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S. HRG. 112–930 

IMPROVING COLLEGE AFFORDABILITY: A VIEW 

FROM THE STATES 

HEARING 

OF THE

COMMITTEE ON HEALTH, EDUCATION, 

LABOR, AND PENSIONS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

ON

EXAMINING IMPROVING COLLEGE AFFORDABILITY, FOCUSING ON A 

VIEW FROM THE STATES 

SEPTEMBER 13, 2012 

Printed for the use of the Committee on Health, Education, Labor, and Pensions 

( 

Available via the World Wide Web: http://www.gpo.gov/fdsys/ 
COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS 

TOM HARKIN, Iowa, Chairman 

BARBARA A. MIKULSKI, Maryland 

JEFF BINGAMAN, New Mexico 

PATTY MURRAY, Washington 

BERNARD SANDERS (I), Vermont 

ROBERT P. CASEY, JR., Pennsylvania 

KAY R. HAGAN, North Carolina 

JEFF MERKLEY, Oregon 

AL FRANKEN, Minnesota 

MICHAEL F. BENNET, Colorado 

SHELDON WHITEHOUSE, Rhode Island 

RICHARD BLUMENTHAL, Connecticut 

MICHAEL B. ENZI, Wyoming 

LAMAR ALEXANDER, Tennessee 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

RAND PAUL, Kentucky 

ORRIN G. HATCH, Utah 

JOHN MCCAIN, Arizona 

PAT ROBERTS, Kansas 

LISA MURKOWSKI, Alaska 

MARK KIRK, Illinois 

PAMELA J. SMITH, Staff Director, Chief Counsel 

LAUREN MCFERRAN, Deputy Staff Director 

FRANK MACCHIAROLA, Republican Staff Director 

(II) 
C O N T E N T S 

STATEMENTS 

THURSDAY, SEPTEMBER 13, 2012 

Page 

COMMITTEE MEMBERS

Harkin, Hon. Tom, Chairman, Committee on Health, Education, Labor, and 

Pensions, opening Statement .............................................................................. 1 

Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming, opening 

Statement ............................................................................................................. 2 

Bennet, Hon. Michael F., a U.S. Senator from the State of Colorado ................. 3 

Bingaman, Hon. Jeff, a U.S. Senator from the State of New Mexico .................. 38 

Alexander, Hon. Lamar, a U.S. Senator from the State of Tennessee ................ 40 

Franken, Hon. Al, a U.S. Senator from the State of Minnesota .......................... 42 

Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode Island ...... 44 

WITNESSES

Howard, Muriel A., Ph.D., B.A., President, American Association of State 

Colleges and Universities, Washington, DC ...................................................... 5 

Prepared Statement ......................................................................................... 6 

Longanecker, David A., Ed.D., M.A., B.A., President, Western Interstate Commission for Higher Education, Boulder, CO ...................................................... 11 

Prepared Statement ......................................................................................... 14 

Morgan, John G., B.A., Chancellor, Tennessee Board of Regents, Nashville, 

TN .......................................................................................................................... 18 

Prepared Statement ......................................................................................... 20 

Preus, Camille, Ph.D., Commissioner, Oregon Department of Community Colleges and Workforce Development, Salem, OR .................................................. 26 

Prepared Statement ......................................................................................... 28 

ADDITIONAL MATERIAL 

Response by Muriel A. Howard, Ph.D. to questions of: 

Senator Enzi ..................................................................................................... 51 

Senator Blumenthal ......................................................................................... 52 

Response by David A. Longanecker, Ed.D., M.A., B.A. to questions of: 

Senator Enzi ..................................................................................................... 52 

Senator Bennet ................................................................................................. 53 

Senator Blumenthal ......................................................................................... 54 

Response by John G. Morgan, B.A. to questions of: 

Senator Enzi ..................................................................................................... 55 

Senator Blumenthal ......................................................................................... 56 

Response by Camille Preus to questions of: 

Senator Enzi ..................................................................................................... 56 

Senator Bennet ................................................................................................. 57 

Senator Blumenthal ......................................................................................... 57 

(III) 

(1) 

IMPROVING COLLEGE AFFORDABILITY: 

A VIEW FROM THE STATES 

THURSDAY, SEPTEMBER 13, 2012 

U.S. SENATE, 

COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS, 

Washington, DC. 

The committee met, pursuant to notice, at 10:35 a.m., in room 

SD–430, Dirksen Senate Office Building, Hon. Tom Harkin, chairman of the committee, presiding. 

Present: Senators Harkin, Enzi, Bingaman, Hagan, Merkley, 

Franken, Bennet, Whitehouse, Blumenthal, and Alexander. 

OPENING STATEMENT OF SENATOR HARKIN

The CHAIRMAN. Good morning. The Senate Committee on Health, 

Education, Labor, and Pensions will come to order. 

As the fall semester began in recent weeks, more than 21 million 

students enrolled or returned to college, whether on campus or online. While this number sounds impressive, we are reminded again 

on Tuesday by the OECD, the Organization for Economic Cooperation and Development, that America continues to lag other advanced nations and we now rank 13th when it comes to younger 

adults with degrees. 

As we know all too well, one of the main reasons that America 

has fallen from the top spot is that college has become increasingly 

unaffordable for a growing number of Americans. During the August break, I heard repeatedly from students and parents across 

Iowa about the financial squeeze they are facing from the spiraling 

cost of college and, of course, their increasing anxiety about the 

level of student debt. These are the real stories of financial hardship behind the statistics that we’ve heard over and over: how student debt has crossed the $1 trillion mark; how average loan debt 

topped $25,000; how public college tuition has tripled since the 

1980s, outpacing both inflation and family income. 

America’s system of higher education has been one of shared responsibility. Students, families, States, and the Federal Government all take a part in funding a college education. But, in the past 

30 years, we’ve witnessed a gradual and structural realignment of 

each partner’s share of the growing cost of college. States are contributing less, while students and their families are shouldering a 

heavier burden, financed largely through the Federal Government’s 

financial aid programs. 

This cost shifting means that State and local support per student 

is lower today than it was 25 years ago in constant dollars. States 
2 

collectively spend $6.12 per $1,000 in personal income, down from 

$8.75 just in 1990, though personal income has increased by 66 

percent over that period. Moreover, States’ spending on higher education as a share of their budget is declining. States now spend an 

estimated 11.5 percent on higher education, down from 14 percent 

20 years ago. 

This declining investment means that students have to pay more 

as public institutions try to cover the State cuts through tuition 

hikes. Net tuition accounted for just 23 percent of educational revenues in 1986. Today, it is more than 43 percent. Given the fact that 

70 percent of America’s college students attend public colleges and 

universities, the national implications of this State retrenchment 

for college access and success are obvious. 

Now, for its part, the Federal Government has stepped up efforts 

to help students pay for college. I hope that we can all acknowledge 

that this model of shifting cost is neither sustainable nor desirable. 

To be fair, these trends mask significant efforts by some States— 

admittedly, only a few—to increase investments in higher education. I think it also obscures the fact that funding alone will not 

necessarily make possible what I hope is our shared goal for each 

and every American to have access to high-quality, postsecondary 

educational opportunities regardless of one’s background. While 

funding is essential, smart policies are integral to maximizing the 

impacts of such investments. 

With the committee’s previous hearings on college affordability, 

today’s hearing will focus on what’s being done and how it can be 

replicated or adapted by others to keep the dream of higher education alive for students. The previous hearing emphasized promising strategies employed by innovative colleges and universities to 

curb the cost while improving student outcome. Today, we’ll shift 

our attention to States and their policies for improving affordability. 

We are fortunate to have a distinguished panel of guests. They 

will shed light on State efforts, policies, and initiatives that hold 

promise for prioritizing and improving college affordability. They 

will help identify State barriers to innovation, efficiency, and effectiveness at both the systems and the institutional levels. There is 

much room for progress and improvement when it comes to our 

system of higher education. It seems to me that a consensus is 

emerging from these very productive hearings on the need to break 

with business as usual. 

Increasing college affordability is going to take leadership, collaboration among all stakeholders, and a real sense of urgency. I 

look forward to our continuing efforts in this regard and our work 

with our distinguished Ranking Member, Senator Enzi, and colleagues on both sides to tackle this problem and to ensure that our 

higher education system remains affordable, accessible, and resulted-oriented both for students and taxpayers. 

With that, I invite Senator Enzi for his opening remarks. 

OPENING STATEMENT OF SENATOR ENZI

Senator ENZI. Thank you, Mr. Chairman, and thank you for continuing to focus the committee on the increasing challenges that 

students and their families face in paying for college. As you were 
3 

making your remarks, I couldn’t help but reflect back on some comments by a former Governor of Tennessee and a former University 

of Tennessee president who said that because of Federal costs that 

the Federal Government has shifted to the States, the only place 

that they have flexibility is in how much they give to colleges. So 

we’ve added to the problem somewhat there, too. 

While there’s very little left to say about how expensive higher 

education has become, I recently heard a very disturbing description of just how high college prices have climbed. Earlier this summer, the Finance Committee held a hearing focused on higher education provisions in the tax code. During that hearing, one of the 

witnesses explained the following: If milk and gas had risen as fast 

as college prices since 1980, gas would be $13 a gallon today and 

milk would be $23 a gallon. 

This is simply astounding and underscores the urgent need for 

us to begin asking questions about the effectiveness of current Federal student programs and how we can do things better. We’ll be 

looking to reauthorize the Higher Education Act in the next few 

years and through that look for ways that the Federal Government 

can better serve students. As we begin that process, it’s important 

that we consider what’s being done at the State level. 

For that reason, we’ve asked our witnesses today to discuss a few 

of the promising innovations already being implemented throughout the States. Many of these could and should serve as a model 

for future reforms in the Federal student aid programs as we work 

to reverse the seemingly endless increases in college costs. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Enzi. 

As I said, we have an exceptional panel of witnesses here today. 

I want to thank all of you for taking the time to be here and sharing your experience. I will start, and I will yield to others for introductions. 

I will start by welcoming our first witness, Dr. Muriel Howard, 

president of the American Association of State Colleges and Universities. Before becoming president in 2009, Dr. Howard was 

president of Buffalo State College, a campus of more than 11,000 

students, approximately 1,700 faculty and staff, a financial operation of more than $214 million. 

Prior to joining Buffalo State, she was the vice president for Public Service and Urban Affairs at the University of Buffalo, where 

she served in various leadership capacities over a 23-year period. 

A graduate of the University of New York’s Richmond College, Dr. 

Howard holds a master’s degree in education and a Ph.D. in educational organization, administration, and policy from the University of Buffalo. She has also received six honorary degrees and 

many awards for her contributions to public higher education, for 

service to her community, and her commitment to diversity. 

We thank you for being here. 

Next, I would yield to our distinguished Senator from Colorado 

for purposes of our next introduction. 

STATEMENT OF SENATOR BENNET

Senator BENNET. Thank you, Mr. Chairman, and thank you 

again for holding this important hearing. It’s my honor to introduce 
4 

Dr. David Longanecker to the committee. Dr. Longanecker has 

served as president of the Western Interstate Commission for 

Higher Education in Boulder, CO, since 1999. The commission is 

a regional compact among 15 western States which seeks to improve access to higher education. 

Previously, Dr. Longanecker served for 6 years as the Assistant 

Secretary for Postsecondary Education at the Department of Education. In this role, he developed and implemented initiatives that 

provided more than $40 billion annually in student assistance. 

Prior to that, he served as the State higher education executive 

officer in both Colorado and Minnesota. He was also the principal 

analyst for higher education for the Congressional Budget Office, 

and welcome back. 

Dr. Longanecker has worked closely with our Lieutenant Governor, Joe Garcia, who serves as the executive director of the Colorado Department of Higher Education. This collaboration promises 

exciting developments for the future of higher education in Colorado. 

Dr. Longanecker has been an exemplary leader in education, 

both nationally and in Colorado, and I look forward to his testimony. 

Thank you for being here today. 

The CHAIRMAN. Thank you very much, Senator Bennet. 

I would yield to Senator Alexander for purposes of our next introduction. 

Senator ALEXANDER. Thanks, Mr. Chairman, and thanks for the 

series of hearings. It’s my privilege to welcome John Morgan here. 

John is one of our most experienced State officials. He has worked 

with the State of Tennessee for 30 years. He has been the Controller of the Treasury. He was deputy to our Democratic Governor 

before the election of our new Republican Governor, with whom he 

now works. He is chancellor of the Tennessee Board of Regents, 

which is the sixth largest system of public higher education in the 

country. It has a number of 4-year institutions and 2-year institutions. 

What I’m especially looking forward to hearing about is the system that he and Governor Bredesen put in place and that Governor 

Haslam and he are now implementing, which has our State focusing more of our dollars for higher education on retaining and graduating students than simply the number who are enrolled. One 

way to save money if you’re going to a 4-year institution is to stay 

and graduate in 4 years or 5 years instead of 6 years, which is the 

norm. 

Welcome, Mr. Morgan. 

The CHAIRMAN. Thank you very much. 

The next witness will be Dr. Preus. As commissioner of Oregon 

Community Colleges, Dr. Preus provides leadership and advocacy 

with the Governor, the legislature, and other statewide stakeholders for Oregon’s 17 community colleges, seven workforce investment areas, and many community-based organizations. Prior to her 

appointment as Commissioner, Dr. Preus held leadership roles in 

workforce development at the local end State levels. 

She has also had private sector experience as a chemist and 

quality control manager with United States Steel. She serves on 
5 

numerous boards across the country and graduated from Cumberland Junior College and Middle Tennessee State University. 

She earned a master’s in business administration from Indiana 

University and her doctorate from Oregon State University. 

We welcome you all, a very distinguished panel. All of your statements will be made a part of the record in their entirety. What I 

would ask is that you just give a brief summation in 5 to 7 minutes. We’ll go down the line, and then we’ll open it up for a dialog. 

Dr. Howard, we’ll start with you. Welcome and please proceed. 

STATEMENT OF MURIEL A. HOWARD, Ph.D., B.A., PRESIDENT, 

AMERICAN ASSOCIATION OF STATE COLLEGES AND UNIVERSITIES, WASHINGTON, DC 

Ms. HOWARD. Good morning, and thank you, Chairman Harkin, 

Ranking Member Enzi, and distinguished Senators of the committee. As you know, my name is Muriel Howard, and I’m president of the American Association of State Colleges and Universities, henceforth referred to as AASCU. 

AASCU’s membership comprises of approximately 420 public institutions that vary by enrollment, size, and mission, but are primarily recognized as State comprehensive master’s institutions. It 

is an honor for me to appear before you today, and I applaud the 

committee for continuing to examine this important subject of college affordability. 

College affordability is the responsibility of four primary stakeholders, the Federal Government, State government, institutions, 

and families. The Federal Government has strengthened its commitment in recent years with increased funding for the Pell grant. 

And I thank each of you for that, especially you, Mr. Chairman. 

Institutions have a responsibility to provide a quality education 

while maintaining reasonable tuition. I am pleased to report that 

public 4-year institutions have been working hard to be responsible 

partners in the college affordability compact. These institutions 

provide substantial grant aid to financially needy students, and institutional spending data from the past decade illustrates that 

master’s comprehensive public colleges and universities have kept 

overall increases in the cost of educating students at roughly the 

rate of inflation. 

So why the dramatic increase in tuition during the past several 

years? Simply put, State investment in higher education is on a 

downward spiral. Per student, State investment in higher education has deteriorated over the past 25 years. Numerous studies 

have cited this as the single greatest factor in the rise of tuition 

at public 4-year institutions. 

States, though, can help by investing in student financial needbased aid programs. State grant-aid programs award money for college, based on financial need, academic merit, or a combination of 

both. Over the past 20 years, there has been an increase in awarding more merit-based aid than there has been need-based aid. The 

shift toward merit aid programs is a step backward, in my opinion, 

in addressing college affordability. Merit-based programs distribute 

aid to students from higher income backgrounds, awarding taxpayer funds to students who would likely have enrolled in college 

regardless of the financial aid. 
6 

States, on the other hand, should provide greater flexibility 

around institutional policies. Flexibility is essential when resources 

are constrained. Greater institutional flexibility in setting tuition, 

financial aid, the procurement and sharing of goods and services, 

and adjusting regulations involving capital improvements are critical. 

In the area of tuition policy, it’s important for me to note that 

public institutional leaders in 40 States do not have complete autonomy to establish their own tuition rate. This authority rests in 

either a State agency or the State legislature. Likewise, the institution should have flexibility and control to determine how tuition 

dollars are allocated across the campus, including the use of tuition 

dollars for student financial aid. 

States should ensure that students are college- and career-ready. 

As the committee knows, 46 States have adopted the Common Core 

State Standards that are designed to better prepare students for 

college and career success. Implementation of these standards will 

reduce remediation costs and time to degree, thereby reducing the 

overall financial burden on students. Proper and successful implementation of the new State Standards must involve higher education. 

States should also consider mission-driven, flexible, and equitable performance-based funding systems. You will soon learn 

much more about that from the Tennessee witness this morning. 

Finally, an area where the Federal Government’s leverage can 

have an important impact on college affordability is through maintenance of effort provisions. The Federal Government has pursued 

this strategy in recent years through several legislative vehicles. 

AASCU’s analysis indicates that Federal maintenance of effort provisions are successful, and that without them States would have reduced public higher education funding more dramatically, which 

would result in even higher tuition increases. 

In closing, State funding is the most critical component to ensuring college affordability, although I have highlighted several nonfinancial related policies that can also positively affect institutions 

with keeping the overall cost to students as low as possible. 

Thank you, and I look forward to the discussion. 

[The prepared Statement of Ms. Howard follows:] 

PREPARED STATEMENT OF MURIEL A. HOWARD, PH.D., B.A. 

SUMMARY

The introduction notes that there are four main actors in higher education financing and ensuring affordable college access—Federal and State governments, institutions of higher education, and families. The primary reason for tuition increases at 

public institutions is the reductions or lack of sufficient increases in State higher 

education funding. Public master comprehensive institutions have held per-student 

costs to the rate of inflation during the past decade. 

Dr. Howard discusses State strategies that can help promote college affordability 

and student success. She notes four specific areas including: policies providing State 

funds in support of students on need-based, rather than merit-based, financial aid 

programs; policy reforms that provide greater flexibility to institutions and which 

in turn can generate cost savings and better utilization of moneys; implementation 

of college and career-ready State academic standards; and the use of performancebased funding initiatives. 

States should be pursuing policies that award State aid through need-based formulas, ensuring better affordability to low-income students. Under flexibility, the 

testimony calls for greater autonomy for institutions setting and controlling their 
7 

1Trends in College Spending, 1999–2009, Delta Cost Project. http://www.deltacostproject.org/ 

analyses/deltalreports.asp. 

own tuition; relief from restrictions on the use of tuition funds, including the allocation of awarding financial aid; easing requirements within State procurement rules 

for acquiring goods and services; and finally, simplifying the requirements associated with the construction of capital projects. College-ready academic standards will 

result in better prepared students, which may in turn reduce costs by decreasing 

the time required to degree completion. Finally, performance-based funding may be 

a useful tool, but has not to date demonstrated its relationship to affordability. 

The conclusion highlights what the Federal Government can do to support the 

State’s role in affordability. Since direct support to institutions is the single, greatest factor in tuition prices, the Federal Government can encourage continued State 

support through maintenance of effort provisions in legislation. It is suggested that 

education policy should be viewed by State and Federal policymakers in a broad 

P–20 context and provide sufficient flexibility while remaining goal oriented. 

Thank you Chairman Harkin, Ranking Member Enzi, and other distinguished 

Senators for affording me this opportunity to speak to the States’ role in making 

college affordable. I commend the committee for exploring this topic. My name is 

Muriel Howard and I have the honor of serving as the president of the American 

Association of State Colleges and Universities, AASCU. Now in its 51st year, 

AASCU is a national leadership association consisting of some 400 presidents, 

chancellors and system heads of public 4-year colleges and universities. The group 

is diverse in its membership, ranging from small, liberal arts institutions enrolling 

a few hundred students to research-intensive universities that enroll tens of thousands of students. However, we are mainly recognized as representing the comprehensive, master’s institutions which include nearly all the public Historically 

Black Colleges and Universities (HBCUs), Hispanic Serving Institutions (HSIs) and 

numerous other Minority Serving Institutions (MSIs). AASCU institutions offer affordable access to a quality postsecondary education to nearly 4 million students annually. 

College affordability is a responsibility of four primary stakeholders: the Federal 

Government, State government, institutions, and families. The Federal Government 

has strengthened its commitment in recent years with increased funding for the Pell 

grant. I want to thank each of you for that commitment, and to extend special appreciation to you Chairman Harkin. Families, as the consumer, have a role in paying for some portion of the student’s college education. Institutions have a responsibility for maintaining tuition prices at a reasonable level and for working to restrain 

college costs. Public 4-year institutions have been a responsible partner in the compact to mitigate rising costs associated with attending college. In addition to awarding substantial grant aid to financially needy students, institutional spending data 

from the past decade illustrate that master comprehensive public colleges and universities have kept overall increases in the cost of educating students to roughly the 

rate of inflation. This analysis of institutional spending, conducted by the Delta Cost 

Project at the American Institutes of Research, indicates that it is these institutions 

that are the most efficient in American higher education, with spending-per-degree 

the lowest of any sector.1

So why the dramatic increase in tuition prices during the past several years? The 

answer leads us to the final major player in ensuring college affordability—the 

States. Per-student State investment in higher education has deteriorated over the 

past 25 years. Numerous studies have highlighted this trend and have correctly 

linked it as the single largest reason for the rise in tuition at public 4-year institutions. I recognize that as the fiscal situation at the Federal level has become alarming, States also have been facing challenging budgetary circumstances, especially 

since they must abide by balanced budget requirements. However, while State investment is the most important factor in maintaining affordable tuition, there are 

other avenues for States to explore that will help ease the financial burden of a college education. I will briefly discuss four strategies States can utilize to improve college affordability and student success. 

