[Senate Hearing 108-426]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-426

 THE HIGHER EDUCATION ACT AND THE WORKFORCE: ISSUES FOR REAUTHORIZATION

=======================================================================

                                HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                                   ON

   EXAMINING ISSUES FOR REAUTHORIZATION OF THE HIGHER EDUCATION ACT, 
    FOCUSING ON A KNOWLEDGE-BASED ECONOMY, THE RELATIONSHIP BETWEEN 
      POSTSECONDARY EDUCATION AND THE WORKFORCE, AND FINANCIAL AID

                               __________

                             MARCH 4, 2004

                               __________

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


                       U.S. GOVERNMENT PRINTING OFFICE
92-485                       WASHINGTON : 2004
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092250 Mail: Stop SSOP, Washington, DC 20402ï¿½090001


          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                  JUDD GREGG, New Hampshire, Chairman

BILL FRIST, Tennessee                EDWARD M. KENNEDY, Massachusetts
MICHAEL B. ENZI, Wyoming             CHRISTOPHER J. DODD, Connecticut
LAMAR ALEXANDER, Tennessee           TOM HARKIN, Iowa
CHRISTOPHER S. BOND, Missouri        BARBARA A. MIKULSKI, Maryland
MIKE DeWINE, Ohio                    JAMES M. JEFFORDS (I), Vermont
PAT ROBERTS, Kansas                  JEFF BINGAMAN, New Mexico
JEFF SESSIONS, Alabama               PATTY MURRAY, Washington
JOHN ENSIGN, Nevada                  JACK REED, Rhode Island
LINDSEY O. GRAHAM, South Carolina    JOHN EDWARDS, North Carolina
JOHN W. WARNER, Virginia             HILLARY RODHAM CLINTON, New York

                  Sharon R. Soderstrom, Staff Director

      J. Michael Myers, Minority Staff Director and Chief Counsel

                                  (ii)

  




                            C O N T E N T S

                               __________

                               STATEMENTS

                        THURSDAY, MARCH 4, 2004

                                                                   Page
Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming, 
  opening statement..............................................     1
    Prepared statement...........................................     3
Dodd, Hon. Christopher J., a U.S. Senator from the State of 
  Connecticut, prepared statement................................     5
Jeffords, Hon. James M., a U.S. Senator from the State of Vermont     7
Alexander, Hon. Lamar, a U.S. Senator from the State of Tennessee     7
Bohlen, Charles H., President, Laramie County Community College; 
  James C. Votruba, President, University of Northern Kentucky; 
  Beth B. Buehlmann, Vice President and Executive Director, 
  Center For Workforce Preparation, U.S. Chamber of Commerce; 
  Diana G. Oblinger, Ph.D., Executive Director of Higher 
  Education, Microsoft Corporation; Ellen O'Brien Saunders, 
  Executive Director, Washington State Workforce Training and 
  Education Coordinating Board...................................     8
Murray, Hon. Patty, a U.S. Senator from the State of Washington..    18

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.:
    Charles H. Bohlen............................................    31
    Response to questions of the HELP Committee from Charles H. 
      Bohlen.....................................................    36
    James C. Votruba.............................................    39
    Response to questions of the HELP Committee from James C. 
      Votruba....................................................    42
    Beth B. Buehlmann............................................    49
    Response to questions of the HELP Committee from Beth B. 
      Buehlmann..................................................    53
    Diana G. Oblinger............................................    56
    Response to questions of the HELP Committee from Diana G. 
      Oblinger...................................................    62
    Ellen O'Brien Saunders.......................................    66
    Laura Palmer Noone...........................................    80
    Coalition for a Competitive American Workforce...............    83
    U.S. Chamber of Commerce.....................................    84
    The American Association of State Colleges and Universities..    85

                                 (iii)

  

 
 THE HIGHER EDUCATION ACT AND THE WORKFORCE: ISSUES FOR REAUTHORIZATION

                              ----------                              


                        THURSDAY, MARCH 4, 2004

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:03 a.m., in 
room SD-430, Dirksen Senate Office Building, Senator Enzi, 
presiding.
    Present: Senators Enzi, Alexander, Jeffords, Murray, and 
Clinton.

                   Opening Statement of Senator Enzi

    Senator Enzi. I will call the hearing to order. I will give 
a brief statement. Senator Murray will be here in a while and 
she will give a statement.
    The rules are that we will ask questions in order of 
arrival, assuming other Senators will show up. We do ask the 
presenters to condense their statements to five minutes. 
Everything that you sent, which I have looked at and is 
excellent, will be a part of the record. But if you can 
condense it so that we get the best five minutes of it, that 
will allow us to do some questions.
    The record will also remain open for an additional 2 weeks 
so that questions can be submitted and hopefully we will get 
timely answers so those can also be a part of the record, and 
that will give you a chance to expand even more.
    I am really pleased with the knowledge that has been 
assembled here for our help today and I do want to thank 
Senator Gregg for giving us the opportunity today to discuss 
how higher education can help students develop the skills this 
Nation needs to compete and succeed in the global economy.
    For generations, the skills and ingenuity of the American 
workforce have fueled the greatest economy in the world. Our 
ability to equip our workforce with the skills needed for jobs 
in the ever-changing, increasingly global economy will 
determine the prosperity of generations to come.
    What this hearing is really about is keeping the American 
dream alive for workers of today and tomorrow. Some might say 
the American dream begins with a good job. I say the American 
dream begins before that. It begins in our schools and in our 
institutions of higher education where the skills needed to 
perform the jobs are sowed. For me and for my friends when I 
was growing up, the American dream was the belief that we could 
be anything we wanted to be if we were willing to study hard 
enough and work hard enough in our chosen field.
    The Higher Education Act plays a critical role in preparing 
the 21st century workforce for 21st century jobs. According to 
the Department of Labor, over 80 percent of the fastest-growing 
jobs in the country require some college education. As the need 
for advanced skills continues to grow, it seems clear that our 
institutions of higher education must step up to fill that 
need.
    Indeed, the proportion of workforce made up of those with 
some college education has continued to grow. Unfortunately, as 
Chairman Alan Greenspan has noted, we appear nonetheless to be 
graduating too few skilled workers to address the apparent 
imbalance between the supply of such workers and the burgeoning 
demand for them. High-skilled jobs in this country remain 
unfilled because employers can't find qualified workers. 
Workforce demographics suggest that the gap between the demand 
for high-skilled workers and the supply will only widen. Our 
postsecondary schools must do a better job of supplying the 
21st century workforce for the 21st century jobs.
    Some institutions are ahead of the curve in designing 
curriculum and partnering with the businesses in their 
communities to design programs that will help students enter 
high-growth and high-wage job sectors. Two of the witnesses 
here today, Dr. Charles Bohlen, President of the Laramie County 
Community College, and Dr. James Votruba, President of the 
Northern Kentucky University, represent institutions with 
strong track records in identifying local community workforce 
needs and designing their curriculum to meet those needs. These 
institutions are placing their graduates in high-growth 
sectors. As a result, the students leaving these institutions 
are on their way to achieving economic security and stability. 
They are on their way to achieving the American dream for 
themselves and for their families.
    Community colleges have been at the center of the workforce 
development and economic development in Wyoming and elsewhere. 
In fact, workforce development and economic development go hand 
in hand. You need businesses to provide jobs. You also need a 
skilled workforce to attract business to an area. It follows 
that skills training can be a tool for economic development as 
well as for improving the quality of life for workers.
    A critical part of helping these students achieve the 
American dream is to provide them with sufficient support to 
see they complete their program of study. According to the 
Department of Education's National Center for Education 
Statistics, roughly half of all students who begin a 4-year 
undergraduate degree program finish that program within 6 
years. This is an issue that Congress must address. These 
students are beginning the road to stability and security, yet 
half of them aren't finishing the journey.
    Along with the Workforce Investment Act, the Higher 
Education Act is part of a comprehensive approach to improving 
the lives of our workers and increasing the strength of 
businesses and communities. I was pleased to work with Senators 
Kennedy and Murray and other members of the HELP Committee on 
crafting the Workforce Investment Act Amendments. This bill was 
truly a bipartisan effort. It passed the committee unanimously 
and it passed the Senate by unanimous consent last November.
    I am urging everybody to ask for a conference committee to 
get that job finished. When it passes unanimously, you can't do 
better than that. There is no reason why we shouldn't be 
getting a conference committee busy on that, so I hope 
everybody will push for that.
    We should all be concerned about the loss of American jobs 
offshore. In the evolving global economy, the cause is complex. 
However, the call for education and skills training is loud and 
clear. That is what that Workforce Investment Act is, 
incidentally. It trains about 900,000 people a year for the 
kinds of skills that are needed in the workforce.
    The path to the American dream for our people and the 
economic prosperity for our Nation is paved by the skills of 
our workforce. Borrowing Chairman Greenspan's words again, 
``what will ultimately determine the standard of living in this 
country is the skill of the people.'' Our institutions of 
higher education are a beacon, calling for innovation and 
prosperity for our workers and our businesses to our shores. 
Skills training is a critical part of that process.
    I would like to thank the witnesses again for the testimony 
they are going to present today and the discussion that we will 
have.
    [The prepared statements of Senators Enzi and Dodd follow:]

                   Prepared Statement of Senator Enzi

    Today we will explore the relationship between higher 
education and our Nation's ability to compete--and succeed--in 
the new economy. For generations, the skills and ingenuity of 
the American workforce have fueled the greatest economy in the 
world. Our ability to equip our workforce with the skills 
needed for jobs in the ever-changing, increasingly global 
economy will determine the prosperity of generations to come.
    What this hearing is really about is keeping the American 
Dream alive for workers of today and tomorrow. Some might say 
that the American Dream begins with a good job. I say that the 
American Dream begins before that. It begins in our schools and 
in our institutions of higher education where the skills needed 
to perform these jobs are sowed. For me, and for my friends 
when I was growing up, the American Dream was the belief that 
we could be anything we wanted to be if we were willing to 
study hard enough and work hard enough in our chosen field.
    Our economy is a lot more complicated now than it was when 
I was growing up. Higher education is more important than ever 
in providing American workers with the job skills they need to 
succeed--now and in the future. The Higher Education Act plays 
a critical role in preparing the 21st century workforce for 
21st century jobs.
    We should all be concerned about the loss of American jobs 
offshore. In the evolving global economy, the cause is complex. 
However the call for education and skills training is loud and 
clear. Ingenuity and skills are a beacon for jobs. Therefore, 
we must keep the beacon of innovation shining brightly on our 
shores.
    As Chairman of the Federal Reserve Board, Alan Greenspan, 
said last month in a speech to the Greater Omaha Chamber of 
Commerce, ``we need to ensure that education in the United 
States, formal or otherwise, is supplying skills adequate for 
the effective functioning of our economy.'' According to the 
Department of Labor, over 80 percent of the fastest growing 
jobs in the Country require some college education. As the need 
for advanced skills continues to grow, it seems clear that our 
institutions of higher education must step up to fill that 
need.
    Indeed, the proportion of our workforce made up of those 
with some college education has continued to grow. 
Unfortunately, as Chairman Greenspan noted, ``we appear, 
nonetheless, to be graduating too few skilled workers to 
address the apparent imbalance between the supply of such 
workers and the burgeoning demand for them.'' High-skilled jobs 
in this Country remain unfilled because employers can't find 
qualified workers. Workforce demographics suggest that the gap 
between the demand for high-skilled workers and the supply will 
only widen. Our postsecondary schools must do a better job of 
supplying the 21st century workforce for 21st century jobs.
    Higher education in this country has traditionally been 
synonymous with skills training. Since it was enacted in 1965, 
the Higher Education Act has been the tool that has paired 
students with the highest level of training they need for entry 
into the workforce in the highest wage sectors. Almost 40 years 
later, the make up of our students--and the demands on our 
workforce--have dramatically changed. Many postsecondary school 
students are no longer entering college directly out of high 
school. Many skills that were needed when a student entered 
postsecondary education are no longer relevant by the time they 
graduate. The Higher Education Act must keep pace with the 
rapidly changing and increasingly global economy as well as 
with the changing student body.
    Some institutions are ahead of the curve in designing 
curriculum and partnering with the businesses in their 
communities to design programs that will help students enter 
high-growth and high-wage job sectors. Two of the witnesses 
here today--Dr. Charles Bohlen, President of Laramie County 
Community College, and Dr. James Votruba, President of Northern 
Kentucky University--represent institutions with strong track 
records in identifying local community workforce needs and 
designing their curriculum to match those needs. These 
institutions are placing their graduates into high-growth 
sectors. As a result, the students leaving these institutions 
are on their way to achieving economic security and stability. 
They are on their way to achieving the American Dream for 
themselves and their families.
    Community Colleges have been at the center of workforce 
development and economic development in Wyoming and elsewhere. 
In fact, workforce development and economic development go 
hand-in-hand. You need businesses to provide skilled jobs. You 
also need a skilled workforce to attract business to an area. 
Most employers, when asked, say the most important thing to 
their long-term success is the presence of a skilled workforce. 
It follows that skills training can be a tool for economic 
development, as well as for improving the quality of life for 
workers.
    The new Lowe's Home Improvement Distribution Center in 
Cheyenne, Wyoming proves that workforce development is a 
powerful economic development tool. Lowe's was looking at a 
number of sites to open a regional distribution center. Laramie 
County Community College partnered with State and local 
economic development and workforce development agencies to 
provide job training to meet Lowe's needs. This was a primary 
reason Lowe's selected Cheyenne. One hundred eighty-five 
graduates of this training program found jobs at Lowe's or 
other distribution centers in the area. This is a huge number 
of jobs for Wyoming and a real economic boost to Cheyenne.
    A critical part of helping these students achieve the 
American Dream is to provide them with sufficient support to 
see that they complete their program of study. According to the 
Department of Education's National Center for Education 
Statistics, roughly half of all students who begin a 4-year 
undergraduate degree program finish that program within 6 
years. This is an issue that Congress must address. These 
students are beginning the road to stability and security, yet 
half of them are not finishing the journey. Institutions are 
part of the solution, as is the business community, and 
Congress has an important role to play as well. Getting these 
students in the door to postsecondary education is only the 
first hurdle. Making sure they leave with the skills they need 
to compete for good jobs is the ultimate goal.
    Along with the Workforce Investment Act, the Higher 
Education Act is part of a comprehensive approach to improving 
the lives of our workers, and increasing the strength of our 
businesses and communities. I was pleased to work with Senators 
Kennedy and Murray and other Members of the HELP Committee on 
crafting the Workforce Investment Act Amendments. This bill, 
which was a truly bipartisan effort, passed the Senate by 
Unanimous Consent last November. I urge my Colleagues to allow 
this important legislation to proceed to conference.
    This committee must build on our previous efforts to keep 
the United States and its workers at their competitive best by 
working cooperatively to reauthorize the Higher Education Act, 
as we did--and I hope we can continue to do--with the Workforce 
Investment Act.
    The path to the American Dream for our people and to 
economic prosperity for our Nation is paved by the skills of 
our workforce. Borrowing Chairman Greenspan's words again, this 
time from the Banking Committee hearing last month where he 
testified, ``what will ultimately determine the standard of 
living of this country is the skill of the people.'' Our 
institutions of higher education have a difficult task ahead. 
We can--and must--help them succeed. These institutions of 
higher education are a beacon calling innovation and prosperity 
for our workers and our businesses to our shores.

