Higher Education Reports: Declining state funds

While Arkansas colleges are benefitting from the Arkansas Lottery Scholarship that helps provide more tuition assistance, state funding for higher education has not kept up with growth.

“In Arkansas, we’ve not done enough to keep up with funding as we should have. Nationwide, the phenomena is the same. States are contributing lesser or fewer percentages of dollars than in previous budgeting cycles,” said Sen. Jimmy Jeffress, D-Crossett.

In addition to receiving less state money, endowments have been flat or decreased due to the economy, said Dr. Donald R. Bobbitt, president of the University of Arkansas System.

Shane Broadway, director of the Arkansas Department of Higher Education, said state guidelines show Arkansas’ public institutions should have more funding.

The Higher Education Funding Formula was adopted by the state legislature in 2003, calling for $200 million in new money to adequately fund the state’s public colleges.

The formula, if funded incrementally, could have been fully funded in 10 years, Broadway said. That hasn’t happened. An alternate plan would be to bring institutions to 75% of the model, which would have needed $63 million from the state for the fiscal year.

Instead, colleges and other institutions received $3.6 million. (About $600,000 of that went to the University of Arkansas for Medical Sciences, which was not included in the funding model, Broadway said.)

‘NEEDS AND WANTS’
While funding from the legislature has declined, colleges have not slowed down in their needs and wants, Jeffress said.

“I don’t know that their needs are nearly as much as their wants,” he said.

“I wonder how much of the gap is attributable to professors having really good classrooms, and how much goes for coffee shops and executive suites,” Sen. Sue Madison, D-Fayetteville, said. “The expense of going to college is a serious concern.”

Madison is the co-chair of the Arkansas Legislative Council Higher Education Subcommittee. She said the committee has challenged colleges to find ways to keep costs down.

DEFERRED MAINTENANCE
Bobbitt said there are some new buildings on UA system campuses, but more is going on in terms of deferred maintenance on buildings.

“Interest rates have dropped to near-zero levels. Universities have taken advantage of that,” he said.

ADHE records show the state’s public universities have an estimated $2.3 billion in deferred maintenance – repairs and updates that have been needed and put off for decades, in some cases. Broadway said that estimate is based on figures provided to ADHE by college administrators.

“The recession and low interest rates have helped us in ways that I wouldn’t have anticipated four years ago,” Bobbitt said. “If we refurbish with energy efficient systems and better materials now, it will be setting us up for the future.”

LOTTERY OPPONENT
Madison is open about her dislike of the lottery system and voted against its establishment.

“We really are trying to encourage more Arkansans to go to college and get a degree,” Madison said, saying a better-educated population has a positive impact on the economy and the job market.

But Madison also said some students may feel encouraged to take easier classes rather than more challenging ones so they can keep their lottery-funded scholarship.

“I think we still have to consider the background. Some students are graduating ill-prepared to go to college. They’re losing their scholarships because they can’t keep their grades up,” Madison said.

SCHOLARSHIP DROPS
An ADHE report examining the 2010-2011 year – the first year – showed 28.4% of scholarship students lost their funding at the end of the freshman year. However, that percentage spikes to 41.5% when you look only at two- and four-year public institutions.

ADHE records show 23.4% of lottery scholarship recipients at four-year schools needed remediation courses compared to 49.3% of recipients at two-year schools and 0.6% at private schools.

The scholarship money may be used for technical programs at two- and four-year schools which offer a professional certificate – something students from alternative and traditional classrooms seek. The scholarships also are open to non-traditional students, defined as anyone out of high school for a year. But “open” doesn’t mean available.

The state capped funding for non-traditional students at $12 million. There’s a waiting list of 5,000 students who qualified last year, but didn’t get scholarships because the money was already in play for the 2010-2011 freshman class.

By June 1 of this year, 10,000 additional non-traditional students had applied. Broadway said it isn’t known yet how much, if any, of that money will be freed up for the new academic year by students cycling out of the program, either by completing degree programs or by losing their scholarship. First-year statistics showed that non-traditional students had the highest renewal rates at 73.3%.

SUPPORTING THE LOTTERY POOL
Bobbitt believes the scholarship program is “wonderful” and allows Arkansas students the chance to get a degree without incurring significant financial debt.

“Obviously, if you look at the state economically, in average wages, we’re not one of the top 10 or 20 states. Families struggle to put together enough to send a child to college,” he said.

Lottery and state officials contend they try to be thrifty to ensure as much money as possible goes in the scholarship pool.

Baldridge said the lottery staff saves the state tens of thousands each year by producing all advertising and point-of-sale materials for 1,900 retailers in-house. For lottery commission meetings, Baldridge said she now buys bottled water and makes the coffee rather than paying a service in their building to provide it. They borrowed art and enlarged photographs from the Arkansas Parks Department to decorate the walls.

“We’ve done a lot of things that are cost conscious, because we know that every nickel we spend is a nickel that can go to a scholarship,” Baldridge said. “It’s an interesting proposition to use something like this for a public good. Sixty-three percent of the voters thought so.”

‘TAKE IT SERIOUSLY’
Broadway said his staff tries to save money, too. The staff is more efficient in operations and didn’t have to bring in temporary workers to process applications like they did the first year. The first year his office spent $1.3 million in administration and processing costs. This year, they spent $500,000.

Broadway said he’s proud of the lottery program.

“I think it’s certainly been a great benefit to students and families. For a lot of them, it makes the difference in going and not going,” he said. “I hope students who receive that understand the opportunity they’ve been given,” Broadway said.

Continuing, he noted: “That’s $18,000 (over four years) to help them pay for college. But once they get there, they have to maintain it. It’s something I try to emphasize: You’ve got to take it seriously from Day 1. We lost 40% of last year’s freshmen. Some were not academically prepared, some had issues arise, but some just were not serious.”