pptxSOCIAL AND HISTORICAL CONTEXT - LFTVD.pptx
SOCIAL AND HISTORICAL CONTEXT - LFTVD.pptx
 
Mattingly "AI & Prompt Design: Structured Data, Assistants, & RAG"
Mattingly "AI & Prompt Design: Structured Data, Assistants, & RAG"Mattingly "AI & Prompt Design: Structured Data, Assistants, & RAG"
Mattingly "AI & Prompt Design: Structured Data, Assistants, & RAG"
 
Mattingly "AI & Prompt Design: The Basics of Prompt Design"
Mattingly "AI & Prompt Design: The Basics of Prompt Design"Mattingly "AI & Prompt Design: The Basics of Prompt Design"
Mattingly "AI & Prompt Design: The Basics of Prompt Design"
 
Nutritional Needs Presentation - HLTH 104
Nutritional Needs Presentation - HLTH 104Nutritional Needs Presentation - HLTH 104
Nutritional Needs Presentation - HLTH 104
 
microwave assisted reaction. General introduction
microwave assisted reaction. General introductionmicrowave assisted reaction. General introduction
microwave assisted reaction. General introduction
 
psychiatric nursing HISTORY COLLECTION .docx
psychiatric  nursing HISTORY  COLLECTION  .docxpsychiatric  nursing HISTORY  COLLECTION  .docx
psychiatric nursing HISTORY COLLECTION .docx
 
The basics of sentences session 2pptx copy.pptx
The basics of sentences session 2pptx copy.pptxThe basics of sentences session 2pptx copy.pptx
The basics of sentences session 2pptx copy.pptx
 
Gardella_Mateo_IntellectualProperty.pdf.
Gardella_Mateo_IntellectualProperty.pdf.Gardella_Mateo_IntellectualProperty.pdf.
Gardella_Mateo_IntellectualProperty.pdf.
 
Measures of Central Tendency: Mean, Median and Mode
Measures of Central Tendency: Mean, Median and ModeMeasures of Central Tendency: Mean, Median and Mode
Measures of Central Tendency: Mean, Median and Mode
 
Z Score,T Score, Percential Rank and Box Plot Graph
Z Score,T Score, Percential Rank and Box Plot GraphZ Score,T Score, Percential Rank and Box Plot Graph
Z Score,T Score, Percential Rank and Box Plot Graph
 
Mehran University Newsletter Vol-X, Issue-I, 2024
Mehran University Newsletter Vol-X, Issue-I, 2024Mehran University Newsletter Vol-X, Issue-I, 2024
Mehran University Newsletter Vol-X, Issue-I, 2024
 
Gardella_PRCampaignConclusion Pitch Letter
Gardella_PRCampaignConclusion Pitch LetterGardella_PRCampaignConclusion Pitch Letter
Gardella_PRCampaignConclusion Pitch Letter
 
Explore beautiful and ugly buildings. Mathematics helps us create beautiful d...
Explore beautiful and ugly buildings. Mathematics helps us create beautiful d...Explore beautiful and ugly buildings. Mathematics helps us create beautiful d...
Explore beautiful and ugly buildings. Mathematics helps us create beautiful d...
 
Mixin Classes in Odoo 17 How to Extend Models Using Mixin Classes
Mixin Classes in Odoo 17  How to Extend Models Using Mixin ClassesMixin Classes in Odoo 17  How to Extend Models Using Mixin Classes
Mixin Classes in Odoo 17 How to Extend Models Using Mixin Classes
 
Sports & Fitness Value Added Course FY..
Sports & Fitness Value Added Course FY..Sports & Fitness Value Added Course FY..
Sports & Fitness Value Added Course FY..
 