                   Prepared Statement of Senator Dodd

    Good morning and thank you all for joining us. I would like 
to thank you, Senator Enzi, for convening this important forum 
on a topic that we will be spending the better part of next 
year on, the reauthorization of the Higher Education Act.
    The Higher Education Act authorizes the Federal 
Government's major activities as they relate to financial 
assistance for college. It provides aid to institutions of 
higher education, services to help students complete high 
school and enter and succeed in postsecondary education, and 
provides mechanisms to improve the training provided to members 
of one of our most important professions--teaching.
    When I think of the Higher Education Act, naturally, I 
first find myself thinking about financial aid. How can we make 
college financially accessible? I also think about the nation's 
workforce. How can we ensure that universities are providing us 
with the intellectual capital America needs to compete in the 
21st Century?
    Today's students, like today's workforce, look very 
different than they did even 20 years ago. The student 
population is more diverse and is overwhelmingly composed of 
``nontraditional students.'' What are nontraditional students? 
Students that did not graduate from high school, go immediately 
to college and depend on their parents for financial support. 
More than half of all of today's undergraduates are financially 
independent, almost half delayed college enrollment immediately 
after high school, 39 percent are 25 years of age or older, 48 
percent attend part-time, 22 percent have dependents, 13 
percent are single parents and 39 percent work full-time. 
According to some, roughly 1/3 of nontraditional students 
enroll to obtain additional education that is required by their 
jobs.
    Today's working students are balancing their studies with 
their families and careers. They can not interrupt their work 
day for classwork leaving limited time for additional education 
and retraining. Yet, they look to higher education to upgrade 
their skills, increase their earning potential, and in some 
cases, change careers.
    Not only are today's students different, employers have 
different needs. As one of our panelists will testify to, 60 
percent of corporations are now prevented from upgrading 
technology because of a lack of properly trained workers. Four 
out of every future five jobs will require some higher 
education and 75 percent of today's workforce will need to be 
retrained over the coming years just to keep their current 
jobs. 60 percent of future jobs will require training that only 
20 percent of today's workforce possess, and 40 percent of 
future jobs do not currently exist. When you consider that 
business productivity and profitability depends on the quality 
of our workforce, it becomes clear that the American economy 
depends on our ability to educate American students to the 
American economy's needs.
    Rest assured, this is not just a corporate issue, it is an 
individual quality of life issue. Compared to a high school 
degree, an associates degree is worth nearly half a million 
dollars in extra income and a bachelor's degree is worth an 
additional $1 million. A master's degree is worth an additional 
$1.1 million and a doctoral degree is worth $3.2 million more. 
Over the last year, the unemployment rate of those without a 
high school diploma was 8.8 percent, those with a high school 
diploma was 4.9 percent and those with a bachelors degree or 
higher was 2.9 percent. Clearly, college has become an 
essential component of a middle-class lifestyle.
    What can we do to get students the training and retraining 
they need to secure good paying jobs while supplying business 
with the human capital that they need to remain competitive and 
profitable? Today we are going to hear from a panel of experts 
in both higher education and business to see what it is that 
they think we can do to help. I want to thank all of our 
witnesses for joining us this morning. I look forward to 
hearing their suggestions for how we can simultaneously provide 
students with the skills they need to earn livable incomes and 
provide business with the human resources--the knowledge, 
skills and intellectual capital needed--to retain America's 
competitiveness in a global economy.
    Senator Enzi. Senator Jeffords, do you have a statement?

                 Opening Statement of Senator Jeffords

    Senator Jeffords. Thank you very much. I just want to echo 
your comments that it is terrible that we have not been able to 
get to conference on the bill. Those of us that worked so hard 
on it and I think came up with an excellent piece of 
legislation are really very frustrated by the lack of 
cooperation with the House on this.
    I will ask some questions, Mr. Chairman, but that is it for 
now.
    Senator Enzi. Thank you very much.
    Senator Alexander?

                 Opening Statement of Senator Alexander

    Senator Alexander. Thank you, Mr. Chairman. I am here to 
learn today. I am really proud of the work Chairman Enzi has 
done on workforce and higher education. Senator Jeffords has 
been involved with this area for a long time and I am grateful 
for that.
    There is a lot of talk about jobs today and a lot of 
reasons for that talk, but I learned a long time ago that in 
our country, we are constantly losing jobs and we are 
constantly creating jobs. The focus needs to be on how can we 
create an environment in which we can create the largest number 
of good-paying new jobs to replace the jobs that are always 
being lost to international competition.
    The single best way to do that is by helping men and women 
go from one job to the next with better skills and better 
education, and our community colleges and some of our higher 
education institutions have been our secret weapons in the 
production of better job skills and new jobs and I look forward 
to learning more about how we can encourage that.
    Senator Enzi. Thank you.
    The five witnesses on the panel today represent a broad 
perspective on the Higher Education Act reauthorization. Dr. 
Charles Bohlen, the President of Laramie County Community 
College, will testify from the perspective of a 2-year 
institution of higher education. He will also describe a 
partnership between his institution and a regional Lowe's 
distribution center in Cheyenne and the workforce training 
programs that the college implemented to prepare its students 
for work at the Lowe's facility.
    Dr. James Votruba, the President of Northern Kentucky 
University, has taken an extensive interest in partnering his 
academic programs with the local business community. He will 
describe his institution's focus on developing intellectual 
capital and how his institution has worked with local firms to 
train and place students in high-growth job sectors after 
graduation. He will describe the iNET and METS program, two 
particular programs that train students for work in the local 
business community.
    Dr. Beth Buehlmann, the Vice President and Executive 
Director of the Center for Workforce Preparation of the U.S. 
Chamber of Commerce testified before the House Education and 
Workforce Committee last year on the Workforce Investment Act 
and has extensive understanding of the Higher Education Act. 
She will describe the need for highly educated, highly skilled 
workers in the modern economy and how the Higher Education Act 
would work in conjunction with other Federal programs to train 
workers.
    Dr. Diana Oblinger, the Executive Director of Higher 
Education, Microsoft, will present an employer's perspective on 
the Higher Education Act and its success in training workers 
with adequate skills. She has written a book on how well higher 
education is succeeding in preparing graduates for the 
workforce. She will provide a broad perspective on the needs of 
the high-growth job sectors and what changes might be made to 
the Higher Education Act.
    Ellen O'Brien Saunders, the Executive Director of the 
Washington State Workforce Training and Education Coordinating 
Board, is the minority witness and will discuss broad concepts 
relating to both workforce development and higher education.
    I appreciate all of you being here today and look forward 
to your testimony. We will start with Dr. Bohlen.

   STATEMENT OF CHARLES H. BOHLEN, PRESIDENT, LARAMIE COUNTY 
 COMMUNITY COLLEGE; JAMES C. VOTRUBA, PRESIDENT, UNIVERSITY OF 
   NORTHERN KENTUCKY; BETH B. BUEHLMANN, VICE PRESIDENT AND 
 EXECUTIVE DIRECTOR, CENTER FOR WORKFORCE PREPARATION, UNITED 
STATES CHAMBER OF COMMERCE; DIANA G. OBLINGER, PH.D., EXECUTIVE 
  DIRECTOR OF HIGHER EDUCATION, MICROSOFT CORPORATION; ELLEN 
    O'BRIEN SAUNDERS, EXECUTIVE DIRECTOR, WASHINGTON STATE 
      WORKFORCE TRAINING AND EDUCATION COORDINATING BOARD

