Guest Post: A Missed Opportunity to Stimulate Change in Higher Education

In its first days, the Obama administration made two bold moves affecting higher education. One was declaring that the nation would regain world leadership in college attainment by 2020. The other was pushing through the $787 billion American Recovery and Reinvestment Act (aka the stimulus), which to date, has pumped an estimated $6.5 billion into the nation’s public colleges and universities. As administration officials look back on their first year, they need to consider the possibility that the stimulus may end up doing little to advance the president’s goal and may even frustrate progress toward it.

That does not mean that the stimulus has been a waste or a boondoggle, as some pundits suggest and many Americans appear to believe. A recent report by Illinois State University and the State Higher Education Executive Officers indicates that the stimulus cushioned the blow to states’ higher education budgets, trimming what would have been a 3.5 percent one-year cut to a 1.1 percent cut. At the same time, I think it’s fair to say that policymakers missed a golden opportunity. The federal government had a chance to use this money—and states’ eagerness to have it—to leverage real change in higher education but didn’t take it.

So how could the federal government have exerted more leverage? 

States could have been asked for spending plans reflecting a commitment to increasing college attainment levels.  Instead, some of the states receiving the most in stimulus funding are the very same ones that are capping or even reducing college enrollment. California, for example, has received nearly $2 billion in stimulus funds while cutting enrollment at its universities. If the nation’s largest state is turning tens of thousands of qualified students away, what does that say about our prospects for regaining world leadership on college attainment? 

States could have been required to invest in long-term strategies for getting a handle on higher education costs. Given that the U.S. continues to outspend the rest of the world while posting lackluster college completion rates, major new investments by federal or state governments must focus on cost containment and innovation. Instead, the stimulus legislation simply asked states to maintain their higher education funding levels. There are models for delivering courses, programs, and services—developed by college faculty and staff—that are aimed at delivering better results at lower cost: such as those being undertaken by the University of Maryland;  the University of Akron and Lorain County Community College; and Northern Arizona University and Yavapai College. At a time when our economy and our demographic makeup are experiencing radical change, we should be investing in what’s next rather than just maintaining effort.

By contrast, the administration has articulated reform expectations for K-12 funding through its Race to the Top program. Why couldn’t the same have been done for higher education? Some argue that the Administration is pursuing reform through the Community College Initiative and College Access and Completion Fund, which are part of the Student Aid and Fiscal Responsibility Act legislation that is currently pending in Congress. That is a fair point, but it still does not answer the question of why some portion of stimulus funds could not have been used to drive reform.

A few states have used at least part of their stimulus funding on long-term improvements in higher education, including:

Indiana: The state is now implementing one of the most aggressive performance funding systems in the nation. Stimulus funds helped to expand this system, which awards a significant portion of base funding (not supplemental funding) to individual institutions on the basis of overall degree completion as well as degree completion for low-income students.

Montana: Last year, the state legislature allocated a portion of the state’s stimulus funds to create a virtual community college designed to re-package existing courses and programs focusing on dual high school-college enrollment and workforce training and deliver them online to every corner of the state.

Texas: In 2009, legislators allocated $80 million in stimulus funds to establish a Performance Incentive Fund that rewards public colleges and universities for helping students to complete certificates and degrees, especially at-risk students and students pursuing certificates and degrees in high-need areas.

Granted, the jury is still out on whether or not these efforts will achieve their intended goals. These states, however, deserve credit for using this unique opportunity to try and bring innovation and reform to their higher education systems, rather than just being satisfied with the status quo. For those who would dismiss this argument as wonky and wishful, consider a couple of realities:

There won’t be another stimulus of this size and scope. The President has made that pretty clear by proposing a domestic spending freeze for the next three years.

The states are not out of the fiscal woods by a long shot. With unemployment still in the double digits, it will be at least two years before state revenues begin to move in a positive direction, and even when that happens, higher education will not be at the top of the “must do” list. 

All of this suggests that, absent an economic turnaround that defies conventional wisdom or divine intervention (or both), states will trod the well-worn path of providing less access to higher education and charging more for it. This will move us away from President Obama’s goal, not closer to it.

The American Recovery and Reinvestment Act may offer a corollary to Bowen’s Revenue Theory of Cost (colleges will raise as much as they can and spend everything they raise): governments can spend money for higher education quickly, they can spend it strategically, but they rarely (if ever) can do both.

Travis Reindl is the state policy and campaigns director at CommunicationWorks, a public affairs firm that specializes in educational improvement. Prior to joining the firm, he had 15 years of experience in higher education policy and advocacy. Most recently, he served as program director at Jobs for the Future, where he led a national initiative focused on increasing productivity in higher education. Before that, he headed the state policy analysis unit at the American Association of State Colleges and Universities. He has written extensively on issues of college affordability, accountability, and governance. His views are his own and do not necessarily reflect those of the New America Foundation.