World class colleges, sluggish financial aid

It is a point of pride among Michiganians that we have great public universities and private colleges.

We have two Top Ten universities that are friendly rivals, and high-quality regional universities. In addition to providing an excellent education for Michigan residents, our universities attract respected scholars and cream-of-the crop students from all over the world. We have a number of widely respected private colleges as well.

So why does Michigan lag behind most other Midwestern states and much of the country in providing financial aid that makes such great education affordable?

Per capita, Michigan spends $194 on need-based financial aid grants per undergraduate student — lower than every other Midwest state except Ohio, and is only one-quarter what Indiana and Illinois spend.

According to the Project on Student Debt, in 2011-2012, Michigan private 4-year college graduates owed an average of $32,672 in student debt, 74% more than similar graduates owed in 2003-2004. For public university graduates, it was $28,147, a 50% jump during the same period.

Having highly skilled people in our state is great for business and the economy, but when our graduates spend years paying off debt, it takes a little of the blush off the bloom. High college debt limits the upward mobility of those graduates and restricts the money they can spend in their communities. At worst, it can contribute to severe financial difficulty.

Michigan needs to make the affordability of education as high of a priority as the quality and prestige of our institutions:

 

Rolling back progress

The Senate Finance Committee Wednesday approved a bill to reduce the state’s personal income tax rate from 4.25% to 3.9% by 2017, a move that would reduce state revenues by up to $874 million when fully implemented in Fiscal Year 2018.

While the purely political appeal of a tax cut during an election season is obvious, the League testified, based on a recently released report, that the risks to Michigan’s economy far outweigh any benefits. Low- and moderate-income workers will see little in return while the wealthiest taxpayers would benefit the most. (more…)

Making sure kids count in Michigan

The 2013 KIDS COUNT Data Book released today by the Annie E. Casey Foundation ranks Michigan No. 31 among the states for overall child well-being with No. 1 the best state. This year that honor goes to New Hampshire.

Michigan not only ranks behind 30 other states, it trails all Great Lakes neighbors. Minnesota is near the top at No. 4, followed by Wisconsin (12), Illinois (23), Ohio (24) and Indiana (30).

Last year, the only year where there is an apples-to-apples comparison, Michigan was No. 32. We inched up slightly but really we’re just treading water. (more…)

The 2014 State Budget: What’s at Stake for Low-Income Michigan Residents?

 Report in PDF

THE BIG PICTURE

List of child and family issues at stake in budgetThe Fiscal Year 2014 state budget has been moving quickly through the Legislature, with both the governor and the Legislature expressing a desire to complete work by the beginning of June.

The House of Representatives has passed all of its budgets for Fiscal Year 2014 through two omnibus budgets, including: (1) the Education Omnibus Budget ($15 billion), which funds School Aid ($13.2 billion), community colleges ($334.9 million), and higher education ($1.4 billion); and (2) the General Omnibus Budget ($33.9 billion), that funds all other state departments and services, including community health ($15.3 billion), human services ($5.9 billion), and transportation ($3.4 billion).

The Senate has also approved most of its budget bills in preparation for the joint House/Senate conference committees that will iron out differences between the two versions–utilizing the budget targets adopted based on projected revenues from the May Revenue Estimating Conference.

This aggressive timetable is being challenged by a number of major budget issues driving the debate, including:

Medicaid Expansion: The governor’s budget included 100% federal funds—available through the Affordable Care Act–to support the expansion of Medicaid coverage to very low-income parents and childless adults up to 133% of the federal poverty level.  This expansion would increase the number of Michigan residents covered by Medicaid from approximately 1.8 million to 2.2 million, reducing the number of uninsured adults by 46%. 

Medicaid expansion would result in savings in the state’s General Fund of $206 million in Fiscal Year 2014 alone by allowing the state to use federal funds to provide comprehensive services to a population that is currently eligible for very limited state-funded health benefits. Savings to the state’s General Fund would grow to $1.2 billion through 2020.

How the uninsured in Michigan could be helped by Medicaid expansionThe governor recommended that half of the savings in state funding be deposited in a newly created healthcare savings fund to offset any future costs related to Medicaid expansion. The remaining funds were to be used to fund vital services, or expansions, including the Healthy Kids Dental program.