STATE INVESTMENT IN STUDENT FINANCIAL NEED-BASED AID PROGRAMS

State disinvestment in public colleges and universities and the subsequent corresponding increases in tuition prices have raised the profile of State grant aid as 

a vital component in financing a college education for low- and middle-income students. State grant aid programs award money for college based on financial need, 
8 

2 National Association of State Student Grant and Aid Programs (2012). 42nd Annual Survey 

Report on State-Sponsored Student Financial Aid: 2010–2011 Academic Year. Retrieved from 

http://www.nassgap.org/documentldownload.aspx?documentID=880. 3 Ibid. 

4 Brookings Institution State Grant Aid Study Group (2012). Beyond Need and Merit: 

Strengthening State Grant Programs. Brown Center on Education Policy at Brookings. Retrieved 

from http://www.brookings.edu/∼/media/research/files/reports/2012/5/08%20grants%20chingos% 

20whitehurst/0508lstatelgrantlchingoslwhitehurst.pdf. 

academic merit or a combination of need and merit. These programs are typically 

funded through State taxes or lottery revenues. Each State has a unique approach 

to State aid, with some States having multiple grant programs. 

State student aid grants remain a centerpiece of college finance for millions of 

Americans; however, these grant funds are increasingly being distributed based on 

academic merit, as opposed to financial need. According to the National Association 

of State Student Grant and Aid Programs (NASSGAP), almost 4.3 million students 

received a total of $9.2 billion in State grants in 2010–11.2 Of the State grant money 

awarded that year, 71 percent was need-based and 29 percent was merit-based. In 

contrast, in 1992–93, 90 percent of State grant funds were awarded at least partially on students’ financial circumstances.3

The shift toward politically popular merit-based aid is a step backward in the effort to boost college attainment. Unmet financial need is still a major hurdle for college enrollment and completion for low-income students. Merit-based programs often 

distribute aid to students from higher income backgrounds, awarding taxpayer 

funds to students who would have likely enrolled in and finished college without the 

help of the subsidy. Awarding State grants based solely on high school performance 

remains an inefficient use of precious State resources, perpetuates longstanding inequities in American society and may be contrary to the fundamental purposes of 

student financial aid. 

State policymakers should consider the recommendations of a paper policy issued 

this spring by the Brookings Institutions, Beyond Need and Merit: Strengthening 

State Grant Programs. The report calls for State grants targeted to students with 

financial need while also requiring students to meet basic academic milestones toward timely degree completion. The report’s recommendations include the following: 

1. Target State grants to needy students with the potential to succeed. By 

restricting aid to low- and middle-income students, States can use their resources 

most efficiently. The report also encourages States to look beyond 18–24-year-old 

college students to adult populations, and possibly implementing a separate program for these students. 

2. Consolidate and simplify student grant programs, making them easier 

to understand and navigate by families. The system of institutional, State, and 

Federal aid is complicated, and States should make every effort to merge their grant 

programs and make them understandable for students and families. 

3. Use incentives to drive timely degree completion. Provide grant aid incentives to students, such as rewarding additional aid at specified milestones in earned 

credits hours. Programs must have well-designed incentives for students to make 

progress toward finishing their degrees on time. This should not include high GPA 

requirements. 

4. States that reduce funding for grant programs or make other programmatic changes should do so without harming students with the most 

financial need. In States where grant program funding is reduced, or program eligibility requirements or other program reforms are altered, programs should not 

change academic requirements that have a deleterious effect on low-income and 

nontraditional student participation.4

GREATER STATE FLEXIBILITY INVOLVING INSTITUTIONAL POLICIES

A second area of action that States can take to enhance college affordability involves the granting of greater flexibility to public colleges and universities on a 

range of institutional matters. In the absence of increases in State operating support necessary to keep tuition prices from rising above the rate of inflation, States 

can provide greater autonomy to institutions, helping them in their quest to maximize the efficiency and prudent utilization of scarce resources, which can in turn 

help reduce the college cost burden to students. 

One area where flexibility can be most helpful is in the setting of tuition policy. 

The tuition dollars paid for by students and their families account for an increasing 

share of public universities’ general fund budgets. Greater flexibility and institutional control in the setting of tuition rates and the subsequent utilization of the 

tuition revenues allows for more strategic use of these moneys. Yet, in 40 States, 
9 

5State Tuition and Financial Aid Assistance Policies for Public Colleges and Universities. 

State Higher Education Executive Officers, 2010–11. http://www.sheeo.org/finance/tuit/2010– 

2011Tuitionlandlfees.pdf. 6Public College and University Procurement: A Survey of the State Regulatory Environment, 

Institutional Procurement Practices, and Efforts Toward Cost Containment (April 2010). American Association of State Colleges and Universities and the National Association of Educational 

Procurement. http://www.aascu.org/uploadedFiles/AASCU/Content/Root/PolicyAndAdvocacy/ 

PolicyPublications/aascunaepfinal%281%29.pdf. 

an entity other than the institution has control over such policy; many times authority over tuition matters is in the hands of State agencies and even State legislatures.5 As an example of a new, rational approach to tuition policy, lawmakers in 

New York have implemented a plan that allows the State’s public universities to 

raise tuition prices moderately over the next several years and to use a portion of 

the revenues strategically in ways that will foster college affordability and generate 

greater institutionally led economic development activity. This approach provides 

students and families with more certainty in college planning, and institutions with 

greater assurance in their fiscal planning in the years ahead. 

Likewise, public colleges and universities must have sufficient flexibility in the allocation of financial aid dollars provided to students. AASCU institutions enroll a 

large proportion of students from low-income backgrounds, and therefore strive to 

maximize the utility of grant aid to students. The flexible, strategic use of institutional grant aid is essential if our States and the Nation are to meet ambitious— 

and vital—educational attainment goals. 

Another opportunity where States can provide institutions with greater latitude 

which can in turn lead to reduced costs for students involves State policies and 

mandates pertaining to the procurement of goods and services. Collectively, public 

colleges and universities spend billions of dollars annually on everything from laboratory equipment to energy to insurance; procurement policies and practices affect 

virtually every aspect of campus operations. 

A 2010 study of institutional and State procurement policies and practices, conducted by AASCU in collaboration with the National Association of Educational Procurement (NAEP), illustrated that some States’ procurement policies inhibit public 

colleges’ and universities’ ability to fully maximize purchasing power, generate cost 

savings, enhance product/service quality and improve the efficiency of institutional 

procurement operations.6

The AASCU/NAEP study offered a number of State policy reforms to contain costs 

and improve productivity in institutional procurement. These include allowing institutions to participate in group-purchasing consortiums, making institutional participation in State purchasing contracts voluntary, allowing institutions to conduct negotiations with suppliers beyond the competitive bidding process, and to review, and 

if warranted, increase the minimum dollar threshold for purchases requiring State 

approval and adjust minimum thresholds involving formal competitive (sealed) bids. 

The report features case studies from three States—Colorado, Kansas and Virginia—where public universities have been granted greater control over procurement matters, allowing the institutions to save money and reallocate funds to where 

they make the most impact: in the classroom. 

A final area where greater State flexibility and autonomy can lead to improved 

cost savings, institutional performance and student and taxpayer savings is in the 

area of capital construction. As with tuition, financial aid and procurement policies, 

the framework involving oversight of the campus construction process varies considerably by State. A common refrain echoed by frustrated campus officials is that the 

maze of State approval processes, regulations, mandates and various other administrative requirements often slow construction timelines down to a glacial pace. The 

extent of State bureaucratic red tape often dampens the pace at which the positive 

outcomes associated with campus improvements can be realized, among them being 

the creation of jobs and spin-off economic development associated with construction 

projects, and students’ and professors’ ability to use the facilities in a timely manner. Surely, moneys can be better spent on supporting the core teaching and learning enterprise rather than on the capital construction process, where an overwhelming and unnecessary slate of State rules and reporting requirements siphon 

off precious institutional resources. 

In the overarching call for greater State flexibility as it affects campus policies 

and practices, one thing must be made clear: greater autonomy in no way should 

be construed as a diminishment of institutional accountability. As stewards of the 

public’s trust, State colleges and universities must rightfully account for all resources, public and private, in order to fully leverage every dollar in the advancement of the teaching, research and service missions of these public enterprises. 
10 

7 Update on Federal Maintenance of Effort Provision: Reinforcing the State Role in Public 

Higher Education Financing (July 2012). American Association of State Colleges and Universities. http://www.aascu.org/policy/publications/policy-matters/2012/MaintenanceofEffort-II 

.pdf. 

INCREASING COLLEGE READINESS—IMPLEMENTATION OF THE COMMON CORE

STATE STANDARDS

A third area where States are demonstrating leadership and which holds strong 

promise for raising students’ readiness for and participation in postsecondary education involves new college and career-readiness academic standards. While nearly 

all the States have adopted the Common Core State Standards, a few have developed their own set of standards. The Common Core State Standards are designed 

to better prepare students for success in college. This should lead to reduced timeto-degree, thereby reducing the overall cost burden on students, and more efficient 

use of institutional resources. However, proper and successful implementation of the 

new standards by States must involve the higher education community and more 

specifically, public institutions of higher education. Ensuring that both K–12 and 

postsecondary faculty have a working knowledge of the standards, through strong 

working partnerships, is essential. In addition, States must engage their higher education institutions and systems in the development and implementation of learning 

assessments associated with the new curricular standards. It is through these partnerships that better curriculum and course alignment will occur, along with 

strengthened pre-service and in-service teacher development programs. 

MISSION-DRIVEN, FLEXIBLE AND EQUITABLE PERFORMANCE-BASED FUNDING SYSTEMS

A final activity that I will discuss involves a more strategic State approach in the 

allocation of institutional operating support. Over the last 3 years, many States 

have developed performance-based funding (PBF) systems for public colleges and 

universities. PBF systems tie a portion (or all) of an institution’s State funding to 

performance on a series of metrics, such as student retention and degree completions. The objectives of these systems are to incentivize institutions to address a variety of State strategic goals, such as productivity improvement, cost savings and 

workforce development. While this approach to higher education finance is not new, 

best practices gleaned from prior attempts and advances in State data collection 

have led to a series of promising performance-based funding programs. In particular, Tennessee and Pennsylvania have innovative approaches that account for 

institutional differences while still driving performance improvement. AASCU supports State experimentation with performance-based funding systems that account 

for the diverse missions among State institutions and that award institutions for 

boosting measures of success for low-income students. 

IN CONCLUSION

I began my remarks by highlighting that there are multiple entities involved in 

making higher education affordable. The Federal Government’s role does not merely 

need to be constrained to student aid programs. In the last reauthorization of the 

Higher Education Act, as well as in several other pieces of legislation, provisions 

have been inserted requiring States to maintain a certain level of funding support 

for public higher education institutions. AASCU’s own analysis indicates that Federal ‘‘maintenance of effort’’ provisions are successful and that without them States 

would have reduced higher education funding more dramatically over the past several years.7 Given the strong relationship between State funding for public higher 

education and tuition costs at these institutions, it is clear that without these Federal maintenance of effort requirements, tuition costs would have increased even 

more dramatically in many States. 

The maintenance of effort provision contained in the Higher Education Act is 

rather weak compared to provisions in other education and healthcare measures. As 

such, higher education is often squeezed out of the budget process as States meet 

Federal funding requirements established in P–12 education programs, as well as 

in meeting Medicare/Medicaid costs. While there is widespread acknowledgement 

that higher education is a major State economic driver, the reality is that State 

budget priorities center on P–12 education funding, Medicare/Medicaid programs, 

and public safety/corrections before higher education. While recognizing there are 

many views on the subject of maintenance of effort, I simply urge Congress to fully 

understand the interplay of these provisions. It is certainly within the Congress’ 

purview to remove these Federal requirements; however, if there are to be Federal 
11 

provisions, then they should be treated as equally as possible in order to provide 

States with some flexibility to fund all of them. 

State funding is the most critical component to any State higher education activity; however, I have highlighted several other non-financial related policies that can 

also have a positive effect on assisting institutions with keeping the overall cost burden to students as low as possible. 

American higher education is a key generator for economic prosperity. We are all 

well aware of the statistics related to the jobs that will require a postsecondary education in the years ahead. States and the Federal Government need to examine education in the context of a P–20 continuum and invest and implement policies accordingly. There is not a one-size-fits-all solution, thus these policies should provide 

needed flexibility while remaining goal-oriented. 

The CHAIRMAN. Thank you very much, Dr. Howard. 

Dr. Longanecker. 

STATEMENT OF DAVID A. LONGANECKER, Ed.D., M.A., B.A., 

PRESIDENT, WESTERN INTERSTATE COMMISSION FOR 

HIGHER EDUCATION, BOULDER, CO 

Mr. LONGANECKER. Mr. Chairman and members of the committee, good morning, and thank you for the opportunity to be with 

you today. 

For the record, I’m David Longanecker. I’m president of the 

Western Interstate Commission for Higher Education, which is a 

federally chartered interstate compact that has the simple mission 

of trying to expand access to high-quality postsecondary education 

to the citizens of the West. It represents the 15 Western States. 

There are some States that think they’re western, but they didn’t 

join WICHE, so they’re not part of the West. 

[Laughter.] 

We’re here today to talk about improving college affordability. 

More specifically, I was asked to talk about the strategies for improving college affordability that are being designed and implemented at the State level, and I’ll focus on the West. 

The 21st century has really brought a new way of thinking about 

what affordability means, at least at the State level. Affordability 

now refers not only to what students have to pay and their families 

have to pay, but also what the States can afford. There have been 

three waves that really have created this change in philosophy 

from one that’s focused almost exclusively on students to one that’s 

focused on both students and State resources. 

The first is the rapid increase in the demand for higher education that has occurred. It has been driven by the needs of our 

Nation for a better educated population and by the increasing returns on investment to a college education for individuals. But, the 

result is a much larger share of our population going to college 

than was in the past, and that makes the limited funds available 

to the States to be spread more thinly. 

The second wave is really an evolution in the philosophy about 

who should pay for college. Many at the State level now see higher 

education as having great benefits as both a public good and as a 

private good, and, thus, redefining how those costs should be 

shared by students and government has been a factor in what has 

been occurring recently. 

And, third, the exceptional financial difficulties the States have 

faced over the last few years have really required that States look 

at all public services, including higher education, in a different way 
12 

and work on doing more with less. To find the right balance between public and private benefits and affordability, States are pursuing a number of very creative new approaches to maintaining affordability. Some of these policies and practices focus on improving 

the efficiency and the effectiveness in the delivery of education, 

what I’ll refer to as supply-side activities. 

Perhaps the most popular of those is performance funding. Tennessee is sort of a leader in this area, and I’m sure you’ll hear 

something about that. It’s pretty much all the rage in higher education these days. In the West, about half of the WICHE States are 

involved with performance funding. Most of those focus on the completion agenda. Some people have said they think that the completion agenda is an anti-access agenda and an anti-affordability 

agenda. They’re absolutely wrong. 

As Senator Alexander mentioned, if institutions are rewarded for 

performance on the completion of their students, they’re going to 

find a way to get their students to completion quicker and more 

likely to completion. Both of those are going to reduce the costs and 

increase the benefits to the students who are involved. So from our 

perspective, it’s a very positive activity. 

A number of our States, in addition to working on that, are working explicitly in their performance agreements to reduce equity 

gaps that exist in higher education. That would be true in Colorado 

and in Nevada. In Washington State, the community colleges and 

technical education system has developed a performance-based 

funding system that rewards students at different benchmarks as 

they progress, because the research suggests that students who 

achieve those benchmarks are more likely to complete their education. Oregon is exploring a performance-based funding strategy 

that, if adopted, will tie funding to institutions based on their delivering education at a highly efficient rate. I’ll leave it to Dr. Preus 

to explain that in greater detail for you. 

An alternative to outcomes or performance-based funding is incentive funding. Many of the States are using incentive funds to 

encourage institutions to change the way in which they’re doing 

business and to be more affordable. In South Dakota, while they 

have eliminated this recently, they were providing funding for institutions to adopt a program of studies that was developed by the 

National Center for Academic Transformation which promotes the 

use of hybrid, technology-enhanced instruction which proves to 

have higher student learning at a substantially lower cost. 

The California legislature is considering designating a special 

funding stream to enhance student success in the California community colleges, specifically, through a variety of academic and student support services. So you’ve got a variety of supply-side things. 

On the demand side, we have traditionally at the State level focused on need-based student financial aid or, more recently, as 

Muriel indicated, merit-based aid programs. We’re still using financial aid as a tool, but we’re refining that. In Washington State, 

which has had the strongest financial aid system in the West, generally, they have a new public-private partnership intended to complement their existing need-based program which is intended to reward lower and middle-income students who participate in STEM 

fields through combined public and private funding. 
13 

In Massachusetts, they have a pilot program they’re looking at 

to pay at-risk students to take more credit hours, because students 

who take more credits graduate sooner. The research is pretty clear 

on that. That’s an area that’s been researched at the institutional 

level by MDRC—found very promising results. Massachusetts is 

looking to see if you can take it to scale at the State level. 

A number of States have developed blended programs that take 

the best of merit-based programs and the best of need-based programs and put them together. The program I like the best is Oklahoma Promise Scholarship. From the eighth grade on, if you take 

a rigorous curriculum in a high school and get decent—doesn’t 

have to be great—grades and stay like a nice person—you don’t go 

get a criminal record—you basically are assured that your tuition 

will be paid. What’s very interesting is recently, last year, the legislature passed that that program has to be funded before any other 

service of State government receives any funding. 

Now you have a combination of supply and demand, the way 

States do that. Some of the States are actually blending the two 

of those and putting both of those together. In the past, Washington’s finance policies have probably been the most in sync of any 

of the Western States, and they’re now making that better with 

their new public-private partnership. They’ve also passed a State 

law that says if the institutions raise their tuition beyond a reasonable level, which they establish, then the institutions have a requirement—the public institutions have a requirement to fill in the 

additional financial need that that has created for students with 

assessed financial need. 

Oregon is amplifying this program I just mentioned. I think it’s 

the most innovative of the new initiatives that are there. I’ll let 

Cam talk about that rather than me try to talk about it. I think 

what they’re talking about could be a real transformation in the 

way in which we finance our education. 

All in all, the unique times that we face have forced the States 

to become very creative in fashioning ways to preserve financial access for their students. While the changes wrought by the new approaches are uncomfortable for many, because they break the traditional concepts of affordability and of quality, they are necessary if 

we are to assure that the students can afford to go to college, given 

the times we face. 

The unfinished agenda, I believe, is that the various partners— 

the students, their families, the institutions, State and Federal 

Government—need to work more in sync than we do today to ensure that the various strategies we are doing blend well together 

and ensure affordability in the world of limited resources. The Federal Government could provide a major impetus for such partnerships if its major student financial aid programs and other programs required a stronger partnership between the Federal, the 

State, and the institutions. 

You’ve done this very effectively in the past. The old SSIG program, at least in its initial incarnation, encouraged the States to 

develop need-based aid programs. You could do it again, and I encourage you to do so. 

Thank you. 

[The prepared statement of Mr. Longanecker follows:] 
14 

PREPARED STATEMENT OF DAVID A. LONGANECKER, ED.D., M.A., B.A. 

SUMMARY

AFFORDABILITY

The 21st century has brought a new way of thinking about what affordability 

means. Affordability now refers both to what students and their families can afford 

and to what taxpayers can afford. The dilemma is that the new focus on what the 

States can afford has tested the limits of what students and their families can afford. 

PROMISING STATE-LEVEL SUPPLY-SIDE INTERVENTIONS

The most popular current strategy involves the use of performance funding to reward and induce greater affordability. Examples include the following: 

• Colorado’s new Master Plan for Higher Education will reward institutions for 

greater success in reducing equity gaps in graduation rates and numbers, as will 

Nevada’s new funding formula. 

• The Washington State Community and Technical College system has developed 

a performance-funding process that rewards institutions based on the success of 

their students in achieving various persistence benchmarks. 

• Oregon is exploring a performance-funding strategy that will tie funding to institutions based on their delivering education at a highly efficient threshold. 

PROMISING STATE-LEVEL DEMAND-SIDE INTERVENTIONS

Affordability initiatives have focused on reducing the cost to students through financial aid. 

• Washington State has embellished its robust State need-based financial aid program with a new public/private partnership intended to reward lower and middleincome students who chose to major in STEM fields of study. 

• Massachusetts has developed a pilot program to see if providing grants to needy 

students who commit to taking more credits each term will enhance their persistence and completion. 

• The Oklahoma Promise Scholarship assures eighth graders who come from lowand moderate-income families that if they take a rigorous curriculum in high school, 

get decent (but not necessarily exceptional) grades, and stay out of trouble they will 

have their tuition paid for at any State institution. 

PROMISING STATE-LEVEL INTERVENTIONS BLENDING SUPPLY AND DEMAND EFFORTS

WICHE has encouraged the Western States to integrate all of their finance policies, so that they work in sync to assure affordable access to and success in highquality educational opportunities. 

• Washington has traditionally balanced a comparatively high tuition structure at 

both the 2-year and 4-year level with a strong need-based financial aid program. 

• Arizona integrated policies that sought to assure that the State’s three public 

universities would have sufficient funding to thrive through the combination of 

State support and tuition revenue and that increases in tuition would be matched 

dollar for dollar by institutional funds for students with financial need (defined as 

Pell grant recipients). 

• Oregon’s recently adopted Shared Responsibility Program creates a State policy 

based on an overall higher education financing partnership with the State, the student, the student’s family, the Federal Government, and the institutions of higher 

education. 