    Mr. Bohlen. Thank you, Senator. Good morning. My name is 
Dr. Charles Bohlen and I am President of the Laramie County 
Community College in Cheyenne, Wyoming, and I am pleased to be 
with you to offer this testimony on behalf of my colleagues as 
well as the American Association of Community Colleges, AACC, 
on the Higher Education Act and its relation to providing the 
Nation with a skilled workforce. AACC represents 1,173 
regionally accredited institutions and serves as the voice for 
community colleges.
    Wyoming's and the Nation's community colleges are a 
confluence where Federal funds through the HEA and WEA and 
other Federal programs merge with State and local support to 
provide education and training programs to prepare America's 
workforce.
    Futurist Ed Barlow predicts that America's community 
colleges will become the finishing schools for gold collar 
positions. In other words, a growing number of bachelor's and 
higher degree holders will attend community colleges after 
completing their baccalaureate degrees to obtain technical 
skills needed in the emerging knowledge-based industries.
    Our community colleges are committed to access and thus 
have a primary mission, that is, assisting the disenfranchised 
and the unempowered to acquire the necessary skills to procure 
jobs that provide livable income. In Wyoming and the rest of 
the United States, community colleges are the primary providers 
of a technically skilled workforce.
    AACC strongly supports the current programs and the basic 
structure of HEA and does not believe that the Act is flawed in 
any fundamental way. Rather, reauthorization provides an 
opportunity to make a system that is working well function even 
better.
    We do ask that you retain the current definitions of higher 
education institution. Much to the distress of community 
colleges across the country, the leadership of the House 
Committee on Education and the Workforce is currently 
supporting legislation that would undermine key support for 
community colleges. We expect that the HELP Committee will be 
asked to support this same single definition of institution of 
higher education, which would make for-profit institutions 
eligible for programs such as Title III(a). In addition, scores 
of non-HEA programs whose eligibility is key to HEA definitions 
would suddenly be open to proprietary schools, including the 
Carl D. Perkins Vocational and Technical Education Act and the 
National Science Foundation Programs.
    Community colleges strongly oppose this change and ask the 
committee to reject such a change. Here is why. For-profit 
institutions are necessarily concerned with delivering profits 
to their shareholders or owners. Nonprofits are, by definition, 
dedicated to serving the public interest by keeping student 
costs low so that the least able or capable have access to the 
benefits provided by a higher education. If we cut those funds, 
those limited funds, even finer, there is not going to be 
enough to allow community colleges and other public 
institutions to provide access.
    We also request that you retain the 90/10 rule. The so-
called 90/10 rule was enacted in 1992 to prevent institutions 
from recruiting low-income students in order to profit from 
their eligibility for Federal aid. In 1992, the national 
student default rate was a whopping 22.4 percent. Today, after 
implementing the 90/10 rule, the rate is 5.4 percent, the 
lowest to date. We ask that you please retain the so-called 90/
10 rule to continue to prevent abuse of Federal financial aid. 
We also support eliminating the 50% rule but maintaining an 
education role and distance education safeguards.
    As you well know, distance education is a tremendous and 
exciting development in American higher education. Distance 
education is especially important in rural States, such as 
ours, Wyoming. Consequently, AACC supports repeal of the so-
called 50% rule and most other differential treatment of on-
campus and distance education. However, we believe that some 
safeguards must be put back in place.
    The 50% rule was included in the 1992 HEA Amendments to 
address the fraudulent activities of many correspondence 
schools. These schools had high default rates and a 
disproportionate record of fraud of student aid funds.
    The Internet has made delivery of postsecondary education, 
including now a growing amount of workforce training, more 
flexible and available. It reaches rural areas and offers new 
opportunities for working adults. This is a boom for students 
unable to study on campus due to geographic conflicts or 
location.
    It also means that unscrupulous institutions could easily 
reach millions of new students with little more than a pop-up 
advertisement. Any benefits from distance education would be 
overshadowed if prudent steps are not taken to prevent 
fraudulent providers from exploiting students and the Federal 
Government.
    Consequently, we think the Education Department's Education 
Demonstration Program could serve as a model for a permanent 
program to allow individual schools to receive waivers of the 
50% rule. This approach recognizes the importance and the 
increasing interest in distance education, but protects 
students and student aid programs from being taken advantage of 
by easily accessed and highly advertised programs that do not 
provide education.
    Senator, during the question and answer period, I would be 
glad to give some detail on the Lowe partnership if you so 
desire. I wish to thank you and the committee for allowing me 
to be here this morning. It is indeed an honor.
    Senator Enzi. Thank you very much.
    [The prepared statement of Mr. Bohlen may be found in 
additional material.]
    Senator Enzi. Dr. Votruba?
    Mr. Votruba. Thank you, Mr. Chairman. It is a pleasure, as 
well, to be here with you and with the committee. I must tell 
you that I have been known to speak for five minutes before I 
get to the verb, but I will work hard.
    [Laughter.]
    Northern Kentucky University is one of over 400 
comprehensive universities located throughout the Nation. All 
universities teach students, where the major research 
universities tend to place a primary focus on the discovery of 
knowledge. We tend to focus very heavily on the application of 
knowledge to address the needs of the regions that we serve. In 
many respects, we could be described as stewards of place.
    Our approach to workforce development focuses on fostering 
intellectual capital from childhood through adulthood. We know 
that the ability of our region, as well as every other region 
in this Nation, the ability to compete in a knowledge-based 
economy, will depend on our capacity to recruit and retain 
intellectual capital. This is where the game will be won or 
lost in our local community and in all of yours.
    We also know that our greatest source of job creation will 
be small and medium-sized companies, which has implications for 
public policy and for HEA reauthorization.
    Now, the corporate and community leaders in our region have 
made clear to us that they want us involved in fostering 
intellectual capital at four different levels, and I will hit 
them briefly.
    First, they want us to seed intellectual capital by working 
with K-12 education. An example of that, last year, we had 
2,000 students involved in math and science enrichment programs 
on our campus and more to follow.
    Second, they want us to prepare intellectual capital, and 
by that they mean align your academic programs with the high-
need job sectors that we have in our region. Today, I know that 
Kentucky University produces more IT graduates than any other 
university in the Commonwealth, and that is intentional based 
on what we heard from our region.
    Third, our region wants us to sustain intellectual capital. 
In today's world, the knowledge that a student possesses when 
they graduate from college often has a very short shelf life. 
Now, more than ever, the ability of a company to remain 
competitive depends on what we call ``just in time'' access to 
learning. Now, this is a very different education than what is 
offered on most campuses. It is education in a form, at a time, 
and in a place that is optimally convenient for both the worker 
and the employer. It is typically noncredit and nondegree 
education focused on very specific learning outcomes.
    Five years ago, we created the Metropolitan Education and 
Training Services Center, or METS, in response to this need for 
just in time learning. METS has served over 250 companies and 
13,000 employees. Most of the companies that we have served are 
small or medium-sized and with limited financial resources to 
support education and training.
    This past year, we opened a 43,000 square foot corporate 
learning facility that supports METS. It is a state-of-the-art 
facility with over $4 million in instructional technology. Were 
it not for public support at the State level, that facility 
would not have been possible because the customers that we are 
serving, the clients that we are serving, do not have the 
capacity to sustain a facility like this financially.
    Fourth, we provide intellectual capital in the form of 
faculty and student expertise in order to support company 
competitiveness. One example is useful. Last year, we created 
the Institute for New Economy Technologies, or what we refer to 
as iNET, in order to connect companies with our information 
science faculty and students who can assist in software 
development, systems applications, and computer structures. 
This service provides low-cost and high-quality expertise to 
companies while giving faculty and students a chance to address 
real world applications.
    Along with the programs and services that I have just 
described, we have gone to great lengths in both our hiring 
practices and our incentive and reward systems to ensure that 
faculties see working with our local region as an important and 
valued dimension of their professional activity.
    What we know is this. The 21st century university will be a 
very different place in terms of who it serves, how it serves 
them, when it serves them, and what it serves them.
    Now, in closing, I want to mention two areas that I think 
have particular relevance for our conversation today. First, I 
will emphasize again that most of our clients cannot afford to 
pay the full cost of the programs or services that we provide. 
Whether it is small or medium-sized companies or individual 
workers, they require a financial subsidy which currently is 
borne by the university.
    As a result, the work that I have just described is 
generally a cost center rather than revenue center for a 
university, and at times of budgetary challenge, all 
organizations, including universities, focus on expanding 
revenue centers and reducing cost centers, which puts the work 
that we are discussing here at risk.
    Let me emphasize this point. By contrast, the Federal 
Government has, over the past 50 years, helped produce the most 
powerful university-based research enterprise in the world. It 
has done so through enormous resource streams that support both 
the researcher and the university itself. If fostering 
intellectual capital in the application of faculty expertise to 
support economic growth and competitiveness is to be a core 
campus mission, which I believe it should be, it will be 
necessary to have access to resource streams that support this 
work at both the State and Federal level.
    At the State level, one example is useful. The Kentucky 
Council on Post-Secondary Education has recently created the 
Regional Stewardship Trust Fund that provides resources to 
comprehensive universities to support efforts to address local 
and regional needs. To my knowledge, no other State is going 
down this road and it might be something worth looking at at 
the Federal level.
    Finally, it is important that Federal efforts to support 
workforce and intellectual capital development be aligned 
across Federal agencies and programs. In short, we need 
resource streams that support the learner across the lifespan, 
the institution in terms of program development, and they need 
to be coordinated across Federal and State agencies.
    Thank you very much, and I would be glad to answer whatever 
questions you may have.
    Senator Enzi. Thank you.
    [The prepared statement of Mr. Votruba may be found in 
additional material.]
    Senator Enzi. Dr. Buehlmann?
    Ms. Buehlmann. Mr. Chairman and Members of the committee, I 
am pleased to be here today. The U.S. Chamber of Commerce is 
the world's largest business federation, representing more than 
three million businesses and organizations of every size and 
sector and region. The Center for Workforce Preparation, CWP, 
an affiliate of the U.S. Chamber of Commerce, focuses on 
workforce development and quality education issues. It helps 
businesses and Chambers in their communities find, use, and 
build resources to support productive workplaces and develop a 
skilled workforce.
    I am going to discuss four points in my remarks. The first, 
that a skilled workforce is a bottom-line issue for employers 
to remain competitive. Three surveys that the CWP has conducted 
confirm that employers agree that a skilled workforce is 
essential to maintaining their competitiveness. They report 
difficulty, however, in finding qualified workers due to lack 
of skills and are not confident that the workers' skills will 
keep pace with future requirements.
    Consider that in 1950, 80 percent of jobs were classified 
as unskilled. Now, an estimated 85 percent of all jobs are 
classified as skilled. The number of workers with education 
beyond high school grew 138 percent between 1980 and 2000, 
while between 2000 and 2020 this number is expected to grow 
only by 19 percent.
    Second point, postsecondary education is a necessary factor 
to achieving a skilled workforce. Forty percent of job growth 
in this decade will be in jobs requiring postsecondary 
education, yet only two out of five adults in the workforce in 
2000 had any postsecondary education, associate degree or 
higher. It is estimated that 60 percent of tomorrow's jobs are 
going to require skills that are possessed by only 20 percent 
of today's workforce, and as Senator Enzi said, four out of 
five jobs will require some form of postsecondary education or 
equivalent.
    Severity of these current workforce development challenges 
clearly indicates that lifetime education and training is no 
longer an option, it is a necessity, and it is a necessity for 
individuals, for employers, and for our economy.
    My third point is that traditional concepts of 
postsecondary education may need broadening, and that is 
because today, 73 percent of all postsecondary students are 
nontraditional students. They are working adults who are trying 
to balance careers, family responsibilities, financial and 
other personal obligations. They can't afford to reduce their 
hours on the job or lose valuable wages while incurring 
additional expenses, such as tuition and child care. Employers, 
especially small and medium-sized employers, where 75 percent 
of new job growth is expected to occur, cannot afford to 
interrupt their operations, and particularly for those 
employers who are attending classes during office hours or 
business hours.
    As the need for workers with postsecondary education skills 
is growing, we must begin to address the needs of these 
nontraditional students. The global economy and advances in 
technology place increased demands on the American workforce 
and the current workforce has greater need to keep pace with 
future skill demands. It is imperative that we modify and 
expand the policies of postsecondary education to serve the 
needs of these nontraditional adult worker-students.
    Finally, I would like to suggest some policy considerations 
for the reauthorization of the Higher Education Act to address 
these concerns. Financial aid reforms for less than half-time 
students. Working adults going to school less than half time do 
not receive the same assistance that a dependent living in the 
same household would receive. Modifications of financial aid 
eligibility to shorter-term and more flexible educational 
programs and greater utilization of distance learning, perhaps 
by eliminating the 50% rule, is an effective way to reach adult 
workers.
    Incentives for institutions that develop programs and 
schedules for working adults. Consideration should be given to 
applying the competencies developed through certification 
programs toward traditional college credit. Many workers 
accumulate certificates with competencies and skills and those 
don't translate into college credit and, therefore, cannot 
allow them to achieve the degrees that they would like to.
    Establish flexibility for new collaboratives to deliver 
services. Better online course work, access, classroom 
instruction schedules, and locations must be flexible enough to 
accommodate work schedules of employed adults.
    And finally, examination of differences across institutions 
and what impact different treatment by Federal and State laws 
has on serving adult workers efficiently and effectively.
    These are just a few broad recommendations to align 
postsecondary education with the needs of employers and adult 
workers to become more skilled and remain competitive.
    Also attached to my testimony are two documents. One is 
additional policy recommendations adopted by the U.S. Chamber 
of Commerce Board of Directors, and then recommendations from a 
partnership that the U.S. Chamber has formed with several 
proprietary institutions.
    I want to thank the committee once again for this 
opportunity and I will be happy to answer any questions that 
you may have at the appropriate time. Thank you.
    Senator Enzi. Thank you very much.
    [The prepared statement of Ms. Buehlmann may be found in 
additional material.]
    Senator Enzi. Ms. Oblinger?
    Ms. Oblinger. Mr. Chairman and Members of the committee, we 
believe that higher education is critical in preparing the 
workforce of today and of tomorrow. But before I talk about how 
we are doing, I would like to say a few words about what we 
should be doing.
    I think there are three things that society is really 
asking higher education to provide. The first is a skilled 
workforce. Certainly students, parents, employers look to our 
colleges and universities to prepare them for life, not just 
for the first job but for a career path that may develop into 
disciplines that aren't even known today, things such as 
genomics or nanotechnology.
    The second is to provide for social mobility. Our country 
long has had a tradition of using higher education to provide 
for social mobility. In essence, a college education is the 
ticket to the middle class. Predictions are that one to two 
million additional students will enter American higher 
education by the year 2015 and a large number of those will 
come from low-income families. Our schools and colleges must 
help them to be successful.
    And third, I think we need to encourage an active, 
informed, and engaged citizenry. We can't forget about the 
Jeffersonian ideal. A democracy's success flows directly from 
the thoughtful participation of an informed citizenry, and 
colleges have an important role to play in preparing students 
to understand issues as well as the consequences of action or 
inaction.
    I think these purposes illustrate that although the 
benefits of higher education accrue to individuals, higher 
education is ultimately not a private good. It is a social, 
cultural, and economic imperative for the Nation as a whole.
    And if higher education is an imperative, then I think we 
have to ask four questions. The first question is, what does it 
mean to be prepared for the workforce? Certainly, we have all 
agreed that we need an ever more skilled workforce if our 
economy is to thrive. I would define a skilled workforce as 
educated people with mental agility and adaptability. Companies 
such as Microsoft have clear and evolving definitions of the 
competencies that are required in today's workplace. This list 
includes items such as agility, creativity, and ethics. These 
competencies are on top of the fundamental skills we already 
think of, and that certainly is a lot to ask of our educational 
system, but it is something that I think we must ask of them.
    The second question is, can we out-think the rest of the 
world? Certainly, we all recognize that brain power is the 
primary source of national wealth. As other countries have 
improved their schools and colleges, as their college going 
rate and graduation rates have increased, we must keep pace, as 
well. I think we have to ask ourself also the question of 
whether we have a long-term vision to ensure that our 
population is educated, not just once but whenever it is 
needed.
    The third question is, are we doing all that we can to make 
students successful? Our success in graduating students from 
college is uneven at best. Only seven percent of low-income 
students who begin college immediately after high school 
graduate by the time they are 24 years old. Large numbers of 
students enter college unprepared. Nearly half of all college 
students need some form of remediation, and I think that is 
symptomatic of a high school preparation and oftentimes of low 
expectations of what these students can achieve.
    Recently, we have come to embrace the understanding that 
all students can learn. Those who need remedial assistance are 
not incapable. All too often, it is that they have not been 
helped to find a path to successful learning. Studies have 
indicated, for example, that a strong high school curriculum 
can help shrink the college completion gap in half. Are we 
doing enough to make students successful?
    And the final question is whether our students can achieve 
academically, get all ``A''s if you will, and still flunk life. 
Our education is about more than just a job. It is about being 
active and engaged citizens. It is about being involved in our 
communities. It is about having the ethics and the will to do 
the right thing.
    Certainly, a large part of higher education is about the 
workplace, but the workplace exists in a much larger context. 
It exists in the context of communities striving to improve the 
quality of life for all citizens. The workplace exists in the 
context of an increasingly diverse culture, and the workplace 
exists in a world that cannot turn back the clock on 
globalization.
    Higher education is more critical than ever in preparing 
our workplace. It is a critical element in how we fare as 
individuals and as a society. We all share responsibility to be 
certain that higher education can help us actively compete with 
the rest of the world, ensure student success, and be prepared 
for a life of active and informed citizenship. A strong higher 
education system is critical if we are to be prepared for that 
future.
    Senator Enzi. Thank you.
    [The prepared statement of Ms. Oblinger may be found in 
additional material.]
    Senator Enzi. Ms. Saunders?
    Ms. Saunders. Good morning, Mr. Chairman, Members of the 
committee. On behalf of the State of Washington, I want to 
thank you for inviting me to discuss the connections among 
higher education, workforce development, and economic vitality.
    I am especially pleased to appear before this committee 
since this offers me an opportunity to extend our appreciation 
to you for the work that you have done on the Workforce 
Investment Act Amendments, and we will do everything we can to 
move the amendments to conference committee. You did a fine job 
on it and soon you will be taking up the Carl Perkins 
reauthorization and I will look forward to involvement in that 
discussion, as well.
    Meeting the education and skill needs of employers is very 
key to our Nation's future and I want to speak specifically to 
Washington State and what has happened there. The employer 
community recognizes the critical importance of providing 
postsecondary education and training, as you heard from my 
colleagues down the table. Governor Gary Locke's 
Competitiveness Council, consisting of some of the top business 
leaders in our State, recently concluded that human capital is 
the key to economic competitiveness. Our surveys of employers 
support Ms. Buehlmann's surveys of employers, that employers 
even in a recession are having difficulty finding skilled 
worker, and so these themes you will hear obviously repeated.
    We have an agreement in our State that a skilled workforce 
is critical. Within this context, how do higher education, 
workforce development, and economic development connect? Well, 
we are shifting from supply-driven to a demand-driven strategy. 
I will talk a little bit about that. We are targeting our 
resources and we are committed to accountability for results. 
We are depending a lot on partnerships to get the job done.
    As we think about moving to a demand-driven strategy, one 
that thinks about the employer as the customer and thinking 
about connecting more closely education and training in the 
employer community, we have had to do some nontraditional 
thinking. We are recognizing and supporting in our State key 
industries following a cluster strategy, if you will. We are 
coordinating our investments across programs and agencies and 
targeting them to key economic sectors.
    We are seeding local alliances of companies in an industry 
to organize their demand for training and education services. 
And finally, we are strengthening our public sector's ability 
to be relevant, to be helpful to employers as they try and meet 
their competitive needs. These are the actions we believe we 
must take to meet employer needs and to secure our economic 
future.
    As you consider higher education's role in economic 
vitality, we encourage you to keep in mind the leadership 
potential that you have to encourage higher education 
institutions to connect not only to employers, which is 
critical, but also to other organizations in their communities 
to craft comprehensive approaches. Education and training 
networks are essential.
    A powerful example for creative thinking through 
partnerships in meeting an industry's workforce needs in 
Washington State is health care. Almost every State is 
addressing this fundamental industry's critical shortages and 
we are, too. An aging workforce, an aging customer base, longer 
lives for all of us, and increasingly complex technologies all 
contribute to this crisis.
    By bringing health care employers, unions, and higher 
education together to the table at the State level and in 12 
panels around the State, we have targeted our Workforce 
Investment Act Section 503 incentive moneys to health care. We 
have created new programs at community and technical colleges. 
We have expanded existing programs at 2- and 4-year 
institutions. We have created new apprenticeships in record 
time. We have leveraged industry investments. We have captured 
Federal discretionary grants. And we have made health care the 
place for State investments in higher education in a very tight 
budget year.
    As I said, State budgets are tight. One tactic to our 
economic development cluster strategy is that we are investing 
scarce State higher education resources in high-demand fields. 
We define high demand as high demand by employers, not 
necessarily high demand by students. Health care, engineering, 
technical occupations are some of those.
    Our precious higher education investments must truly 
contribute to economic growth and individual opportunity. As 
Governor Locke says, and I guess, I don't know, he said it 
before Alan Greenspan, we have thousands of unemployed people 
and we have thousands of jobs that are vacant. What is wrong 
with that picture? The picture is wrong because there is a 
mismatch of skills between the workers who are looking for work 
and employers who have vacancies.
    Economic change is continuous and global competition and 
changing technology, as we know, can have serious downsides for 
workers. Washington State has one of the best sets of policies 
in the Nation for responding to worker dislocations while 
simultaneously increasing workers' skills. We have programs 
that are funded through the State to encourage postsecondary 
training. We have extended State additional benefits program to 
support people while they are in training, and we have an 
integrated structure of services with the Workforce Investment 
Act.
    We estimate that about one-sixth of our community and 
technical college enrollments are dislocated workers, so it is 
a big issue in Washington State. It is not going away. So we 
are targeting our key sectors. We are investing in high-demand 
fields, including supporting dislocated workers so they can 
take advantage of these high demands. How do we know that our 
programs are working? How do we know that we are getting our 
best bang for the buck, if you will?
    Accountability is a fundamental value for us. From our 
State budget process to the evaluation of an individual 
training program, we have rigorous evaluations and we can tell 
you that these investments are working. All workforce 
development programs are estimated to boost participants' 
lifetime earnings and public tax revenues by amounts exceeding 
program costs.
    Employment rates among former program participants vary 
from 60 to 92 percent and have remained stable even during the 
last 2 years of recession. In programs serving adults, 68 to 92 
percent of former participants reported that they were working 
in jobs connected to the skills they learned in their training, 
and placement in training-related jobs increased during the 
past 2 years for four of our ten programs. Earnings increased 
significantly during the last 2 years for almost all programs. 
And over 85 percent of employers reported that they were 
somewhat or very satisfied with the overall quality of work 
performed by former program participants.
    Results for our 34 community and technical college programs 
are especially impressive, with very strong positive short-term 
net impacts on employment, wages, and earnings, and longer-term 
returns to us of $16 for every public dollar spent. Results for 
private career schools are also positive and getting stronger.
    We use rigorous information to help policy makers make 
decisions about investments and to help individuals make 
choices about education and training. Our consumer report 
system, which includes the eligible training provider list 
under the Workforce Investment Act, and its companion website, 
www.jobtrainingresults.org, show the actual results for 
programs. This is a terrific guide for students, parents, 
teachers, and employers in selecting programs.
    As you proceed with reauthorization of the Higher Education 
Act, we encourage you to use the Act to add to the country's 
skill base, recognize the retraining and lifelong learning 
needs of our workforce and their employers, require 
accountability for outcomes, and encourage broad partnerships 
to meet our Nation's needs. Thank you very much.
    Senator Enzi. Thank you.
    [The prepared statement of Ms. Saunders may be found in 
additional material.]
    Senator Enzi. I appreciate the oral testimony that all of 
you have given. I will encourage staff and Senators to look at 
the more detailed testimony that will be a part of the record. 
There are truly some outstanding suggestions and ideas and ways 
of phrasing things that all of you have put in your more 
detailed text.
    The ranking member, Senator Murray, is here. Did you want 
to make a statement before we start the questioning?