To date, the Legislature has not endorsed the expansion of Medicaid, resulting in pressures throughout the state budget, and threatening the opportunity for healthcare coverage for hundreds of thousands of very low-income Michigan residents. House Republicans recently released HB 4714, a bill to expand Medicaid to 133% of poverty, but under onerous conditions, most notably a 48-month limit on Medicaid benefits for nondisabled adults (ages 21-65), as well as a requirement that recipients contribute up to 5% of annual income on copays, premiums and deductibles. The bill could not be implemented without a federal waiver that provides 100% federal funding for current and newly eligible nondisabled adults, as well as administrative costs. The bill also ends the Medicaid expansion when it is no longer 100% covered by federal dollars, which under the Affordable Care Act is scheduled to occur in 2017. 

Transportation Funding: The Fiscal Year 2014 budget debates are also being shaped by the governor’s proposal to increase funding for Michigan roads and transportation infrastructure by $1.2 billion. The governor proposed to fund the road improvements by taxing gasoline at the wholesale level, increasing vehicle registration fees, and local taxing options.

While there is general agreement that Michigan’s roads and bridges are in serious disrepair and new investments are needed, consensus on how to pay the bill has yet to be achieved. Legislative options have included increases in the general sales tax—an option that could affect other vital state services, including human services and schools.

Michigan Tax Changes and Expected Revenues:  In 2011, the Michigan Legislature adopted a major “tax shift” that reduced taxes on businesses by 83%, while increasing taxes on individuals by 23%.  As part of that shift, Michigan’s Earned Income Tax Credit, an effective anti-poverty tool that helps hardworking families whose incomes put them and their children below or moderately above the federal poverty line, was cut by 70%. EITC payments in 2011 statewide were $353.5 million; for the 2012 tax year, they are expected to fall to $106 million.

The new revenue consensus by state fiscal experts is that Michigan will have an additional $702 million in combined revenues above earlier estimates for fiscal years 2013 and 2014—including a total of $579 million in state General Funds, and $123 million in the School Aid Fund.  While encouraging, these increases follow years of steep revenue declines and related budget cuts, many of which disproportionately hurt low- and moderate-income working families, children and seniors.

In Fiscal Year 2014, the Legislature has an opportunity to use the potential infusion of federal Medicaid funds and unexpected state revenues to begin to reverse some of the policy decisions made to balance the budget and provide business tax cuts, as well as to invest in the educational and human services that have been shown to improve economic competitiveness. 

FISCAL YEAR 2014 BUDGET ISSUES AFFECTING LOW-INCOME RESIDENTS

Among the major issues affecting low-income Michigan residents in the proposed Fiscal Year 2014 budgets being considered by the Legislature are the following:

Access to health and mental health care:  As a result of the failure to date to expand Medicaid, both the House and Senate budgets restrict access to vital health and mental health services. 

Hundreds of thousands of currently uninsured Michigan residents will not have access to medical and mental healthcare that is fully federally funded. In addition to the budget hole of more than $200 million created by the Legislature’s failure to accept federal funds to expand Medicaid, the decision affects the state’s residents and communities in a number of ways:

  • At least 320,000 currently uninsured Michigan residents would be unable to receive coverage for both Medicaid healthcare and mental health services.  More than 1.8 million Michigan residents (19.4%) now rely on Medicaid for their basic health services. Further, the share of Michigan births covered by Medicaid has been growing—from 35% in 2003 to 51% in 2010.
  • By giving more women access to healthcare before and between pregnancies, Medicaid expansion would improve the preconception health of mothers and birth outcomes, including a reduction in infant deaths.
  • Expanded access to Medicaid family planning services could also mean significant cost savings for the state.  Approximately 60% of women eligible for Medicaid deliveries report that their pregnancies are unintended, compared with 27% of privately insured women.
  • Medicaid expansion could reduce employer healthcare costs, increase economic activity, and decrease the state’s long-term healthcare liabilities—with federal funds covering 100% of the costs through 2016, phasing down to 90% in 2020 and beyond.
  • The Department of Community Health estimates that Medicaid expansion would cut Michigan’s uncompensated care costs–caused by those who must turn to emergency rooms for their care—by a total of $320 million through 2022.