STATE EFFORTS TO ASSURE AFFORDABILITY IN THE NEW NORMAL

Good morning and thank you for the opportunity to testify before you today. I am 

David Longanecker, president of the Western Interstate Commission for Higher 

Education (WICHE), a federally chartered interstate compact of the 15 Western 

States with the mission of expanding access to high-quality postsecondary education 

for the citizens of the West. 

We are here today to talk about ‘‘improving college affordability’’—more specifically, to talk about the strategies for improving college affordability that are being 

designed and implemented at the State level. WICHE is very pleased to have the 

opportunity to join in this discussion because there are a number of very promising 
15 

State initiatives in the West and elsewhere dedicated to making college more affordable. 

But in addressing this set of policy initiatives, we must first define what we mean 

by ‘‘affordability.’’ 

Since about the turn of the century, we at WICHE have been looking at the concept of affordability in a new way—and very differently than it had been defined 

in the last century. 

Traditionally, the concept was quite simple. Affordability meant colleges charge 

tuition that was affordable to those citizens who wished to be students. The standard policy response, therefore, was to keep tuition as low as possible. Many States 

even imbedded the concept that college should be either free or as close to free as 

possible in State law. This was particularly true in the West, where the traditions 

of private higher education are not as strong as in other regions of the country and 

where most higher education was provided with public funding through public institutions. 

In the middle of the last century both the Federal Government and the States embellished the original concept in two important ways. First, through the Higher 

Education Act of 1965 and amendments of 1972, which established most of the current array of Federal student aid programs, the Federal Government recognized 

that individual affordability varied, depending upon a family’s financial circumstances, and public policy responded by developing the concept of need-based financial aid. Second, it recognized that costs other than tuition (living expenses, 

books, fees, etc.) also affected affordability and needed to be taken into account. Following the Federal lead, State public policy also recognized these two qualifying conditions to individual affordability and universally established State-level need-based 

financial aid programs. 

Truth be told, however, the States were not nearly as committed to this new concept of affordability as the Federal Government was. Many of the States created 

their need-based programs only to receive the matching Federal funds available 

through the State Student Incentive Grant Program (SSIG). While every State ostensibly established a ‘‘need-based’’ program, only about a dozen established robust 

efforts. In the West only California and Washington established serious need-based 

grant programs; most States continued to abide by the original concept, equating 

affordability with low tuition. 

The 21st century has brought a new way of thinking about what affordability 

means, at least at the State level. Affordability now refers both to what students 

and their families can afford and to what taxpayers can afford. Three factors have 

shaped this new concept of affordability. First, the rapid increase in the demand for 

higher education, driven by our Nation’s need for more well-educated people in the 

workforce and the increase in individual returns on investment from higher education, has strained budgets and pushed legislators to look at how much their States 

can afford to pay. Second, an evolving change in philosophy about who should pay 

for higher education has shifted policy in a number of States from an assumption 

that higher education is primarily a public good that should be paid for primarily 

with public funds to a political philosophy that assumes that higher education has 

great benefits as both a public good and a private good and that its cost should be 

more equally shared by students and government. Some have seen this as a shift 

toward the privatization of public higher education, but in truth it is more of a balancing of costs between beneficiaries. Third, the exceptional financial difficulties 

that States have faced as a result of two recessions in quick succession at the beginning of this century have created what is commonly referred to as the ‘‘new normal,’’ 

in which all public services, including higher education, must do more with less and 

in which evidence-based results are the metric. The result of these three new ways 

of thinking about affordability in higher education has led to State policy that relies 

more significantly on students paying a larger share of the costs of college. 

The dilemma, of course, is that the new focus on what the States can afford has 

tested the limits of what students and their families can afford—and it is concern 

about this aspect of affordability that you are really focused on today. I just encourage you to recognize that affordability is now confounded by the financial limits of 

State government than it traditionally has been. 

Today, I will share with you some of the most promising State policies and practices intended to assure higher education affordability, as we now define it. Some 

of these policies and practices are supply-side interventions, focusing on changing 

institutional behavior. Others are demand-side interventions, focusing on changing 

student behavior. Yet others combine interventions focused both on institutional 

(supply-side) and student (demand-side) behaviors. 
16 

PROMISING STATE-LEVEL SUPPLY-SIDE INTERVENTIONS

It should be acknowledged that many of the activities of States to increase productivity and efficiency in order to maintain affordability have been fostered by the generous support of Lumina Foundation and the Bill & Melinda Gates Foundation. A 

Lumina Foundation project, originally dubbed ‘‘Making College Affordable,’’ provided 

substantial funding to a bevy of States, which have provided the test bed for many 

of the affordability initiatives referenced below. The Complete College America organization has furthered these efforts by engaging more than half of the States in developing clear metrics and methods for improving their productivity. 

Perhaps the most popular current strategy, both at the State legislative and governance level, involves the use of performance funding to reward and induce greater 

affordability. Examples include the following. 

• Many States are adopting performance funding strategies that will reward institutions for graduating more students. While this may not appear to be an affordability strategy, it truly is. Institutions realize that students who can’t afford college 

are much less likely to enroll in the first place and less likely to graduate if they 

do enroll. Thus, for the institutions to reap the rewards of graduating more students 

they must assure students that higher education is affordable. In the West Colorado’s new Master Plan for Higher Education will reward institutions for greater 

success in reducing equity gaps in graduation rates and numbers, as will Nevada’s 

new funding formula. 

• The Washington State Community and Technical College system has developed 

a performance-funding process that rewards institutions based on the success of 

their students in achieving various persistence benchmarks. Again, while this may 

not seem like affordability policy, it is, because students who persist at higher rates 

reach their educational goals quicker and thus more affordably. 

• Oregon is exploring a performance-funding strategy that, if adopted, will tie 

funding to institutions based on their delivering education at a highly efficient 

threshold, comparable to the most productive competitors in the higher education 

marketplace. 

Other States are providing incentive funding for institutions that adopt programs 

designed to focus on affordability. 

• South Dakota provided funding for institutions to adopt programs developed by 

the National Center for Academic Transformation, which promotes the use of hybrid 

(technology-enhanced) classroom instruction that has demonstrably increased student learning at a lower cost. 

• The California Legislature is considering designating special funding to enhance 

student success in the California Community Colleges through a variety of academic 

and student support services. 

PROMISING STATE-LEVEL DEMAND-SIDE INTERVENTIONS

Traditionally, affordability initiatives have focused on reducing the cost to students through financial aid, and this remains fertile ground for State policy innovations and interventions. 

• Washington State, which traditionally has had one of the most generous and 

economically rational sets of State finance policies, has embellished its robust State 

need-based financial aid program with a new public/private partnership intended to 

reward lower and middle-income students who chose to major in STEM (science, 

technology, engineering, and math) fields of study. 

• Massachusetts has developed a pilot program to see if providing grants to needy 

students who commit to taking more credits each term will enhance their persistence and completion. This program will test whether such pay-for-performance approaches—which have worked at the institutional level, according to some research—can be taken to scale at a State level. 

• A number of States have developed blended programs that combine the best 

principles of both need-based and merit financial aid programs. The Oklahoma 

Promise Scholarship, for example, assures eighth graders who come from low- and 

moderate-income families that if they take a rigorous curriculum in high school, get 

decent (but not necessarily exceptional) grades, and stay out of trouble they will 

have their tuition paid for at any State institution. A unique feature of this program 

is that legislature is required to fund this program before considering the budget 

of any other State services. 
17 

PROMISING STATE-LEVEL INTERVENTIONS BLENDING SUPPLY AND DEMAND EFFORTS

WICHE has encouraged the States with which it works to integrate all of their 

finance policies, so that they work in sync to assure affordable access to and success 

in high-quality educational opportunities. 

• In the past, Washington’s finance policies were perhaps the most in sync. The 

State has traditionally balanced a comparatively high tuition structure (high by 

Western standards) at both the 2-year and 4-year level with a strong need-based 

financial aid program. As mentioned above, the State has recently enhanced this approach with a new public/private partnership program—the Washington Opportunity Scholars—to assure even greater affordability for students seeking degrees in 

the urgently needed STEM fields of study. It has placed a requirement in legislation 

that institutions that increase tuition above recommended levels must meet the additional financial need that such action causes. 

• Similarly, Arizona in the early years of the new century adopted integrated policies that sought to assure that the State’s three public universities would have sufficient funding to thrive through the combination of State support and tuition revenue and that increases in tuition would be matched dollar for dollar by institutional funds for students with financial need (defined as Pell grant recipients). 

• Oregon’s recently adopted Shared Responsibility Program is perhaps the most 

innovative new initiative to blend supply- and demand-side strategies. Built upon 

a similar program in Minnesota, Oregon’s program creates a State policy based on 

an overall higher education financing partnership among the following players. 

• The State, which is responsible for supporting the public good. 

• The student, who as the principle beneficiary of the education is responsible 

for contributing what she/he is able to provide. 

• The student’s family, which has an obligation to contribute what it reasonably 

can before it asks others to do so. 

• The Federal Government, which is a significant partner through the Pell 

Grant Program, the Direct Student Loan Program, and the Federal Hope Tax 

Credits and Deductions. 

• The institutions of higher education, which have a responsibility for operating 

as efficiently as possible to sustain affordability. 

This program fashions a partnership that defines in policy the expected responsibility of each of these five partners and specifies how the sum of their contributions 

will equal the desired whole. Originally conceived primarily as a financial aid policy, 

the program is now being viewed as the framework for all higher education funding: 

State appropriations, tuition revenues, and State-based and privately provided financial aid. 

CONCLUDING REMARKS: A CHANGING WORLD FOR AFFORDABILITY AT THE STATE LEVEL

The unique times we face, dubbed the new normal, have forced the States to become quite creative in fashioning ways to preserve financial access for their students, using a variety of new approaches. While the changes wrought by new approaches are uncomfortable for many because they break from traditional concepts 

of affordability, they are necessary if we’re to assure our students that they can afford to go to college, and they’re sufficient to the task. Observing these changes in 

the West has been particularly interesting. The recent economic distress hit many 

of the Western States more severely than of the rest of the Nation, while affecting 

others much less. Yet the affordability change agenda is nearly universal in the 

West in one fashion or another. Those States most significantly impacted by the economic downturns of the new century have focused primarily on supply-side approaches, forcing greater productivity and efficiency reforms among their institutions of higher education or combined supply- and demand-side interventions. States 

that have weathered the recent economic malaise will have also focused on improving affordability. Alaska and Wyoming, for instance, have maintained their traditions of low-tuition but created new, blended financial aid programs that reward 

students for preparing well for college and performing well while in college, with 

a particular focus on the most financially needy students. 

The unfinished agenda, however, is for the various partners—students, families, 

institutions, and State and Federal Governments—to work more in sync to ensure 

that their various strategies blend well and assure affordability in a world of limited 

resources. The Federal Government could provide a major impetus for such a partnership if its major student financial assistance programs required a stronger partnership between Federal and State governments and institutions. With limited resources at every level of government, it simply makes sense to assure that these 
18 

partners, along with students and their families, work together as a team to win 

the higher education affordability game. 

The CHAIRMAN. Thank you very much, Dr. Longanecker. 

Mr. Morgan, please proceed. 

STATEMENT OF JOHN G. MORGAN, B.A., CHANCELLOR, 

TENNESSEE BOARD OF REGENTS, NASHVILLE, TN 

Mr. MORGAN. Good morning, Chairman Harkin, Ranking Member Enzi, and members of the committee. I appreciate very much 

the opportunity and the invitation to be here. I am the Chancellor 

of the Tennessee Board of Regents. As Senator Alexander noted, 

it’s the sixth largest higher education system in the country. We’re 

comprised of 13 community colleges, 27 technology centers, and six 

public universities literally located across the State. On a combined 

basis, we have in excess of 200,000 students in our system this fall. 

We’re one of two higher education systems in Tennessee. The 

other is the University of Tennessee system, which governs the 

four UT institutions and their activities. As was noted, your fellow 

committee member from Tennessee was president of the University 

of Tennessee system from 1988 to 1991, and it is especially an 

honor for me to be here with him today. I suspect he’s the one responsible for me being here before you today. So if you don’t like 

what I have to say, you can blame him. 

[Laughter.] 

The Complete College Act of 2010 may be the boldest attempt by 

any State yet to focus the energies and resources of its public higher education enterprise on meeting the State’s development needs. 

Implicit within the Complete College Act is the acknowledgement 

that the higher education funding structure must support the 

State’s priorities. However, the fiscal reality within which we operate has been one of severely reduced State funding over recent 

years. 

Tennessee students now cover almost two-thirds of the cost of 

their education at our public institutions. About 20 years ago or so, 

that was about the State’s share. The implication of this trend, if 

it continues, will be detrimental to our higher education aspirations. As resources have diminished, expectations for our systems 

have grown. The Complete College Tennessee Act included several 

important elements aimed at transforming our public higher education system into a more efficient, effective, and outcome-focused 

enterprise. 

Perhaps most importantly for today’s discussion, the Complete 

College Act called for our coordinating board, the Tennessee Higher 

Education Commission, to create a formula to allocate available 

State funding to public higher education institutions based on outcomes. Historically, Tennessee, like most other States or many 

other States, based the allocation of State appropriations mostly on 

enrollment. Typically, it was the number of students enrolled on 

the 14th day of the fall semester. The incentive was pretty clear: 

Enroll as many students as you can each year. 

In some ways, the new outcomes-based formula turns the old system on its head. Attachment A of my written testimony shows the 

outcomes upon which the formula is built, one set for community 

colleges and a similar but appropriately different set for univer-
19 

sities. These outcomes are weighted differently across institutions, 

thereby recognizing differences in institutional missions. 

As you can see in the examples, the outcomes formula is heavily 

weighted around student retention, progression, and ultimate success. And, importantly, as Dave said, it’s the numbers of students 

meeting benchmarks, the numbers of credentials awarded, not just 

the rates of success. Access and enrollment are still important. 

One very important aspect of the outcomes-based formula that, 

frankly, I neglected to note in the written testimony is that student 

success outcomes based on progression and awards attributable to 

students from low-income households defined as Pell eligible and 

adult learners earn 40 percent premium compared to other students. It’s heavily weighted toward dealing with students that, in 

order for us to meet our goals, we have to be more successful with. 

These are students who, historically, we have been least successful 

with. 

So we’re changing. We’re adopting strategies that we believe will 

lead to student success. A few examples: Our community colleges 

are piloting cohort-based programs modeled after the successes of 

our Tennessee Technology Centers. Our institutions are implementing a variety of intentional and intrusive student advising approaches, including early alert and intervention systems, default 

curriculums for undeclared majors, degree mapping, individualized 

graduation plans—a whole host of strategies. 

The performance of our presidents in our system is being evaluated on progress toward completion goals and improved outcomes. 

Working with the UT system and several private institutions, we’ve 

developed 49 universal transfer pathways in 29 academic disciplines that guarantee seamless transition from 2-year programs 

to 4-year universities. There are many more: Our participation in 

Access to Success, Completion Academies, the Degree Compass 

technology that’s being deployed at Austin Peay State University. 

A whole host of strategies are being employed. 

We continue to work closely with Complete College America, and 

we agree with their assertion that time is the enemy. Students who 

must drop out are less likely to return and complete their degrees 

and certificates. If the time to earn a 4-year degree, Senator, could 

actually be 4 years or less, then everybody wins. If students come 

prepared and with credits already earned through dual credit, dual 

enrollment programs at their high schools or prior learning credits 

for adult learners, then they are much more likely to finish and finish faster. We are aggressively expanding those programs in Tennessee. All of this activity is really being driven by the outcomesbased formula. 

We very much appreciate your attention to this important subject, and we appreciate the help that you can provide at the Federal level. A few ideas are included in my written testimony. From 

reviewing the testimony of the other panelists, they have better 

ideas than I had. It is important that we think about Federal financial aid in a more flexible way, that we’re able to support program structures that we know will work better than the past and 

traditional practices, and that’s not always easy. 

In closing, thank you for the opportunity to be here, and I’ll be 

happy to respond to any questions that you may have. 
20 

[The prepared statement of Mr. Morgan follows:] 

PREPARED STATEMENT OF JOHN G. MORGAN, B.A. 

SUMMARY

In January 2010, the Tennessee General Assembly enacted the Complete College 

Tennessee Act, arguably the boldest attempt by any State in the country to focus 

the energies and resources of its public higher education enterprise on meeting the 

State’s development needs. Implicit within the CCTA is the acknowledgement that 

the higher education funding structure must support the State’s new priorities. 

While student fees have increased at the institutions, growth in enrollment, declining State funding, and cost inflation have combined to produce real reduction in 

funds available to the institutions to pay for educational services. Yet, as resources 

have diminished, expectations for the outcomes of our system and the institutions 

have grown. The result of the convergence of these circumstances is to require every 

decision about resource allocation at every level to be viewed through the lens of 

its impact on outcomes. 

Many elements of the CCTA have direct impact on college affordability by improving operating efficiencies, reducing time to degree and focusing resources on strategies that lead to greater success. 

But perhaps most importantly, the CCTA called for the creation of a formula to 

fund public higher education based on outcomes like increasing the numbers of degrees, diplomas and certificates awarded. As important as increasing the numbers 

of students with credentials is ensuring productivity as well as quality. Academic 

standards, integrity and quality must continue or be enhanced. It’s quality of the 

workforce that will drive the economy, not just the number of people with degrees. 

However, a significant challenge exists for TBR and its constituent institutions. 

To be successful in meeting their goals, every institution must be more successful 

with students who have historically been least successful reaching their education 

goals, particularly low-income first generation students, adult learners and underrepresented minorities. Helping these students will require more hands-on, hightouch and high-tech efforts, all of which also translate to high cost. 

Despite our challenges, we are on the right track. With the right resources and 

the right conversations—like the one we’re having today—Tennessee can lead the 

way in workforce development and economic growth. 

The combination of passage and implementation of the Complete College Tennessee Act and the First to the Top Act have propelled Tennessee to the forefront 

of the national conversation about education reform. 

In January 2010, the Tennessee General Assembly enacted the Complete College 

Tennessee Act (CCTA). The CCTA is arguably the boldest attempt by any State in 

the country to focus the energies and resources of its public higher education enterprise on meeting the State’s development needs. Together with the First to the Top 

and Race to the Top initiatives, Tennessee has enacted a range of measures designed to spur improvement in Tennessee’s education pipeline—specifically, improving student performance and graduation rates at both the high school and college 

levels. The central idea of the CCTA, advanced by the prior administration and 

readily embraced by Tennessee Governor Bill Haslam, is that in order for Tennessee 

to thrive in the global economy, the education and skill levels of Tennesseans must 

improve significantly. Implicit within the CCTA is the acknowledgement that the 

higher education funding structure must support the State’s new priorities. 

If successfully implemented, the CCTA will prove to be the most transformative 

and visionary legislation affecting Tennessee’s public higher education systems in 

recent times. History has proven that a more educated citizenry results in a society 

with faster economic growth and a more stable democracy. Today, more than ever, 

we need a renewed focus on higher education. 

Options available to students abound with the growth of proprietary schools. Unfortunately, while the for-profit institutions are growing, the public institutions that 

fueled the growth of college credentials after World War II have suffered through 

years, sometimes decades, of State-level funding cuts. Many are no longer Statefunded, but State-supported. Total State support for higher education nationally fell 

by 7.6 percent from the 2011–12 fiscal years, according to a report from Illinois 

State University and the State Higher Education Executive Officers. The report also 

indicates a reduction in the per-student spending by States—to reach the lowest 

point in some 25 years. (Chronicle of Higher Education, ‘‘State Support for Colleges 

Falls 7.6 percent in 2012 Fiscal Year,’’ 2012.) 
21 

In Tennessee alone, State funding for public colleges, universities and technology 

centers decreased by almost 30 percent for the Tennessee Board of Regents (TBR) 

universities since 2008, shifting more of the funding burden to students. At all 46 

institutions, including community colleges and technology centers, funding has been 

cut an average of 24 percent. As State support for higher education has declined 

and, despite improved efficiencies, the share of the cost paid by students has increased—thus, so has the price. Tennessee students now cover about 67 percent of 

the cost of their education at public universities, and some 60 percent at community 

colleges. The implication of this trend, if it continues, will be detrimental for all 

Tennesseans. 

This is the reality of today’s economy and today’s funding climate, and therefore 

the new ‘‘fiscal reality’’ of the operating environment for Tennessee’s public higher 

education. In the past several years in the TBR alone, we have opened the door to 

access for more students. Enrollment in our six comprehensive universities and 13 

community colleges has grown 26.4 percent from 2001 to 2011. 

To meet the demands of serving more students with fewer resources, greater operating costs, changing technologies and greater expectations, Tennessee’s institutions 

look dramatically different than in years past. Within the last 2 years alone, our 

universities have eliminated, among others, degree programs in foreign languages, 

English, music education, Africana studies, women and gender studies, human 

sciences, aerospace education, and industrial engineering, and they have terminated 

dozens of concentrations or certificates to address decreased funds and changing demands. While student fees have increased at the institutions, growth in enrollment, 

declining State funding, and cost inflation have combined to produce real reduction 

in funds available to the institutions to pay for educational services. At the TBR, 

we have become more efficient and effective in delivering our services. In fact, on 

average, the total revenue per student (before inflation) at our universities in 2011 

was 4 percent less than in 2008. During the same period, the impact at our community colleges was even greater, averaging almost 9 percent less per student. In other 

words, students are covering more of the financial burden for their education at 

public colleges and universities in Tennessee than ever before, even as our institutions are becoming more efficient. 

Yet, as resources have diminished, expectations for the outcomes of our system 

and the institutions have grown. The result of the convergence of these circumstances is to require every decision about resource allocation at every level to 

be viewed through the lens of its impact on outcomes. Every day, at every TBR institution, including the central office, the focus is on deploying resources in a way 

that will make a real difference and lead to real results. 