Policy Sample

  • 1. Compressed Budgets & Shifting Revenues A Primer on Policy Alternatives and Options Gordon M. Groat, M.Sc., R.C.P. University of Arizona
  • 2. 2 Introduction The phenomenon of dramatic tuition increases has far reaching ramifications in the field of Higher Education. Analysis of seminal literature highlights the cyclical nature of the funding mechanisms and the policies, which actuarially control the revenue streams that are critical to the ongoing operations necessary to fund the institutions as we have come to know them. In 1990, The Pew Higher Education Research Program on Policy Perspectives (June, 1990) discussed former Secretary of Education William Bennett’s angst over the public discussions concerning the costs and prices of Higher Education. The focus in 1990 had shifted from price to expenditure--from what students and their families pay, to what colleges and universities spend. In the tradition of an economic cycle of inflation and recession, the most recent discussions on this topic have noticeably returned to the concern over the out-of-pocket costs imposed upon students and their families. Over the past five years, the tuition at our countries public colleges has risen at an annual rate of slightly greater than 4 percent. However, for 2002-2003, many of the public colleges are projecting increases double digits in the (Morgan, 2002). College Board’s data (www.collegeboard.com) depicts the following increases in tuition and fees:  At 4-year private institutions, tuition and fees average $18,273 ($1,001 more than last year’s $3,725 – a 5.8% increase)  At 4-year public institutions, tuition and fees average $4,081 ($356 more than last years $3,725 – a 9.6% increase)  At 2-year private institutions, tuition and fees average $9,890 ($690 more than last year’s $9,200 – a 7.5% increase)  At 2-year public institutions, tuition and fees average $1,735 ($127 more than last year’s $1,608 –a 7.9% increase)
  • 3. 3 These trends have a dramatic impact on the image of Higher Education administration’s ability to control costs, growth and revenue. It is the intent of this paper to investigate the policies currently in place at the University of Arizona in an effort to ascertain potential modifications or changes that may be necessary to minimize the historical cycle of these tuition increases and gain greater control of our own destiny. A thorough review of both historical and current literature shall provide us with a broad spectrum of policy modifications and enhancements, which have been implemented to minimize the volatility and dependence upon state governments and their constituents. Through this assortment of alternatives, it is our intent to provide a detailed recommendation of the current policies and regulations as they relate to the University of Arizona, and the tuition dilemma that we currently face. Problem Formulation Tuition increases have been a part of the education landscape for over thirty years (Ehrenberg, 1999). Tuition levels have been rising, on average, by 2 to 3 percent more than the rate of inflation ever since the turn of the century. Ehrenberg (1999) cites that a number of forces continue to place upward pressure on tuition costs. “These include the aspirations of academic institutions, our “winner take all” society, the shared system of governance that exists in academic institutions, recent federal government policies, the role of external actors such as alumni, local government, the environmental movement and historic preservationists, periodicals that rank academic institutions, and how universities are organized for budgetary purposes and select and reward their deans.” In order to gain a better understanding of the “costs” of higher education it is critical that
  • 4. 4 we have a working understanding of the definitions associated with this topic. According to the definitions stated by the National Commission on Costs in Higher Education (1998), terminology used in this paper means the following:  Cost per student: The average amount spend annually to provide education and related services to each full-time student equivalent (FTSE)  Sticker Price: The tuition and fees that institutions charge  Net Price: What students pay after financial aid is subtracted from the total price of attendance. Financial aid comes in the form of grants, loans, work study  General Subsidy: The difference between the cost to the institution of providing an education (cost/student) and the tuition and fees charged to students (sticker price) For students currently attending, or prospective students and their families, the rising cost of education leads to an endless number of debates and discussions. Is it cost prohibitive to attend the University of Arizona as an out-of-state student? Will the tuition in my home state increase faster than an out-of-state school such as the University of Arizona? How do the tuition increases compare to the increases amongst peer institutions? What value does an education from the University of Arizona carry? In order to address these concerns, our investigation of the pricing policies and strategies shall delve into the actions taken by institutions and states, which have the greatest investment into our own Universities supply base. It is our goal to investigate the critical policies affecting the rapid cost increases and develop options for controlling these costs in an effort to develop a concise strategy and positioning statement with respect to the University of Arizona’s tuition dilemma.