                  Opening Statement of Senator Murray

    Senator Murray. Mr. Chairman, let me just thank you for 
having this hearing today. I appreciate all your work on WEA 
and all the legislation you work on. Your focus on this, I 
think is really important. The relationship between higher 
education and a skilled workforce is one that I think we really 
do need to talk about.
    I want to welcome my two friends from Washington State who 
are here, Ellen O'Brien Saunders and Diana Oblinger, who bring 
great expertise to this.
    I do want to just say one thing. I think it is really 
important that we look at the Higher Education Act and what we 
are doing in terms of workforce training, but when we debated 
the No Child Left Behind Act, we really focused on elementary 
school. We are now jumping to the Higher Education Act and we 
are missing one critical piece called our high schools, where I 
think we really need to have a good conversation at a national 
level on what we are doing in our high schools to make sure 
that our students are ready to go on to college or to go on to 
a career.
    I have introduced a bill focused on this called the PASS 
Act that focuses on literacy skills, career counseling, and 
reforms in our schools, and hope we can have that kind of 
conversation here in the future. I want to thank Ellen 
Saunders, who is here, who has participated with me at home as 
we try to develop that kind of conversation, but I think it is 
a critical one that we need to have.
    I am delighted we are talking about the workforce and 
higher education. We talked about elementary schools with No 
Child Left Behind. Let us also talk about high schools.
    Thank you, Mr. Chairman.
    Senator Enzi. Thank you.
    To begin the questions, Dr. Bohlen, when you started your 
testimony, you talked about gold collar workers. Could you 
expound on that a little bit?
    Mr. Bohlen. This is a term that came from a futurist that 
has been working with our college as we have tried to develop 
our vision for the future, but he is talking about knowledge-
based businesses that require knowledge-based workers and this 
knowledge changes over and over and over. For instance, some of 
the skills that were needed a few years ago are now going 
offshore, for instance I-tech consultants and so on. But there 
is going to be new emerging fields, for instance, 
nanotechnology. We have no idea where all of that is going to 
take us in the future.
    So there is going to be a need for retraining and that 
retraining might not just be community college graduates. It 
very well could also be people that have advanced degrees, 
baccalaureate and even higher, but need short-term training to 
get their skill level back up for these gold collar positions. 
So he is typically talking about knowledge-based industries.
    For instance, right now, my college is trying to get the 
funds for an integrated systems technology laboratory. That 
laboratory is for industrial maintenance people, but they are 
not people that go and twist old wrenches anymore. They have to 
know how the computer chip interacts then with the industrial 
controls, from pneumatics to hydraulics and programmable logic 
controllers and so on. So even the people that we once thought 
were very low skilled now require high skills that have a very 
large technical base. So that is one way we are going to be 
able, for instance, to help retain manufacturing jobs in our 
community, is if we can move more to automation but then have 
the gold collar type of people that can service and maintain 
that high tech equipment.
    Senator Enzi. Thank you. All of you have expressed the 
importance of the cooperation between higher education and 
businesses, and there was some stress also on other 
organizations. Would any of you care to speak on how you 
envision Congress could play a role in getting those 
partnerships to work? Ms. Saunders?
    Ms. Saunders. I will take a crack at it. The Workforce 
Investment Act offers--I think of it frequently as having two 
parts. One is, if you will, a framework, an architecture for 
the collaboration among programs to deliver services, and it 
also has specific services that are funded through the Act.
    The kind of thoughtful work that went into the Act that 
acknowledged that in a community, no matter what your funding 
source, no matter what your institution, the employers that you 
are working with are the same employers as the other program or 
the other institution. I mean, there is only one set of 
employers. They are the employers.
    To the extent that you can suggest in the Act this 
recognition that collaboration where employers--in communities 
where employers actually hire, that will be very, very helpful, 
and I think that there probably are some examples of that at 
the table. There certainly are in Washington State, where the 
employer really does not care what organization you come from 
and what your source of money is and what your limits are and 
what your administrative requirements are and your eligibility. 
Their full-time work is actually running the business, not 
learning the bureaucracy.
    So to the extent that you can encourage people, and I would 
be happy to think some more about language, to set their 
program requirements aside and think about how they can partner 
so that everyone wins through the partnership will be extremely 
helpful.
    Ms. Buehlmann. One of the things I was going to mention is 
that you have a unique opportunity right now with the Higher 
Education Act, the Workforce Investment Act, and the Vocational 
Technical Education Act to look across those three pieces of 
legislation, which really do run the gamut of high school, 
college, and beyond.
    I think one necessary component is that we have to 
understand what the goal is, what ultimately we are looking 
toward and align those efforts toward that. I think Ms. 
Oblinger raised a couple of points that begin to craft that 
mission. But we also have to begin to look broader than silo 
issues and find out what the resources are across those 
programs. We have to establish leadership in communities where 
we can bring the right stakeholders together to give an 
appropriate role and acknowledge and respect the roles of those 
varieties of players and then build a system that works, and I 
think it takes both State leadership and leadership at the 
local level to bring those together.
    I couldn't be sitting here if I didn't think that it was 
critically important to understand that the role of employers 
is more than just to stamp, you know, approve something and 
move on. They have a vested interest. They can help cross those 
silos because they don't pay attention necessarily to where the 
funding comes from and they have a vested interest in the 
economy and the growth of the community.
    Senator Enzi. Dr. Bohlen?
    Mr. Bohlen. Senator, let me take a little whack at that 
also. An emerging number of our companies are small companies, 
and of course to remain competitive they do not have lots of 
money for training. In fact, I have run into some entrepreneurs 
and they believe that their job is to provide jobs. It is the 
public's job to help prepare people for those jobs.
    I think there are several things that we could do. For 
instance, when we were working with Lowe's, we were very 
fortunate that we were already in the process of developing a 
relationship with the State of Georgia. If there was a national 
clearinghouse where curricula could be mentioned, a part--we 
were willing to pay for the curriculum, but we needed to 
respond very quickly with a very quality product and it was 
just very fortuitous that we were able to locate that in the 
State of Georgia. We didn't have the resources to ramp up for a 
company the size of Lowe's and be able to prepare a quality 
product.
    In addition to that, we were very fortunate that there were 
State dollars. If there was greater flexibility with Title IV 
dollars, especially to serve what are being called the under-
employed--these were working adults where it took probably two 
in a family to just barely make it. They needed higher wages in 
order to be able to have a little income for their family. We 
just were not able to work within the context of what Title IV 
funding might look like to be able to establish that 
partnership. So as Dr. Buehlmann mentioned, we need greater 
flexibility with types of grants that come through Title IV.
    Senator Enzi. Dr. Votruba?
    Mr. Votruba. Senator, if I might just add a thought, in 
terms of 4-year universities, workforce really has two 
dimensions. It is preparing people for work and then it is 
continuing to update folks on a regular basis. The latter, I 
think, sometimes gets overlooked. The large companies can 
afford to pay the full cost of that education, generally 
speaking. In fact, oftentimes, they will have their own 
educational divisions that do nothing but the ongoing education 
of their employees.
    It is the small and medium-size companies that need 
support, and they will come to us in part because they can't 
afford the vendors. The vendors are in a for-profit mode. They 
are coming to us and saying, look, in order for us to go from 
small to medium and medium to large, we need some public 
support. And I think it is around that public support that 
anything that the Federal and State government can do to be 
helpful would be much appreciated by the employers.
    Senator Enzi. Thank you. My time has expired, so Senator 
Jeffords?
    Senator Jeffords. Thank you for some very discouraging 
news.
    [Laughter.]
    I feel more frustrated as time goes by at the status of 
this Nation and how far we are behind the rest of the world in 
trying to prepare our workers and all. So this is a very 
important meeting and hopefully we can do something to bring us 
into position to be not in a position of losing so many jobs 
overseas or having to bring in people from overseas that have 
the training because we can't train them.
    As all of you know, we in Congress write education 
legislation in cycles. One year we work on higher education. 
Another year we work on elementary and secondary education. 
Often there is an unfortunate outcome of such a time frame, is 
that we fail to coordinate most Federal education initiatives.
    We are just beginning the higher education review process 
and hopefully we will soon take up vocational education. Last 
fall, under the leadership of Senators Enzi, Murray, Kennedy, 
and Gregg, we were able to pass a Quality Workforce Investment 
Act bill. I would like to hear your suggestions as to how we 
can better coordinate all the Federal education proposals, 
particularly the elementary, secondary, higher education, and 
vocational education, etc.
    I don't see any hands going up--
    [Laughter.]
    Ms. Buehlmann. I will jump into the fray.
    Senator Jeffords. I knew you would come through, Beth.
    [Laughter.]
    Ms. Buehlmann. Yes. I am used to responding to your 
questions, Senator.
    [Laughter.]
    Ms. Buehlmann. In the State of Alabama, we have had the 
good fortune of working with Enterprise, Alabama, a very small 
community, on doing just that, trying to look across the 
resources in their community, trying to understand what the 
strengths and the value of all of those contributions can be 
toward the economic growth of that community.
    We were so successful, in fact, that the mayor of Dothan, 
Alabama, right next door to Enterprise, began to be a 
spokesperson for that, not only in his region but at the State 
level, so recognized that it now has been moved to the State 
level to try to integrate and pull together economic 
development, various education, higher education, K-12 
education, workforce investment issues, and look at it as a 
comprehensive leadership role from the State level, how to 
bring those agencies and organizations together, create the 
policy environment within which then the local communities can 
assess their resources, bring them together in a way that fits 
their needs in their community but contributes toward regional 
and State growth.
    I suggested not only allowing States to begin to look 
across agencies and bring those agencies together through 
leadership, but then also creating a policy environment and a 
regulatory environment, if you want, so that the locals can 
then do the same kind of thing and reach across regionally as 
opposed to just through silo and turf issues.
    I would also suggest that we at the Center for Workforce 
Preparation are working very hard with Chambers and communities 
to begin that conversation and that dialogue and to look across 
those various funding streams to create a better environment, 
economic environment in communities.
    Senator Jeffords. Ms. Oblinger?
    Ms. Oblinger. Senator, let me just add another vote around 
the importance of community. I will give you a case in point in 
El Paso, Texas. The University of Texas at El Paso has done a 
beautiful job of taking leadership for a lot of activities in 
that community that reached from higher education down into the 
K-12 schools and they found that they were not retaining the 
students that graduated from the university. They were leaving 
for better jobs elsewhere. They had a lot of people who didn't 
even aspire to higher education because as they grew up, they 
were told that they couldn't do any better than be a 
hairdresser.
    The university took a lot of leadership in that particular 
community, began working with religious organizations, 
community groups, schools, and helping people develop the idea 
that they could achieve more, being sure that the quality of 
the schools was improved. They have measured themselves 
ruthlessly on how well they are doing, where they have gaps, 
where they need to improve, and it has been a wonderful 
success, but it has taken time and it has taken breaking some 
rules so that they could change regulations around tuition and 
such so that they could do the right things for the community.
    So I think we do have some very good examples. Maybe one of 
the big gaps we have is many of us don't know where some of 
those good examples are. So maybe a clearinghouse would be very 
helpful for all of us, not just on that question but on the 
previous one.
    Senator Jeffords. That is an interesting thought. Yes, Dr. 
Bohlen?
    Mr. Bohlen. Senator, one of the things that would be 
helpful would be if Congress could help an alignment between 
these various Acts so that we have similar outcomes. We almost 
have to operate them as silos because the outcome standards are 
not consistent between WEA, Perkins, and the Higher Education 
Act, and that would help us a lot if you could create a matrix 
of where those types of standards and, therefore, the 
initiatives have to be consistent. They at times run at cross 
purposes.
    In addition to that, I have been very intrigued in Colorado 
and Wyoming, where the Daniels Foundation has funded extensive 
intervention programs for high school students. They are run by 
colleges, but they are for high school students that are first 
generation and the parents have to be involved, and the goal is 
to help those students develop career goals and then to provide 
them a scholarship to attend the college of their choice. That 
is what the Daniels Foundation does. Now, with the college of 
choice, that doesn't mean a lot of students could be funded.
    We are very fortunate in Wyoming right now where we do have 
a little bit of a budget surplus, so my institution this year, 
using our own funds, are going to try to replicate that and to 
have more students in that. But it is that involvement with a 
group of students, helping them determine--a cohort of first-
generation students and first-generation parents developing a 
knowledge of what jobs can be, what futures can be, and the 
role of being successful while you are in high school so that 
you can then be successful.
    We really need those probably in every community. That 
probably takes a lot of funding to do that. But right now, it 
is very difficult to work your way through the State 
bureaucracies, with Perkins funding, to be able to try to get 
that in place. So to me, there needs to be more time spent 
trying to address what can we do to help students and parents 
develop that support system and develop a look at the future.
    Mr. Votruba. Senator?
    Senator Jeffords. Yes?
    Mr. Votruba. I think what you are hearing in one way or 
another from all of us is that place matters, and where this 
integration and collaboration has to occur is in local 
communities. I can give you an example of a P-16 or what many 
here would call K-16 model in our local region where the P-12 
schools, the community college, the university, local business 
and industry all get together to create and support a seamless 
system of education with the understanding that some students 
after high school are going to go into the workplace. Others 
are going to go into some form of postsecondary education.
    It is around those local collaborations, I think, that 
support has to occur. It may be possible to develop--it is 
partnership at the local level, but supported by State and 
supported by the Federal Government.
    I wonder if it is possible to create some kind of beta 
testing sites where we try some approaches at the local level 
and see how they work. I think it is also possible to create 
State audits and local audits that allow us to look deeply at 
where these projects are taking root, where innovation is 
occurring so we can learn from it and generalize it in the form 
of public policy.
    Ms. Buehlmann. Can I make one more statement, though? I 
think we also have to talk about things differently. It isn't a 
choice whether somebody goes on to postsecondary education or 
whether they go into the workforce. I think what we are finding 
today is that we have got to integrate those and understand 
that if somebody goes into the workforce, they have every 
opportunity to go back to postsecondary education, to training, 
to proprietary schools, to other institutions to get the skills 
that they need to keep growing in the workforce.
    So we have to not talk about this as if you have a choice 
when you are coming out of high school that you are only going 
to go to college or you are going to go into the workforce. It 
is now an integrated system that we have to understand that 
those resources are available to people throughout their life 
and we build a seamless system that serves every person, not 
just those that are coming out of high school directly and can 
go into college.
    Mr. Votruba. And that does mean that these traditional 
institutions behave differently.
    Ms. Saunders. Sir, I have been sitting here mulling because 
of the sequencing of the way that the Congress takes up 
legislation is sort of your world, not mine. We are trying to 
influence you in the sequence and then implement what you put 
in place.
    But it does seem to me, with all respect, since you are the 
experts on this for sure, that this kind of hearing that you 
are having right now is the kind of hearing that can help this 
integration if the sequencing is the way you do business. So 
you take up things and then the next year you take up something 
else and you say, whoops, we missed something 2 years ago or 3 
years ago.
    It does make sense to me that as you are approaching the 
Higher Education Act, you would cast your mind back to the last 
couple of years, No Child Left Behind or the Workforce 
Investment Act, and say, are there issues that we wanted to 
address or should have addressed or have now thought of that we 
need to weave into our considerations of the Higher Education 
Act?
    All I can say is that unless--and then the other option, of 
course, is some collaboration and conversation at the Federal 
level. There is a lot of talk about communities, but I firmly 
believe that policy matters. Smart people, good leaders, 
flexibility are very important, but policy plays a huge role in 
how people orient themselves to the job that needs to get done.
    So I would be very interested in more of an active 
conversation at the Federal level, Federal, State, and across 
agencies, as well. I think that would be extremely helpful, so 
think about that.
    Senator Jeffords. Thank you.
    Senator Enzi. Senator Alexander?
    Senator Alexander. Thank you, Mr. Chairman. This is very 
interesting. I am not as discouraged or as disappointed as 
Senator Jeffords said he might be. I think you are doing 
probably the most successful work in education today, 
particularly at the community college level, at some 4-year 
colleges and workforce training.
    My experience is that there is really nothing new about job 
loss in America. It has been going on my whole public life over 
the last 25 years. Our strength as an economy is not measured 
by how many jobs we lose, it is measured by how many good new 
jobs we create to replace those jobs and how well we train 
people to fill those jobs. And while we don't want to lose any 
jobs, we want to recognize the pain that goes with moving from 
one to the other. That is the way things have been for at least 
25 years in our country and I think all we are seeing today is 
an acceleration of that trend.
    So as we think about what the response should be, rather 
than go too far to create something new, maybe we should just 
accelerate our response, in other words, do more of what we 
have been doing. And as I look at what we have been doing, the 
wisdom of it is pretty simple and it is very different than 
what we do in K through 12. In higher education, we focus on 
really two principles. One is autonomy and the other is we 
allow generous amounts of government money to follow students 
to the schools of their choice. That creates lots of 
collaborations, lots of choices. It creates lots of 
flexibility, fast-moving institutions. It creates contracts 
with businesses. It creates short-term objectives which can 
rapidly change as circumstances change.
    I notice, as all of you have thought of, interesting things 
that might be done. My reaction is the reaction of most of you 
to that opportunity is that, well, in the end, if we tried to--
they could probably be best done by local collaborations and 
local decisions and local efforts.
    I am welcoming the discussion and suggesting that maybe we 
just need to do more of what we have been doing, which is to be 
as generous as we can be with funding for students who find 
their way to institutions who create workforce training 
contracts and then let you figure out how to do that.
    Now, there are some impediments. I want to ask you about a 
couple. Senator Murray raises an interesting question about 
high schools. I would like to talk more about that sometime 
with her and with others on the committee. But I wonder, in any 
of your cases, high school students go to your institutions, 
whether the high school dollars, $6,000 or $7,000 a year per 
student, that a State, local, and Federal Government spends on 
a high school student can simply be transferred to the 
community college for a program that is more interesting and 
more relevant for that student, and if that is not the case, 
shouldn't that be the case?
    My second question is, do the limits on Pell Grants--and as 
I understand it, they can't be used year-round, you can only 
use them, say, two out of three semesters--does that interfere 
with training and do the limits on loans interfere with it? 
Would it be easier, rather than to have annual limits, just to 
say, here is an amount that someone may borrow for the whole 
educational period and pay it back? I am guessing the limit on 
Pell Grants might have more to do than loans with the students 
we are talking about.
    So should there be a sort of Pell Grant for high school 
students, either with the State funds now spent for high school 
that could go to community colleges or new Federal dollars, and 
should there be some change that would make it possible for a 
Pell Grant recipient to use it all year long if that is the 
kind of training or course that student needed?
    Mr. Votruba. Senator, I think that there is a need for 
greater flexibility. What we are experiencing right now, I 
believe, is a major transformation in postsecondary education 
in this country. And what the Federal Government has done for 
years--and there is no greater example of this than the post-
World War II investment in federally-funded research--what the 
Federal Government has done is influence institutional 
behavior.
    And when you are in a time of transformation of the type 
that we are in now, and I mean fundamental--universities like 
mine are thinking anew about who we serve, where we serve them, 
how we serve them, when we serve them, what we serve them. We 
are gathering interaction from employers, not just employers, 
but from parents and from local leaders, politically, everybody 
else, the boundaries are becoming far more seamless and 
universities are much more permeable in terms of their 
willingness to receive and act on what they hear from the world 
that they serve.
    It is clear, for example, going to your last point, that 
the semester system is dying. The semester system is dying. We 
are what I would call a de-commodified industry at this point. 
We no longer have a monopoly on postsecondary education. What 
that means is that we are serving people where and when they 
want to be served. And to the extent that the Pell Grants can 
be more flexible in being able to allow students to study where 
and when and how they choose, it seems to me everyone is 
served.
    But I would encourage the committee and the Congress to 
think about--to start with the question of what kind of 
behavior do we want to encourage on the part of postsecondary 
education and then how do we encourage it, because--and I agree 
with you. I have never been more optimistic. In 28 years in 
this career, I have never been more optimistic about the 
ability, the willingness and capacity of these postsecondary 
institutions to serve the public interest, never. It is an 
exciting time.
    Mr. Bohlen. Senator, I am intrigued with your thinking 
about high school students. An awful lot of States already have 
concurrent enrollment programs where students do that. I 
would--this is just my opinion right now--would hate to see us 
further dilute the moneys that we have available for Pell 
Grants, for instance, to make them available for high school 
students. I think that we have already got systems in place, 
and we don't want to move students too fast. There is a 
maturity that we need to do and I think we need to beef up what 
we are doing in our high schools and not be wasting senior 
years and so on. Then we can give them advanced--start them at 
a higher point once they are in collect. But we do do a lot of 
concurrent enrollment.
    I also want to add to this greater flexibility with our 
Pell Grant system, for instance. My college is also eroding its 
semester system. It is going to be a thing of our past. It is 
within our vision to become a 24/7 college.
    We have a new dental hygiene program that instead of a 2-
year program, it is 16 months. To be real honest, we have had a 
booger of a time trying to fit the aid for those students into 
the semester system. So we, in essence, had them start at one 
time and then the semester that they are loaded in happens to 
be whichever one is most convenient. Is that unethical? I don't 
know. It is legal, I guess, but it does serve the student.
    So in 16 months, we can get a student out there in the job 
market starting at $45,000 to $60,000. That is not too bad for 
16 months of training. Now, those students have spent maybe two 
to 3 years getting ready for the preparatory courses they have 
to have, but then they emerge as dental hygienists. Many of 
these are single-parent moms. To be able to see them going from 
dependence on our system to independence and buying that car 
for their family, buying that first home, it is very 
gratifying, and so we need that greater flexibility.
    Ms. Buehlmann. I think what you are hearing, I have two 
comments. One, I served on the panel for looking at the high 
school senior year a couple of years ago. One of the things 
that we found is that as we establish standards for the K-12 
system and assessment of whether or not student performance 
meets those standards, those are not aligned and have no 
relationship whatsoever to what institutions of higher 
education are asking as enrollment requirements for students to 
enroll in postsecondary education. We need to better align 
those kinds of efforts.
    Second, I think what you are hearing is we have now what we 
referred to previously as nontraditional students becoming much 
more the traditional or the student that is being served 
through our institutions of higher education across public-
private, profit-nonprofit, and that we need to think about how 
the policies that we craft at the Federal level are serving 
those adult workers and those nontraditional students, not to 
do away with what we have done for the more traditional 
student, but to think about how we can better align across what 
we used to think of as nontraditional students as well as the 
traditional student.
    Senator Enzi. Senator Murray?
    Senator Murray. Thank you, Mr. Chairman. I am intrigued by 
Senator Alexander's comments, too. Actually, a number of States 
do have programs. We have one in Washington State called 
Running Start that allows students in high schools to take 
college credit. Actually, when I was in the State legislature--
it is a long time ago--I opposed it to begin with. I thought 
that would not be a good way to go. It has actually been a very 
successful program and I am impressed with what they have done.
    I would be very concerned about diluting Pell Grants. I 
think that the demands on Pell Grants is really difficult 
today. If we created a different fund that would help students 
in nontraditional roles in other ways, I think I would be 
interested in talking to you about that.
    What I am most concerned about for our high school students 
is that not a lot of--or there are too many of them today who 
reach juniors in high school and go, ``Oh, I didn't know I 
needed 4 years of math, now I can't go to college,'' and they 
give up. I know I have had this conversation with Ms. Saunders 
and would love to hear your comments on it, because you have a 
great pamphlet you put out called ``Where Are You Going'' to 
high school students once they get out to give them some 
options, but I would love to hear your comments on what kind of 
changes you think we need within our high school system so that 
students have choices when they get out and haven't limited 
themselves when they are juniors in high school.
    Ms. Saunders. I would love to share some thoughts about 
that. I mean, my board has spent actually quite a bit of time 
in the last year grappling, and I hope this doesn't further 
depress Senator Jeffords--
    [Laughter.]
    Ms. Saunders. --but grappling with our State's dropout rate 
and what needs to be done to help students see a reason to stay 
in school, to apply themselves so that they can take advantage 
of the one absolutely, for them, free opportunity to increase 
their own human capital and then to actually emerge from high 
school with a plan for the future.
    We are concluding that the earlier we reach young people, 
the better, and that we need to make sure that students 
thinking about posthigh school planning now, that we reach 
students in middle school. We need to find a way to work with 
students and their parents so that the consequences of the 
course-taking choices that they make are very clear.
    This ``aha'' that happens in the 11th grade or 12th grade 
is one that is totally within our control to fix. I mean, this 
is not rocket science to connect with students and their 
parents in middle school, and we have a couple of examples in 
Washington State where the schools have essentially redesigned 
their guidance function so that they help students understand 
why they are at school, what are the opportunities in the 
future, and to make a plan for their future that includes both 
staying in school and engagement in rigorous education.
    As the parents learn what is out there in terms of 
occupational choices, when they learn what a series of course 
selections over the course of 4 years really means for their 
children's future, they become very alert to the choices that 
the kids are making. And, in fact, in Franklin Pierce High 
School, the parents select the series of courses that the 
students take. The parents sign the form.
    This seems so simple, that parents would be choosing the 
courses of study for their students, but, in fact, in most high 
schools, kids choose their courses. They work with somebody and 
they choose their courses and word goes through the school what 
is easy, what is an easy A, who really requires homework. They 
have a network. When parents are involved and they have hopes 
and dreams for their children, then the ratcheting up of the 
courses is very clear. So that is one thing, grab them early.
    The other one is to integrate the academic learning--math, 
science, English--with how it is actually used in the real 
world, application. Now, in the Perkins Act, there is a 
requirement that over on the vocational side, that academics be 
integrated into the vocational programs. But it is not always 
the case that the same burden of application is placed over on 
the academic side, which is the ``aha'' that the kid can say, 
oh, algebra, oh, here is how it is used. And many, many young 
people, I mean, all of us have different learning styles, and 
it is the same of kids, they need ways of applying academics so 
that they make sense to them.
    Guidance is critical. Guidance is critical, and guidance 
that is knowledgeable about postsecondary opportunities, what 
they really require in terms of skills and course taking and 
where they will lead in the future. Our guidance system is 
overwhelmed with--it is overwhelmed with crises, children's 
crises, and it is understaffed. But our view is that every 
teacher can be a guidance counselor, if you will, a guidance 
officer, and that we need to spread this responsibility for 
children and their future throughout the building and out into 
the community.
    Senator Murray. Ms. Oblinger?
    Ms. Oblinger. Let me second two things that you have heard. 
One is expectations, and there are some wonderful models out 
there. High school may be too late for setting expectations of 
students and there are a number of programs that go back, 
particularly into middle schools, and try to raise the 
expectations of students, but it is also raising the 
expectations of parents and helping them be prepared.
    But the parents don't work in all cases. I think we have 
seen a number of very nice examples of where using online 
mentors, either professionals or other college students who are 
able to reach many of these at-risk students and help them 
aspire and know what they actually need for college 
preparation, what they need in terms of extracurricular 
activities and so on, and those, many times, stem a big gap 
that we currently have in the system.
    The second point that I would emphasize is making learning 
relevant. One of the reasons that we lose a lot of students 
from postsecondary education well before they arrive is because 
they simply don't see relevance. There are some federally-
funded programs that are working very hard to drive increasing 
relevance back into high schools and middle schools. One, for 
example, from the National Science Foundation is called the 
National Science Digital Library Project. They are working with 
creating archives of real material that students can use and 
manipulate and find very useful. They also provide support 
tools for teachers.
    So I think there are some good examples there of where the 
technology can actually be used to help improve expectations 
and also improve the relevance all the way back into the 
elementary and high schools.
    Senator Murray. I know my time is out. Let me just say, Mr. 
Chairman, I think this is a topic we really need to focus on. I 
really would encourage you to look at the bill I have 
introduced, the PASS Act, because one of the things we do is 
look at putting literacy coaches into high schools because we 
are doing so much remedial education at colleges today, 
especially community colleges, where we miss these kids when 
they are in high school and then we pay for it in college and 
we rob our institutions of the ability to provide other classes 
because they are doing remedial work.
    And the second thing we do is look at academic counselors 
for these schools very early on, middle school, so they know 
what classes they need to take so they don't end up being a 
high school senior without enough classes to get into a 
university.
    But I think your comments on parents is critical. I think 
involving parents is important. We do that in my bill, as well. 
I would just end by saying language barriers are critical here. 
We need to recognize cultural differences, as well. I talked to 
an eighth grader not very long ago whose parents spoke Spanish 
only who told me he didn't want his parents to be able to learn 
English because he controlled what his family, by only speaking 
English, and I thought, wow--
    [Laughter.]
    Senator Murray. --when you send that stuff home with your 
kid and you expect the parents to know it. So we need to have 
real attention paid to the ability to get all parents involved, 
as well, and I know others wanted to comment. Unfortunately, my 
time is out. But I really do encourage this committee to look 
at that issue. I think it is really important.
    Senator Enzi. This has been an excellent hearing.
    Senator Jeffords. Very stimulating.
    Senator Enzi. There have been a lot of good ideas. I 
started with about a dozen questions. I didn't get to ask many 
of those. Now I have written about another 15.
    [Laughter.]
    Senator Enzi. I have made several pages of notes here on 
great ideas that you have mentioned or stimulated. You have 
given us a lot to work on, so we will be sending some 
additional questions to you. I didn't even get to get into the 
very specific ones.
    For instance, I wanted to learn more about Northern 
Kentucky University's emphasis on teaching students about 
starting their own business, entrepreneurship. I have done an 
inventor's conference and I keep the entrepreneurship merit 
badge pamphlet featured on my conference table. Everybody asks 
about it. Sri Lanka just translated that into Sri Lankan 
because they thought it was such an excellent book.
    There are a lot of things we haven't had an opportunity to 
touch on, but I can tell that we have an outstanding panel and 
we will look forward to some additional information from you. I 
can't thank you enough for taking the time to be a part of 
this. Thank you very much.
    The record will remain open for another 2 weeks. The 
committee is adjourned.
    [Additional material follows.]