More than 70,500 children will not have access to dental care. The governor proposed to add $11.6 million in state General Funds to expand the Healthy Kids Dental program to cover an additional 70,500 children in three Michigan counties—part of a multi-year plan to cover all children in the state. The House rejected the governor’s plan.  The Senate agreed with the governor, but did not specify which counties would become part of the program in the upcoming fiscal year. A failure to move forward with the governor’s plan to expand the Healthy Kids Dental program statewide could have the following consequences:

  • Approximately 70,500 children in Ingham, Ottawa and Washtenaw counties would not have access to preventive oral health care. 
  • The governor’s plan to expand the Healthy Kids Dental program to the estimated 720,000 children not currently covered would be derailed. Currently, more than 440,000 children are covered by the program in 75 of Michigan’s 83 counties.  Many of the state’s most urban areas are not yet covered, including Oakland, Macomb, Washtenaw and Wayne counties—with a disproportionate impact on children of color.
  • Continued dental emergencies and related costs are likely.  Children enrolled in Healthy Kids Dental are 60% more likely to receive preventive dental care by age 3, and 25% less likely to have dental emergencies.  Trends in infant mortality chart

Michigan infants, and particularly infants of color, will continue to die unnecessarily. For Fiscal Year 2014, the governor recommended $2.5 million to begin to implement Michigan’s infant mortality reduction plan. The House rejected the governor’s proposal, while the Senate included a placeholder for further discussion in conference committee. Without additional funding:

  • Michigan will be less able to move ahead with its plan to reduce infant mortality, particularly for African American infants who are much more likely to die in the first year of life, including regional perinatal care, initiatives to reduce medically unnecessary deliveries before 39 weeks, the promotion of safe sleep practices for infants, and expanded home visiting programs.
  • Michigan’s infant mortality rates will continue to be higher than most states.  Michigan ranks 37th among the states in infant mortality, with rates for African American infants that are more than two-and-one-half times higher than white babies.Map of lead poisoning case rate

Many children will continue to be exposed to toxic lead poisoning. Last year, the Michigan Legislature approved an additional $2 million for Michigan’s lead abatement program, known as Healthy Homes, for total funding of $4.9 million.  The governor vetoed the expansion, and the program is funded at $2.9 million this year.  For Fiscal Year 2014, the governor maintains funding at $2.9 million.  The House added $1 million for total funding of $3.9 million next year, while the Senate included a placeholder to ensure discussion at the joint House/Senate Conference Committee.

  • Lead has a particularly devastating effect on young children when it can compromise the developing central nervous system and cause irreversible damage to cognitive capacity and behavior.
  • Of the nearly 69,000 children targeted for lead poisoning testing (who are insured by Medicaid or live in one of 14 targeted communities), 57% were tested in 2012.  Testing for lead poisoning peaked in 2010, and has  decreased slightly since.  Nearly 150,000 children under the age of six were tested in 2012.
  • Prevention works.  While, the number of children with confirmed elevated lead blood levels has declined dramatically, some areas of the state still have very high rates of lead poisoning.   The city of Detroit had over half the state’s lead poisoning cases in 2012.  The second highest total was in Grand Rapids.

Public assistance for low-income families, children and adults: The governor, House and Senate have recommended cuts in funding for the Department of Social Services of approximately 10-11% in Fiscal Year 2014, with most of the decline coming from continued steep drops in caseloads for basic assistance programs such as the Family Independence Program, FIP, and the Food Assistance Program , known as FAP. These caseload declines reflect policy changes over the last several years that have restricted eligibility for basic assistance programs. 

More very poor children will be denied access to basic income assistance The governor reduced funding for FIP by $15.8 million to a total of $239.4 million to reflect continued reduction in caseloads—projecting caseloads will fall from 53,298 in the current year to 49,226 in Fiscal Year 2014—a 7.6% reduction.  Both the House and the Senate agreed with the governor’s caseload projections.

