How NJ Colleges Can Cope with Economic Pressures

 

The Record

Richard F. Keevey and Darryl Greer

June 2, 2010

 

Seventy percent of undergraduates in the United States depend on public institutions of higher education to help them achieve the American Dream.  Public colleges and universities, in turn, depend largely on state government appropriations and increasingly on tuition dollars for financial support.

 

Most people would agree that this funding model has been faltering for many years -- and is now broken.

 

State tax appropriations in 2010 per full-time equivalent student at four-year public colleges and universities were approximately 12 percent lower in constant dollars than 10 years ago.  The share of state funds supporting operating costs at state colleges and universities has decreased to 36 percent from 50 percent during that time period.

 

In New Jersey, the average tuition and fees have increased over the decade to nearly $11,000 from about $5,000.

 

New Jersey is one of the most expensive systems in the country.  In 2009, New Jersey had the highest average total of tuition, fees and room and board ($19,548), and between the late Nineties to 2008, the share of family income needed to pay for four-year college expenses increased from 19 percent to 34 percent.

 

This situation will not soon improve -- if ever.  The twin problems of shrinking appropriations and increasing tuition are more acute in New Jersey than in most states, and state support will probably be even lower in the immediate future as the state is plagued by structural budget deficits, high debt payments and an underfunded pension system.

 

Despite the cost, New Jersey's four-year public colleges and universities are attracting record numbers of students.  Between 2000 and 2006, enrollment increased by more than 10 percent -- to almost 123,000 from 115,000 -- and the demographics suggest that enrollment will stay strong for at least the next decade.

 

So, how does New Jersey move forward with providing our residents with a college education under the triple whammy of declining revenue, rising costs and increasing demand?  How can the state improve access and affordability and maintain accountability?

 

Recently, the Policy Research Institute for the Region of Princeton University in conjunction with the New Jersey Association of State Colleges and Universities conducted a special program at Princeton University to consider these issues with a unique combination of New Jersey, Pennsylvania and Connecticut college presidents, along with think-tank experts from across the country.

 

Some of the issues considered as good options to address the challenges include:

 

n	Transform higher education to include administrative restructuring, new funding strategies, faculty involvement and more cross-disciplinary efforts.
n	Provide public institutions with greater control of tuition revenue, purchasing and construction - and in general implement regulatory reforms.
n	Implement performance-based incentives based on outcomes rather than input variables.
n	Direct faculty members, administrators and college boards to work together to devise solutions to reduce expenses.
n	Develop realistic accountability measures - not just paper exercises.
n	Implement mergers of functions internally and externally for economies of scale.

 

Other issues were considered and debated, including governance and the merits and shortcoming of eliminating the state Board of Higher Education in 1994, the need to increase the public's understanding of the value that higher education provides and the importance of making higher education a higher policy for the governor and Legislature.

 

The following key themes reflect the general conclusions of the forum's deliberations:

 

n	Better state funding is unlikely in the foreseeable future, and therefore institutions need to plan accordingly.
n	The current enrollment and financial challenges demand transformative change, including a close look at management and educational delivery structures, functions, goals and supporting revenue streams.
n	In a climate of scarce public funds, institutional productivity and public benefits must be carefully and not too narrowly defined.

 

Fittingly, Governor Christie has just appointed a Higher Education Task Force, to be chaired by former Gov. Tom Kean, to reform New Jersey's system of higher education.  The task force is charged with studying the key issues and impediments facing the state's higher education institutions and developing recommendations for reform.

 

This is indeed a daunting but very necessary assignment.  The work of this task force will be critical for New Jersey to successfully move forward both economically and educationally.

 

Richard F. Keevey is director of the Policy Research Institute for the Region at Princeton University, and a former budget director and comptroller for New Jersey.  Darryl G. Greer is the CEO of the New Jersey Association of State Colleges and Universities.