                          ADDITIONAL MATERIAL

                Prepared Statement of Charles H. Bohlen

    Good morning. My name is Dr. Charles Bohlen and I am President of 
Laramie County Community College (LCCC) in Cheyenne, Wyoming. I am 
pleased to be with you to offer this testimony on behalf of my college 
as well as the American Association of Community Colleges (AACC) on the 
Higher Education Act (HEA) and its relation to providing the nation 
with a skilled workforce. AACC represents 1,173 public and private, 
associate degree-granting, regionally accredited institutions, and 
serves as the national voice for community colleges.
    Community colleges enroll 44 percent of all U.S. undergraduates 
(measured in terms of head count) and 45 percent of first-time 
freshmen. Almost two-thirds, 63 percent, are enrolled on a part-time 
basis of fewer than 12 credit hours. The average age of our students is 
29 years. Community colleges enroll 46 percent of all African-American 
undergraduate students, 55 percent of all Hispanic students, and 46 
percent of Asian/Pacific Islander students in higher education. Thus, 
we pride ourselves on being the ``Ellis Island'' of higher education.
    To a large degree, the growth that is commonly referred to as the 
community college movement occurred in large part because of the HEA. 
In the fall of 2003, community colleges had credit enrollments of about 
6.3 million students, and another 5 million non-credit students. These 
numbers have surged over the last few years, and the growth shows no 
signs of abating. This jump in enrollments is due in part to the fact 
that community colleges are usually the first choice for workers 
challenged by a soft economy. Most of our colleges report that the 
recent spike in enrollments, which has placed them under enormous 
pressure, has been due to both the baby boom echo of traditional 
college-aged students, as well as older individuals who are under-
employed or are recently unemployed. Indeed, the largest category of 
growth last year (2002-03) in eligible applicants for the Pell Grant 
program was for independent students with children--a staggering 13.6 
percent increase.
    Wyoming is a very rural State that is served by seven community 
colleges and one public university. The colleges operate outreach 
centers in any community with 500 people or more. To reach students in 
isolated areas and those whose time demands do not allow them to 
receive their education through on-campus instruction, the colleges 
provide online instruction. To meet the needs of their local 
communities, Wyoming's community colleges offer short-term workforce 
training, and certificates and associate degrees in vocational/
technical areas. Likewise, Wyoming community colleges serve as major 
gateways to the University of Wyoming by offering the first 2 years of 
baccalaureate studies. The community colleges and the university are 
highly collaborative, resulting in Wyoming being one of the first 
States where all higher education institutions use the same course 
descriptions and course numbers for freshmen and sophomore transfer 
courses.
    Wyoming's and the nation's community colleges are a confluence 
where Federal funds provided through the HEA, WIA, and other programs 
merge with State and local support to provide education and training 
programs to prepare America's workforce. Futurist Ed Barlow predicts 
that America's community colleges will become the finishing schools for 
gold collar positions. In other words, a growing number of bachelor's 
and higher degree holders will attend community colleges after 
completing their baccalaureate degrees, to obtain technical skills 
needed in the emerging knowledge-based industries. Our community 
colleges are committed to access and have as a primary mission 
assisting the disenfranchised and un-empowered to acquire the necessary 
skills to procure jobs that provide livable incomes. In Wyoming and the 
rest of the United States, community colleges are the primary providers 
of a technically skilled workforce.
    The training conducted by Laramie County Community College for 
Lowe's Company Inc. is a case study of the confluence of Federal and 
State roles in serving a business and a community. In 2001, the Lowe's 
Company Inc., home improvement retailer, chose Cheyenne as a site for a 
distribution warehouse to serve over 100 of its stores. Quickly Laramie 
County Community College convened the local economic development 
organization, Cheyenne LEADS, the Wyoming Business Council, the Wyoming 
Department of Workforce Services, and the Wyoming Community College 
Commission to develop a cooperative approach with Lowe's to provide 
pre-employment training. The Business Council assisted the college in 
procuring the license to use the Georgia Department of Technical and 
Adult Education's Quick Start Certified Warehousing and Distribution 
Specialist training program.
    Even though Lowe's had never partnered with a community or 
technical college for pre-employment training, they were so impressed 
with the college's quick response and the quality of the Certified 
Warehousing and Distribution Specialist curriculum, that they agreed to 
interview all graduates of the 150 hour training program and to pay a 
higher salary for employees with the warehousing certification. Two 
hundred seventeen graduated from the program, with 185 employed at 
Lowe's or other distribution centers in the Cheyenne Area. Lowe's 
management said the following about their experience with their start 
up in Cheyenne,
    Training and experience are two of the largest concerns of any 
company. The Certified Warehousing and Distribution Training not only 
provides core skills, but a general understanding of the industry and 
environment. Those qualifications in a workforce are invaluable to 
industries moving into a new market and this is one of the greatest 
commitments to the community, industry, and its citizens that I have 
ever seen.
    At Laramie County Community College, Federal funds, largely 
provided through the HEA, WIA, and Carl D. Perkins Vocational and 
Technical Education Act, allow the college to provide access to higher 
education, to provide support services for those who typically could 
not be academically successful, and to provide state-of-the-art 
equipment for students in vocational/technical studies.