  • 5. 5 Criteria Selection Six specific alternatives have been selected from a multitude of both historical and current topical literature. These alternatives each represent potential methods to reduce the dependence on State revenues and follow the principle of, “Resource Dependence Theory” (Slaughter, Leslie, 1997). “Resource dependence theory suggests that as unrestricted moneys for higher education constrict, institutions with a national system will change their resource-seeking patterns to compete for new, more competitively based funds. To respond to new opportunities, institutions will have to shift away from basic research toward more applied science and technology. Further, they will likely increase tuition and become more active in expanding sales and services while lowering labor costs”. The alternatives, which appear to have the most viable opportunity to allow the University to regain control of their financial solvency are as follows:  Establish income threshold  Increase aid: low tuition/low aid, high tuition/high aid  Decrease burden imposed by state and federal administrative requirements  Change or alter state constitution  Limit number of incoming students through academic thresholds  Advocate tiered plans: incoming freshmen pay more than existing students, varies by degree, ranking…etc
  • 6. 6 (Table 1) Decrease Admin. Alternatives Establish income Alter State Increase Aid Burden imposed by Tiered Plans Increase Selectivity Criteria threshold Constitution states and agencies Favors low income Increase due to Increased by Favors low students, has been on inferred increase in Cost to Students No cost to students program or year No Cost income students decrease for last 30 quality thru entering University years * selectivity Increased lattice cost due to non- Lose revenue in Possibly significant Increased Decrease institutional standardization aggregate but Institutional costs Direct Benefit indirect costs due to Revenue discretionary funds with obvious increase on per lobbying efforts implications for student basis increased revenue Potential benefit to May shift current Revenue Potential to Must be combined Public Svc. Community Maintain low SES maintain existing admin. Efforts to redirection maintain or with income Outreach category students programs outreach projects opportunities increase outreach threshold program Additional revenue Potential to boost Academic Capitalism Should decrease More strategic, focus streams // possible research budgets Research Not Applicable // Aid should enhance direct cost of on science & redirection through tuition research research activities technology opportunities redirection Relative percentage equal Potential Place increased Maintain the integrity Graduate research Opportunity to across graduate disaggregation of emphasis on graduate Grad vs Undergrad of commitment to may be positively enhance graduate and graduate program students and their graduate students impacted subsidization undergraduate tuitions research programs Income thresholds fall within the scope of key groups that shall continue to have significant priority with our nation’s educators. The emerging groups that will meet with the political favor are students coming from low-income families and underserved groups. This strategy leverages the argument for equity while seeking to support traditionally underserved groups. A peer institution, the University of Texas, has proposed as series of policies which provide significant protection for this group. Or, according to (Potter, 2003), “The University of Texas System’s Board of Regents last month proposed free tuition for all Texas students from families with annual incomes below the state’s median income of $40,860 in 2001.” The proposal by Texas, called the “Texas Compact” proposes that lawmakers’ relinquish their tuition setting power to colleges. The University of Arizona has spoken to these issues and the Arizona Board of Regents currently supports the same policies.
  • 7. 7 Increasing aid is a consequence of the trend in decreasing state government support as administrators increasingly feel that tuition hikes are the only way to regain lost money; however, they also feel that increasing tuition will also have the effect of making education more accessible to financially disadvantaged students. According to University of Arizona Provost George Davis, as a result of the 2003/2004 tuition increase, “there will be an $11 million increase in financial aid for undergraduates and a $2.6 million increase in financial aid for graduate students in the drafted proposal (Raz, 2003, ¶. 9)..” This shifting of tuition revenue to support low income students has some literature to support the idea. “The Targeted Subsidy Model” (Hearn and Longanecker, 1985) can be interpreted to state that, rather than waste financial resources subsidizing every student, even the ones that could and would pay to attend the same university with a substantially larger tuition than the one they currently pay, to the detriment to the university; by using this strategy, increasing tuition substantially is more efficient in assisting low-income students. An increase in tuition that affluent students can afford to pay can be used to subsidize financially disadvantaged students. Hence, from this perspective, financial assistance is “targeted” to those that actually need it and can therefore more effectively help them because more funds are now available to do so. Reduction of the Administrative Lattice will reverse a trend that resulted in the increase of administrative personnel. The more discretionary income an institution generated, the greater the investment in additional administrative personnel. The tendency to solve problems by adding to the administrative lattice further supported the increased growth and cost burden associated with this strategic business unit. As the lattice of administrative function at our nation’s universities have experienced significant growth during the years 1975 and 1985, academic support personnel increased 60 percent while faculty numbers only increased by an average of