  • FIP caseloads have been declining dramatically in recent years, in large part the result of policy decisions, including the adoption in 2011 of changes in lifetime limits for assistance. Between 2010 and the projections for 2014, caseloads will have fallen from 79,233 to 49,226—a drop of 38% in just five fiscal years. 
  • Approximately seven of every 10 FIP recipients are children, and 60% of those children are under the age of 9.
  • To be eligible for FIP, the average family of three must have an annual income of less than $9,800, and the maximum benefit is $492 per month.Chart shows drop in FIP caseloads

The number of Michigan residents with access to basic food assistance will continue to decline. The governor reduced funding for the Food Assistance program (formerly called the Food Stamp program) by $683.7 million in recognition of the loss of temporary federal funds, as well as caseload reductions—largely based on changes in FAP eligibility, including the adoption of an asset test.  The governor assumes that caseloads will fall from 1.1 million cases appropriated this year, to 876,650 in 2014—a 19.4% reduction.  The actual average monthly FAP caseload through March of this year was much lower than appropriated at 912,755. The House and Senate agreed with the governor’s caseload recommendations.

  • Between 2004 and 2011, FAP caseloads grew by 135%.  In 2011, Michigan adopted an asset limit for families receiving assistance, limiting access to food assistance for families, and turning away federal funds available to assist low-income families. Since that time, FAP caseloads have declined slightly.
  • Over 70% of FAP recipients receive no other state cash assistance, and the average monthly benefit for a two-person household is $267.

Low-income working families will continue to struggle after losing significant income with the 70% cut in the state’s Earned Income Tax Credit.  In 2011, the Michigan Legislature slashed the state Earned Income Tax Credit from 20% of the federal EITC to just 6%. The state EITC is a refundable tax credit for working families, designed to promote and reward work and offset other taxes paid by low wage workers that consume a higher percentage of their total income. The governor, House and Senate have not recommended EITC restorations.

  • The EITC is a proven tool in the fight against poverty.  Last year, at 20% of the federal credit, the state EITC kept 14,000 children from falling into poverty.  This year, at just 6%, only 5,000 children will escape poverty, leaving another 9,000 behind.
  • The EITC serves as a temporary income supplement for most families—three out of five use the credit for just 1 or 2 years while they get back on their feet.
  • The credit has been shown to increase employment, reduce the need for public assistance, boost local economies, and benefit businesses by helping low-wage workers cover work-related costs such as transportation and child care. 

Adequate funding for a top-notch cradle to career educational system:

More low-income 4-year-olds will benefit from early childhood education.  The governor increased funding for the Great Start Readiness Program by $65 million, from $109.3 million in the current year to $174.3 million in Fiscal Year 2014, while indicating his intention to expand the program by another $65 million in Fiscal Year 2015.  The governor’s proposal would open up approximately 16,000 new half-day slots for 4-year-olds, requiring that at least 90% of the children live in families with incomes below 300% of poverty (up from 75% this year).  The governor also increased the preschool slot payment from $3,400 to $3,624. 

The House provided only $38 million for the GSRP, increasing the per-slot amount to $3,500. The House requires that at least 80% of children served by GSRP live in families with incomes at 200% of poverty or less.  The Senate agreed with the governor on the funding increase ($65 million), but maintained the per-slot amount at $3,400. The Senate would require that all children served live in families with incomes at or below 300% of poverty, with the poorest children being enrolled first.

  • Evaluations of the GSRP show that participants are more likely to be ready when they enter kindergarten and pass 4th grade MEAP tests.  In addition, fewer GSRP participants are retained in grade and more graduate on time from high school.
  • A growing number of economists and business leaders, including heads of Fortune 500 companies, the Federal Reserve Bank, and Nobel Prize-winning economists agree that early childhood programs can generate government savings and produce returns that exceed public investments, with savings accruing from lower costs related to such public services as special and remedial education, high school graduation rates, lower unemployment, higher earnings and reductions in the need for public assistance.
  • An increase in the per-slot payment for GSRP is a priority.  The GSRP per-slot payment has not been increased since 2007, when it was raised by only $100. As a result, districts have been forced to subsidize their preschool programs even as overall district funds become increasingly tight. GSRP per-student funding has steadily lost ground to inflation over the past 10 years, and even the governor’s proposed increase to $3,625 per half-day slot only makes up for a small part of this decline in real funding. The result is less access to services and challenges in maintaining program quality, which is the key to school readiness. 