    HOW CONGRESS CAN HELP COLLEGE STUDENTS ACHIEVE THEIR ASPIRATIONS

    As Congress gets set to reauthorize the HEA, it deserves thanks for 
having done so much to make college possible for those who otherwise 
would not have had the chance to improve their lives through higher 
education. The college continuation rate for recent high school 
graduates has risen from 47 percent in 1973 (just as the central 
student aid programs of the HEA were being implemented) to 62 percent 
in 2001. The genius of creating a student-focused system in which aid 
is delivered to the individual, for use at the college of his or her 
choosing, has repeatedly proven itself. But this investment is one that 
not only accrues to the individual; our economy would be incalculably 
weaker if not for the increased education and training fostered by the 
Title IV programs.
    Student aid works. AACC strongly supports the current programs and 
basic structure of the HEA, and does not believe that the Act is flawed 
in any fundamental way. Rather, reauthorization provides an opportunity 
to make a system that is working well function even better. Our 
colleges view themselves as having a pact with the Federal Government. 
Community colleges strive to keep tuition as low as possible, but for 
those who cannot meet the cost of education, the need-based programs in 
Title IV of the HEA are there to fill the gap. And there is a consensus 
that the HEA has proven extremely efficient and effective in providing 
financing to students and families who need resources to attend 
college.
    Federal student aid represents close to 70 percent of all the 
student aid made available across the country (most of the rest 
consists of institutional grants from private colleges). American 
higher education would be radically different without this aid. 
Furthermore, the student financial aid programs are well targeted those 
who need financial assistance the most are generally those who receive 
it. More than 90 percent of all Pell Grant funds are awarded to 
students with family incomes of less than $40,000.
    Unfortunately, the job of promoting equal access to post-secondary 
education is not yet complete. Access to college remains highly 
stratified by income. Over the last 25 years, a rising tide has lifted 
the college participation rates of students across the income spectrum 
fairly equally, with the largest gains occurring in the second lowest 
income quartile. This is a remarkable achievement. Unfortunately, over 
that same period the persistence gap between less affluent and more 
affluent students has widened. And, despite the gains in overall 
college access, the gaps in college participation across the various 
income bands have remained fairly consistent. We believe these gaps can 
be eliminated, but it will take a far greater financial commitment than 
that which has been made so far by Congress.
    Community colleges are particularly dependent on the Pell Grant 
program. This disproportionate reliance stems from that fact that 
community college students tend to be less affluent than students in 
other sectors, and our low tuition help mitigate the need for 
borrowing. In the current award year, the Department of Education 
estimates that 1.9 million community college students will receive a 
Pell Grant, compared to a total fall enrollment of about 6.3 million.

                  COMMUNITY COLLEGES AND THE WORKFORCE

    A first principle of community colleges is to provide their local 
communities with skilled workers. A correlate goal is to provide 
individuals with the means to attain economic independence. In the last 
25 years, the percentage of workers with an associate degree, 
certificate, or some college has more than doubled from 12 percent to 
27 percent of the workforce. According to the Department of Labor, 
occupations requiring a postsecondary vocational award or an academic 
degree, which accounted for 29 percent of all jobs in 2000, will 
account for 42 percent of total job growth from 2000 to 2010. The array 
of occupational programs offered by community colleges is truly mind-
boggling, and permeates every sector of the economy. Our colleges pride 
themselves on their entrepreneurial nature, and their ability to add, 
or terminate, programs in response to market demand.
    In all of the fields in which high-profile labor shortages exist, 
such as teaching, nursing, information technology, and first 
responders, community colleges are on the front lines, offering 
programs designed to address these pressing needs. For example, 48 
percent of all applicants taking the national registered nurse 
examination to become licensed professional registered nurses were 
graduates of associate degree programs, and these graduates pass that 
examination at the same rate as those who have attended 4-year 
colleges. Sixty-five percent of new health care workers get their 
training at community colleges. Community colleges also train and 
credential 85 percent of the nation's first responders; police, 
firefighters, and emergency medical technicians.
    Of late, much attention has been focused on the disappearance of 
millions of jobs in this country. This job loss is naturally of great 
concern to policymakers. However, it should not obscure the fact that 
our nation still has a desperate shortage of skilled workers; just ask 
some of our most prominent business leaders. Under any plausible 
scenario, the current shortage of skilled workers will increase in the 
years to come, as the economy continues to grow and the baby boom 
generation retires. Shortages in management and technical support 
fields will be particularly pressing. In January of 2003, the 
unemployment rate of those without a high school diploma was 8.8 
percent; those with a high school diploma had a 4.9 percent 
unemployment rate, but those with a bachelor's degree or higher had 
only a 2.9 percent unemployment rate. These rates reflect economic 
reality and pose a daunting challenge for policymakers.
    States consciously use community colleges in their economic 
development strategy, through programs that are designed in part to 
attract and keep businesses. A recent survey by the Education 
Commission of the States showed that at least 21 States provide special 
funding to community colleges to train workers for high-demand 
occupations. Thirty-two States provide funding to support customized 
training for employers.
    Community colleges do not receive adequate recognition for their 
role in educating the nation's teachers. It is estimated that at least 
25 percent, perhaps as much as 50 percent of the graduates of 
bachelors' degree programs in teacher training began their post-
secondary education at community colleges. Community colleges provide 
this initial teacher preparation, but are also heavily engaged in 
professional development for K-12 teachers; post-baccalaureate 
certification for undergraduate majors in non-teaching fields; 
encouraging high school students to enter the teaching field, and 
training the paraprofessionals whose skills must be enhanced as a 
result of the No Child Left Behind law. Consequently, AACC is proposing 
that a small new program in the HEA be created to help community 
colleges further their activity in this critical area. We seek a 
national competitive grant program of $25 million. We are happy to 
provide the committee with further details on this proposal.

              THE ROLE OF THE HEA IN WORKFORCE PREPARATION

    Although it is not commonly thought of as such, the HEA is a 
powerful tool for workforce preparation. In fact, it is the Federal 
Government's largest workforce training program. Roughly half of the 
almost two million community college students who receive Pell Grants 
are enrolled in occupational education programs, and the overwhelming 
majority of proprietary school recipients are enrolled in programs 
designed to prepare them for specific jobs. Also, most of the millions 
of American students who are enrolled in general education programs 
correctly assume that their studies will ultimately lead to greater 
earnings. Surveys indicate that the primary reason people attend 
college is because they believe it will help increase their employment 
opportunities. As the committee is well aware, the spread in earnings 
between those who have just a high school diploma and those who have 
attained college degrees continues to grow. College has become an 
essential component of a middle-income lifestyle. Given the essential 
and irreplaceable role that Congress plays in making college available 
to less affluent individuals, it has an awesome responsibility to 
maintain a vital portfolio of student aid programs.
    As the committee is aware, the student aid programs give 
individuals the choice to attend the institution that suits them best, 
and, given this, the HEA cannot be directly structured to meet 
workforce goals. However, given the intensely competitive nature of the 
nation's postsecondary education system, we firmly believe that the 
HEA's system of providing individuals with the option to receive the 
education and training that suits them best ultimately serves the 
nation's economy well.

        PROTECTING THE FEDERAL INVESTMENT IN COMMUNITY COLLEGES

    The HEA also plays selected roles in helping institutions offer 
high quality workforce and other programs. Much to the distress of 
community colleges across the country, the leadership of the House 
Committee on Education and the Workforce is currently supporting 
legislation that would undermine key sources of support for community 
colleges. We expect that the HELP Committee will be asked to support 
this same ``single definition'' of institution of higher education, 
which would make for-profit institutions eligible for programs such as 
Title III-A, Strengthening Institutions, Hispanic Serving Institutions, 
International Education, etc. In addition, scores of non-HEA programs 
whose eligibility is keyed to HEA definitions would suddenly be opened 
to proprietary schools, including the Carl D. Perkins Vocational and 
Technical Education Act, National Science Foundation programs, and many 
others. Community colleges strongly oppose this change and ask the 
committee to reject such a change. However, we continue to support 
giving students the option of using student aid funds at the 
institution of their choice. And student aid comprises more than 95 
percent of all HEA spending.
    The single definition will substantially reduce funding for 
nonprofit colleges, many of whom are struggling financially. This is 
particularly so for the Hispanic Serving-Institutions (HSI) program, 
where grant funds are relatively accessible once an institution 
qualifies as an HSI. According to Department of Education data, the 
single definition would allow 107 for-profit institutions to become 
eligible for the program. Currently, 243 colleges participate. The 
effect on Title III-A, the Strengthening Institutions program, would be 
equally dramatic for community colleges, many small, struggling 4-year 
colleges, and other financially constrained institutions.
    Using a single definition would greatly expand the pool of eligible 
candidates for HEA institutional grants and many other grants. This 
does not create parity between institutions, as has been asserted, 
because the institutions to which these funds would be awarded are not 
the same. For-profit institutions are necessarily concerned with 
delivering profits to their shareholders or owners. Non-profits are, by 
definition, dedicated to serving the public interest. We commend the 
entrepreneurial nature of profit-making institutions. However, granting 
for-profit colleges access to non-Title IV programs will simply 
increase corporate earnings. It is one thing to give a student the 
choice of attending a for-profit institution, and quite another to 
channel Federal funds directly to support for-profit businesses and 
thus reduce the funds needed by our institutions that, by charter, 
provide access for our nation's neediest people. We note that the 
average community college tuition is $1,905. The average tuition at a 
2-year degree-granting proprietary school is more than five times that, 
at $10,500.

  ELIMINATING THE ``50% RULE'' BUT MAINTAINING AN ED ROLE IN DISTANCE 
                          EDUCATION SAFEGUARDS

    Distance education is tremendous and exciting development in 
American higher education. According to the NCES, More than three 
million students attending colleges and universities are now taking 
distance education courses. Distance education is especially important 
in rural States such as Wyoming. Consequently, AACC supports repeal of 
the so-called 50% rule, and most other differential treatment of on-
campus and distance education. However, AACC believes that the rule 
must be replaced with an additional limited safeguard against program 
abuse.
    The 50% rule was included in the 1992 HEA amendments to address the 
fraudulent activities of many correspondence schools. These schools had 
high default rates and a disproportionate record of fraud and abuse of 
student aid funds. In general, the 50% rule denies Title IV eligibility 
to schools that offer more than 50 percent of their courses by 
correspondence, or have 50 percent of their students enrolled in such 
courses.
    Despite the widespread impression that the 50% rule has outlived 
its relevance, it generally has not prevented the expansion of distance 
education at schools that also offer classroom programs. This is 
because telecommunications courses (primarily those offered by 
television, audio, or computer) are not considered correspondence 
courses for degree programs if the number of telecommunications and 
correspondence courses do not equal at least 50 percent of the courses 
offered by the institution. Some of the colleges that are deeply 
involved in distance education and are pursuing a 100 percent distance 
education program have been included in the Department of Education's 
Distance Education Demonstration Project, created in the 1998 HEA 
amendments.
    The Internet has made the delivery of post-secondary education more 
flexible and available. It reaches rural areas and offers new 
opportunities for working adults. Students can read school 
advertisements, enroll and take courses, and even apply for financial 
aid without leaving home. This is a boon for students unable to study 
on campus due to geographic location or conflicting responsibilities. 
It also means that the unscrupulous can easily reach millions of new 
students with little more than a pop-up advertisement. Any benefits 
from distance education could be overshadowed if prudent steps are not 
taken to prevent fraudulent providers from exploiting students and the 
Federal Government.
    Consequently, we think that ED's Distance Education Demonstration 
Program should serve as the model for a permanent program to allow 
individual schools to receive waivers of the 50% rule. This approach 
recognizes the importance of and increasing interest in distance 
education, but protects students and student aid programs from being 
taken advantage of by easily accessed and highly advertised programs 
that do not provide quality education.
    Finally, we firmly support the role of accreditation in assuring 
quality education. But if institutions that offer most or all of its 
programs by distance gain eligibility for Federal student aid programs, 
the need for additional oversight extends beyond accreditation. 
Ensuring program integrity is clearly a responsibility of the Federal 
Government, on behalf of American taxpayers. Opening distance education 
with no limitations, or without additional oversight by the Department 
of Education, is an invitation for increased fraud and increased loan 
defaults. We hope that the committee will look favorably upon our 
modest proposal to provide an additional safeguard in this rapidly 
evolving area.

      PUTTING REAL FACES ON THE VALUE OF THE HIGHER EDUCATION ACT

Desiree
    Desiree came to Laramie County Community College's TRIO program in 
fall 2002. She was a divorced mother of four young children. She 
received no support from her ex-husband. She was surviving on public 
assistance, food stamps, Section VIII housing, and financial aid that 
did not cover her full need. She was enrolled full-time in the LCCC 
Radiography program. Her cumulative credit hours earned were 105, nine 
credits over the limit allowed by Federal financial aid guidelines to 
complete a 2-year degree. Her GPA was 3.163, not bad for a full-time 
student and mother enrolled in a very demanding academic program.
    But Desiree was struggling. Worries about finances, grades, 
children, and the continual jumping through hoops for her public 
assistance dollars were taking a toll. She sought assistance from TRIO 
for more effective study skill strategies, motivation, career 
exploration, budgeting, and financial aid/scholarship assistance.
    During monthly appointments with her TRIO advisor, Desiree 
developed effective study strategies which gave her more quality time 
with her children. Without funds to pay for extra day care she brought 
her children with her to TRIO sponsored academic workshop so she would 
not miss out on valuable information that ultimately helped her succeed 
in her educational goals. Through TRIO Desiree learned to carefully 
budget her limited financial aid dollars, cutting her living expenses 
to the bare bones. She learned to make wise decisions regarding school 
loans, and she was successful with scholarship applications. Despite 
the scholarships, PELL grant, and loans, Desiree still had a $1,000 
unmet financial need to attend LCCC. LCCC's TRIO granted her a Federal 
TRIO grant aid award of $500 in February 2003.
    External motivation was soon replaced with self-motivation as 
Desiree grew confident in her abilities to be a good student, a good 
mother, and a good financial planner. She continued to work with TRIO 
to develop a resume, plan job search strategies, and develop effective 
interviewing skills. Desiree could see the light at the end of the 
tunnel. Graduation was within her grasp, and the promise a well-paying 
position was in the near future.
    Desiree's drive to succeed despite her challenges, and her 
willingness to work regularly with her TRIO Advisor, helped her achieve 
her educational goal. She graduated in August 2003, passed her National 
Board Exam for Radiography, and took a radiography technician job in 
Nebraska. Desiree reports that she is doing fine, loves her work, and 
is proud to support her children without public assistance.