We are on the right track. With the right resources and the right conversations— 

like the one we’re having today—Tennessee can lead the way in workforce development and economic growth. 

Tennessee’s Governor has set a clear goal to increase the number of postsecondary 

degrees awarded annually by 26,000 by 2015. Today that goal is more important 

than ever. Unless Tennessee can make progress toward achieving a more educated 

population, the skilled and high-wage jobs we need for our economy to grow will 

likely move to, or more likely be created in, other places that have the best prepared 

workforce. 

In order to meet this challenge, the CCTA included several important elements 

aimed at transforming our public higher education system into a more efficient, effective and outcome-oriented enterprise. Many of these elements have direct impact 

on college affordability by improving operating efficiencies, reducing time to degree 

and focusing resources on strategies that lead to greater success. 

For example, the University of Tennessee and TBR systems have together developed and implemented the Tennessee Transfer Pathways, a transfer policy that ensures community college students can readily transfer credits in defined programs 

to public universities. The TBR has evolved our community colleges into a comprehensive system, thereby enhancing the statewide role that community colleges 

can play in providing postsecondary education for recent high school graduates and 

adults. The new system for Tennessee’s Community Colleges will, over time, result 

in significant cost efficiencies as well as educational programming that is more effective and responsive to economic and workforce needs. TBR’s public universities have 

a more defined focus on institutional mission to help avoid future unnecessary program duplication. 

But perhaps most importantly, the CCTA called for the creation of a formula to 

allocate available State funding to public higher education based on outcomes like 

increasing the numbers of degrees, diplomas and certificates awarded. The Tennessee Higher Education Commission has developed a Public Agenda for Higher 

Education centered on improving student outcomes and created changes to support 
22 

its implementation—most notably developing the new outcomes-based funding formula. Funding for public higher education is now heavily weighted toward student 

success measures like these. 

Attachment A lists the outcomes that are incorporated in the outcomes based formula for our universities and community colleges. As can be seen, the outcomes for 

both groups of institutions are heavily influenced by student progress and success. 

The outcomes are the same for all of the State’s universities, however the weights 

assigned to each outcome for each university can vary based on the mission of the 

institution. For example, the weight assigned to the research outcome for the University of Tennessee at Knoxville is 15 percent while research is only weighted at 

10 percent for Austin Peay State University. Similarly, as the example shows, outcomes are weighted differently among the community colleges. 

The outcomes-based formula has created the most tangible and strongest incentive for our institutions to focus on strategies that contribute to student success and 

to align financial resources to fund those strategies. 

As a result, virtually every activity taking place at the TBR central office and at 

each of its institutions is centered on improving the outcomes that have been identified by the THEC Public Agenda and the CCTA. It is no longer sufficient for the 

Board of Regents to view its responsibility as one of policy management and the safe 

guarding of assets. On the contrary, ultimately, the Board is responsible for the system’s success in achieving the goals of the Public Agenda. 

The CCTA and the Public Agenda establish clear linkages between the economic 

development needs of the State and the legitimate aspirations of the State’s public 

higher education systems. In short, the Public Agenda declares that by 2025, the 

State’s workforce must have levels of educational attainment at least equal to the 

national average. The Public Agenda assigns expectations for contributions to this 

goal from the TBR, UT and the private/proprietary higher sector. 

For TBR to meet its current expectation, the system as a whole will need to 

produce 43,202 credentials in 2025. This represents an almost 60 percent increase 

in annual awards over our 2010 baseline. To achieve this goal, the system must increase its outcomes by roughly 3 percent per year, particularly challenging in light 

of demographic trends that reflect a changing population with an increased number 

of the types of learners who face the greatest challenges. 

• More low-income students will be entering our schools. From 2007–11 median 

annual household income declined by 9.8 percent nationwide. Hispanic and white 

households saw a 4.9 percent and 4.7 percent decrease, respectively, while Black 

household median annual income decreased 9.4 percent (Sentier Research, ‘‘Household Income Trends During the Recession and Economic Recovery,’’ 2011.). 

• Demographic projections predict major growth in underrepresented minority 

groups. Nationwide, it is projected that the Latino and Black populations will grow 

by 137 percent and 15 percent, respectively, between 2010 and 2050 while the White 

population will decrease by 9 percent (National Population Projections, U.S. Census 

Bureau. Released 2008; NCHEMS, Adding It Up, 2007). 

• White individuals (aged 25–29) attain bachelor degrees at twice the rate of 

black individuals and three times the rate of Hispanics (39 percent vs. 20 percent 

and 13 percent, respectively), and young people from the highest income quartile 

earn bachelor’s degrees at seven times the rate of children from the lowest income 

quartile (79 percent vs. 11 percent by age 24). (Sources: NCES, Condition of Education, 2010 and U.S. Census Bureau, Educational Attainment in the United States: 

2011; PostSecondary Education Opportunity, ‘‘Bachelor’s Degree Attainment by Age 

24 by Family Income Quartiles, 1970 to 2010.’’) 

Simply put, for TBR and its constituent institutions to be successful in meeting 

their goals, every institution must be more successful with students who have historically been least successful reaching their education goals, particularly lowincome first generation students, adult learners and under-represented minorities. 

Helping these students will require more hands-on, high-touch and high-tech efforts, all of which also translate to high cost. Tomorrow’s successful students will 

require more direct and personal attention—advising, counseling and directing them 

toward the successful completion of their goals. 

TBR institutions are learning from success stories within the system. The Tennessee Technology Centers, for example, have always served these underrepresented 

demographic populations to a larger extent. Yet the Technology Centers have demonstrated dramatic success in helping students complete their academic programs 

through a variety of techniques that are now being piloted at other programs 

around the country: 

1. Most students enroll in defined cohort-based programs with strong structures 

and limited options. Students register for programs, not courses. Class schedules are 
23 

pre-determined and set daily so students can plan outside work and life commitments around a set daily time commitment. Students don’t have to pick and choose 

which classes they take and when, so they only take the courses they need. As a 

result, more finish and finish faster. 

2. Students are provided a cost list including books and supplies, so they aren’t 

surprised with unexpected expenses. 

3. More than 80 percent of the Tennessee Technology Center students are eligible 

for State or Federal grants, or both, which covers the cost of their education and 

often provides additional money for living expenses. The TTCs don’t participate in 

the loan program, and the students graduate debt free. 

Similar cohort programs are being tested at Tennessee’s community colleges and 

may be considered for public universities as well. 

And as important as increasing the numbers of students with credentials is ensuring quality. Academic standards, integrity and quality must continue or be enhanced. It’s quality of the workforce that will drive the economy, not just the number of people with degrees. Implicit in Public Agenda’s attainment goal is the need 

for the credentials to be a result of high quality instruction and relevant to the 

needs of Tennessee’s 2025 economy. 

In some ways, having a clearly established, albeit aggressive, goal is liberating. 

The system and its institutions are able now to pay attention to efforts that matter. 

Priorities are realigned. For the TBR system office, this means that the focus now 

is on empowering staff to engage in activities that will promote outcomes. The result 

is an evolving redefinition of the relationship between system and institution. The 

system interest is less about regulating and more about helping each institution 

meet its goal of increasing relevant, high quality, outcomes. 

Among the changes implemented so far, the TBR has: 

• Established progress toward completion goals and improved outcomes under the 

new funding formula as the basis upon which performance of university and college 

presidents will be assessed. 

• Joined with 10 other higher education systems and multi-campus institutions 

as members of the Education Delivery Institute, a joint effort of The Education 

Trust and Achieve, Inc. designed to assist in the successful implementation of higher education reform agendas. 

• Created within TBR the Completion Delivery Unit, a small group focused on assisting TBR system operating units and institutions with the development of their 

‘‘completion plans,’’ identifying strategies to be pursued, establishing expectations of 

results for each strategy and providing a framework for the campuses and the system to monitor progress in meeting delivery goals in near ‘‘real-time.’’ 

• Through a partnership developed with the Tennessee Business Roundtable, 

Complete College America, Tennessee Higher Education Commission and the University of Tennessee, enabled 16 TBR institutions and two UT institutions to voluntarily participate first in the Nation State-level College Completion Academies, a 

convening of teams from the institutions, national experts and facilitators designed 

to engage institutions in the development of completion plans incorporating best 

practices. Governor Haslam addressed the first academy and facilitated a session in 

the second academy. 

• Embarked upon the development of a central data repository and data warehouse that will put real-time information in the hands of managers throughout the 

system with which they can make decisions and evaluate performance. This has 

been identified as an essential pre-requisite to system and institutional success. 

• Began system-wide, institutional participation in the Access To Success (A2S) 

initiative. A2S is a joint effort of the National Association of System Heads and the 

Education Trust that works with 22 public higher education systems that have 

pledged to cut the college-going and graduation gaps for low-income and minority 

students in half by 2015. TBR has been part of this initiative since 2007 but has 

not, until recently, engaged institutions in the initiative. The goals of A2S align well 

with the needs of the TBR system to address future challenges as demographic 

characteristics of our populations change. 

• In collaboration with THEC and UT, developed 49 universal transfer pathways 

in 29 academic disciplines providing our community college students with clear and 

certain transfer opportunities to public (and many private) 4-year intuitions. 

• With assistance from Lumina Foundation grant funding, engaged in a series of 

pilot programs designed to expand the use of cohort programs and block schedules 

in community colleges as contemplated by the CCTA. Early indications are that 

where feasible, utilizing cohorts and block schedules will result in significant improvements in retention and completion. Expansion of this effort into the 4-year environment may be warranted. 
24 

• Established the Office of Community Colleges and named a vice-chancellor for 

Community Colleges to manage the process of evolving the community colleges into 

a comprehensive community college system. Also, with the help of a Gates Foundation grant, TBR conducted a ‘‘business process analysis’’ designed to identify opportunities for process standardization across the community college system using best 

practices. As this effort continues, it is expected to result in significant efficiencies 

and will help position the community college system as the primary source for significant increases in enrollment and affordability in public higher education in Tennessee. 

• Developed programs that will drive more students into the lower-cost options 

available at the community colleges first, then encourage the continuation of educational achievement by making defined program course transfers seamless from 

community colleges to universities. 

• Encouraged the creation of innovative programs to help with student success. 

For example, Austin Peay State University developed the Degree Compass software 

and application that uses technology to successfully pair current students with the 

courses that best fit their talents and program of study for upcoming semesters. 

Using predictive analytics, the system recommends a course which is necessary for 

a student to graduate, core to the university curriculum and their major, and in 

which the student is expected to succeed academically. Recently, the system gained 

national attention and played a central role in Tennessee’s successful Completion 

Innovation Challenge application, which received a $1,000,000 award from Complete 

College America and the Gates Foundation to support implementing Degree Compass at three other campuses in Tennessee. 

The passage of the CCTA creates an environment wherein effectiveness, efficiency 

and sustainability of high quality results are essential if the TBR and its institutions are to thrive. The outcomes-based formula creates an absolute incentive to 

pursue only those activities that are believed to produce results. Constant evaluation of performance in real-time and a willingness to abandon, or modify, strategies 

that aren’t working is becoming the ‘‘normal course of business’’ for Tennessee’s institutions. 

The outcomes-based formula introduces an entirely new dynamic in terms of 

transparency. How well each institution is performing will be readily apparent as 

a result of THEC’s funding allocation recommendations each year. Historically, accountability within the higher education environment has been elusive. This is no 

longer the case in Tennessee. 

The historical need for the TBR and THEC to monitor and encourage elimination 

of low-producing programs has been eliminated. There is no incentive to continue 

to allocate resources to a low-producing program or a non-productive service unless 

there is a very real indirect benefit to the institution as a whole and a return on 

investment that justifies the expense. 

In this environment, the role of the system office is one of helping institutions in 

creating and utilizing systems and frameworks for continuing evaluation and in 

helping identify interventions that might help improve the outcomes of any given 

strategy. The system office also has an interest in making sure that institutions 

don’t engage activities such as unnecessary duplication of programs that will result 

in inefficient use of resources on a system-wide basis. 

Implicit in the CCTA and the outcome formula approach is that if colleges and 

universities can improve their results, funding will follow. But there is no guarantee 

that will hold true. 

The result of today’s new fiscal reality is that higher education will continue to 

be in a difficult funding environment. Although understandable in context, the system’s historical practice of relying on tuition and fee increases to meet institutional 

spending needs is unlikely to be sustainable. 

It appears that Tennessee, like other States, has reached a point at which tuition 

increases that exceed general inflation rates will be counter-productive to achieving 

completion goals as a system. The potential political response to further significant 

fee increases is concerning as well. Current political and economic environments 

make it more likely that government-imposed limitations (whether at the State or 

Federal level) may be seriously considered. While there is a legitimate government 

oversight role in the management of the public higher education systems, statutory 

solutions to complex and multi-dimensional financial issues—just some of which are 

mentioned here—are not likely to give full recognition to the unintended consequences that uniformly applied policies will hold for individual institutions. 
25 

SUGGESTIONS FOR HOW THE FEDERAL GOVERNMENT CAN ENCOURAGE AND SUPPORT

STATES IN EFFORTS TO INCREASE EDUCATION ATTAINMENT WHILE ENSURING

AFFORDABILITY

1. More need-based funding available to students at both the State and 

Federal level is needed. Aid allocations reflect that scholarship and grant aid is 

gradually shifting from fewer need-based awards to more merit-based awards. In 

Tennessee, approximately $90 million is awarded from lottery scholarships to students from households whose expected family contributions exceed full cost of attendance. A similar amount would cover the gap to fully fund assistance for eligible 

need-based students. As the number of students who need financial support grows, 

we see a shift to more funding going to students whose families have demonstrated 

the ability to pay, and a growing number of students whose families do not have 

the means to pay cannot afford to enroll without expensive student loans. 

2. Federal incentives for States to keep their funding for public higher 

education stable or increasing is needed. The Federal requirement of State 

maintenance of effort funding for American Recovery and Reinvestment Act dollars 

provided a real benefit to colleges and universities. Ever-shrinking State funding 

levels threaten to reduce the amount of money available in the funding formula, creating an environment where institutions are competing in a zero-sum game for a 

piece of an ever-shrinking funding pie instead of striving for growing funding incentives. 

3. Federal financial aid policies need to more closely align with best educational practices at the States levels. Military veterans who require learning 

support are often blocked from receiving funding for the types of support and techniques that have proven more effective than traditional classroom-based developmental courses because they are considered ‘‘independent study programs.’’ Individual study incorporated into a for-credit class that is supplemented by technology 

support taught in laboratories with instructors should qualify for Veterans Administration support, but it currently does not. Regular financial aid policies structured 

solely around traditional semesters and terms don’t conform well for alternative 

scheduling that successful cohort-based programs sometimes require—allowing students to start and stop at different intervals. Those ‘‘non-standard terms’’ result in 

aid award difficulties. 

4. Federal recognition that increasing prices and tuition rates greater 

than the rate of inflation are the result of decreasing State funding allocations is needed. Statutory solutions to complex and multi-dimensional financial 

issues—just some of which are mentioned here—are not likely to give full recognition to the unintended consequences that uniformly applied policies will hold for individual institutions. 

ATTACHMENT A 

Formula Outcomes and Example Weights Based on Institutional Mission 

Universities APSU UTK 

Carnegie classification 

Masters 

medium 

(percent) 

Research 

university/ 

very high 

activity 

(percent) 

Students Accumulating 24 hrs ............................................................................................................... 3.0 2.0 

Students Accumulating 48 hrs ............................................................................................................... 5.0 3.0 

Students Accumulating 72 hrs ............................................................................................................... 7.0 5.0 

Bachelors and Associates ....................................................................................................................... 25.0 15.0 

Masters/Ed Specialist Degrees ............................................................................................................... 20.0 15.0 

Doctoral/Law Degrees ............................................................................................................................. 0.0 10.0 

Research and Service ............................................................................................................................. 10.0 15.0 

Transfers Out with 12 hrs (good academic standing) .......................................................................... 10.0 5.0 

Degrees per 100 FTE .............................................................................................................................. 10.0 10.0 

Six-Year Graduation Rate ....................................................................................................................... 10.0 20.0 

Total .................................................................................................................................................... 100.0 100.0 
26 

Community colleges Dyersburg Nashville Average 

Carnegie classification 

Associates/ 

rural medium 

(percent) 

Associates/ 

urban multicampus 

(percent) 

Students Accumulating 12 hrs .................................................................................... 6.0 4.0 5.0 

Students Accumulating 24 hrs .................................................................................... 7.0 5.0 6.0 

Students Accumulating 36 hrs .................................................................................... 7.0 6.0 6.0 

Dual Enrollment ........................................................................................................... 5.0 5.0 7.0 

Associates .................................................................................................................... 10.0 20.0 15.0 

Certificates ................................................................................................................... 10.0 20.0 13.0 

Job Placements ............................................................................................................ 10.0 10.0 9.0 

Remedial & Developmental Success ........................................................................... 20.0 10.0 12.0 

Transfers Out with 12 hrs (good academic standing) ............................................... 15.0 10.0 13.0 

Workforce Training (Contract Hours) ........................................................................... 5.0 5.0 6.0 

Awards per 100 FTE .................................................................................................... 5.0 5.0 8.0 

Total ......................................................................................................................... 100.0 100.0 100.0 

The CHAIRMAN. Thank you very much, Mr. Morgan. 

Now we turn to Dr. Preus. 

STATEMENT OF CAMILLE PREUS, Ph.D., COMMISSIONER, OREGON DEPARTMENT OF COMMUNITY COLLEGES AND WORKFORCE DEVELOPMENT, SALEM, OR 

Ms. PREUS. Good morning and thank you for the invitation, Mr. 

Chairman, Ranking Member Enzi, and distinguished members of 

the committee. For the record, my name is Camille Preus. I am the 

director of the Department of Community Colleges and Workforce 

Development for the State of Oregon. 

Never has education been more important to the lives and fortunes of Americans, Oregonians, or our local communities. Yet, in 

Oregon, we are falling behind. Our current generation of young 

adults, those 25 to 34, are less educated than their parents’ generation, and few are earning certificates, credentials, and degrees beyond high school. 

Each year, well-paid jobs requiring only a high school diploma 

are replaced by new jobs that increasingly require postsecondary 

preparation. Over the next decade, in Oregon, 61 percent of all jobs 

will require technical certificates, associate degrees, or higher levels of education. Making postsecondary education accessible and affordable to increase the skills of Oregonians and Americans is an 

imperative. 

I’d like to set a little Oregon context, if I might. There are encouraging signs of progress in our State. We marshaled some 

strong bipartisan support in the 2011 session to address these challenges and opportunities head on. Oregon established, I believe, the 

most aggressive high school and college completion goals in the 

country. They are, by 2025: 40 percent of our population would 

have a bachelor’s degree; 40 percent of our population would have 

an associate’s or professional credential; and that the remaining 20 

percent would have earned a high school diploma or its equivalent. 

We refer to these targets as the 40/40/20 goal. 

Oregon also set a most ambitious education reform agenda. We 

want to create a coordinated education system, we want to focus 

State investment on outcomes, and we want to build statewide sup-
27 

port systems. The unified student-centered system of public education from preschool through graduate school, what we call P–20, 

connects the educational sectors to achieve the State’s educational 

outcomes. When I refer to P–20, I’m referring to education for children from birth through their education career, including early 

learning, K–12, community colleges, undergraduate, and graduate 

programs. 

One key investment area within the P–20 system is postsecondary access and affordability. To reach our 40/40/20 goal of educational attainment, the State must be strategic in generating a 

college-going culture across the education continuum and in making and honoring the promise that postsecondary education will be 

within reach of all learners who achieve a high school diploma. 

In Oregon, we have the Shared Responsibility Model. It’s a fourstep approach to affordability. The model involves four steps that 

enable all students to cover the cost of college attendance. The 

model assumes that the student, as the primary benefactor of the 

education, bears the first and most significant responsibility for 

paying for college. So step one is the student share. A defined student contribution spells out the amount every student would contribute to his or her education. It’s based on their decision to attend a community college, a 4-year public or private university in 

Oregon. 

The family share for both dependent and independent students 

is determined by an established financial need-based formula of incomes and assets, family structure, and attendance patterns. Families with greater resources are expected to cover the remaining 

cost. Middle-income families are expected to contribute some. Families with very low or no resources are expected to contribute much 

less or nothing. 

The Federal share—the same need formula determines how 

much aid, if any, the Federal Government will provide or replace 

some or all of the family contribution. As the final partner, the 

State assists only when there is a remaining need not covered by 

the other partners. These grants—in Oregon called the Oregon Opportunity Grant—support the student’s choice by reflecting a differential cost of public 2-year and 4-year colleges and public universities. If a student chooses an eligible 4-year independent college or 

university, they receive assistance as well, but not any more than 

they would if they went to a public university. 

The implementation of the Shared Responsibility Model in Oregon has increased State investment in need-based aid. It has also 

increased the number of students eligible for receiving State financial aid, which has nearly doubled, and enrollment continues to increase. 

In closing, Oregon’s educational attainment goal of 40/40/20 is 

more than just a series of numbers. It represents an aspirational 

goal for degrees and certificates. It also represents a commitment 

to increasing the socio-economic benefits for all of our citizens. Connecting student learning along the P–20 education continuum is an 

important step in increasing the number of students who successfully complete high school and enter college. But, equally important, it is a promise of college as accessible and affordable. 

Thank you very much. 
28 

[The prepared statement of Ms. Preus follows:] 

PREPARED STATEMENT OF CAMILLE PREUS, PH.D. 