  • 8. 8 less than 6 percent (Pew, 1990). Several phenomenon have contributed to the expanding lattice and the increased costs associated with the growing administrative functions.  Increased regulation and external micromanagement: These two phenomenon have resulted in increased burden upon the institutions attempts to comply with the addition of alternative revenue streams.  Consensus Management: Increased participation by quality circles has resulted in decreased accountability and productivity. This managerial strategy oftentimes protects the organizational status quo.  Expansion of Administrative Entrepreneurialism: Higher Education has not demonstrated the ability to apply the principle of growth by substitution. Many new problems are investigated separately: new groups are formed, new administrative functions defined. Tiered tuition in the State of Arizona has been the topic of some discussions designed to capitalize on the demand surplus for certain programs. This would effectively price certain programs at a higher rate than others. A second form of this strategy that is being implemented is tiering the tuition by charging incoming students more than returning students. The higher price is imposed on each new class, so that after four years, students in all four classes will be paying the new, higher rate (Morgan, 2002). This policy is designed to lessen the impact upon current students yet retain the increased earnings of higher tuition rates for entering freshmen. Several major institutions have initiated these programs including The Ohio State University, University of Illinois, Purdue, and Texas A&M (Hebel, 2002). Indiana and Penn State Universities have also pursued this policy and many institutions with tiered tuition policies have offered various forms of financial aid to alleviate the difference in tuition to those students unable to pay the difference. Initial plans at the University of Arizona include exploration of tiered tuition based on program demand while gradual tuition increases will be implemented throughout the university students, those enrolled and those entering. Support for students unable to pay the increased
  • 9. 9 tuition has been pledged by the University of Arizona’s President. The Arizona Board of Regents has given permission to the University to explore these options and also to recommend that tuition be raised. Constitutional change to permit tuition hikes in the State of Arizona have also been the subject of significant debate. Some argue that because the Constitution of the State of Arizona mandates regarding education provides that “the instruction furnished shall be as nearly free as possible” (Arizona Constitution, 2003). The tuition increases being explored in the late 1990s drew the attention of lawmakers who asked if the Arizona Board of Regents, in fact, may have violated the constitution’s promise of “nearly free” tuition. The Attorney General ruled in favor of the Arizona Board of Regents statutory authority to raise tuition in 1999. The Attorney General in 1999 was Janet Napolitano, the same Janet Napolitano who is now the sitting Governor of the State of Arizona. Changing the constitution is an arduous process that is not likely to receive neither legislative nor gubernatorial support in the short term. An identical dispute concerning constitutional guarantee is being debated by the Board of Governors of the University of North Carolina system. Despite a Constitutional guarantee of free tuition “as far as practicable”, the Board has agreed to raise in-state tuition 8% next year, and will allow the states 16 campuses to impose additional increases that range from $100 to $400 (Morgan, 2002). The majority of the additional revenues will be directed to pay for the 5,800 additional students expected in the fall. Increasing the selectivity of the University of Arizona through a reduction in the number of students accepted into an institution of higher education necessitates a delicate balance of several factors. A decision on size-its total enrollment-will influence non-tuition income per student (Winston, Yen, 1995). An example of this is that by restricting an institutions student