Pamela
    In August, 2002, Pamela, a 31 year old single mother of three young 
children, ages 6, 4, and 3, came to LCCC seeking financial and 
emotional assistance to become a Certified Nursing Assistant. She had 
been referred by the Safe House Sexual Assault Center for battered 
women in Cheyenne, Wyoming, to the Transitional Services Program at 
LCCC. She came through the doors broken, terrified, wounded and still 
had black and blue bruising around her eyes and cheek. Pamela bravely 
entered our doors and asked for help. She and her children were living 
at the safe house and her husband of 7 years was incarcerated for 
domestic violence. Pamela didn't know how long he would be in jail and 
she knew that time was of the essence. It was time for her to gain her 
independence and find a way to support her family. She saw education as 
the pathway to that independence.
    From the time she was a small child growing up in Alaska she 
dreamed of becoming a nurse. Instead she married a man from Wyoming, 
moved here and they began their own family business. Pamela's primary 
job was stay-at-home mother. Sadly, over the years, she became a victim 
of her husband's rage and frequent beatings. Although she never stopped 
dreaming of becoming a nurse, her life now was a matter of survival for 
Pamela and her children. Through a series of events and the support of 
family and friends, Pamela was able to report her abuse and receive the 
help she so desperately needed.
    Through the help of Cheyenne Housing Authority, Pamela and her 
children moved out of the shelter and moved into a mobile home. Because 
it was too late to apply for financial aid, the Transitional Services 
Program, funded in part through Carl D. Perkins Vocational and 
Technical Act, 1998, paid her tuition, and bought her books, CNA 
uniform, stethoscope, CPR certification, and provided mileage 
reimbursement for her to attend classes at LCCC.
    By the end of fall semester 2002, Pamela successfully completed her 
CNA classes and the Transitional Services Program paid for her to take 
her State nursing board examination. She passed the exam and found 
gainful employment at a local nursing home caring for the elderly. 
Pamela reports that she is the happiest she has been in her adult life. 
She loves her work, she is financially independent, and her family is 
continuing to heal from the wounds of domestic violence. Pamela is 
continuing to take classes at LCCC. Her ultimate goal is to become a 
Registered Nurse--a childhood dream come true!
    Thank you for your consideration of these views. I would be pleased 
to answer any questions that you might have.
    Response to Questions of the HELP Committee From Charles Bohlen
    Question 1. I want to highlight something from your written 
testimony that I think is incredibly important. You point out that this 
nation has a desperate shortage of skilled workers, and I tend to 
agree. Unemployment decreases significantly as an individual's level of 
education increases. Can partnerships between local businesses and 
institutions of higher education help to address this shortage of 
skilled labor, and what can Congress do to facilitate the development 
of those partnerships?
    Answer 1. Local business and institutions of higher education 
partnerships are vital for the economic well-being of our communities 
and thus our States and our nation. Higher education institutions must 
be responsible, adaptable, and willing to tailor their education and 
training to match the skill competency needs of these businesses. At 
the local level, community colleges are best positioned to meet these 
needs. At the State and regional level, universities must be ready to 
respond to the higher level research and skills development needs of 
their respective areas of service.
    Small companies typically are cash strapped because of the demands 
of competing in a global economy. This means then that small businesses 
do not have funds to adequately prepare and maintain a technical work 
force. In addition, many small business owners believe that since their 
role is to provide jobs, it is government's role to develop a skilled 
and ready workforce.
    Congress can facilitate the development of these partnerships 
through a number of strategies. Community colleges should be recognized 
as primary providers of skills training for businesses needing 
employees with less than baccalaureate level skills. A big step would 
be the passage of President Bush's Community-Based Job Training Grants. 
I suggest that these grants be allocated to States and targeted to 
business/community college partnerships. In addition, funds such as WIA 
need to be easier to access. The profile of qualified recipients is too 
limiting and funds are not typically available to those I call the 
under-employed; i.e., working adults who are not in jobs with livable 
incomes. My college, Laramie County Community College (LCCC) in 
Cheyenne, Wyoming, is a college of about 5,000 students serving an area 
of about 100,000 people in our two-college area. Only 20 people are 
attending the college on WIA funding. These figures support my argument 
that WIA funds are too restricted.
    Many companies need workers with moderate technical skills that can 
be acquired through shorter-term training that is less that a 1-year 
certificate or associate's degree. For instance, LCCC helped prepare a 
technical labor pool for Lowe's and other distribution centers by 
offering a Certified Warehousing Specialist Program of 150 clock hours 
or 10 credit hours. Pell, Carl Perkins, and Workforce Investment Act 
rules are almost impossible to fit to these types of training that are 
not degree-oriented but do prepare people for a job that provides a 
livable income.

    Question 2. In your testimony you highlight the enormously 
successful partnership between the Lowe's regional distribution center 
and LCCC. You point out that Lowe's may have had some reservations 
initially, as they had never participated in a similar program with 
other institutions of higher education. What do you think encouraged 
them to buy into the partnership with the local community college, and 
can that type of partnership be replicated in other communities?
    Answer 2. According to Lowe's representatives, they elected to 
enter into a partnership with LCCC because of the quality of the 
curriculum that we offer and because of the college's customer-driven 
rapid response to the skill development needs of Lowe's, and the ready 
availability of State of Wyoming Training Funds. The curriculum, Quick 
Start Certified Warehousing and Distribution Specialist, was licensed 
to the Wyoming Business Council through an agreement with the State of 
Georgia's Department of Technical and Adult Education Department. I do 
wish to note that currently the State of Wyoming Training Fund has run 
out of funds until July 1, 2004, and thus if another company such as 
Lowe's wished to form such a partnership, LCCC would not be able to 
respond since Federal Funds do not have the flexibility needed. 
Possibly a small number of citizens who meet WIA eligibility could be 
funded.
    In Wyoming the community colleges share training curricula but 
there is not a national clearinghouse for training curricula. LCCC is 
even willing to pay for training curricula but there is not a single-
source clearing house. Congress could consider funding and establishing 
such a clearing house in cooperation with a national entity such as the 
American Association of Community College (AACC).
    In summary, community colleges and even many regional universities 
are prepared to develop training partnerships with businesses. Federal 
funds are not available to pay for the training that would come out of 
these partnerships.

    Question 3. You mention in your written testimony that Community 
Colleges are dependent on the Pell Grant program. Much discussion 
around the current reauthorization of the Higher Education Act has 
centered on increasing available loan limits to undergraduate students. 
Can you think of an argument, from the community college perspective, 
against raising loan limits?
    Answer 3. First of all, community colleges' primary emphasis is on 
access, and we would never want to do anything that threatens access. 
This would not be in the long-term best interest of our nation. For the 
overwhelming majority of our students, current maximums are sufficient.
    In terms of loans, community colleges are primarily concerned about 
potential over-borrowing and the tremendous consequences that follow 
for years when students default. Typically community colleges, through 
their vocational/technical or career programs, prepare people for 
technician level knowledge-based positions. While these jobs provide 
livable incomes, the earning levels are not such to allow the repayment 
of high levels of debt.
    Community colleges believe that even if loan maximums are not 
raised, but most definitely if they are, community colleges must be 
given more flexibility to lower loan maximums for entire classes of 
students, such as first-time students who need large amounts of 
remediation. There is current limited authority in this area and it has 
proven to be insufficient.

    Question 4. You point out in your testimony that access to college 
is a challenge for many students, despite efforts from the Federal 
Government to provide assistance to attend college. I agree that access 
is a challenge and one that I anticipate working closely with my 
colleagues to address. On the other hand, I believe retention and 
persistence toward graduation are every bit as essential as the 
opportunity to enroll. Can you comment on how Congress could help 
improve the retention and persistence of undergraduate students?
    Answer 4. I have a great concern about the Federal Government 
regulating retention and persistence. One size just does not fit all. 
Many students at my community college are not attending necessarily to 
graduate. Many are attending to develop the skills necessary to acquire 
a livable-income job. In addition, a growing number are seeking a 
specialized certification, such as the various Microsoft network 
certifications. Other students take credit courses that are part of a 
short-term training program such as the Quick Start Certified 
Warehousing and Distribution Specialist mentioned in response number 2. 
All of these students will have completed their goals without pursuing 
a degree. What then would be the definition of successful retention and 
persistence of these students?
    At LCCC, we found that tough economic times for us during the 90's 
forced us to look at the bottom line and thus at efficiencies. It 
became very apparent that quality instruction and retention efforts 
were the best ways to keep classes full and thus increase our 
efficiencies.
    I do understand that this is an important issue and that far too 
many degree-seeking students are not completing their degrees. One 
thing that Congress can do to improve post-secondary educational 
outcomes is to ensure that high school students take and succeed at a 
rigorous curriculum and enter colleges ready to do collegiate work.
    Another idea is to provide greater grant assistance, particularly 
for Pell Grants. One of the primary factors mitigating against 
graduation is the fact that community college students have to work to 
finance their college and other obligations. While I believe that 
students receiving financial aid should support their education through 
work, I also know that students should work no more that 15 hours per 
week if they are going to be academically successful. Thirty percent of 
all full-time community college students also work full-time. These 
students clearly need more resources. Another unfortunate reality is 
that part-time students, who are a majority of community college 
students, have a harder time making it to graduation and even those 
that do graduate, have to ``stop-out'' numerous times before 
completion. The graduate who ``stops-out'' and then returns would not 
be seen as a success with a one-size fits all definition of retention 
and persistence.

    Question 5. You bring up an issue that I have followed closely for 
several years. You recommend repeal of the ``50% rule'' as it applies 
to e-learning, or online distance education. I believe access to higher 
education is synonymous with flexible attendance, and distance learning 
holds great promise to open the doors of higher education to the most 
remote of communities. While I agree that distance learning programs 
should be eased into Title IV eligibility gradually, I am concerned 
that we not create two separate standards for e-learning programs and 
traditional schools. Can you comment on your efforts to develop 
distance learning programs and the successes and challenges you've 
encountered, as well as briefly comment on AACC's proposal for distance 
learning?
    Answer 5. LCCC was a pioneer in online instruction. We have 
developed a large selection of online instruction courses by offering 
our faculty incentives to develop online courses and to teach online. 
Frankly, part of our motivation to move into distance education was 
fear of losing enrollment to Western Governors University (WGU). Our 
faculty responded to our call to develop online courses and soon LCCC 
had more online students than WGU. We find that most of our distance 
education students are from our service area or became familiar with 
LCCC while they were stationed at F. E. Warren Air Force Base.
    LCCC has closely monitored quality, retention, and pass rates by 
comparing on-campus courses to the same courses taught online. We find 
no quality differences. Faculty are now even blending online course 
delivery with campus-based courses by using the online materials to 
supplement the campus-based courses. Currently ten percent of LCCC 
enrollment is online. This is far from fifty percent.
    I believe AACC's proposal has merit. LCCC is being held to a high 
standard for distance education courses by our regional accrediting 
agency, the Higher Learning Commission (HLC) of the North Central 
Association. We will not be able to offer degrees solely online until 
we get approval from the HLC. We currently are seeking that approval by 
demonstrating that we have courses equivalent in quality to our on-
campus courses and that we provide adequate support services to 
distance education students.
    Not all distance education providers are accredited by a regional 
accreditation organization, and thus review and approval by the 
Department of Education would be a way of assuring quality to the 
consumer and to reduce the risk of abuse by unscrupulous providers.

    Question 6. You point out that degree programs provided from 
traditional institutions can avoid the restrictions in place as a 
result of the 50% rule as long as the institution does not offer more 
than 50 percent of its courses through this method of learning. 
According to a recently released GAO study, the number of institutions, 
both traditional and online only, that will reach this threshold in the 
next few years is only the tip of the iceberg. Does the 50% rule limit 
future enrollment in LCCC or other institutions that would like to 
expand their distance learning programs, especially in Wyoming, where 
distance is a major issue for student access to higher education?
    Answer 6. LCCC and all Wyoming higher education providers are a 
long way from the 50% rule and thus the rule is not an issue for us. 
With respect to other providers that may wish to serve Wyoming, the 
AACC proposal for having the Department of Education review and approve 
these organizations would reduce the exposure of Wyoming residents to 
inferior distance education programs.

    Question 7. You mention the story of two students that illustrate 
perfectly my feelings about higher education. These two students took 
advantage of available resources and, together with a commitment from 
their institution to help them succeed, left the college with a degree 
and skills to succeed independently of public assistance. Both of these 
students would be described as ``nontraditional.'' In your view, is 
Congress doing enough to help nontraditional students, and if not, what 
could we do better?
    Answer 7. In my opinion there are a number of hurdles that are 
currently limiting higher education for the ``non-traditional 
student.'' These hurdles could be lowered through Congressional action. 
It is almost impossible for people receiving Temporary Aid for Needy 
Families (TANF) to attend college to develop the necessary skills to 
escape from low wage jobs. TANF needs to be restructured so that it has 
a stronger ``Education First'' basis.
    As I mentioned earlier, Workforce Investment Act (WIA) funds 
typically are not available for under-employed individuals.
    There is a need for more funding for supplemental/support programs 
such as TRiO so that more colleges could have these programs that 
assist non-traditional students to overcome the barriers that block 
degree completion. Both people I gave as examples are typical non-
traditional students. It took just a little supplemental support, 
mentoring, and financial aid, to move them to completion.
    Regarding Title IV of HEA, there is a need for greater flexibility. 
Non-traditional students need the opportunity to receive aid in the 
fall, spring, and summers. The old traditional semester system does not 
serve the non-traditional student who needs to finish her/his degree in 
as short a period of time as possible. Because of family requirements, 
it is important that these people get into the workforce as soon as 
possible.
    Some other things that Congress could do would be to:
     provide more funds for child care services;
     change the income protection allowances in the ``need 
analysis'' formula to provide greater assistance to these students; and
     change the HOPE Scholarship tax credit to allow the credit 
to cover books, fees, supplies, and equipment. Also, changing the 
Lifetime Learning tax credit to cover more of non-credit students' 
educational costs would help. Currently the credit only covers twenty 
percent.
                  Prepared Statement James C. Votruba

    Mr. Chairman and Members of the Committee, thank you for inviting 
me to share my thoughts on workforce development and how it interacts 
with Federal higher education policy.
    I represent Northern Kentucky University, a 14,000 student campus 
located in the Northern Kentucky/Greater Cincinnati region with a 
population of nearly two million people. We offer a broad array of 
undergraduate and masters level programs as well as law. Last year, in 
a national study sponsored by the American Association of State 
Colleges and Universities, Northern Kentucky University was recognized, 
along with five other comprehensive universities, for its cutting-edge 
work related to community engagement. Where the major research-
intensive universities place a major focus on the discovery of 
knowledge, comprehensive universities focus on the application of 
knowledge to address the needs of the geographic regions that they 
serve. A defining quality of comprehensive universities is their focus 
on what we call the ``stewardship of place''.
    Our region is comprised of several very large multi-national 
companies including Procter & Gamble, Ashland Inc, and Toyota Motor 
Manufacturing North America. However, as we chart our economic future, 
we, like most other regions in the nation, look to growth in small and 
medium sized companies for the bulk of our new job creation. The 
University's approach to workforce development is built on this 
assumption.
    It is now well understood that the ability of a region such as ours 
to compete on a national and global scale depends on our capacity to 
recruit and retain intellectual capital. Indeed, our corporate and 
community leaders recognize that competition in this century will be 
for intellectual capital, particularly in the knowledge-intensive 
employment sectors. Knowledge workers at every level will determine 
whether a region has the capacity to compete.
    Six years ago, the University conducted a strategic planning 
process called Vision, Values, and Voices. Through small group 
conversations with over 300 corporate and community leaders from 
throughout the region, we analyzed the major challenges confronting the 
region and the role of our University in helping to address them. At 
the top of everyone's list was the workforce challenge described in 
four dimensions. First, leaders emphasized the need for more people 
prepared to fill jobs in the highest demand employment sectors. Second, 
they emphasized the need for convenient access to continuous education 
and training for those currently employed. Third, they emphasized the 
need for access to faculty expertise in support of company needs. 
Finally, they encouraged us to work with P-12 education to enhance 
workforce readiness. Based on these conversations, we have organized 
our workforce development efforts in the following ways.