SUMMARY

Never has education been more important to the lives and fortunes of America, 

Oregonians and our communities. Yet, In Oregon, we are falling behind. Our current generation of your adults—ages 25–34 is less educated than their parents’ generation, with fewer earning a certificate or degree beyond high school. Each year, 

well-paid jobs requiring only a high school diploma are replaced with new jobs that 

increasingly demand postsecondary education, technology skills and advanced training beyond high school. Over the next decade 61 percent of all Oregon jobs will require a technical certificate, associate’s degree or higher level of education. 

The Oregon Context. There are encouraging signs of progress across Oregon. Marshaling strong bipartisan majorities in 2011, the Oregon Legislature addressed 

these challenges and opportunities head on. 

Oregon established the most aggressive high school and college completion goals 

of any State in the country; by 2025, we must ensure that 40 percent of adult Oregonians have earned a bachelor’s degree or higher, that 40 percent have earned an 

associate’s degree or postsecondary credential, and that the remaining 20 percent 

have earned a high school diploma or its equivalent. We refer to these targets as 

our ‘‘40/40/20’’ goal. 

Oregon set a most ambitious education reform agenda: 

• Create a coordinated public education system. 

• Focus State investment on achieving student outcomes. 

• Build statewide support systems. 

The unified, student-centered system of public education from pre-school through 

graduate school (P–20) connected the educational sectors to achieve the State’s educational outcomes. (The ‘‘P–20’’ term refers to the education of children from birth 

through their education career including early learning programs, the K–12 system, 

community colleges, and the undergraduate and graduate programs of universities.) 

One key investment area within the P–20 system is postsecondary access and affordability. To reach our 40/40/20 educational attainment goal the State must be 

strategic in generating college-going culture across the education continuum, and in 

making and honoring, a promise that postsecondary education will be within reach 

for all learners who achieve a high-school diploma. 

A Four-Step Approach to Affordability. The shared responsibility model of the Oregon Opportunity Grant involves four steps that enable all students to cover the 

cost of college attendance. The model assumes that the student, as the primary beneficiary of the education, bears the first and most significant responsibility for paying for college. 

STEP 1: STUDENT SHARE

The defined student contribution spells out the amount every student would contribute to his or her education, based on the decision to attend a community college, 

a 4-year public or private college or university in Oregon. 

STEP 2: FAMILY SHARE

The family share for both dependent and independent students is determined by 

an established financial need formula based on incomes and assets, family structure 

and attendance patterns. Families with greater resources are expected to cover the 

remaining costs, middle-income families are expected to contribute some of the remaining costs, and families with very low to no resources are expected to contribute 

much less, or nothing. 

STEP 3: FEDERAL SHARE

The same need formula determines how much aid, if any, the Federal Government will provide to replace some or all of the family contribution. Students whose 

families earn less than $40,000 in pre-tax income and assets are eligible for a Pell 

grant (up to $5,550 currently). Middle-income families with Federal tax liability are 

often eligible for one of the Federal education tax credits for tuition paid the prior 

tax year. 
29 

STEP 4: STATE SHARE

As the final partner, the State assists only when there is a remaining need not 

covered by the other partners. These grants (Oregon Opportunity Grants) support 

student choice by reflecting the differential costs of public 2-year and 4-year colleges 

and public universities. Students who choose eligible 4-year independent colleges 

and universities receive assistance as well—but no more than their public counterparts. 

The implementation of the Shared Responsibility Model has increased State investment in need-based aid. The number of student’s eligible and receiving State financial aid has nearly doubled and enrollment has increased across all post 

secondary sectors. 

Oregon’s educational attainment goal of 40/40/20 is more than a series of numbers—it represents an aspirational goal for degrees and certificates but it also represents a commitment to increasing the socio-economic benefits to all citizens. Connecting student learning along the P–20 education continuum is an important step 

in increasing the number of students who successfully complete high school and 

enter college but equally important is the promise of college as accessible and affordable, as with Oregon’s Shared Responsibility Model. 

Good Morning, Mr. Chairman and other distinguished members of the committee. 

My name is Camille Preus, I am the commissioner of the Oregon Department of 

Community Colleges and Workforce Development. Today however, I am here representing the State of Oregon and all of our 24 public postsecondary institutions. 

We appreciate the invitation to join the committee as you focus on successful policies, initiatives and strategies, designed and implemented at the State level, to improve college affordability. 

I believe one such successful policy is Oregon’s need-based financial aid program 

known as the Shared Responsibility Model. Before I discuss the Shared Responsibility Model policy it is important to explain the context. 

Never has education been more important to the lives and fortunes of America, 

Oregonians and our communities. Yet, in Oregon, we are falling behind. Our current 

generation, of young adults (ages 25–34), is less educated than their parents’ generation and fewer of them are earning a certificate or degree beyond high school. 

Each year, well-paid jobs requiring only a high school diploma are replaced with 

new jobs that demand postsecondary education, technology skills and advanced 

training beyond high school. Over the next decade 61 percent of all Oregon jobs will 

require a technical certificate, associate’s degree or higher level of education. This 

proportion of high skill jobs will only accelerate by 2025. Today, Oregonians with 

an associate’s degree earn at least $5,000 more per year than those with only a high 

school diploma. Those with a bachelor’s degree earn approximately $17,000 more 

per year. Eighty-nine percent of family wage jobs, paying more than $18.00 per 

hour, will require a technical certificate/associates degree or higher level of education. 

Employment rates also highlight the need for higher education; the national unemployment rate for adults with a college degree is 4.4 percent—half the 8.8 percent 

unemployment rate for those with only a high school diploma and one-third of the 

13.2 percent unemployment rate for high school dropouts. 

Education however, is not just about improving personal income and job security. 

Higher levels of education are associated with better health, longer lives, greater 

family stability, less need for social services, lower likelihood of involvement with 

the criminal justice system, and increased civic participation. All are benefits not 

only to the educated individuals and their families, but also to healthy, thriving 

communities. 

The Oregon Context. There are encouraging signs of progress across Oregon. At 

every level of education in Oregon, leaders, faculty and teachers are pioneering new 

practices that enable students to achieve their potential as lifelong learners and contributors to our economic and civic life. 

In 2011 the Oregon Legislature addressed these challenges and opportunities 

head on, marshaling strong bipartisan majorities to enact: 

• Senate bill 253 which established the most aggressive high school and college 

completion goals of any State in the country; and, 

• Senate bill 909 which called for the creation of a unified, student-centered system of public education from pre-school through graduate school (P–20) to achieve 

the State’s educational outcomes. 

Senate bill 253 defines our goal: by 2025, we must ensure that 40 percent of adult 

Oregonians have earned a bachelor’s degree or higher, that 40 percent have earned 
30 

an associate’s degree or postsecondary credential, and that the remaining 20 percent 

have earned a high school diploma or its equivalent. We refer to these targets as 

our ‘‘40/40/20’’ goal. 

Senate bill 909 created the Oregon Education Investment Board (OEIB) and 

charged it with the responsibility, across P–20, to ensure that all public school students in the State reach the established educational outcomes. The ‘‘P–20’’ term refers to the education of children from birth through their education career including 

childcare and early learning programs, the K–12 system, community colleges, and 

the undergraduate and graduate programs of universities. 

There are three key strategies in the initial OEIB plan to reach the 40/40/20 goal: 

• Create a coordinated public education system, from preschool through college 

and career readiness to enable all Oregonian students to learn at their best pace 

and achieve their full potential. At the State level, this will require better integration of our capacities and smarter use of our resources to encourage and support 

successful teaching and learning across the education continuum. • Focus State investment on achieving student outcomes. Oregon defines the core 

educational outcomes that matter for students, their families and our State: 

• All Oregon children enter kindergarten ready for school. • All Oregonians move along the learning pathway at their best pace to success. • All Oregonians graduate from high school and are college- and career-ready. • All Oregonians who pursue education beyond high school complete their chosen programs of study, certificates, or degrees and are ready to contribute to 

Oregon’s economy. 

• Build statewide support systems. It is not the State’s role to deliver education, 

but rather to invest in and support the institutions and providers across the State 

that do. To succeed, the State must engage educators and leaders, students and 

families, communities and employers to achieve the educational excellence envisioned for Oregon students. The State will continue to set standards, provide guidance, conduct assessments and coordinate support and resources to its public educational pathways. 

The three strategies are overlapping, driven by student learning outcomes and 

aimed at transforming the State’s approach to education. Under the leadership of 

Governor Kitzhaber, the State is also transforming its approach to the budget, 

leveraging investment in innovations and rewarding success. 

A key investment area is postsecondary access and affordability. To reach our 40/ 

40/20 educational attainment goal the State must be strategic in generating a college-going culture across the education continuum, and in making and honoring a 

promise that postsecondary education will be within reach for all learners who 

achieve a high-school diploma. 

THE SHARED RESPONSIBILITY MODEL

The average tuition and fees to attend a State university in Oregon today, represents 11.3 percent of median family income in the State, a doubling of the percentage paid 30 years ago when many of today’s leaders went to college. In the last few 

years, the State-student share of college costs shifted from the State covering 51 

percent in 2001 to covering only 31 percent in 2010, with students picking up the 

balance through higher tuition. As a result, Oregon students from low- and middleincome families are borrowing more, working more, taking a longer path to graduation, or simply giving up on college altogether. 

Oregon realized it could not afford to put college education beyond the reach of 

so many Oregonians, when as stated earlier, more jobs in our economy require postsecondary training or a degree. In 2007 the Oregon Legislature passed, with wide 

bipartisan support, Senate bill 334 enacting the Shared Responsibility Model for the 

Oregon Opportunity Act. This bill restructured the need-based Oregon Opportunity 

Grant into a shared responsibility and partnership among students, their families, 

the Federal Government and the State to meet college costs and increase educational attainment statewide. 

Addressing the Public Interest. Oregonians recognize the benefits of postsecondary 

education. Students develop better skills, job prospects and earning potential, while 

the State benefits from a more productive and diverse workforce, better-paying jobs, 

and higher income, tax-paying citizens. Oregonians believe that even if students 

have no family resources to pursue postsecondary education, they should at least 

be able to work their way through college. 

But today, working one’s way through college is no longer an option for most students. In 1965, an Oregon student could work approximately half-time at a minimum wage job year-round and pay for a year at a public university. A current student attending a community college would have to work 36 hours a week, 44 hours 
31 

a week for a student attending a public 4-year university or 90-hours a week for 

a student attending an independent university, year round to do the same. 

A Four-Step Approach to Affordability. The shared responsibility model of the Oregon Opportunity Grant involves four steps that enable all students to cover the 

cost of college attendance. The model assumes that the student, as the primary beneficiary of the education, bears the first and most significant responsibility for paying for college. The contributions of other partners—family/household, Federal Government, and the State are based on the resources it takes to close the ‘‘affordability 

gap’’ for each student. 

STEP 1: STUDENT SHARE

The defined student contribution spells out the amount every student would 

contribute to his or her education, based on the decision to attend a community college, a 4-year public or private college or university in Oregon: $5,700 per year for 

a community college student; and $8,700 per year for a 4-year college/university student (public or private). 

Each student would decide the best personal strategy by combining one or more 

of several options to cover their share of postsecondary costs: working, borrowing 

(student loans), savings, private scholarships, Federal work-study, institutional 

grants, etc. For example, working at a minimum wage job during the summer and 

part-time during the school year would cover $5,700 of the community college contribution or a smaller percentage of the 4-year contribution ($8,700). 

STEP 2: FAMILY SHARE

The family share, for both dependent and independent students, is determined by 

an established financial need formula based on incomes and assets, family structure 

and attendance patterns. Families with greater resources are expected to cover the 

remaining costs, middle-income families are expected to contribute some of the remaining costs, and families with very low to no resources are expected to contribute 

much less, or nothing. 

STEP 3: FEDERAL SHARE

The same need formula determines how much aid, if any, the Federal Government will provide to replace some or all of the family contribution. Students whose 

families earn less than $40,000 in pre-tax income and assets are often eligible for 

a Pell grant (up to $5,550 currently). Middle-income families with Federal tax liability are often eligible for one of the Federal education tax credits for tuition paid the 

prior tax year. 

STEP 4: STATE SHARE

As the final partner, the State assists only when there is a remaining need not 

covered by the other partners. These grants (Oregon Opportunity Grants) support 

student choice by reflecting the differential costs of public 2-year and 4-year colleges 

and public universities. Students who choose eligible 4-year independent colleges 

and universities receive assistance, but no more than their public counterparts. 
32 

MORE AID = MORE ACCESS

Beginning in 2008 the State doubled the annual State commitment to the Oregon 

Opportunity Grant from $34 million in the fall of 2007 to $72 million in the fall 

of 2008. The average award amount in 2008 was $2,600 for a community college 

student, nearly double the $1,398 from 2007. Today the Opportunity Grant is funded at just under $100 million with awards to more than 56,000 students. 

The gap between the cost of attendance and resources to pay for college has also 

dropped for a full-need student since the implementation of the Shared Responsibility Model. The need gap for a community college student has decreased by half 

and for a student choosing a 4-year public institution the gap has been reduced from 

$8,874 (2004–5) to $3,776 today. 

The Shared Responsibility Model design also helped middle-income families afford 

college—up to $70,000 for a family of four, previously capped at $31,000. College 

savings plans do not reduce the grant award. 

Another key aspect of the Shared Responsibility Model is statewide outreach. 

Leveraging the Federal College Access Challenge Grant, secondary and post 

secondary partners launched an aggressive ‘‘get-the-word-out’’ campaign that included advertising on TV and radio, mailings and posters targeted to student, parents and counselors and community outreach visits statewide sponsored and supported by cross-sector education groups. This resulted in an increase of eligible applicants from 41,800 in 2007 to 74,694 in 2008 and 155,103 estimated for 2011–12. 

HOW CAN THE FEDERAL GOVERNMENT ENCOURAGE AND SUPPORT STATES

IN AFFORDABILITY?

There are a number of ways in which the Federal Government can help States 

provide education at a lower cost. First, it should be noted that the maintenance 

of effort (MOE) requirements included in the American Recovery and Reinvestment 

Act (ARRA) concerning expenditures for public higher education did in fact serve to 

sustain funding at a time of tremendous fiscal duress. This had a direct impact in 

maintaining educational services and in limiting community college tuitions. Although the Federal Government is no longer supplementing State education budgets, other means of exerting similar leverage should be explored. 

In addition, the Federal Government should consider regulating public institutions of higher education differently from other sectors of higher education, particularly for-profit institutions. The reason for this is obvious—public institutions are 
33 

funded and regulated in a fashion that is fundamentally different, and infinitely 

more exacting, than what’s generally provided for-profit colleges. Community colleges are accountable to taxpayers and the broader public; for-profit colleges are accountable to their owners, usually shareholders. As a result, community colleges 

have been subjected to a regulatory apparatus that is entirely inappropriate to their 

nature. 

The Federal Government also could help States in their efforts to be more efficient 

by aligning the various reporting requirements that it imposes on institutions of 

higher education. These requirements differ for various programs, such as the HEA 

and the Workforce Investment and the Carl D. Perkins Act, and these in turn differ 

from information that States themselves require. A concerted effort needs to be undertaken to eliminate these inefficiencies. Many community colleges have only one 

individual who is responsible for meeting all reporting requirements. Sometimes 

States becoming directly involved in providing needed information. In addition, the 

Federal Government needs to be much more aggressive in ensuring that appropriate 

State educational entities have access to data that will enable them, in concert with 

institutions, to identify the earnings of students after they have left institutions. 

These data in turn will help colleges to maximize resource allocation. 

Many States are leading efforts to overhaul remedial education, often through 

modular courses. Unfortunately, this new approach has led to complications in the 

area of return of Title IV funds and standards of satisfactory academic progress. We 

urge the committee to place special attention on all the positive changes taking 

place in this area, which could well lead to much higher success rates for our students. 

CONCLUSION

Oregon’s educational attainment goal of 40/40/20 is more than a series of numbers—it represents an aspirational goal for degrees and certificates but it also represents a commitment to increasing the socio-economic benefits to all citizens. Connecting student learning along the P–20 education continuum is an important step 

in increasing the number of students who successfully complete high school and 

enter college but equally important is the promise that college is accessible and affordable, as in Oregon’s Shared Responsibility Model. 

The CHAIRMAN. Thank you, Dr. Preus. 

Thank you all very much, both for your verbal statements which 

were very provocative in terms of getting us thinking, but also for 

your written statements. We’ll start a round of 5-minute questions 

now. 

Dr. Howard, I have some questions on the tuition setting flexibility that you seem to advocate. It seems to me if we allow institutions to set their own tuition without any caps, aren’t we risking 

revenue maximizing tuition policies to hurt low-income students 

the most? Even New York, the example you cited, implies some 

caps by the State when you referred to moderate increases. How 

do you strike a balance between greater institutional autonomy 

and flexibility in setting tuition while preserving affordability and 

access? 

Ms. HOWARD. Well, I think we have to have all the stakeholders 

involved in this process to try and come forward with a tuition policy that is rational, predictable, and manageable. States are all in 

different places in terms of their levels of tuition. I think States 

that look at the economic model—how much families are contributing, how much aid is available—are able to come forward. 

For example, New York just came out with a predictive model 

where tuition will go up by X percent over the next 5 years. Two 

and a half percent of that tuition increase must go back into needbased aid. Families know for the next 5 years what tuition will cost 

them. The model is rational because all the stakeholders were involved and looked at what the State was able to do. Therefore, the 

State committed to an MOE, a maintenance of effort provision, that 
34 

they would provide, which then keeps the tuition at a level that’s 

predictable and manageable, and it’s sort of not just going up and 

down based on how the State income is faring or its economic situation. 

I’m not advocating for tuition to spiral out of control by institutions just willy nilly setting their own tuition, but to have a model 

that’s rational, predictable, and manageable for all stakeholders. 

The CHAIRMAN. Let me get to something else here. In the previous hearing that we had, we had representatives of colleges. 

Some of them were talking about how the different colleges have 

instituted different policies, like procurement policies, textbooks, 

things like that, that have really cut costs dramatically. It occurred 

to me then that why aren’t other colleges looking at what some successful colleges have done and start to replicate it. 

I asked about it on the State level. We’ve seen some State efforts 

that seem to be moving in the right direction, in terms of procurement policies and other things like that. Why don’t we see more 

States replicating successful efforts—I think, Dr. Howard, you 

mentioned Colorado, Kansas, Virginia—to enable colleges and universities to streamline their operations? Why aren’t we finding 

more other States sort of replicating this? What’s the problem? 

Mr. Morgan. 

Mr. MORGAN. Senator, that’s exactly what we’re doing in Tennessee. Several national organizations have completion agendas 

and pretty broad agendas, and we’re part of, I think, just about all 

of them. One of the things that Complete College America does, for 

example, is bring States together in what they call Completion 

Academies to share best practice. That has been extraordinarily 

valuable for us in Tennessee in terms of identifying strategies that 

have worked other places that can work in Tennessee. 

That’s more designed around completion, but it also bleeds over 

into operational issues as well. We are just now going through a 

process in our system based on experiences in other States of implementing a system-wide procurement model that will really allow 

us to leverage our system—all the institutions that we have, some 

46 institutions—so that we can group purchases and achieve the 

economies available. 

We are also cooperating with the University of Tennessee system 

to see if there’s opportunities to bring the total higher education 

spend in Tennessee to the table as we negotiate with vendors for 

textbooks and for other kinds of equipment, supplies, and so forth. 

We’re very much about the business of doing that. 

I think what you would find across the country is that States are 

heavily engaged in a kind of unabashed theft of ideas from one 

place to another. I’m very interested in the Oregon Promise Program that we’re going to hear more about probably as we talk. So 

I think that is happening. I think it’s happening in a very productive way. 

The CHAIRMAN. My time has run out, but I’ll recognize Dr. 

Longanecker. 

Mr. LONGANECKER. Yes, I believe there’s—and this is really 

strange for me to say, because I’m generally noted in the community as a pessimist. But on this, I’m fairly optimistic. The performance funding activities that are going on are all focused on trying 
35 

to improve the efficacy or the efficiency of the system. What that 

does is it forces institutions to then think about ways they can collaborate to do this. 

Programs developed by our sister organization in the Midwest— 

the Midwest Higher Education Compact, which does a lot of collective purchasing. We’ve actually joined with them now. We provide 

a master property insurance program that saves the system in Nevada over $1 million a year by participating in that. There is a 

great deal of energy on this. The programs of the National Center 

for Academic Transformation have really started to transform 

many institutions. I think Tennessee is using that in a substantial 

way to provide higher quality education, as measured by student 

outcomes, for a lower price. I think there really are some wonderful 

things happening. 

When I was a Fed back in the old days, in the last century, there 

was—we always wondered why the great ideas that FIPSE had 

weren’t done by other folks. I think one of the reasons that replication was so difficult is that there were really no financial incentives 

for doing that. The money was OK. Change is hard, so you do it 

first. It wasn’t tough times. These are tough times. 

There’s really a change in the attitude of the institutions themselves all the way down into the faculty. For the first time, I think, 

faculty are a significant part of the discussions about the change 

agenda. I’m reasonably optimistic, which is a strange place for me 

to be. 

The CHAIRMAN. Thanks, Dr. Longanecker. 

Senator Enzi. 

Oh, I’m sorry, Dr. Howard. Did you have a comment? 

Ms. HOWARD. Well, actually, I was going to basically echo some 

of the statements that David has just mentioned. But, I do want 

to say that I think States can do more. I think our initial focus 

when institutions begin to experience a drop in State support—that 

the focus was on the institution. I think your last round of hearings 

brought forward a lot of those innovations that occurred, because, 

at first, we were looking at institutions to generate ways to reduce 

costs. 

Now, I think, States are really fully at the table and helping 

more. I think it may seem that States are coming to this a little 

later, but I think that was simply because our focus was initially 

at the institutional level. But they are leading now. 

The CHAIRMAN. Thank you very much. 

