More data needed on state higher-education spending

Posted Jan. 05, 2009, at 7:19 p.m.

Dramatic increases in the cost of college have concerned policymakers and the college-going public for years. Citing data indicating that “college tuition and fees increased 439 percent from 1982 to 2007 while median family income rose 147 percent,” a recent article in The New York Times opined that “the rising cost of college threatens to put higher education out of reach for most Americans.”

Facing substantial state budget shortfalls, college costs also will be on the minds of state lawmakers. Balancing the state budget likely will require cuts to state subsidies for higher education, which presents lawmakers with an opportunity to look carefully at the state’s higher education spending.

It is worth asking: How much do policymakers really know about what state higher education spending really buys? Debates about higher education spending usually focus on inputs such as state appropriations and tuition rates. There typically is less emphasis placed on outcomes.

Which outcomes should be our focus? The primary products one hopes our higher education institutions produce are graduates with college degrees. Research indicates that the possession of a college degree has many benefits, including a far higher lifetime income for those with a degree. An adult with a two-year associate de-gree, for instance, makes more money than an adult of similar age who attended college but never received a degree.

So if degreed graduates are the preferred outputs of higher education institutions, what does it cost to produce one, and which colleges most effectively use tuition and taxpayer dollars to produce students with degrees, rather than just enrolling students who later drop out? Can the state’s larger universities produce degreed graduates more efficiently than smaller ones? Can associate degrees, for instance, be produced less expensively at our state universities or at our community colleges? Can private colleges turn out degreed graduates more cost-effectively than public colleges?

To answer these questions, which should be of importance to policymakers in these tight budget times, the Maine Heritage Policy Center developed a new “cost-per-degree” analysis. By taking overall spending and dividing it by the number of degrees granted, adjusted to account for type of degree, we were able to estimate the cost to produce a degreed graduate at each of Maine’s public and private universities and colleges.

Our findings suggest a number of areas for further research and indicate that additional analyses of this type may be of use to Maine policymakers as they effectively work to manage the state’s investment in higher education.

We found, for instance, that the cost-per-degree varies widely from college to college and from campus to campus. Counterintuitively, the larger schools of the state’s university system had higher per-degree costs than the smaller campuses. During the 2005-06 school year, the University of Maine spent $150,281 per bachelor’s degree, but a bachelor’s degree at the University of Maine at Fort Kent cost that school only $50,589. This would indicate either that the larger schools are subsidizing the smaller schools in some way or have higher nondegree-related costs.

The data also appear to indicate that the University of Maine System is able to produce associate degrees more cost-effectively than the state’s community college system. For the 2005-06 school year, it cost $80,131 per associate degree at Northern Maine Community College in Presque Isle, for example, but only $25,355 at the University of Maine at Presque Isle, two miles away. One is left to wonder whether there may be savings to be had by merging certain University of Maine and Maine Community College campuses, if degrees can be had for less cost at one campus than at another.

A number of Maine’s smaller public colleges also proved to be a value to taxpayers. By tracking the levels of direct state subsidy granted to each of the colleges in the University of Maine system, we were able to calculate that the University of Maine at Presque Isle and the University of Maine at Fort Kent made more efficient use of taxpayer resources than the university system’s larger campuses. For the 2005-06 school year, a bachelor’s degree at Fort Kent, for instance, cost taxpayers $16,636, compared to $48,954 in taxpayer subsidies at Orono’s University of Maine.

What about Maine’s private colleges? While some of the private colleges had higher per-degree spending than the schools of the University of Maine System, other private colleges, such as Husson University in Bangor, had lower per-degree costs. In some states, budget savings have been generated by providing tuition vouchers for private colleges in place of additional appropriations to public colleges. At the very least, policymakers should investigate how some of Maine’s private colleges operate degree programs more cost-effectively than the state’s public colleges.

This data make clear that the time has come for substantive outcome-based analysis of Maine’s colleges and universities, both public and private. Too often, discussions surrounding higher education policy in Maine revolve around how much more money is needed, as opposed to how the money already available is currently being spent. If budget-writers in Augusta are to make prudent decisions about how Maine invests its higher education dollars, they will need just this kind of outcome-based data.

Stephen Bowen directs the Center for Education Excellence at the Maine Heritage Policy Center. The center’s report on per-degree costs at Maine’s colleges is available at www.mainepolicy.org.

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