State Funding for Universities

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A new report by the Center on Budget and Policy Priorities reveals Arizona’s per-student rate of support for higher education dropped over 48 percent from 2008 to 2014. At the same time, tuition increased by about 80 percent. Arizona Board of Regents president Eileen Klein will discuss the situation.

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Ted Simons: A new report by the center on budget and policy priorities shows that for the past six years, Arizona leads the nation in cuts to state aid to higher education. The report also shows that during those same six years, Arizona had the highest tuition increase in the country. Joining us now is Arizona board of Regents president, Eileen Klein. It's good to see you again. Thank you for joining us.

Eileen Klein: Thanks for having me.

Ted Simons: Let's get to the numbers quickly and where we can go from the numbers. Tops in C=cuts to state aid, I think the dollar amount ranks maybe tenth, but in terms of a percentage rank, that is not very good.

Eileen Klein: Right. Tough times for sure. So while the report is new, the news is not. Arizona's universities were in fact among the hardest hit. In a way it is not a surprise in a sense that our state was among the hardest hit of all states during the recession, but it has produced some challenging circumstances for our university. It resulted in about $400 million worth of cuts to our universities, most of which unfortunately had to be made up by tuition increases.

Ted Simons: Indeed, and that is where we get to the tuition increase, highest in the country. That actual dollars ranks number one there as well. For those watching right now, paying tuition in one way, shape, or form, what do they take from this? What -- is this going to be change soon? The dynamics seems very problematic for those who are really concerned about this.

Eileen Klein: Right. It is challenging. Certainly affordability is a big issue for our families. Incomes we realize are not increasing that quickly. The reality is that there has not been replacement revenue by either the federal or state government. So, whereas before the recession, the state was our primary funder, today the state only provides about one third of the total dollars for the universities, and as a result families have had to make up the difference. On top of that, our university student population grew by about 23,000 students during the same period. So, all of the way around, universities needed to find more resources, tuition being one of them. Other partnerships needed to be another, and we were forced to change our business model.

Ted Simons: Talk about that change. We have had those discussions on this program before. If state aid -- if we have a new normal here, which may be, in fact, happening, how do we change? Where do we go?

Eileen Klein: Right, so the universities obviously needed to think about their own priorities. Reductions were made. There certainly were layoffs but at the same time we tried to think about how we could make our offerings more affordable. So we used more online technology, we brought programs into local communities like in lake Havasu. We tried to augment our partnerships with community colleges, today we have over 1200, partnerships with community colleges in our state all which were designed to offer not only more local offers but offerings at a more affordable price point. But for the long term, something has to give. We are concerned that students cannot necessarily pay the increase in tuition. When we look at the K12- Pipeline, students will have more financial need, which makes that even more difficult. We don't know how long federal aid is going to hold out around Pell grants. So ultimately we are in a conversation now with our policymakers. Where do we go from here to make sure that college stays affordable?

Ted Simons: Talk about that conversation. What's being said?

Eileen Klein: The good news in the past two years, remember this report -- it is compiling information that is several years old. In the past two years, the legislature has begun to add back money. So we've recovered about $ 90 million total, so nowhere near what we had in terms of support before, but certainly it is helpful in terms of aid to our universities. But, overall, we need to start talking about how we fund our universities. We are trying to change our funding model. The old growth model didn't work. The state could not afford it. And so we are trying to work with our legislature in funding us around performance. So as we contribute to the Arizona economy, whether for new graduates or research contributions, that the state begins to add back to our base budget so that we can continue to keep prices low, that college can be affordable and accessible and also that we can be effective. We need to be providing quality offerings as well.

Ted Simons: Indeed. I know some lawmakers -- we've had these discussions on the program before -- don't see necessarily the need for a research university just teach the reading writing but take it to a higher level and move on -- how do you work that dynamic into the conversation?

Eileen Klein: Right. So the universities occupy a very special place in terms of our economy. We don't just impart knowledge, we produce knowledge. And our businesses count on us producing graduates who know the latest, that they are ready to go to work and also that they are ready to develop new technologies and deploy new skills in the workplace. And so universities are at the forefront of that knowledge creation and knowledge transfer into the private sector. You hear companies that they choose to locate near one of the universities because they want to be near the talent and access really to resources that the university provides in terms of research capability. And we also need the state's help with that. So the universities are looking to double their research capacity by 2020 and that is going to take a pretty significant commitment in terms of infrastructure for buildings, for technology, and it is really important. Our business community recognizes, they have stepped up greatly to support that effort because they know it is essential to drive the economy in the future.

Ted Simons: How do you get that message across? Is it by way of the business community, if X, then Y? Again, you know what it is like down there at the legislature. There are folks that simply don't want to spend what some say needs to be spent.

Eileen Klein: I appreciate their efforts to make sure that our state stays strong because to be sure, no business wants to be here if we don't have a strong financial condition for our state, but at the same time companies want to be here because they know they can get the talent they need to run their businesses. So, we heard repeatedly have heard from business groups that we need you to produce more high-qualified workers for us, particularly in technology-based fields and we're trying to respond to that. I think we're responding to that well. It can't happen without a true partnership with the state and that's the model we're trying to evolve.

Ted Simons: So, with parents watching now, students watching now, and in the rear-view mirror they see number one in terms of cuts of state aid, number one in terms of tuition increase, will they want to get away from the rearview mirror and start looking through the windshield, what are you telling them? What is the optimism or hope here?

Eileen Klein: First, thanks for choosing higher education. The best bet for your own future and it is becoming increasingly the ticket you need to get to the middle class in our society. But the truth is we are doing more to also make sure that our costs are more predictable for families. So we have implemented now, in one form or fashion, tuition predictability or guarantee plan. So families know, coming through the door what it is going to cost them. Students can do the calculations, and then we have caps in place at two of the three universities to make sure that the costs don't exceed that so that they know they can afford the tuition long term.

Ted Simons: What about student aid?

Eileen Klein: Long term, our state really does need to get very serious about how we're going to support students. As I mentioned, our students are going to be more financially needy, and we are unlike other states where they have significant state-based financial aid for students. We need to develop that. That will be a longer term place for us, but one that we are eager to talk to legislators about and they do understand those needs. For them it is a matter of trying to figure out how to juggle those priorities. That will be essential for us going forward and also we're trying to work with our students on their own money management skills. So we're experimenting with programs like Arizona earn to learn, where students get foundation information in financial literacy, so they know how to manage their own funds, that they take loans that are truly for their education and not for their life-style. And so all of these factors come into play. We are proud our students graduate with less debt than students do nationally, but ultimately we know that we have to make sure that they don't leave college with a mountain of debt.

Ted Simons: Last question before you go. This report said that all of the numbers, these are all policy choices. You have been on both sides of this particular area -- very high on the governor's office now presidents at the Board of Regents, very high on both levels -- is it a good thing that states are not majority stakeholders in terms of policy?

Eileen Klein: So, it -- it is a challenge. So, we certainly are public institutions. We operate in the public interest. But more and more we're going to need more private sector solutions, whether it's partnerships or new ways of creating a financing model. So what we are looking to do is making sure that we work with our policy makers going forward on creating the very-- really the most modern university system that we can create with enough freedom and flexibility so that we can get the resources we need to serve the public. And at the same time, though, we want to make sure that the state stays committed. Their support is important and it needs to continue.

Ted Simons: All right. Good to see you again.

Eileen Klein: Thanks, thanks so much.

Eileen Klein:President, Arizona Board of Regents;

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