Senator Enzi, thank you. 

Senator ENZI. Thank you, Mr. Chairman. 

Dr. Longanecker, when I was in the Wyoming legislature, I was 

a delegate to the WICHE. 

Mr. LONGANECKER. I know. You and your fellow Senator are the 

only two WICHE Senators we have. 

Senator ENZI. I remember being in San Francisco at a meeting 

when Governor Geringer of Wyoming and Governor Leavitt of Utah 

announced the Western Governors University. Among all the college presidents, the main conversation was, ‘‘Well, what do we do 

with out-of-state students?’’ And there’s always that kind of a tuition discussion as well. I appreciate all the ideas that you put forward, and we’ll have some specific questions on more detail on 
36 

some of those. I appreciate the broad range of universities and colleges that you’re representing with that. You mentioned Dr. Preus 

and her comments. 

I was fascinated by your comments on student share. I’m not so 

sure that we haven’t gotten away from that a little bit and think 

that everything should be provided for them. Can you tell me a little bit more about how that student share is based on the level of 

the school that they choose? 

Ms. PREUS. Mr. Chairman and Ranking Member Enzi, there is 

a formula. I dare say it might be too complicated for the committee 

meeting timeframe. We do a cost of attendance for the community 

colleges, the 4-year publics, and 4-year independent or private institutions. Then there’s an expectation that a community college 

student would not have to secure a loan in order to afford tuition, 

which at the current rate is about $3,200 a year for tuition. University and independent university choice would require a minimum 

of $3,000 borrowing. 

What we try to do is use a formula where the student would 

work approximately 30 hours during the school year and full-time 

during the summer. That dollar amount becomes the student’s 

share. Then for the university, it’s that share, which is right now 

$5,700, plus $3,000 in borrowing, so $8,700 for a 4-year university. 

That’s how we establish the share. 

Senator ENZI. It appears that that would make them have some 

consideration on where they decided to go. I’ll have some more 

written questions for you on that one, too. 

The main question that I have for all of you, actually, is what 

steps can the Federal Government take to improve affordability or 

maybe, more important, what ways the Federal Government is impeding your efforts to improve affordability, access, and completion? And that may take a much more detailed answer than you 

might be able to give here. But, if you can, just give me a brief answer on that and then follow it up in your written responses. 

Mr. MORGAN. If I could, I’ll give you one example, and this is actually one that there’s some hope that we’re going to work through 

this. One of the things we’ve done in Tennessee is significantly redesigned our remedial and developmental education programs. 

Many students come to us—70 percent or so will come to us with 

some need for supplemental or what we now call learning support 

needs. VA benefits don’t pay for remediation developmental education in ‘‘independent study.’’ 

Well, what we’ve discovered in Tennessee through this reinvention of our remedial and developmental curriculum is that emporium models, using math labs with tutors and faculty in a very 

structured way—but it’s an individualized study. We would argue 

it’s not independent study at all. We’ve been going back and forth 

now for months with the VA about being able to use their benefits 

to pay for that methodology, which has proven to us to be far superior to the old models of remediation and developmental instruction. 

There are other examples. We’re moving toward cohorts, which 

are continuous enrollment programs, in our community colleges 

and may well begin looking at that in our universities. The Pell 

system doesn’t really fit that very well, and it’s difficult to figure 
37 

out how to use the Federal financial aid that is available to support 

those kinds of what we consider to be more successful, more innovative practice. 

Senator ENZI. Thank you. 

Anyone else? 

Mr. LONGANECKER. I’d like to jump in on that. I mentioned some 

of that. I think we need fairly radical change when you get around 

to reauthorization next year in some regards. We talk about a partnership. Right now, the partnership is the feds pay, everybody else 

takes. There isn’t a stake in the game for the other principal actors. 

I think to the extent that you could build in a reasonable partnership, a real partnership, it would be useful so that institutions 

have a stake in the student’s success and there’s some value in 

that; so that the State has some stake in the student’s ultimate 

success and there’s some value in that; so that we’re working together. Too often, I think the Federal Government has tried to substitute for inaction by States or institutions. Institutions don’t 

share in some of the exceptional costs, the default rates and others 

that are a part of the game. 

The States don’t share in the cost, particularly now that we don’t 

have an SSIG program. That was a clever little program. Before it 

was passed, almost no States had need-based programs. Within a 

few years, every State did. It wasn’t designed well for the future, 

and so it faded away, as I think it well probably should have. The 

idea of building in partnerships and stakes—if States don’t want 

to go along, well, to hell with them. I mean, let their citizens suffer. 

The States that struggle and do a good job, then they should benefit from a partnership—a little hard for a Federal Government to 

say. 

We’re beyond the point where I think we can expect—I mean, I 

talked about the States changing their concept of affordability. 

You’re in the same place. I mean, come November, you’re going to 

be facing a huge set of difficult choices about what you fund and 

what you don’t fund. We’re going to have to find ways in which we 

work closer together as institutions, State and Federal Governments, and as families. 

I think the student share concepts that are built into the Oregon 

Shared Responsibility Model are really exceptional. They recognize 

the reality of what students do today, and they also call loans 

loans, not financial aid. That’s a student’s contribution. They’re 

going to have to pay it back. It’s in the student’s share, not in the 

financial aid. Loans are not financial aid. College work-study is not 

financial aid. It’s work. We should recognize, though, and admit 

that. They’re benefits. 

They’re certainly good things to have. But we sell them in the 

financial aid packaging as though we were giving a great gift to the 

students. The unfortunate part is the students sometimes think it 

was a gift and don’t realize what the loan is, and so we get ourselves in trouble. 

Ms. HOWARD. I would still like to encourage you to continue to 

look at the maintenance of effort provision. I think in the Higher 

Education Act now, it’s still rather weak compared to some provisions in other education and healthcare measures. Higher edu-
38 

cation is being squeezed out at the State level when the States look 

at P–12 and they look at the needs they have to meet in terms of 

healthcare, ET cetera. Higher education is the entity that’s really 

being squeezed out. 

I think the maintenance of efforts provisions have worked. States 

understand them. The States that have maintained those provisions are the ones that—my institutions are saying that they are 

developing robust partnerships. I think at the State and Federal 

levels, higher education really needs to be looked at as a part of 

the overall economic driver within communities, and they’re not 

kind of these stand-alone institutions that should be treated just 

like any regular State agency. 

Higher education is really the engine that is going to help us satisfy the goals that you’ve heard some of my colleagues mention and 

help us be competitive in the future. I think continuing to ask 

States to maintain some effort—families and institutions cannot do 

this alone. We’re going to get through the efficiency and effectiveness measures. We’re going to be very good at that. We’re going to 

be innovative. 

States are going to come along and help push us some more to 

be more efficient and, hopefully, will give us more policies that will 

allow us to be more efficient and effective, because I still think 

States have not done everything they can do in terms of giving 

campuses more leeway in terms of deciding how to move dollars 

from one line item to another, how to use capital investments and 

resources to generate savings, how to do more things at the local 

level so that it isn’t strained out over a long period of time, which 

ends up costing the institution more. 

Maintenance of effort has been really important and successful, 

and we need to strengthen that measure going forward in the 

Higher Education Reauthorization Act. 

Senator ENZI. I have far exceeded my time. I will do some followup in writing and hope that you will provide more answers, because this is a great panel and great answers. I appreciate it. 

The CHAIRMAN. It’s a great panel, and this topic is at the top of 

our list, because we’ve got to work on this next year on the reauthorization of the Higher Education Act. 

Senator Bingaman and then Senator Alexander. 

STATEMENT OF SENATOR BINGAMAN

Senator BINGAMAN. Thank you all for being here. Let me ask 

about the whole impact of technology on all of this that you folks 

are doing and that we’re talking about here. It strikes me that in 

higher education, just as in a lot of other aspects of our lives, technology is dramatically changing the models that are available to 

folks. I mean, I read in the newspaper—I haven’t taken these 

courses yet, but there are a lot of very high quality courses that 

you can take online. 

Now, more and more, universities are agreeing that they will set 

up systems or they’ll hire folks to essentially do monitored testing 

to see whether you’ve actually mastered the substance of the course 

and whether or not you passed the course. You don’t get college 

credit for it. They’re not going to give you a university credit to-
39 

ward a degree. They’ll give you a certificate that says you passed 

the course, basically. 

This is a type of individualized instruction that seems to me to 

sort of undermine the whole concept of universities and community 

colleges and everything, the way we’ve always thought of it. It gets 

harder and harder for folks to justify paying $30,000, $40,000, or 

$50,000 a year for tuition and devoting 4 or 5 years of their life 

to going and being on a campus when they can sit at home or anywhere and take these online courses and get credit—not get credit, 

but get at least an acknowledgement that they have mastered the 

substance of what’s being taught. 

I think, Dr. Longanecker, you talked about hybrid and blending 

programs and that kind of thing. I guess I’m just interested in any 

insights any of you can give me as to how you folks are accommodating to this. I mean, if I was worried about my ability to afford 

college, and I was just out of high school, I would be looking seriously at what are the options for getting some course work accomplished through these alternative ways that are either no cost or 

low cost, and then trying to find somebody who would acknowledge 

that I took the courses and passed them. I don’t know if any of you 

have insights. 

Dr. Longanecker, I’d be interested in your thoughts. 

Mr. LONGANECKER. Sure. Clayton Christensen, who is sort of the 

guru of disruptive technology, has written a book about higher education and has suggested that, basically, the changes in the delivery of higher education are the disruptive technologies in higher 

education. I think he’s absolutely right. 

There’s really two elements to this. One is the technology and 

the use of that in the instruction, and the other is the movement 

more toward assessment of competence rather than seat time as 

the measure of student learning, if you will. You put those together, and they have the potential of sort of radically reforming 

or destroying education as we know it. My sense is that what’s 

going to happen is it’s going to be reformed, not destroyed. 

These are going to help us do a much better job, and we’re already seeing it. I think it’s Maryland—they require that students 

take a portion of their education online. In Idaho now, they’re actually requiring that of elementary and secondary students. There’s 

a presumption that that will be an integral part of the way in 

which we learn, and it already is. 

We find that most of the students who are taking online courses 

in our public universities are actually students in the university 

who could have taken the course on campus but maybe they had 

something else they wanted to do during that time, or they heard 

it was a better course, or some of them maybe heard it was an easier course. I don’t know. 

By and large, there are a lot of reasons why people are sort of 

blending things together. Some are taking totally online. Some are 

taking blended courses. There’s still great value in the seminar and 

in the laboratory science course that’s on campus and whatever. I 

think what you’re going to see is a radical transformation. 

Senator BINGAMAN. Am I also right, though, that as this transformation occurs, there ought to be some opportunities to save 

money? 
40 

Mr. LONGANECKER. Yes, there are. In fact, for the first 15 or 20 

years of online, we didn’t save money. We were learning. It really 

wasn’t—it was mostly an add-on, and it actually cost us. But we 

are seeing technology advancements now that allow us to save substantial money. I mentioned the National Center for Academic 

Transformation, and they’re saving money. Texas is developing a 

$10,000 degree that involves the use of technology. It’s a different 

type of education. 

Frankly, my three children got regular college degrees, and I 

think there is value in the contact and in the campus and in the 

community experience that’s part of college. I hope we don’t lose 

that. I don’t think we will, because I think many people believe 

there’s value in that. There are two substantial benefits from the 

changes that are occurring. One is it will reduce the cost of all college. The second is it will make college much more available to a 

much larger share of the population than we have traditionally 

reached. 

The CHAIRMAN. Thank you, Senator Bingaman. 

Senator Alexander. 

STATEMENT OF SENATOR ALEXANDER

Senator ALEXANDER. Thanks, Mr. Chairman. I want to thank you 

and Senator Enzi for these hearings. I think they’ve really been 

very helpful and on a subject we all care about, which is making 

it easier to afford college. I’m going to focus on one word. I listened 

for it very carefully at our last hearing, and it didn’t come up until 

I mentioned it. I haven’t heard it today, although Dr. Howard almost said it. The word is Medicaid. 

We all seem to agree that the reason tuition is up is because 

State funding is down. I know that based on my own experience. 

Thirty years ago when I was Governor, 70 percent of the cost of 

going to college in Tennessee was paid by the State and 30 percent 

by the student. If we increased tuition by 3 percent, we increased 

the State’s share by 3 percent. That was just kind of understood. 

Today, as Mr. Morgan has said, it’s the reverse. Now, why is 

that? Well, the main reason for that is because the cost of Medicaid 

in the Tennessee State budget 30 years ago was 8 percent, and the 

cost today is closer to 25 percent. That’s true everywhere in the 

country. This isn’t President Obama I’m talking about. This has 

been happening for 30 years. 

Just to give you an example of it, I came to Washington to see 

President Reagan 30 years ago and said, 

‘‘Mr. President, this is squeezing—Medicaid is going to 

squeeze everything out of our budget, and I won’t be able to 

afford to fund higher education properly. Why don’t you take 

all of Medicaid, Mr. President, and we’ll take all of K through 

12 at the State level.’’ 

He agreed with that and mentioned it in his State of the Union. 

Nobody else agreed with it. 

If we had done that at the time—and I’m just using this to show 

an example of the problem—the States would have come out about 

$5 billion ahead. In other words, if all the responsibility for Medicaid had been in Washington, and all the responsibility for K 
41 

through 12 had been in the States, the States would have come out 

about $5 billion ahead 30 years ago. 

If that were true today, if all the growth of Medicaid over the 

last 30 years had been in Washington, and the growth of K through 

12 had been in the States, States would come out ahead to date 

$92 billion a year. I mean, the State of Tennessee would have $2 

billion more to spend, roughly, and I can guarantee you that much 

of it would go to higher education. 

Why is that? It’s because the Federal Government requires the 

States to spend money on Medicaid through maintenance of effort 

formulas that are in the healthcare law and in Medicaid and other 

mandates. They extend all the way to 2019. If you tell the Governors and legislators they have to spend it on healthcare, it won’t 

be there to spend on colleges and universities. 

I don’t like maintenance of effort. I’m opposed to one for higher 

education. If so, why do we have Governors and legislators? Why 

don’t we just have a Washington Congress that says, ‘‘All right. 

Tennessee spends this much on roads, this much on prisons, this 

much on’’—and we can all go home. We don’t need Governors or 

legislatures. It’s the maintenance of effort for Medicaid that has 

gotten higher education into the mess it’s in today, in my judgment. 

Turn it around the other way. What if the States and the legislatures got together and tried to get a pledge from Senator Corker 

and me that we’d never spend less than X on roads in Washington? 

We wouldn’t tolerate that, and they shouldn’t tolerate a maintenance of effort from here. 

That’s my view of it. I think the first thing we can do to make 

it easier to afford college is to stop ordering States to spend a certain amount on healthcare and leave Governors and legislatures 

free to do what they want to do. You’d see a lot fewer examples 

of what happened in Tennessee 2 years ago when Medicaid spending went up 15 percent and higher education spending went down 

15 percent. Had they been free to spend it as they wished to, I’m 

sure it would have been more even. 

Now, Mr. Morgan, you’ve watched the State of Tennessee for 

about the same time I have, over the last 30 years. You’ve been 

with Democratic and Republican Governors. Let me ask you two 

quick questions. One is what’s the tuition today in your 4-year colleges and in your community colleges? 

Mr. MORGAN. Senator, our tuition today in our 2-year colleges is 

about $3,600 a year. It’s about twice that, about $8,000 a year, at 

the universities. 

Senator ALEXANDER. Do you have any comment over the 30 years 

on the effect that the increase in State spending for Medicaid has 

on the reduction in State money available for higher education? 

Mr. MORGAN. There is absolutely no doubt, Senator, that over 

the years the increased cost of healthcare, mostly represented in 

the Medicaid program, has crowded out other State purposes. I 

think it’s just true. Particularly, in a State like Tennessee—and I 

don’t want to get into a tax reform conversation. But in a State like 

Tennessee, where our tax base really is not very elastic—in fact, 

it is inelastic. As the economy grows, the tax base doesn’t. That has 
42 

created particular problems for us in order to keep up with mandatory spending on things like Medicaid. 

Other issues, though, have also contributed to that. It’s not just 

Medicaid. But Medicaid certainly is the largest. In the last few 

years, in the last 5 or 6 years, the rate of growth in what we now 

call our TennCare program was not as great as it had been in prior 

years, although, as you note, a couple of years ago was a pretty big 

hit, and we expect that to continue now—kind of back on trend for 

the next few years. It will make it much more difficult to fund 

higher education. 

Higher education doesn’t have constitutional protection in Tennessee. Prisons and K–12 systems in Tennessee do have constitutional protections, either based on historical litigation or exclusive 

provisions in our State Constitution. I wish we had maybe a little 

constitutional provision for higher education. 

Senator ALEXANDER. Thanks, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Alexander. 

Senator Franken. 

STATEMENT OF SENATOR FRANKEN

Senator FRANKEN. Thank you, Mr. Chairman, and thank all of 

you. 

Dr. Longanecker, one of my top concerns I hear about from students in Minnesota, after concerns about how to pay for college, is 

a concern that they really don’t necessarily understand the true 

cost of college. I hear this also, not only from people all over the 

country, but from school counselors, who are overwhelmed as it is, 

but get these aid letters that are just really hard for them to sort 

out, let alone for the parents of the student or the student. 

Currently, every postsecondary school uses its own financial aid 

award letters, making it really impossible for students to compare 

letters to each other. I mean, if you look at them, they’ll use different names to describe the same thing. Sometimes a loan won’t 

even be listed as a loan. It’ll just have a code. And this is an award 

letter. Very often, you don’t think of an award as something you 

have to pay off with interest, you know. 

I’ve introduced bipartisan legislation to require colleges to use a 

uniform financial aid award letter with common names and common terminology. Do you see the value in this type of legislation? 

Mr. LONGANECKER. Yes, I do. In fact, Secretary Duncan and the 

Department have come up with a recommended letter to the communities—— 

Senator FRANKEN. That’s voluntary, though. 

Mr. LONGANECKER. Voluntary. The dilemma I think we’ve got 

right now is, in most cases, they aren’t intentionally non-communicative. But we’re dealing here, for the traditional college student, 

with a person who has very modest understanding of personal finance. So unless you have a clear representation of what the award 

is, it can be really misunderstood. 

I mentioned earlier that many students don’t understand what 

a loan is when they go to college. They get a loan, and there’s no 

payment with that loan, and they presume that that’s the way it’s 

always going to be. It was a loan without repayment, if you will. 

Or they’re told that there’ll be repayment afterwards. Sometimes 
43 

that’s a loan that’s accruing interest. They don’t understand what 

that means. 

I have a personal story. My brightest daughter—I have three 

wonderful daughters. My brightest daughter was going to law 

school, and they gave her all the money she needed to go to law 

school. And she says, ‘‘Look at this. This is wonderful. I’m going to 

take out all these loans. It’s going to be great.’’ And I’m saying, 

‘‘No, you aren’t. Look at the interest rates on those.’’ She says, 

‘‘Well, I don’t have any interest while I’m in school.’’ 

Well, of course, she did. She didn’t have to pay it. But it was accruing. She’s going to owe twice as much when she got out of law 

school as she thought she was going to owe. This is an extremely 

bright person. They hadn’t explained all of that to her. They were 

making sure she could afford to go to college. I think it’s very important that we have a standard way—— 

Senator FRANKEN. And, once again, this is your brightest daughter. 

[Laughter.] 

Mr. LONGANECKER. Yes, that would have been my brightest 

daughter. 

Senator FRANKEN. I think that underscores the point. 

Mr. LONGANECKER. Yes. She is a smart little bugger. I think it’s 

really important that they know. I know the Secretary is trying to 

do it through voluntary means, because he doesn’t have the capacity to do it through a requirement. I think it would be interesting 

and useful to have—— 

Senator FRANKEN. I wonder who would have that ability to do 

that. 

Mr. LONGANECKER. The U.S. Senate could pass a bill on it. 

Senator FRANKEN. Oh, that’s why I introduced the bill. I mean, 

you said that traditional students—— 

Mr. LONGANECKER. Non-traditional students face the same dilemma. You’re coming back to school. It’s been a long time since 

you’ve been there. If you come from a low-income family, you often 

have a real strong aversion to certain kinds of assistance. You really need something that clearly lays it out. Now, that doesn’t mean 

they’ll all know exactly what you said or listen to what you said. 

That’s the other side. 

Senator FRANKEN. Well, if we have a common form that names 

everything the same so you can compare apples to apples—— 

Mr. LONGANECKER. Yes. 

Senator FRANKEN [continuing]. Also, that says how much you’re 

going to owe in addition to this—because very often, the letters will 

just have what aid you have, meaning what grants and what loans 

you have. It won’t say how much more you have to pay—and also 

to have something that says how much you’re going to have to pay 

per month to pay off these loans. And if you have that, it would 

be much, much easier for students. 

This is something I hear from students all the time who are in 

the middle of it, in college, or students that have graduated and 

didn’t realize the level they were going to pay. And instead of saying, ‘‘Oh, you should have been smarter,’’ why not just make a uniform financial aid letter that everyone can understand. I have very, 

very smart guidance counselors who wrote me and thanked me, be-
44 

cause they said, ‘‘This is very hard for me, and this is my job, let 

alone how hard it is for the student.’’ 

Mr. LONGANECKER. Yes. I think, again, not everybody will get it. 

But we ought to give them the capacity to get it. 

Senator FRANKEN. Yes. I think that’s obvious. Thank you. 

I know I’ve gone over my time, Mr. Chairman. 

The CHAIRMAN. Thank you very much. 

Senator Whitehouse. 

STATEMENT OF SENATOR WHITEHOUSE

Senator WHITEHOUSE. A quick editorial point and then two questions. The editorial point is that at the tail end of all that confusion, people are often left stuck with enormous amounts of debt. 