Michigan public schools will continue to struggle to balance their budgets.  The governor’s budget did not include an across-the-board increase in the per-pupil allowance received by public schools.  The governor instead recommended $24 million for equity payments of up to $34 per pupil to further close the foundation funding gap between districts by raising the per-pupil payments for the lowest funded districts receiving the minimum grant from $6,966 to $7,000 per-pupil. However, the governor reduced funding for “best practices” grants by 70% (from $80 million to $25 million), and kept performance funding for districts at the current year level of $30 million.

The House also did not fund an across-the-board increase in the per-pupil allotment for schools, but provided total funding of $36 million to bring the equity payment up to $50 per pupil for districts with foundation allowances below $7,016. The House did not fund best practices grants, but included a placeholder to further discuss them in conference committee.

The Senate included $24 million for a $9 increase in the basic foundation allowance for schools, as well as an $18 per pupil in the minimum foundation allowance.  The Senate did not include the equity payments, and eliminated funding ($80 million) for `best practices payments.    

  • In school year 2012-13, Michigan public schools suffered a cut of $470 per pupil in their foundation allowances, and this budget fails to offset those cuts. 
  • School districts not eligible for the equity payments could actually suffer additional cuts in their overall per-pupil allotments if they are affected by cuts in best practices grants.

As tuition skyrockets at public four-year universities, fewer people will be able to afford a college education. The governor’s budget provided $1.24 billion for university operations, including $24.9 million in new funding (a 2% increase) that would be allocated based on six performance metrics:  undergraduate completions in critical skills (science, technology, engineering, mathematics and health); research expenditures; six-year graduation rates; total completions; administrative costs as a percentage of core expenditures; and tuition restraint.

The House and Senate appropriated the same level of overall funding as the governor, but the House made tuition restraint a prerequisite for receiving performance funding, lowering the tuition threshold from 4% to 3%. The Senate also made tuition restraint a prerequisite for receiving performance funding, but retained the governor’s 4% tuition restraint threshold.

  • At most Michigan public universities, tuition for four years of college has more than doubled in the past 10 years; students graduating in 2013 will pay more than twice the amount paid by students who graduated in 2003.
  • The 2% increase for performance funding is below the current year increase of 3%.

Low-income adults will struggle most, as needs-based financial aid becomes more scarce. In 2009, the Michigan Legislature eliminated five needs-based grants for students, and the governor, House and Senate again failed to restore those grants in their Fiscal Year 2014 budgets.  The governor provided continuation funding for two of the remaining grant programs, including: (1) $31.7 million in federal TANF funding for the Michigan Tuition Grant, a needs-based grant; and (2) $18.4 million in TANF for the Michigan Competitive Scholarship, a merit-based scholarship with eligibility based on ACT scores. Under the governor’s budget, private colleges with students receiving Michigan Tuition grants would be required to participate in the state’s P-20 longitudinal data system, and report on the number of Tuition and Pell Grant students graduating, as well as the number taking remedial education classes.

In his Fiscal Year 2014 budget proposal, the governor increased funding for the Tuition Incentive Program by $3.2 million (7%) in state General Funds, adding to current spending of $43.8 million in federal TANF to bring total funding to $47 million. The TIP is available to students who are eligible for Medicaid, and the governor’s budget limits reimbursements to universities under the TIP to 300% of the average community college tuition rate.

The House agreed with the governor on funding levels, as well as the governor’s TIP policy changes, but did not require private colleges to participate in the P-20 data system.

The Senate also agreed with the governor on funding levels, but did not include the governor’s TIP policy changes or the Michigan Tuition Grant language requiring P-20 data system participation for private colleges.

  • Student loans often make up a large part of a student’s financial aid package, but the rising costs of tuition and high interest rates make it imperative that grant aid be available as well. Federal aid programs such as Pell Grants do not cover a large enough portion of costs by themselves to keep postsecondary education a?ordable for low-income students, so all states have state-funded programs that allocate some grants on the basis of income as opposed to merit or other factors.
  • Over the last 10 years, states across the country increased investments in need-based grants by an average of 84%.  Michigan, running counter to the national trend, decreased state funding by 20%–one of only two Midwest states to cut needs-based grant funding during that period.
  • In 2010-11, Michigan invested the least in grant dollars per student of all Midwestern states. Michigan spent 4.6% of its higher education budget on state grants in that year, while Pennsylvania, Indiana and Illinois all spent higher than the national average of 12.5%.
  • In 2010-2011, only 14% of Michigan’s full-time students received some kind of grant aid, ranking the state second to lowest in the Midwest, and 40th in the nation.