  • 10. 10 body, it will protect its per-student endowment income; if it had twice as many students, other things being equal, it would have half as much endowment income per student. Winston further elaborates on the issue of demand in his 1999 article titled Subsidies, Heirarchy and Peers: The Awkward Economics of Higher Education. In this article Winston states “colleges exercise control over whom they sell to by generating excess demand and then selecting the students with the characteristics they most desire from the queue.” In relation to the U of A’s current budget problem, one policy alternative to remedy its decreasing finances can be seen in terms of cutting costs by becoming more academically selective. This could potentially help the U of A reduce its costs because it would arguably give the administration more control over some of the factors that contribute to its costs. Support for this proposition can be interpreted from the ABC Bulletin #3 in regards to President Likins “Focused Excellence” plan. According to it, the relatively open admissions standards that the university has established resulted in shortages of classes, residence hall rooms, and lab space. The current policy demonstrates very little discretion in quality control, and we find ourselves admitting students whose academic profile almost guarantees frustration and failure in this academic environment (ABC Bulletin #3, 2002) By becoming more academically selective, the University of Arizona will be able to exert greater control of its costs by admitting fewer, academically superior students who would then be in a better position to graduate. A second benefit would be the reduced impact on limited resources such as faculty and facilities. Lastly, the increased selectivity will bolster the University of Arizona’s reputation as a center of excellence. Selectivity, as applied to higher education focuses on the ratio of applicants to admissions, test scores, and high school grades is one of the most significant and sought-after
  • 11. 11 descriptions of a institution of higher educations quality. Excess demand occurs when the demand from students is significant at a given price relative to supply (Winston, 1999). Therefore, selectivity requires the simultaneous generation of demand and the restriction of supply. This could also significantly help the U of A in the future as it could attract even better students, and having an increase in supply of better students could give the U of A more power in increasing its tuition via revenue. Policy Recommendation A thorough review of the historic literature demonstrates since the middle 1980’s, federal and state government financial support for higher education has seen a significant decline (McPherson & Shapiro, 1998). In order to gain control of this negative cycle it is imperative that the University of Arizona takes several critical steps that address both the short and long term financial requirements as defined by the State of Arizona Constitution. As cited, several states have challenged the constitutionality of “free tuition” to mean within reason and not completely free of charges. In light of the dramatic reduction in our state’s revenues, as a result of the extended economic downturn, it seems logical to suggest a dual-pronged policy that shall address both the short term and long-term requirements to eliminate the economic cycle, as well as reduce our dependence on state resource dependency. Short term (2003 – 2004): The immediate crisis requires that the University of Arizona and the Board of Regents develop and implement a policy that fulfills two critical objectives. First, the Universities in Arizona need to raise new tuition revenues to support both existing and the new students expected to enroll in the fall of 2004. Secondly, the simplicity of the program (see Table 2) clearly demonstrates to the general public that our states universities
  • 12. 12 are in desperate need of financial revitalization. Previous single-digit rate increases have neither reduced demand nor alerted the public of the impending financial shortfall. Long term (2004 – 2009): This multiple year policy must provide a more comprehensive, cohesive strategy that expands beyond simply increasing revenue. The long term plan must focus on both price and expenditure and will have long reaching implications concerning the overall viability of the University of Arizona and the states higher education system. Based on these criteria, it is suggested that several of the recommended alternatives are incorporated to produce a policy that takes into consideration the complex nature of the public they are seeking to serve. i. Establishment of an income threshold. ii. Decrease administrative burden associated with grants and research and ensure a commensurate decrease in the administrative lattice. iii. Initiate tiered tuition programs beginning 2004/2005. iv. Increase selectivity commensurate with peer institutions. The development of the multi-faceted approach to our recurrent financial situation employs several states “Best Practice” policies and programs. It is critical that a public education program is instituted concurrent with the introduction of this policy. Public sentiment must understand and support the strategy both prior to its introduction and throughout its life cycle. Constraints The Arizona Board of Regents has raised tuition and it is critical to note that the largest percentage increase in 2003/2004 tuition will be shouldered by Arizona residents with the largest burden falling to resident graduate students. The real price, however, has not been significantly increased in dollars. A comparative analysis of tuition levels with the listed peer institutions from
  • 13. 13 the states where the University of Arizona draws the highest number of out of state students reveals some data comparisons. The leading states where Arizona drew the Fall 2002 incoming class are California, Illinois, Texas, and Washington. (figure 1) Source: University of Arizona Decision and Planning Support (DAPS) Prior to the 2003/2004 tuition levels, the University of Arizona was highly competitive with the peer institutions from those states where the University of Arizona incoming class emanated from. In the case of Berkeley, it was only a few hundred dollars more for tuition at the University of Arizona and hence, a comparison of external economic factors might be a large factor. Factors such as the cost of living would be a component of these factors. In some other cases, it was actually less expensive for a student from Illinois to pay out of state tuition than to pay their own in state tuition. This difference is compounded for those students selecting high