One of the dirtiest deeds that was done to American students was 

squirreled away in the so-called Bankruptcy Reform Act, where 

they made student loans non-dischargeable which shoveled buckets 

of money into the pockets of the lenders who had lent at a rate that 

presumed that was not the case. It was kind of a surprise attack 

on the students. 

I don’t think anybody has put their fingerprints on that provision 

since then. But there it lies, and students have this additional burden that ordinary borrowers don’t have as a result. 

My two questions—the first is about Pell grants. Could you each 

just touch very briefly on how important you think Pell grants are 

in the financing strategy for college of lower income families? 

Ms. HOWARD. Well, certainly, I think it has played a real important role in helping millions of individuals to be able to obtain an 

education in this country. 

Senator WHITEHOUSE. We have one really important. 

Ms. HOWARD. Right. 

Mr. LONGANECKER. I’d say it’s really, really important, but not 

for every Pell grant recipient. That’s one of the areas I think there 

needs to be some reform in. For the students who have the most 

need, it makes the difference in whether they go to college or not. 

The way the program works, whenever we increase maximum, we 

also bring in a new population of more middle-income students. I 

know there’s a lot of concern about the middle-income students 

today. They aren’t nearly as vulnerable as that most-needy student, and we may need to think about targeting better in the future. 

Senator WHITEHOUSE. Mr. Morgan. 

Mr. MORGAN. Pell grants are essential to our lower income students being able to go. There’s just no question about it. 

Senator WHITEHOUSE. Dr. Preus. 

Ms. PREUS. Extremely important. 

Senator WHITEHOUSE. OK. Really important, really, really important and essential, and extremely important. Good. My other question is one that I invite you to take for the record, if you like, because in 2 minutes and 45 seconds, I’m not going to get answers 

to this from everybody. But it has to do with what many of you 

were saying about accountability and, particularly, how it’s measured. 

A woman who is a single mother in South Providence and who 

decides that she’s going to improve her economic situation and go 
45 

to CCRI and start taking credits might very well start off signing 

up for a bunch of credits and being optimistic. Then she’ll go in, 

and she’ll find out, ‘‘I was a little over-optimistic about how much 

time and energy I could devote to this. I’m going to have to drop 

a credit or so.’’ And then maybe in the next term, there’s a 

childcare issue, so she drops out entirely. 

But she comes back again and takes another credit and then 

maybe two more. In the meantime, she is learning skills and has 

refocused her life, and, sure enough, boom, along comes a job in the 

field that she’s interested in. She gets that job. She’s got her economic foothold. So no more credits. She’s satisfied. For her, that 

CCRI experience was a success: ‘‘I moved from where I was not 

happy to a job where I am happy.’’ 

When you look at her career from a purely university-based perspective, she dropped credits, she missed semesters, she never 

graduated, and she looks like a failure. In her life, it’s a success. 

Mission accomplished: ‘‘I have a foothold job that gets me into the 

economy where I want. I can take care of my child, and I’m on my 

way.’’ 

Who does the best job of figuring out what real success is in 

terms of ultimate job placement? And how should we be looking at 

that question? 

Mr. LONGANECKER. Well, I’m really glad you asked that question, 

because I think that is a success. Most of the people who face those 

same dilemmas don’t ever get to the point of success. I think there 

are two or three things. One is we need to find a way in which we 

define success, both in terms of the completion of the education and 

in terms of why it was we completed the education, so moving into 

the workforce. 

I think this is really a great example of where the Federal Government needs to bring together the activities of the Labor Department and the Department of Education and, if you will, perhaps 

the IRS or the Social Security Administration so that we can determine whether the people have achieved the success that we want 

them to. We’re involved at WICHE with a four-state—we’re working with four States to essentially blend their education data bases 

and their labor data bases, their UI data bases, so we can look at 

the success of students. 

Now, we’ll be able to do some really good policy work on that. 

But we won’t be able to look at individuals because the privacy 

laws don’t allow us to do that. 

Senator WHITEHOUSE. My time is up. If anybody else would like 

to add thoughts in terms of an answer, I’d love to hear from you. 

This has been a really terrific panel, and I want to thank the 

Chairman for bringing you all here together—an impressive panel. 

The CHAIRMAN. We’ll start a second round here. I’m sorry that 

Senator Alexander left, and I don’t mean to speak in his absence. 

But I did want to respond a little bit on the Medicaid issue. An article in the Washington Post this summer, dated July 3d, quoting 

Kaiser Family Foundation, said that, 

‘‘Despite beliefs that Medicaid is claiming a larger share of 

State budgets, the share of State general fund dollars for Medicaid has remained fairly stable, increasing from 14.4 percent 

in 1995 to 15.8 percent in 2010.’’ 
46 

The most recent up-tick is largely due to the recession. I mean, 

who gets Medicaid—poor people and people who are out of work. 

The idea of maintenance of effort—the CBO estimated that if we 

repealed the maintenance effort, there would be 300,000 people 

added to the ranks of the uninsured, and that 400,000 beneficiaries 

would be pushed out of Medicaid and CHIP, two-thirds of whom 

would be children. 

Again, if they’re kicked out, it’s like they don’t disappear. They 

still get sick. They still have to be taken care of. They’re going to 

be a bigger burden if the sicker they get, that’s when they show 

up at the hospital or the emergency room. I hope we’re not trying 

to pit poor kids against college students. It’s poor kids. How do you 

get Medicaid? You’ve got to be really poor. So I hope we’re not 

going to try to pit poor kids against college students. 

The other thing I want to say about this is that—and I don’t 

have the data now, but I’ve seen it in the past—that States in the 

past 20 or 30 years, when times are good, cut taxes. Governors love 

to run on cutting taxes. So they cut taxes. Then when they hit bad 

times, they can’t raise taxes in bad times. Then you get into another cycle of good times and you want to cut taxes even more. 

We have had a decreasing level of State revenues over the last 

20 to 30 years in general funds. What do the States do? Lotteries, 

casinos—that’s where they’re making their money now. And who 

plays the lottery? Who goes to the casinos? Poor people. You don’t 

see rich people at these casinos. Well, you see them in Las Vegas 

maybe. They might go there for other reasons besides just gambling. 

When I hear States crying about their budgets and stuff, I say, 

‘‘Well, show me what your revenues have done over the last 

20 or 30 years. How are you collecting your revenues? Where 

are they going, and your budgets?’’ 

You can’t just say that just because—and the other thing is this 

30 years—and Senator Alexander was right about this—I don’t 

know if he alluded to this or not, but that we have a growing number of poor people in this country in the last 30 years. Look at it. 

Just look at the data. 

There was a graph in the paper the other day about more and 

more income going to the top one-fifth—I forget what it was—like 

50 percent of our income is now going to the top one-fifth of income 

earners, and less than 5 percent going to the bottom fifth. That’s 

what’s eating us up. It’s this lack of revenues and the fact that we 

have a growing population of poor people in this country. 

I didn’t mean to get off on all that. But I just wanted to respond 

to that. Mostly, what I’m interested in, though, is pursuing—as I 

said, this is a great panel. We have the Higher Education Act next 

year. I think there’s a lot of things we can do. I feel strongly that 

maintenance of effort is something that we really, really have to 

maintain. 

Also, we’ve got to look at how we can incentivize States to do the 

kinds of things you’re doing in Tennessee or what you’re doing in 

Oregon, which really kind of gets my curiosity about how you have 

a seamless system and how you encourage these kids to get 

through the seamless system from community colleges to colleges. 
47 

The other thing we need to tackle is pay for performance. Well, 

what is performance? Is it 4 years? Well, you know, I went to a 4- 

year college. But it took me one extra quarter to finish because I 

changed my major. So I didn’t have enough credits in my new 

major. I needed to go another—we were on the quarter system at 

the time, so I had to go an extra quarter. 

There’s a lot of that that goes on, where kids go to college, thinking they’re going to do something, and find out that’s really not 

where their aptitude lies. They change, and it requires them to go 

to school for an extra semester or so. Second, there’s a lot of kids 

who go to college and because of economic situations they drop out. 

They go to work for a while, save some money, and go back to 

school. 

Sometimes it does take longer than 4 years. I don’t know what 

the proper—is it 5 years? Is it 6 years? A lot of people seem to have 

settled on 6 years. I don’t know what the proper cutoff is for some 

kind of pay for performance, for getting these kids through in a 

short period of time. We know it saves money. That I know. The 

shorter period of time you’re in college, the more money you save. 

How do you accommodate these other things I spoke about in 

terms of finances, in terms of illnesses, in terms of changing your 

major? Once you start writing in exceptions, where do you end? So 

who’s got the answer for me? 

Mr. LONGANECKER. I’ve got the answer. One of the real advantages of these new outcomes-based funding programs like Tennessee has is they provide all the right incentives to the institution, 

but they don’t tell the institution exactly how to do it. For example, 

the institution knows now that they aren’t going to get paid for 

that person until he or she graduates. I mean, they’re not going to 

get as much money. They’re going to try and do everything they 

can to get that person to graduate. 

The way you get a person to graduation is you break down those 

barriers, so that you have a childcare program for this person that 

was mentioned, so that she doesn’t have to drop out of school. 

The CHAIRMAN. That costs money. 

Mr. LONGANECKER. Yes, it costs money. But it’s worth it because 

you’re going to get some money, and you’re going to get it sooner. 

It really allows the institutions to find the one that fits their circumstances best. And you’d better believe they’ll follow it. They 

sure followed us on enrollments. We said we wanted enrollments, 

and we got enrollments. We particularly got enrollments on the 

14th day, not necessarily on the 30th day. A lot of students have 

dropped courses by then. 

There are a lot of the right incentives if you pay for performance. 

Now, some States have sort of done a half a loaf, and it’s not bad. 

They’ve said they’re not going to pay on graduates, but they’re only 

going to pay for completed courses. Well, then, you provide a disincentive for—gosh, that bright daughter I was talking about used 

to always sign up for 24 to 27 credit hours, because she knew she 

was going to drop the ones that didn’t seem to be as fun, or she 

couldn’t get the ones she really wanted so she signed up for others, 

hoping she’d get into the ones she wanted. 

There was a lot of gaming that went on. That served her pretty 

well for convenience, but it sure cost the State of Virginia, which 
48 

is where she was going at that time, a lot of money, because those 

courses got counted in their formula. 

The CHAIRMAN. Mr. Morgan. 

Mr. MORGAN. One thing I would add to that—and I agree with 

everything David said. But we can also structure our offerings in 

ways that are much friendlier to students who have outside-education obligations. They have families. They have work careers. 

They have other balancing acts that they have to perform. Historically, we haven’t been very flexible in the way we structure programs. 

We’re looking very hard—and the outcomes-based formula drives 

us to look very hard—at how we craft programs that will fit the 

needs of individuals. Frankly, that’s something we can learn from 

proprietary schools, because they’ve done a pretty good job at building programs that fit people’s real-life needs. We just didn’t do that 

very often in public education. I think we’re doing that now. 

Perhaps in Senator Whitehouse’s example of the person who kind 

of comes and goes and finally gets what they need, had we had the 

right program structure on the front end, it may have been a much 

quicker route for that individual to be able to get to an ultimate 

result that would put them in the economy at the place they want 

to be. There are a lot of things that we can do better. 

There’s just one other point I’ll make and then stop. In difficult 

budget times, historically, student services has been one of the first 

things to be cut. In an outcome-based world, suddenly student services becomes one of the last things you want to cut, because having 

adequate services that can really reach out to students, identify the 

problems that they have, counsel them about the career choices 

that they need to make so maybe they don’t waste a quarter or a 

semester or a year exploring—if they had a little more guidance up 

front, they might have gotten on a path that would have led to a 

quicker completion and, therefore, saved resources. 

One of the things that we’re seeing in our system is that focus 

on outcomes has really developed a strong interest on the part of 

all the stakeholders at the institution in having the right student 

services available at the right time. 

The CHAIRMAN. Thank you, Mr. Morgan. 

Dr. Howard. 

Ms. HOWARD. I just wanted to say that I also want us to keep 

in mind that our students today, on average, at many of our campuses are 23, 24, 25, 26 years of age, and they have other real-life 

responsibilities. This sort of perfect perspective we want to have in 

terms of how they move through their educational experience is not 

going to be as achievable for all adult learners. They’re going to be, 

in the future, one of the largest groups that we educate in this 

country. 

We are trying to adjust and be prepared for everyone that’s going 

to be coming through higher education, and that’s a big challenge 

for us. Many of our colleges and universities are beginning to have 

their own e-university within the walls of the traditional university 

so that we do have this hybrid world that students can take advantage of to garner the education that they need. 

We have one system in Pennsylvania that’s starting to look at a 

lot of the courses that are out there online and will look at how 
49 

to evaluate and judge those courses as to whether they have quality and merit and students can take advantage of them and receive 

college credit for them. That’ll be another lifeline that students can 

have in that State, for example, to begin to move forward with 

their education. 

I was listening to him describe the student that he was talking 

about. Although she’s happy now, it doesn’t mean she’s not going 

to hit the wall later, that her job or her career isn’t going to require 

her to go back and receive additional education if she decides she 

wants to move up in that organization or she wants to change jobs 

again. 

I do think in terms of higher education we’re going to have to 

have a more expansive view of it and stop looking at it as an end 

and a beginning. I think we’re all going to be involved in continuing education the rest of our lives when we look at the society 

that we’re developing and how competitive it is. I do think we need 

to be sensitive to that and develop as many pathways as we can 

for individuals to be able to garner a higher education. We are 

working on that, and we also are looking at how we can make it 

most cost-effective, especially for our students. 

We don’t have a pat answer for you today, whether it should be 

four or six or whatever, because our population has changed. When 

I went through college, everybody was 17, and everybody traveled 

as a class. Very few of our students now and in the future are 

going to be coming in as a group and then complete as a cohort at 

the end. We have to be prepared for it when people have to go off 

in terms of other roadways. So I hope we won’t lock ourselves back 

into a view that’s kind of 25 years old that everyone’s going to go 

through in the same amount of time and in the same way, because 

it won’t happen. 

The CHAIRMAN. Thank you very much. 

Senator Enzi. 

Senator ENZI. Thank you, Mr. Chairman. I think this has been 

an extremely valuable panel. I’ve made pages and pages of notes 

here and additional questions. Our work is really going to be cut 

out for us. I mean, not only do we have to do the Higher Education 

reauthorization, but we have to fix No Child Left Behind. 

The CHAIRMAN. We’ve got to redo that, yes. 

Senator ENZI. The Workforce Investment Act should have been 

done 6 years ago. I complain about it every year. 

The CHAIRMAN. You’ve worked very hard on that. 

Senator ENZI. I did hear the comment that we needed to redesign 

remedial. That fits in with fixing No Child Left Behind. If we don’t 

bring them out of high schools better, then they won’t need the remedial courses. High schools have to be somewhat responsible for 

that as well as colleges when it comes to the cost, I think. 

I think we’re going to have to pursue this technology a lot more, 

and it’s going to be interesting—the age of those of us who will be 

making the law, compared to the age that really understands technology. I’ve said in my office, if the computers break down, we’d 

just go find a kid on the street, give him a movie ticket for fixing 

it, and it’s done in 30 minutes. It’s not quite that simple, and that 

isn’t really how we do it. 
50 

Recently, I was in Sweden, looking at their educational system. 

In preschool, they’re using i-Pads and doing educational programs, 

and that goes all the way up. As they get a little bit older, they 

communicate between each other doing team projects, which I 

hated when I was in school because there was always somebody 

that was the weak link that still got credit for my work. But when 

they’re using computers, just two people linked up, the teacher can 

go back and check and see who is doing the work. That has some 

advantages to promoting teamwork, I think. 

It was just fascinating to watch the ways that they were able to 

use this that I’d never even envisioned before. They didn’t write 

stories. They filmed stories. We’re going to have to adjust to that 

level of technology as we’re making the new laws for this. The 

teachers liked the system once they adjusted to it, because it freed 

them up to work with the kids that actually needed help, and the 

kids that were really good were just zooming along on their own. 

Somehow we’re going to have to adjust to that so we can allow others to adjust to it. 

I have a whole range of questions, but we don’t have the time 

to cover them. I will submit them in writing to you and would appreciate answers. You’ve just been a real treasure trove of information for us. There are a lot of areas we need to explore yet before 

we do the Higher Education reauthorization. I just want to thank 

you for your participation today and your great answers. 

The CHAIRMAN. Thank you very much, Senator Enzi. And I’ll just 

join you in thanking the panel, all of you, for being here and for 

all the work you do. As you can see, this is of great importance to 

this committee, because this is something we have to tackle next 

year. 

We’ll leave the record open for 10 days, until September 27. I 

want to thank all my colleagues for all their hard work on this 

issue and other issues before the committee. 

Also, to all of our witnesses who are here, we hope that you will 

be available to us and to our staffs for correspondence and other 

types of information as we move along this fall and next year into 

the Higher Education Act reauthorization. Thank you very much 

for the work you do. Thanks for being here. The hearing is adjourned. 

[Additional material follows.] 
51 

ADDITIONAL MATERIAL 

RESPONSE BY MURIEL A. HOWARD, PH.D., TO QUESTIONS OF SENATOR ENZI

AND SENATOR BLUMENTHAL

SENATOR ENZI

Question 1. At our last hearing, we heard from president Tom Snyder of Ivy Tech, 

who described how his institution is looking to maximize operating efficiencies and 

cut costs. In what ways are States encouraging institutions to find operating efficiencies and cut costs? In what ways do State laws and policies impede institutions’ 

ability to cut costs? 

Answer 1. Given the dramatic rate of State disinvestment in public higher education in recent years, public colleges and universities have worked relentlessly to 

identify and implement cost containment strategies, which have led to improved 

operational efficiencies and productivity, while protecting students from additional 

tuition increases. Public, master’s-level comprehensive universities remain, on a 

cost-per-degree completion basis, the most efficient sector of American higher education. Yet these institutions continually strive to reduce spending while maintaining academic quality. In an analysis of institutional cost-cutting efforts, detailed in 

Cost Containment: A Survey of Current Practices at America’s State Colleges and 

Universities, AASCU found top sources of cost containment to include energy management, auxiliary operations (i.e., housing/dining), distance/online learning, and efficiencies in administrative staffing (see Appendix A, p. 33 of the report for a full 

listing). 

Enhanced operational flexibilities for public college campuses is another avenue 

for further cost reduction. These include changes to capital construction processes, 

data reporting, regulatory burdens, and overly prescribed rules regarding institutional purchasing activities. Regarding the latter, an AASCU study found a number 

of State policy reforms that could lead to significant cost savings in purchasing 

goods and services; savings that can be reallocated to core teaching and learning 

pursuits. Recommendations on State procurement policy reforms are articulated in 

the Executive Summary (p. 8) of the report, Public College and University Procurement: A Survey of the State Regulatory Environment, Institutional Procurement 

Practices, and Efforts Toward Cost Containment. 

Question 2. As you are aware, Congress will be taking steps to reauthorize the 

Higher Education Act in the next 2 years. With this in mind, how can steps now 

being taken by the States serve as a model for us? What types of things are being 

done in the States that can and should be incorporated into Federal efforts to improve affordability, access and completion? 

Answer 2. As I highlighted in my testimony, States are providing institutions with 

some flexibility of State procurement requirements, as well as other State regulations, in order to allow institutions to achieve cost-saving efficiencies. The Federal 

Government should examine how Federal policies influence institutional costs and 

look at minimizing their footprint in those areas. 

Question 3. In your written testimony, you discuss the need to give institutions 

more autonomy. However, given that public institutions are State agencies, how 

much autonomy is too much? Where should States draw the line? 

Answer 3. One of the greatest attributes of the Nation’s higher education system 

is its incredible institutional diversity. Just as our institutions possess distinct missions, so too do our States provide an array of governance and oversight approaches 

involving public postsecondary systems. Some States have strong, centralized systems (Wisconsin, New York, North Carolina), while others provide considerable autonomy (Colorado, Michigan, Virginia). In all States, a general consensus among 

university leaders is that greater flexibility to public universities can help maximize 

their ability to meet several important objectives. These include cost containment, 

revenue enhancement, operational efficiencies, economic development through public-private partnerships, and college affordability (through strategic tuition and financial aid policies). 

It must be underscored that college and university leaders and the governing 

boards remain adamant about ensuring full accountability for taxpayer-provided 

State appropriations and student-paid tuition dollars. Institutional flexibility— 

granted through enhanced State—autonomy—and accountability—are not mutually 

exclusive. Both autonomy and accountability are ideals that can be realized through 

sound public policy measures and effective governance. 
52 

SENATOR BLUMENTHAL

Question 1. Dr. Howard, thank you for being here today. I am curious about the 

portion of your testimony when you suggested that States give greater flexibility to 

institutions as a strategy to increase college affordability. One of the main things 

that you call for is greater institutional flexibility in setting tuition policy, which 

you say will allow States to maximize efficiency and increase affordability. 

Can you elaborate on the connection between institutional flexibility in setting 

tuition and college affordability? 

Answer 1. As I mentioned in my testimony, in 40 States, institutions do not have 

the ultimate authority to establish their tuition rates. In many States, the State legislature has the ultimate control creating a challenging dynamic. The legislature 

will simply legislate a higher tuition when they are not able to increase State funding to institutions. Giving institutions more control over this function and allowing 

them to determine tuition price should result in tuition-setting policies at public 4- 

year institutions that are more sensitive to student-consumer costs. 

Question 2. How specifically do you envision institutions using such flexibility to 

foster affordability? 

Answer 2. The most common method by which institutions utilize tuition policy 

to increase student access is through allocating a portion of tuition revenues for 

need-based student financial aid. Institutional need-based aid is an effective college 

affordability strategy for low- and lower middle-income student populations; a group 

whose success in postsecondary education is paramount to national economic and 

workforce goals. 