 

 

Wrong priorities in higher ed appropriations

While a national report was being released Tuesday making the case for more investment in higher education, a House subcommittee in Michigan approved a controversial spending plan that could lead to even more disinvestment in our universities.

The House Appropriations Subcommittee on Higher Education has been deliberating a university funding bill for several weeks. Tuesday morning, however, a last-minute substitute (made available to some members only a couple hours before) contained a new anti-collective bargaining stipulation and several “social issue” stipulations that have nothing to do with the quality or affordability of higher education. These stipulations could lead to reduced funding for some universities. (more…)

Improving college performance funding

The budget hearings are under way for Michigan’s higher education and community colleges.

For this fiscal year, a portion of the appropriations for postsecondary institutions is in the form of performance funding and the proposed budgets for the coming year do the same.

With 36.5% of community college students and 13% of university students in Michigan enrolled in at least one developmental education course, it’s important that the performance funding system rewards institutions that facilitate the success of these students. A new report, Leave No College Student Behind: Rewarding Institutions That Help At-Risk Students, spells out why this is critical. (more…)

Leave No College Student Behind: Rewarding Institutions That Help At-Risk Students

Full Report in PDF

Michigan’s economic growth depends on a skilled workforce. Nontraditional students (those older than 24 and/or raising families) and students needing basic skills remediation make up an important part of Michigan’s labor pool and need to be part of Michigan’s strategy to build the skills of its workers.

The performance funding system put in place this fiscal year for public universities and community colleges includes metrics that address many important aspects of workforce development, but the system needs to be improved to help improve the success of low-income students and students needing remediation as important agents in Michigan’s economic recovery.

The governor and Legislature should implement incentive funding for institutions based on how effectively they promote student success and postsecondary accessibility for these populations.

Many students begin postsecondary education programs but do not complete them. Only about half of Michigan’s community college students attain a credential or transfer to another institution within six years, and only 60% of four-year public university students graduate within that time. In light of Michigan’s workforce needs in a competitive economy, the state cannot afford to lose this many potential skilled workers who had the motivation to enroll in college.

While we do not know all the reasons so many individuals are dropping out of postsecondary education, it is likely that many are doing so for at least one of two reasons: 1) they are running out of money or are fearful of amassing unmanageable debt, or 2) they are not succeeding academically because they have not mastered one or more basic skills and need remediation.

Michigan’s decision to appropriate a portion of its higher education and community college funding using performance metrics provides an opportunity to address student success in the budget process and rewards institutions that are successful in helping students succeed.

At the outset, it should be said that such performance funding should not be punitive (depriving some institutions of needed base funding increases), because it is assumed most or all institutions are making a good-faith effort to help their students succeed. Rather, the reward money should be allocated in addition to base funding annual increases in order to enable and encourage institutions to provide resources for student success programs and to encourage the sharing of best practices among institutions.

A well-designed incentive funding system can address both the inaccessibility of college due to high tuition costs and the difficulty a large number of students have in completing their programs.

BACKGROUND

The Fiscal Year 2013 Higher Education and Community College budgets include additional funding for institutions based on meeting performance metrics. The budget for public four-year universities includes the following benchmarks:

• Tuition restraint (keeping increases low)
• Total degree completions
• Total degree completions in science, technology, engineering and mathematics (STEM) and
health fields
• Six-year graduation rate
• Institutional support as a percentage of core expenditures
• Research and development expenditures

The budget for community colleges includes funding based on the number of student contact hours and completions.

The university performance metrics address important objectives. However, only the tuition restraint measure addresses the problem of the decreasing affordability and accessibility of postsecondary education. The cost of going to college, combined with the elimination of many state financial aid programs, keeps many low-income students from completing the requirements for a degree or credential (and causes difficulty for many middle-class students and their families as well). The governor had proposed a metric based on the three-year average number of undergraduates receiving a Pell Grant, but that metric was not included by the Legislature.