  • 14. 14 demand programs at institutions with tiered tuition, such as is the case in both Washington and Illinois. (TABLE 2) 2002 / 2003 Entering Freshman Tuition at the University of Arizona and Selected Peer Institutions Public or In State Out of State Name Private $1,802.00 $6,187.00 Public University of Arizona $5,502 $13,009 Public U. Cal. Berkeley $5,055 $16,124 Public * University of Washington $6,748 $15,352 Public * University of Illinois Source: collegecosts.org * Tiered Tuition Rates Apply Once the University of Arizona raises the tuition to the expected levels for 2003/2004 – these differential gaps will be narrowed, and all else being equal, this policy may shift the perceived economic value of enrolling as an out of state student in a negative manner. (Table 3) Arizona Board of Regents Planned Tuition for 2003-2004 ASU/NAU UA Undergraduate Increase Total tuition & fees Increase Total tuition & fees Resident $1,000 (39.9%) $3,593 $1,000 (39.9%) $3,593 Nonresident $1,000 (9.1%) $12,113 $1,250 (11.3%) $12,363 Graduate Resident $1,200 (47.8%) $3,793 $1,250 (49.8%) $3,843 Nonresident $1,200 (10.9%) $12,313 $1,500 (13.6%) $12,613 Source – Arizona Board of Regents The prospect of the addition of tiered tuition at the University of Arizona could further narrow differential gaps and effect cost changes that could negatively impact the willingness of out of state students to leave their state as the cost savings could narrow or disappear altogether. The narrowing financial incentive must be offset by both cost of living differentials as well as ongoing
  • 15. 15 value through policies of increased selectivity and those designed to have a positive effect upon rankings. Reduction of the administrative lattice poses a second constraint to improving the overall efficiency of our institution. Reduction of staff and services when accompanied by increased tuition has the potential to present the image of a poorly run institution. The reversal of this 30- year trend must be well strategically implemented thru a cost-benefit analysis to ensure maximum savings concurrent with the least interruption in services. The third significant constraint to the successful implementation of our long-term strategy focuses on the competitive nature of higher education in the United States. Competing institutions are in nearly identical situations and are making many of the same policy changes as are being proposed in this paper. Therefore, in order to differentiate the University of Arizona, it is critical that we present ourselves as a highly selective school so as to negate minor differences in tuition and living expenses. Also, the University of Arizona may also feel constrained by the Carnegie Classification where it enjoys status as both a Doctoral/Research University – Extensive, and the status of being a Research 1 institute according to the classifications. Loss of the status of either one of these prestigious rankings may not be acceptable to the leadership of the University of Arizona and may not be well received by the Arizona Legislature and Governor. Implementation and Evaluation With the analysis complete, it is time to turn our attention to the development of strategic marketing programs. Crucial to the success of these policy changes is the communication to the appropriate target audiences (Armstrong & Kotler, 2003). While not all-encompassing, the steps noted below shall serve as key tools by which to evaluate both the implementation and performance of our strategy.
  • 16. 16  Phase One: Identification of specific target groups is the first phase of implementation. Key audiences include tax payers, parents of students, state and local politicians, students and parents of prospective students.  Phase Two: Develop the desired message that is to be communicated to each target audience. For example: Parents of prospective students will be interested on the institutional rankings and the return on their investment as indicated through career placement measurements.  Phase Three: Identify channels by which to communicate the messages to the selected targets. Once again, parents can be reached via direct mail campaigns while students can be efficiently channeled thru mass media ranging from campus press to university radio/tv programming.  Phase Four: Once these programs have been instituted, it is imperative that ongoing measurement and evaluation takes place. Key measurement parameters must focus on number of in-state and out-of-state applications, test scores of applicants, acceptance rate from each key state, rate increases amongst neighboring and peer institutions and institutional rankings.  Phase Five: The introduction of these policies shall require that corrective action be taken to adjust the implementation strategy with the on-going dynamics of a competitive, dynamic market environment. Conclusion Several years ago Larry Leslie posed a question to our higher education finance class. His question was whom would we want as a decision maker at the University of Arizona in the event of a budget crisis? Following a lengthy debate, it was decided that an individual with a