Further, flexible tuition policies can facilitate college affordability and student 

success. These include policies involving out-of-state students whose revenues are 

used to subsidize the cost of resident students, and differential tuition policies, 

which charge prices that more accurately reflect the costs associated with academic 

programs. 

RESPONSE BY DAVID A. LONGANECKER, ED.D., M.A., B.A., TO QUESTIONS OF

SENATOR ENZI, SENATOR BENNET AND SENATOR BLUMENTHAL

SENATOR ENZI

Question 1. At our last hearing, we heard from president Tom Snyder of Ivy Tech, 

who described how his institution is looking to maximize operating efficiencies and 

cut costs. In what ways are States encouraging institutions to find operating efficiencies and cut costs? In what ways do State laws and policies impede institutions’ 

ability to cut costs? 

Answer 1. States are using general approaches to encourage their systems of higher education to find operating efficiencies, thus cutting costs. 

• The first, whether intentional or not, is the age-old technique of starving the 

beast. Simply by reducing funding, either in absolute levels as has been the trend 

in the West or in funding level ‘‘per student,’’ States have forced institutions to find 

ways of providing their services for less. While institutions will contend that these 

‘‘draconian’’ actions are decimating higher education, in actual fact institutions have 

found ways to manage well within reasonable cuts. In fact, one of the salutary impacts of this is the recognition of the value of marginal revenues from tuition (even 

without tuition increases), which for most institutions are sufficient to cover the 

marginal costs associated with new students, thus making new students attractive 

as revenue producers, thus, not surprisingly, we see unanticipated FTE student increases. Now, we hear that these new enrollments are exacerbating the funding crisis, when in truth they provide marginal revenues that are helping the institutions. 

• The second general approach, much more intentional, is through performance 

funding, which provides strong incentives for institutions to redirect their funds to 

those goals reflected in the public agenda that drives performance funding reward 

and away from peripheral activities that excite the institution but no one else. 

• The third general approach is incentive funding, which pays institutions for entering into new activities that evidence suggests will increase productivity. For example, South Dakota and Tennessee have provided seed funding to encourage institutions to adopt the blended instruction concept pioneered by the National Center 

for Academic Transformation. Incentive funding and performance funding are often 

thought of as the same thing, but they are far from being the same. Performance/ 

Outcomes funding pays for a desired outcome and comes after the fact. Incentive 

funding pays for an input that is likely to provide the desired outcome and comes 

before the outcome is produced. They can often complement each other, but they are 

distinctly different strategies. 
53 

Question 2. As you are aware, Congress will be taking steps to reauthorize the 

Higher Education Act in the next 2 years. With this in mind, how can steps now 

being taken by the States serve as a model for us? What types of things are being 

done in the States that can and should be incorporated into Federal efforts to improve affordability, access and completion? 

Answer 2. As I mentioned in my testimony, I believe the Higher Education Act 

could be re-crafted to create a more active partnership between the Federal Government and willing States. Given the primary responsibility that the States have constitutionally to provide education, such a partnership makes more sense than having the Federal Government try and cover for States’ lack of adequate attention to 

assuring access to success in higher education. Doing this would be a radical departure, because currently the Federal Government essentially disregards whether 

States support the Federal goals in postsecondary education or not. The argument 

against the partnership approach I propose is that not all States care much about 

educational opportunity for all, and the citizens of those States would be harmed 

if the feds didn’t step in. I argue that, while it is true that not all States are equally 

committed to equal opportunity, we are well pass the huge disparities of the civil 

rights era when the Higher Education Act was initially passed in 1965, and that 

the Federal Government simply can’t afford and shouldn’t afford to bail out States 

that don’t do their share. If States chose to screw their residents, that is unfortunately their prerogative and the Federal Government shouldn’t try and provide 

cover for them. Rather, the Federal Government should share its precious few dollars with States that share the national vision. 

I noted in my testimony that I believe Oregon’s ‘‘design for shared responsibility’’ 

best captures this philosophy. Oregon’s design includes students, their families, philanthropy, institutions, and State and Federal Governments as shared partners in 

ensuring access to success for their students. Students, as the principal beneficiary 

of the education are expected to contribute what they reasonably can toward their 

education, and this student contribution can be provided from current work, savings 

from past work, loans predicated on future work, and/or earned scholarships. Families are expected to contribute, as they should before they expect other taxpayers 

to do so. Philanthropy’s contribution is encouraged and incentivized because it goes 

to reward the student (in the student’s share) for the student’s effort to prepare well 

for college and does not replace the contribution of government. Institutions partner 

by keeping their costs and tuition under control, and the State and Federal Governments cover the remainder in grant aid because everyone else is tapped out. Note 

that much of what we currently call student aid is actually considered part of the 

student’s contribution in the Oregon scheme. College Work Study is considered a 

portion of the student’s earned contribution, and student loans, likewise, are considered part of the student’s earned contribution, albeit from future earning, not current earnings. Indeed, in the Oregon plan, the amount students are expected to borrow is predicated on their projected earnings. It’s a smart idea in which the feds 

could benefit from looking at and perhaps emulating or partnering. 

SENATOR BENNET

I particularly liked your reference to Washington State’s model of public/private 

partnerships. That’s exactly the kind of collaboration we need so that we can provide more opportunities for kids to pursue important STEM fields in this 21st century economy. 

Question 1. Are there best practices that have been developed in Washington 

State that we can try to replicate in other States? 

Answer 1. First and foremost, thank you, Senator, for your kind introductory remarks. 

With respect to the question above, the matching plan in Washington is, indeed, 

a plan that could be replicated elsewhere and is indeed being looked at by a number 

of States. The dilemma is finding a scheme that is attractive enough to attract significant private sector engagement. In Washington, the idea for this matching program actually came out of the private sector, with leadership coming from Microsoft, 

Boeing, and Costco, and the goal is to have a program that brings in $1 billion in 

private sector funds to match $1 billion in public funds. The dilemma is that, despite the private sector leadership on philosophy, the dollars haven’t followed. To 

date the fund has about $20 million in private sector contributions, which when 

combined with the public sector funds, yields mighty slim pickings for distribution 

to students. 

Alaska and Wyoming in recent years have used portions of their largess from gas, 

oil, and coal fee revenues to fund new ‘‘endowed’’ State-aid programs. It might have 

been interesting if they had established an enduring matching component to keep 
54 

both the State and the private sector engaged, rather than essentially eliminating 

the need for this portion of the public agenda to be ‘‘taken care of ’’ and no longer 

worthy of their concern. 

Question 2. For example, how can Colorado work with companies who need STEM 

graduates like Lockheed Martin to partner with schools like Colorado School of 

Mines or Red Rocks Community College? 

Answer 2. I’m currently intrigued by an idea being shopped in California to build 

on the Federal loan program, and its income contingent repayment options, to try 

and ‘‘partner’’ by buying down student loans for students staying in California. In 

general, I think this idea of intentionally building on the Federal programs has 

great merit. 

Another grossly underutilized strategy in American higher education is the use 

of cooperative work-study. I’m not talking here about the usual use of the Federal 

dollars for college work-study, but rather programs pioneered at institutions like 

Northeastern University and Cleveland State University, where large portions of 

the student body, particularly in fields like Engineering, engage in intentional partnerships between their University and local industry to provide remunerated employment that imbeds the clinical part of their education and thus is an integral 

part of their degree program. Such programs have multiple benefits, including a 

wonderful way for students to pay for their education, an opportunity for the firms 

involved to gauge whether they want to hire these students (substantially reducing 

recruitment costs), and a much greater likelihood that these students, once educated 

at public expense in your State, will remain in-state because they’ll have time to 

grade in a firm within the State. 

SENATOR BLUMENTHAL

Mr. Longanecker, thank you for being here today. I applaud the work that you 

have done with the Western Interstate Commission, and I hope it continues. I was 

hoping you could speak further to the importance of the Pell grant. I am a strong 

supporter of the Pell grant, and believe it is a critical baseline for many students 

in need. 

Question 1. I know that the western United States has a significant investment 

in public education, and I’d like to hear your thoughts on the ways the Pell grant 

has supported public institutions, and ways in which the program can be improved. 

Answer 1. Despite the rhetoric of some, the evidence is clear that Pell grants 

make it possible for many people to attend college that would not have done so without these grants. I prefer not to think about the ways in which Pell grants help institutions, because they are intended to help students, not institutions, but without 

doubt many institutions that serve large numbers of Pell grant recipients would not 

be able to remain in business if the students didn’t have the grants that make it 

possible for them to attend college. While many focus on the dependency of for-profit 

institutions on Pell grant recipients for the resources they bring, the case is no less 

true for more community colleges, 4-year public universities, and less selective private colleges. 

What we now know, however, is that while Pell grants have made access possible, 

they have not contributed as much as is needed in promoting persistence and completion of Pell grant recipients. I believe the evidence is strong that adding kickers 

in the Pell grant program for students who achieve above expectations would lead 

to performance above current levels. Indeed, for a few years we had this with the 

Academic Competitiveness and Smart Grants, which provided students additional 

funds if they took a rigorous curriculum in high school and/or majored in a STEM 

field. We know from research that taking the right curriculum in high school is absolutely key to postsecondary success; nonetheless, we dropped the ACG and Smart 

Grants programs because institutions didn’t like them and because States didn’t like 

having to provide a viable high school curriculum. We also know from research that 

greater academic intensity (taking more courses and credit hours) leads to success, 

but we have no incentive for students to take more courses and to become more intensively engaged. In fact we ludicrously define ‘‘full-time’’ as 12 hours of study, 

though no student could receive an Associate Degree in 2 years or a Bachelor Degree in 4 years if they took 12 hours per term. Furthermore, students whose Pell 

grant students perform exceptionally well are treated no differently in the Federal 

programs than institutions whose Pell grant students never graduate. We need to 

imbed within the Pell grant programs incentives for students, institutions, and 

States to partner in achieving greater access to success, rather than accommodating 

access to failure. 
55 

RESPONSE BY JOHN G. MORGAN, B.A., TO QUESTIONS OF SENATOR ENZI

AND SENATOR BLUMENTHAL

SENATOR ENZI

Question 1. At our last hearing, we heard from president Tom Snyder of Ivy Tech, 

who described how his institution is looking to maximize operating efficiencies and 

cut costs. In what ways is Tennessee encouraging institutions to find operating efficiencies and cut costs? In what ways do State laws and policies impede your ability 

to cut costs? 

Answer 1. The implementation of the Complete College Tennessee Act of 2010 

provided the greatest encouragement for institutions to find operating efficiencies 

and reduce costs. As mentioned in my testimony, a critical component of the CCTA 

is the revised funding formula that, for the first time, emphasizes outcomes instead 

of enrollment. The outcomes funding formula drives priorities within our institutions and encourages accountability and measuring what is important—student success. 

As a result of the new funding formula and other components of the CCTA, our 

institutions are striving to improve efficiencies and help students manage their costs 

more effectively by (1) helping them complete their education goals faster, thus saving tuition dollars, and (2) consolidating services and operations. 

Here are some specific examples: 

1. Helping students complete their education goals faster. 

a. Developing articulation agreements across our public institutions. 

b. Creating the Tennessee Transfer Pathways, a set of 49 universal pathways in 

29 academic disciplines. The pathways define a clear roadmap of courses guaranteed 

to transfer to all of Tennessee’s public and many private institutions. 

c. Launching a ‘‘Finish Faster!’’ initiative to create structured learning communities at institutions across the system. The initiative includes cohort, block scheduling and accelerated programs that provide predictable scheduling to minimize 

completion time. A total of 175 structured-learning community programs are being 

offered in our community colleges. 

d. Creating and implementing the Degree Compass software that helps students 

stay focused on the courses they need and will be successful in completing. 

e. Encouraging the development of dual credit and dual enrollment programs that 

allow high school students to complete college credits before they graduate. 

f. Identifying completion points embedded within degree programs by offering certificates for students as they complete academic milestones. 

2. Consolidating services and operations 

a. Coordinating an e-procurement system to create efficiencies of scale and negotiate lower pricing for products and services. 

b. Developing a consolidated system for all 13 of Tennessee’s individual community colleges across the State. 

c. Creating a marketing plan for Tennessee’s Community Colleges to relay a consistent message and enhance the image of the 2-year schools to encourage more students to begin their college careers at a community college. 

d. Encouraging campuses to consolidate academic units where possible and eliminate low-producing programs. 

The greatest impediment to our progress in all of these areas has been the lack 

of a comprehensive financing strategy for higher education in Tennessee. Annual reductions in State funding for higher education and a lack of need-based aid for students are significant barriers to achieving our attainment goals. The former has contributed to a consistent rise in tuition, and the latter has kept many able students 

from completing their education goals. 

Question 2. As you are aware, Congress will be taking steps to reauthorize the 

Higher Education Act in the next 2 years. With this in mind, how can steps now 

being taken by the States serve as model for us? What types of things are being 

done in the States that can and should be incorporated into Federal efforts to improve affordability, access and completion? 

Answer 2. When funding is tied to accountability and measurable outcomes, it allows the State to guide priorities. Tennessee has the advantage of a current Governor who has demonstrated his commitment to increasing educational attainment 

as well as prior leadership that laid important groundwork through the CCTA. 

While Tennessee’s approach has yet to be fully tested and may not be appropriate 

for other States, a Federal expectation that States should establish data-driven, performance-based approaches would be appropriate. The difficulties in implementing 
56 

such a policy would be numerous, especially creating parity with private schools. 

However, it may be worth considering. 

Changes in guidelines that regulate financial aid to encourage the implementation 

of alternative-schedule programs (those that run beyond the traditional fall and 

spring semester periods) may also allow institutions to focus more on providing the 

program formats that students need and demand. 

While controversial and perhaps unrealistic, requiring all institutions that receive 

Federal aid directly or through student financial assistance to be accredited by 

agencies that use criteria at least as rigorous as the Southern Association of Colleges and Schools (SACS) and Council on Occupational Excellence (COE) would be 

a major step forward. 

SENATOR BLUMENTHAL

Mr. Morgan, thank you for your testimony. I appreciate you sharing the experience of Tennessee and its ambitious efforts to address the issue of college affordability. I was particularly struck by the efforts you described to reduce the time it 

takes for each student to complete a program of study and receive a degree. One 

of the major factors that increases a student’s time to degree is the fact that many 

students do not graduate from high school fully prepared to enter higher education. 

As I talk to educators and employers in my home State of Connecticut, I constantly 

hear that students who have practical working experience are much more likely to 

successfully transition into an institution of higher education. Because of these conversations, I am planning to introduce legislation that would expand high-quality 

internship and pre-apprenticeship programs in secondary schools. 

Question 1. Can you speak to the way in which practical working experience can 

prepare a student to enter an institution of higher education? What role can internships and pre-apprenticeships play in reducing time to degree? 

Answer 1. While I cannot provide evidence related to internships and apprenticeships at the secondary school level, our TBR institutions have many examples of the 

value of internships and cooperative education programs for enrolled students. Community college allied health programs require students to spend time in health care 

and emergency response agencies. Our education programs embed student teachers 

in secondary schools. Engineering programs offer cooperative training that allows 

students to work full-time at a company in the midst of their academic plans. These 

programs, and many more like them, have resulted in students who are more employable and better prepared to enter the workforce. Students who participate develop both soft skills and the hands-on training needed for their careers, refine their 

interests, focus their studies in the fields they want to pursue, and better understand the work environment. 

Question 2. One of my great concerns surrounding college costs deals with transparency. I have heard time and time again that many students aren’t adequately 

presented with the costs they will face, and end up saddled with debt that they are 

unable to repay. I was pleased to see from your testimony that the Tennessee Technology Centers are leading in transparency, by, for example, providing up-front lists 

of non-tuition costs such as books and supplies. What more can the Federal Government do to promote disclosure and standardization, so students know what to expect 

financially? 

Answer 2. This issue is important—particularly as students compare public institutions with proprietary schools. In Tennessee, students can easily enroll in a proprietary program with the ease of a form and signature. Disclosure is critical as students consider their options; they need clarity and understanding of the difference 

between grants, scholarships and loans. 

While I am not familiar with the details of Senator Franken’s proposal as discussed in the hearing, the concept of requiring a uniform disclosure to students receiving loans that illustrates likely monthly repayment obligations and total repayments over the loan life is worth further consideration. 

RESPONSE BY CAMILLE PREUS TO QUESTIONS OF SENATOR ENZI, SENATOR BENNET

AND SENATOR BLUMENTHAL

SENATOR ENZI

Question 1. At our last meeting, we heard from president Tom Snyder of Ivy Tech, 

who described how his institution is looking to maximize operating efficiencies and 

cut costs. In what ways is Oregon encouraging institutions to find operating efficiencies and cut costs? In what ways do State laws and policies impede your ability 

to cut costs? 
57 

Answer 1. The community colleges in Oregon are chartered by the State but are 

independent jurisdictions with locally elected board members. This statement is by 

way of explanation and context, not an excuse. Given the ‘‘great recession,’’ Oregon 

like many other States, has reduced its State support for postsecondary education 

resulting in many negative impacts such as increases in tuition, reduction in program offerings. These funding reductions have also generated a number of administrative and service efficiencies as institutions look to balance increasing student success with reduced revenue. Efficiencies within the institutions include actions such 

as centralizing and streamlining student services, eliminating redundancies in data 

collection and reporting. At the State level we have incented institutions to reduce 

program development costs by underwriting development of new programs across institutions, expanding and sharing on-line program delivery, disseminating and instituting promising practices. 

Question 2. As you are aware, Congress will be taking steps to reauthorize the 

Higher Education Act in the next 2 years. With this in mind, how can steps now 

being taken by the State serve as a model for us? What types of things are being 

done in the States that can and should be incorporated into Federal efforts to improve affordability, access and completing? 

Answer 2. Institutional accountability no longer represents responsibility for a 

student only while s/he is enrolled in your institution. Stakeholders, institutions, 

and policymakers now want to know how the student educated in one educational 

sector did in the next step of the educational journey. One way to track student progression is through the exchange of data from one educational institution to another. Currently, FERPA allows this exchange to systematically happen in only one 

direction, forward, a high school may send student record information to a college 

but the college would need to obtain permission from student to send his or her college information back to the very high school from which s/he graduated. Oregon 

is adapting its educational structure to create a more seamless Pre-K through 20 

system including accountability across all educational organizations. A Federal 

change to existing FERPA guidelines to explicitly allow the sharing of student data 

backward down the education pipeline would greatly assist in the tracking of student preparedness and progress. 

SENATOR BENNET

Question 1. You mentioned development of a coordinated pre-school through graduate school system of public education in Oregon. 

1. What types of issues have you focused on in early and K–12 education in order 

to make sure that students are college- and career-ready? 

Answer 1. For early learning, the key issues are ensuring that children are raised 

in stable and attached families and are receiving the foundations necessary to guarantee they are arriving at Kindergarten ready to learn. The creation of ‘‘early learning coordination hubs,’’ and focus on implementing some early screening and assessment of risk factors for children, are aimed at ensuring communities are able to coordinate and deliver more services to families based on their needs. At the K–12 

level, several issues emerge in the area of ensuring students are college- and careerready—certifying students are reading at grade level in elementary school, engaging 

and empower parents (particularly parents in underserved communities) to support 

students in reading and in creating a sense of future for their children, exposure 

in middle grades to college culture, to career and vocational opportunities, handson learning, problem solving and higher levels of problem solving. Important work 

is also being done to confirm that high school students have access to college credits 

and real world experiences, such as internships, by more effectively bridging the 11– 

14 grades. 

Question 2. For example, in Denver, the Children’s Corridor works to make sure 

that all children are prepared for college and their careers by providing a variety 

of affordable health, wellness and education services to support each child. What 

would we need to do to bring this kind of coordination to scale? 

Answer 2. In Oregon, the Early Learning Council is currently working on a Global 

Children’s Budget that will be presented to the Oregon Education Investment Board 

and Legislature in October 2012. This budget describes the State investment necessary to support the health, wellness and educational services for all early learners 

in Oregon. 

SENATOR BLUMENTHAL

I was particularly struck by the portion of your testimony when you described the 

rapid growth of high skill jobs. Unfortunately, the degrees and certificates offered 
58 

by our higher education system do not always reflect the prevalence of these emerging industries. I hear about this trend all the time as I travel across my home State. 

Connecticut employers frequently tell me that they can’t find graduates with the 

skill sets that are required to enter emerging, high-growth industries. For that reason, I introduced the Community College Innovation Act, a bill that would encourage community colleges to develop job training programs that lead to an industryrecognized credential in a high-growth industry. 

Question 1. Do you see a need to expand job training programs that encourage 

students to enter high-growth industries? 

Answer 1. It is critical to the health of our economy that community colleges offer 

high-quality technical training programs in high-growth industries. Indeed, it is a 

fundamental part of our mission, in an ongoing effort to respond to local and regional economic needs. However, this work presents constant challenges, both in the 

identification of the most promising opportunities, when only a limited number can 

be addressed and in identifying resources to meet them. Compared to traditional 

transfer programs, technical training programs are generally far more costly to deliver, as they usually involve expensive technology and must have limited class 

sizes. For these reasons, and because of the extreme negative impact from recent 

funding cuts in Oregon and virtually on all community college campuses across the 

Nation, additional financial support is needed to expand these important efforts. 

Therefore, the Community College Innovation Act would be extremely beneficial to 

our institutions if it were enacted and subsequently funded. The Federal Government also can play a constructive role by ensuring that community colleges and 

State agencies have the wage/earnings data they need to evaluate the impact of 

their training programs. 

Thank you again for the opportunity to appear before the committee and please 

do not hesitate to contact me if I can be of further assistance. 

[Whereupon, at 12:17 p.m., the hearing was adjourned.] 

Æ