The three metrics for student success (degree completions, STEM and health degree completions, graduation rates) measure final outcomes, which is appropriate. However, low-income students and students needing some level of remediation have more barriers to success than other students, especially if they are older, working a job and supporting a family. If there are not metrics that incentivize the persistence and success of these populations, there is a risk that institutions will not devote significant resources to helping them, as they will be considered a liability on the completion and graduation rates. Michigan should provide additional performance funding that rewards four-year and community colleges that effectively serve students needing remediation.

It is important that adding such metrics to the performance funding formulas not penalize institutions that attempt to do the right thing for low-income and low-skill students. Developing programs to help these populations succeed costs money and carries a certain amount of risk; such students are more likely to drop out than those from affluent families (due to economic and other reasons) and hence can be a liability on the graduation rates. Moreover, state support for postsecondary institutions has decreased significantly over the past 10 years. Institutions that help such students succeed should therefore receive incentive funding for these metrics in addition to an annual increase in base funding rather than in place of it (as is currently done with all the components of performance funding).

RECOMMENDATIONS:

Include a metric that rewards institutions that enroll and graduate low-income students.

Tuition at four-year universities has risen dramatically; most institutions have more than doubled their tuition rates since 2003. At the same time, some state need-based grant programs have been cut or eliminated, resulting in a nearly 50% reduction in the number of students receiving grants. These two factors have made it very difficult for individuals of modest means to afford postsecondary education.

The Legislature did not adopt the governor’s metric rewarding universities for the number of undergraduates receiving a Pell Grant, leaving the performance funding system without a metric addressing college access by low-income individuals. It is hoped that the Legislature will include a metric that rewards institutions for facilitating their success. For Michigan to become a high-skill state and grow and attract business, it must increase the skills of this important population and integrate it into the skilled workforce.

Include a performance metric that rewards postsecondary institutions that effectively serve students who need skills remediation.

Many adults age 25 and older enroll in postsecondary skills training in order to expand their job opportunities. In 2011-2012, such students made up 30% of all community college and public university students in Michigan. These nontraditional students often face challenges, such as the need to raise children, maintain a household and work full time while completing coursework. These challenges put constraints on the time spent in classes and study each week, as well as the number of years needed to acquire a credential.

A large number of nontraditional students have the additional challenge of having insufficient basic skills readiness for college level work. Community and four-year colleges respond by requiring developmental education classes, which generally do not count toward a degree. The most recent data available shows that 36.5% of community college students and 13% of university students in Michigan were enrolled in at least one developmental education course. Approximately 30% of community college students enrolled in developmental education are nontraditional (age 25 or older).

If work and family needs create hurdles for nontraditional students, developmental education requirements raise the hurdles higher. One challenge is cost. Developmental education classes cost the same as those leading to a degree, causing some students to exhaust both their out-of-pocket resources and financial aid while being no closer to gainful employment than when they started. This is especially true in light of the recent increases in Michigan public university tuition (community college tuition has not risen significantly) and the concurrent cuts in Michigan financial aid grants.

Another challenge for adult learners needing developmental education is time. Community college developmental education is most often delivered in the form of classes taken separately from courses that lead to a degree. In many cases, they are prerequisites to for-credit classes and may not be taken concurrently. For students who need more than one developmental class, this lengthens the time needed to complete a course of study. Some students spend their entire first year or more in noncredit developmental education classes.

If a student must cut work hours to accommodate a class and study schedule, spending longer in school because of developmental education requirements means more forgone household income. For students raising families, it means less time spent with their children, and increased transportation and child care costs. When developmental education prolongs the duration of time in school, it can be a disincentive to enroll in a postsecondary program or a major reason for dropping out.

A recent study of adults ages 22-30 found that over half of those who drop out of college before attaining a degree or certificate cite difficulty balancing work and school as the primary reason. More than one-third of those said it would be difficult to go back even if tuition and books were fully paid for, citing “working full time” and “family commitments” as the top two reasons. It is easy to see how developmental education requirements can exacerbate these difficulties.