  • 17. 17 background in finance or economics would be extremely valuable. Dr. Leslie calmly contradicted our recommendation and stated that a person with a background in the history of higher education budgets and finance would be especially important. This individual could share past events and teach us of the repercussions from previous actions. Simply stated, avoid past mistakes and improve on earlier successes. The cyclical nature of revenue shortfalls at our nation’s higher education facilities provides a vast array of literature, perspectives and history. Vast amounts of research must be gathered as an institution prepares for a tuition increase in order to ascertain the relative impact on key publics and constituencies. Clearly the University of Arizona must balance the need for additional revenue against the actions being taken by both peer and competitor institutions. Failure to account for such strategic positioning can have dramatic repercussions in terms of decreasing enrollment, loss of revenue, and potential loss of taxpayer support. The Arizona state legislature has served notice to the states higher education institutions of their reluctance to support the current mission of higher education. Based upon this directive, the suggested policy modifications account for two distinct phases in order to both survive and become more financially independent during this economic crisis. In the short term, it is critical to increase revenue realized through tuition. The benefit of increased autonomy from the states support will allow the University of Arizona to establish their independence and forge a future destiny. The long-term policy strategy calls for the introduction of several, albeit intertwined strategic policies aimed to reposition the University of Arizona during the early stages of the twenty-first century. Increasing selectivity concurrent with the establishment of income threshold policies will simultaneously improve the value of our output and preserve a basic tenet in terms of
  • 18. 18 maintaining access to lower income students. Critical to the success of these policies is the inherent flexibility in response to competitor’s own strategic decisions. It must be realized that the future success of our states institutions of higher education cannot be guaranteed through adherence to these proposed policies. When this stage of the economic cycle concludes and state coffers return to a time of surplus revenues, it is critical that the University of Arizona maintains a budgeting and expenditure philosophy that prepares in advance for the next economic downturn. The true test of these policies will be in their ability to overcome the long history of economic crisis and forge their own destiny in the face of other institutions reactive programs and strategies.
  • 19. 19 References Arizona State Constitution. Article 11 Section 6. Admission of students of both sexes to state educational institutions; tuition; common school system. Retrieved April 23, 2003 from http://www.azleg.state.az.us/const/const.htm Armstrong, G. , & Kotler, P. (2003). Marketing. New Jersey: Prentice-Hall. Ehrenberg, Ronald G. (1999). Why can’t colleges control their costs? Cornell Higher Education Institute Working Paper #3 (PDF File). Hearn, James, C. & Longanecker, David. (1985). Enrollment effects of alternative postsecondary pricing policies.” Journal of Higher Education 56-(5), 485-508. Hebel, Sara (2002). Skyrocketing public-college tuition renews calls for better policies. Chronicle of Higher Education, 49, 20-27, 9. Likins, Peter, ABC Bulletin #3, (2002) Focused excellence 5. Retrieved April 18, 2003 from http://infocenter.ccit.arizona.edu/~pacs/printinggraphics/3DS/2002/September/ABC%20Bulletin.txt McPherson & Shapiro. (1998). The student aid game: meeting and rewarding talent in American higher education. Princeton, New Jersey: Princeton University Press. Morgan, Richard. (2002). Students at Public Colleges Brace for Large Tuition Increases. [Electronic Version]. Chronicle of Higher Education. National Commission on Costs in Higher Education (1998). Straight talk about college costs and prices. Phoenix: Oryx Press. Pp1-18. Pew, (1990). The Lattice and the ratchet. Higher Education Research Program Policy Perspectives. 2(4) June. Potter, Will. (2003). North Carolina and Texas try to buck trend of tuition increases. Chronicle of Higher Education, 49, 23-26, 24. Slaughter, S. & Leslie, L. (1997). Academic capitalism: politics, policies, and the entrepreneurial university. Maryland: The John Hopkins University Press. The College Board: $90 billion available in student financial scholarship growth outpacing loan growth. Retrieved April, 23 from http://collegeboard.com/press/cost02html /cost02a.html University of Illinois, Tuition and fees schedule, tiered tuition tables. Illinois. Retrieved April, 23 from http://www.oar.uiuc.edu/current/tuittableFUnew.html University of Washington, Tuition and fees schedule, tiered tuition tables. Student Fiscal Services. Retrieved April, 23 From http://www.washington.edu/students/sfs/sao/ Tuition/pro03.html Winston, G. & Yen, I. (1995). Costs, prices, subsidies, and aid in u.s. higher education Williams Project on the Economics of Higher Education, Discussion Paper #32. Winston, G. (1999). Subsidies, hierarchy and peers: the awkward economics of higher education. The Journal of Economic Perspectives, 13, 13-36.