Students needing remediation are often the most difficult and expensive to serve, and are more likely to drop out before successful completion of a program and attainment of a credential. Institutions that effectively help such students persist and complete requirements for an occupational credential should be rewarded. Incentive funding for successful remediation must be in addition to increases in base funding rather than be a substitute for increases.

When developing a strategy to increase student success, measuring and rewarding persistence is as important as measuring and rewarding completion. With this in mind, the Working Poor Families Project has recommended that metrics and benchmarks should focus on key transition points such as the following:

• Transition from developmental education in a first collegiate gateway or initial course
• Attainment of the first 15 and 30 credit hours of collegiate instruction
• Receipt of a credit-based degree, diploma or certificate

To establish performance-based incentive funding for developmental education, Michigan’s P-20 data collection system needs to collect more detailed information on transition points such as those recommended above. It would also help in the designing of programs if data were collected that would shed light on the success rate of students who transfer from adult education or English as a Second Language programs into postsecondary programs. Currently, postsecondary institutions are required to submit minimal data regarding developmental education (i.e. number of student contact hours per academic year). The technological transition needed to put a system in place for capturing more detailed developmental education information will not happen overnight; the state needs to begin planning for it if it wants to undertake a serious effort to help remedial students succeed in postsecondary training and become employed in a skilled occupation.

CONCLUSION

Performance funding is an imperfect system for funding postsecondary education in Michigan, especially in light of the overall decrease in state funding over the past 12 years. However, it should be improved to reward institutions that go to the expense (and take the risk) of serving students from low-income backgrounds or who need remediation in one or more basic skill areas. The funding should come as an added incentive rather than in place of base funding increases, as a new investment in Michigan’s workforce.

Making such a change would help those students obtain a postsecondary credential leading to skilled employment. That would be good for the students and their families, because such employment would lead to higher salaries and less likelihood of falling into financial difficulty. It would help strengthen Michigan’s workforce, as it would provide the skilled workers that employers are seeking. Finally, it would help Michigan’s economy, as it would lead to more money spent in local communities and increase revenue collected in taxes by the state.

Michigan has already implemented a performance funding system for the purpose of strengthening Michigan’s workforce. Let’s not forget the part of the workforce that is currently low income or that needs basic skills remediation before moving on to occupational training. If we want to build Michigan into a magnet state for employers needing skilled labor and encourage high-skilled entrepreneurial activity, we cannot leave those workers behind. That means not leaving behind low-income students and those needing college remediation.

ENDNOTES

1. Michigan Community College Association and the National Center for Education Statistics via the Michigan Dashboard (http://www.michigan.gov/midashboard, accessed on March 5, 2013.)
2. Michigan League for Public Policy, Keeping It Affordable in Michigan: Disinvestment in Financial Aid Grants Hurts Students and Their Families, November 2012.
3. Michigan League for Public Policy, ibid.
4. Michigan Department of Technology, Management and Budget, Center for Educational Performance and Information, “MI School Data.” (https://www.mischooldata.org/CareerAndCollegeReadiness/IheEnrollmentByIhe.aspx, accessed on March 5, 2013.)
5. Michigan Department of Technology, Management and Budget, ibid.
6. Michigan Office of the Auditor General, Audit Report: Performance Audit of Developmental Education at Michigan Public Community Colleges, May 2009.
7. For more information, see Michigan League for Public Policy, Keeping It Affordable in Michigan: Disinvestment in Financial Aid Grants Hurts Students and Their Families, November 2012. (http://www.mlpp.org/wp-content/uploads//Keeping-it-Affordable-FINAL.pdf)
8. Johnson, Jean and Jon Rochkind, With Their Whole Lives Ahead of Them: Myths and Realities about Why So Many Students Fail to Finish College, Public Agenda, 2009.
9. Johnson et al., ibid.
10. Quinterno, John, Policy Brief: Making Performance Funding Work for All, The Working Poor Families Project, Spring 2012.
11. More information on the P-20 system and developmental education can be found in the Michigan League for Public Policy, The Key Ingredient: Data is Crucial to Building Michigan’s Workforce System, July 2011. (http://www.milhs.org/wp-content/uploads/2010/07/TheKeyIngredient.pdf)

 

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