1. Seeding Intellectual Capital
    We have made a major institution-wide commitment to programs and 
services designed to enrich K-12 education, particularly in science and 
mathematics. Last year, we had over 2,000 elementary, middle, and high 
school students enrolled in some form of math or science enrichment. 
Our goal is to increase this number to 3,000 within the next few years. 
Several years ago, I asked a Nobel Laureate in chemistry when he 
decided that he wanted to be a scientist. Without hesitation, he said 
that it was somewhere around the fourth or fifth grade and that this 
was true for most of his colleagues. Without ``seeding'' at an early 
age, too few workers will be prepared to assume knowledge-based jobs at 
the other end of the educational pipeline.

2. Preparing Intellectual Capital
    We have taken steps to insure that we are preparing graduates in 
fields where the job demand is strong. In 2001, we hired the National 
Center for Higher Education Management Systems (NCHEMS) to undertake a 
study of our regional workforce needs. NCHEMS reviewed current 
employment statistics and interviewed dozens of representatives from 
the full range of employment sectors. Based on what we learned, we made 
a major investment in expanding our information science programs 
including computer science, information systems, and information 
technology at both the undergraduate and graduate levels. Today, we 
produce more information science graduates than any other university in 
Kentucky. At the same time, our Fifth Third Bank Entrepreneurship 
Institute is infusing entrepreneurial principles across the 
University's curriculum. Students from any major may earn a minor in 
entrepreneurship studies and enrollments are strong.

3. Sustaining Intellectual Capital
    While preparing our students for high demand careers is one element 
of workforce development, we know that the knowledge that a college 
graduate takes into the workplace often has a very short shelf life. 
Now, more than ever, the ability of a company to remain competitive 
requires ``just in time'' access to training and education at every 
level in order to support economic competitiveness. This is a very 
different education than is typically found on a university campus. It 
is education in a form, at a time, and in a place that is optimally 
convenient for the worker and the company. While this type of education 
may sometimes involve earning a degree, more often it involves one or a 
series of non-credit education programs targeted at a specific company 
learning need. For example, a company may ask for a single program 
designed to improve their supply chain efficiency or a series of 
programs designed to prepare technical employees to become project 
managers.
    In 1999, we created the Metropolitan Education and Training 
Services (METS) Center to address these ``just in time'' corporate 
learning needs. In its first 4 years of operation, the METS Center has 
served more than 13,000 employees, mostly at the mid to upper levels, 
representing over 250 organizations. The METS professional staff work 
with area companies to identify corporate learning needs, design a 
program to address those needs, and then broker intellectual capital 
anywhere in the world on behalf of those needs. This last point is very 
important. On most campuses, units like METS exist to market the 
university's faculty expertise. If the company's needs do not match up 
with campus expertise, the company must look elsewhere. In contrast, 
the METS staff will use the expertise of our faculty when it's 
appropriate but, when what is needed is beyond the scope of our 
faculty, the METS staff will go anywhere in the world to broker the 
expertise necessary to meet the need.
    In 2003, we constructed a 43,000 square foot advanced corporate 
learning facility to house the METS Center. Located near the 
Cincinnati/Northern Kentucky International Airport and containing over 
$4M in instructional technology, this new state-of-the-art corporate 
learning facility is described as one of the finest in the nation. The 
facility was made possible by a combination of State funds to support 
the annual facility lease and Federal earmark funds to help support the 
technology. Because of these subsidies, we are able to serve small and 
medium sized companies that often cannot afford the full cost of the 
programs.
    What we are seeing today is the dawn of continuous learning as a 
key element in overall corporate and business strategy. Companies are 
finding that they must have strategies to insure that their employees, 
particularly those in knowledge-intensive areas, have access to 
continuous learning in support of their work. Where public policy 
becomes important is that, absent revenue streams to subsidize this 
form of workforce education, colleges and universities will tend 
towards serving larger companies that can afford to pay the full 
program costs and avoid the smaller and emerging companies that require 
the same access but are not able to pay the full cost.

4. Providing Intellectual Capital to Support Economic Growth
    Universities have intellectual capital in the form of faculty 
expertise that can support economic growth. Through our Small Business 
Development Center, individuals can get advice on starting a business 
and developing a business plan. Through our recently created Institute 
for New Economy Technologies (iNET), we connect companies with the 
expertise of our information science faculty and students who can 
assist in software development, systems applications, and computing 
structures. Not only does iNET serve companies with high quality and 
low cost expertise but the work also allows our faculty and students to 
address ``real world'' business challenges and, in the process, deepen 
their insights and understanding. Within the next 2 years, we will 
construct a new corporate/university partnership facility adjacent to 
the University to enable knowledge-intensive companies easy access to 
our faculty and student resources. At the same time, we are expanding 
student involvement in cooperative education and internship 
opportunities as a way of preparing them for their careers after 
graduation.
    The Small Business Development Center and the iNET are but two 
examples of what we call ``boundary spanning'' units designed to make 
the expertise of our faculty and students available to support economic 
development. In both our hiring practices and our incentive and reward 
systems, we are working to insure that our faculty sees working with 
local companies as an important element of their overall professional 
activity.

                      THE PUBLIC POLICY CHALLENGE

    What is described above are four dimensions of workforce 
development that are essential for the growth of our knowledge-based 
economy. They are roles that sometimes overlap but more often 
complement the work of both community colleges and major research 
universities. All four dimensions involve serving individuals and 
organizations who cannot afford to pay the full cost of the programs. 
Unlike traditional forms of instruction and research, each of which 
have both Federal and State resource streams to support them, this work 
is a cost center for most universities. It is rarely acknowledged at 
either the State or Federal level as an essential element of 
institutional productivity. Consequently there is no public 
accountability for such work and there are generally no government 
resource streams to support it.
    In contrast, the Federal Government has, over the past 50 years, 
generated the most powerful university-based research enterprise in the 
world by providing major resource streams that support both the 
individual faculty member engaged in the research and the institution 
where they are located. If universities are to be seen as a prime 
vehicle for fostering intellectual capital in ways that I have 
described above, it will require resource streams to support this work.
    In difficult financial times, the tendency is for organizations to 
concentrate on their revenue centers and reduce those programs and 
services that represent a cost. From a public policy perspective, this 
suggests that, when a university is under financial stress, their 
efforts to seed, develop, sustain, and provide intellectual capital for 
workforce development may be compromised. In my view, the work 
described above related to workforce development is essential for the 
nation's economic future and should be supported by the public policy 
process.
    At the State level, the Kentucky Council on Postsecondary Education 
has created a Regional Stewardship Trust Fund, which would provide 
funds annually to each comprehensive university to address challenges 
important to the regions that they serve. This initiative in Kentucky 
is a creative response to insure that universities are motivated and 
supported to focus their attention on local challenges including 
workforce development and the fostering of intellectual capital. A 
similar Federal initiative should be considered.
    It is important that Federal efforts to support workforce and 
intellectual capital development be aligned across agencies and 
programs. Also the Federal role in coordination is important. Northern 
Kentucky University's service area crosses State boundaries, and as 
such, our activities must be coordinated with several local workforce 
investments boards and two different State boards. Because our region 
crosses State boundaries our efforts become a matter of interstate 
commerce and an appropriate place for Federal leadership. This is just 
one example related to the Workforce Investment Act, but similar 
coordination challenges exist across Federal agencies and programs. Any 
effort that Congress can make to better align Federal programs will 
ultimately improve their collective efficacy.
    During the Higher Education Act reauthorization Congress should 
consider policies that support ongoing efforts to seed, develop, 
sustain, and provide intellectual capital for workforce development. 
One specific area of concern is the ever-increasing reliance on loans 
in the financing of higher education. The fear of debt and the burden 
of existing student debt can be serious impediments for adult learners 
seeking to continue their education.
    The American Association of State Colleges and Universities 
(AASCU), of which I am a member, supports several changes to existing 
student loan policy. Below are two recommendations that I wish to bring 
to the committee's attention at this time. I am submitting AASCU's May 
2003 letter to Chairman Gregg and Ranking Member Kennedy for the 
record.
    The two key adjustments to Federal loan policies that will be most 
beneficial to adult learners are:
    1. Promoting realistic and manageable student loan borrowing while 
recognizing the need to increase subsidized Stafford loan program 
annual limits up to $5,500 in each of the first 2 years, AASCU proposes 
to maintain the existing aggregate undergraduate loan limit. In 
addition, AASCU proposes to offset the first and second year loan level 
increases by giving institutions the authority to establish their own 
lower limits, as appropriate. This policy recognizes the wide variation 
in tuition and fees charged among the nation's institutions of higher 
education.
    2. Requiring extensive loan counseling before a student begins 
borrowing. Such counseling should include: regional data on starting 
salaries in all major fields; details on the amount of annual and 
aggregate debt needed to complete the student's academic program; 
sample payments for that amount of debt; the impact of forbearance and 
capitalization of interest on unsubsidized loans and forbearance; and 
detailed descriptions of repayment options.
    Thank you for the opportunity to appear before you today, and I 
look forward to your questions.

   Response to Questions of the HELP Committee From James C. Votruba

    Question 1. I find your discussion of intellectual capital 
extremely relevant. You've captured the essence of this hearing in a 
single phrase. As Dr. Bohlen stated in his testimony, skilled workers 
are the most important resource in our modern economy. Can you comment 
on the successes of your iNET and METS programs in preparing students 
with the skills they need to enter a high-skilled workforce and 
succeed?
    Answer 1. In my March 5 testimony to the Senate Committee on 
Health, Education, Labor and Pensions, I described four aspects of 
workforce development:
    (1) Seeding Intellectual Capital, which means reaching students 
long before they are ready for college, to ensure they have the 
necessary academic preparation and motivation to acquire the high-level 
skills needed for today's (and tomorrow's) knowledge-based economy;
    (2) Preparing Intellectual Capital, which requires post-secondary 
institutions to prepare graduates for those fields where the job demand 
is currently strong and will remain strong in the future;
    (3) Sustaining Intellectual Capital, which means providing 
continuing education and training in a form, at a time, and in a place 
that is optimally convenient for today's workers and their employers; 
and
    (4) Providing Intellectual Capital to Support Economic Growth, 
which requires us to identify and supply (broker) the best intellectual 
talent to meet the specific needs of workers and their employers.
    The Institute for New Economy Technologies (iNET), and the Fifth 
Third Entrepreneurship Institute of which it is a part, focus on 
numbers 2 and 4: Preparing and Providing. The Metropolitan Education 
and Training Services (METS) and the METS Center are involved in 
numbers 3 and 4: Sustaining and Providing. Obviously each of the four 
aspects of workforce development is also addressed by a variety of 
other units within the University.
    As stated on its web site, iNET serves as a link between high-tech 
companies and the university's human, physical, and academic resources. 
iNET focuses on providing emerging high-technology companies with 
qualified interns and co-op students, relationships with academic 
scholars, and close proximity to university research. iNET is a very 
young unit, having been in operation for less than a year. Yet, in its 
short history, it has developed very strong working relationships with 
about a dozen partners and is currently cultivating numerous additional 
partners. As one would assume, each partnership has unique 
characteristics and requirements, and iNET carefully matches the 
partner's needs with the university's resources.
    A brief description of six initiatives provides an idea of the 
diversity of projects that iNET is promoting. Each of these projects 
includes the use of our students, some employing undergraduate students 
and some graduate students.

Belcan Partners, LLC
    Working under the direction of Dr. Rebecca White, Belcan has 
engaged two graduate level students in a for-credit research project to 
conduct research for its EduNet24 K-12 education start-up initiative. 
Dr. White and the students are working on this project along with Dr. 
Linda Johnson, President of the Center for Information Technology 
Enterprise, an affiliate of Western Kentucky University. Drs. White and 
Johnson have worked closely together throughout the process, which is a 
win-win for the students and for the company.

PeopleStrategy, LLC
    PeopleStrategy has set up an office at the Madison E-Zone (a high 
tech incubator located a short drive from the university), where it 
employs three student interns per semester and will continue to do so 
for at least the next 2 years. The NKU interns are working under the 
direction of Bryan Everly, a software industry veteran, focusing on 
product enhancement to the HR@TheDesktop human resources system. The 
company was recently awarded an R&D Voucher Grant for $200,000; the 
Voucher Grant program is funded by the Commonwealth of Kentucky to 
stimulate economic development. Half of this money will be paid to NKU 
through our partnership with PeopleStrategy. Dr. Jasbir Dhaliwal from 
NKU's Department of Information Systems has been instrumental in making 
arrangements for this program.

Dirigo
    Dirigo, a software development company based in Cincinnati, 
approached the University about hiring student interns from our IT 
program to assist with the development of software products for their 
IBM and Microsoft contracts. They have recently hired the first two 
interns. As the business grows, Dirigo will look to significantly 
expand its relationship with NKU in the areas of both software 
development and product support.

dbaDirect
    We have recently opened a Marketing and Customer Service Center 
located in one of our classroom buildings. The Center will serve as the 
hub for dbaDirect business-to-business marketing efforts and will 
initially employ at least six to eight NKU students. These students 
will work and attend classes all on one campus and receive very high-
level training as a part of their co-op work experience. dbaDirectis a 
rapidly growing database management firm currently located in Florence, 
Kentucky, which is not far from the university.

Biology Contract Lab
    iNET is working with the Department of Biology to determine the 
potential for commercializing some of the excess capacity of our state-
of-the-art Environmental Scanning Electron Microscope located in the 
New Science Building. Students in a graduate entrepreneurship class are 
studying the opportunity and creating a feasibility study for this 
project.

Tri-ED student Internship
    We currently have an MPA student with an entrepreneurship 
specialization working as an intern in the Tri County Economic 
Development offices. He is learning about public policy and 
entrepreneurship and the role of both in building and marketing a 
region.
    In addition to the partnerships described here, iNET has placed 
student interns at a variety of other local companies. Companies 
employing student interns benefit not only from the work of the 
interns, but also from the knowledge and experience of the faculty who 
supervise the interns.
    The Fifth Third Entrepreneurship Institute (EI), of which iNET is a 
part, is heavily involved in Preparing Intellectual Capital. Through 
the EI, we offer an undergraduate minor in Entrepreneurship; more than 
half of the graduates have been non-business majors. Often these 
students are majoring in the arts and humanities, and they want later 
to apply this academic interest to the development of small businesses. 
Currently, there are 121 enrollments in this program.
    Beginning next year, we will offer the Entrepreneurship minor via 
the web which will greatly expand opportunities for persons who do not 
live close to a university or who cannot attend classes during typical 
class times. The Entrepreneurship Institute also offers a 
specialization in Entrepreneurship as part of their graduate-level 
business program, and they will soon be teaching entrepreneurship to 
high school students and to students enrolled at the local community 
college.
    The Metropolitan Education and Training Services' (METS) and the 
METS Center are involved in Sustaining and Providing intellectual 
capital. All or almost all of those served by METS are already in the 
workforce and succeeding to a certain extent. METS, therefore, can be 
thought of as operating in the skill enhancement niche, improving the 
knowledge, skills or other characteristics of workers who are already 
employed. In general, this aspect of workforce development is financed 
by the employing organizations, but not surprisingly, the smaller 
businesses are less able to afford this. As a result, we recognize the 
importance of METS providing some of its programs without cost to the 
employer.
    In the four and a half years since the inception of METS, its 
services have impacted more than 13,000 employees from more than 250 
employers. The majority of the programs were designed to meet the needs 
of a single employer, impacted only employees from that company, and 
were paid for by the company. However, in recognition of the fact that 
smaller employers are less able to afford training, especially training 
that is tailor-made for their employees, METS also provided programs 
that were open to employees from throughout the region; many of these 
programs were offered at no cost. One example of a free program is the 
monthly presentations, each featuring a different speaker, covering a 
topic of interest to those in the business community. Average 
attendance at these 7:30 a.m. talks is 100 persons.
    METS selects the best intellectual capital for all programs and 
services they broker or offer. They have a database of more than 400 
providers from which they select the best one to meet the needs of the 
client. Given METS high standards for providers, it is not surprising 
that they rely on fewer than 5 percent of the providers in the 
database.
    Success in regards to METS Services can be measured in several 
ways. Certainly, numbers served, as reported above, is one measure of 
success. However, there are others as well. METS has been very 
successful in helping employers understand the true levers of 
performance in their respective organizations. That is, they use 
performance assessments to isolate exactly what employees need to do 
better, faster, differently or more frequently (as well as what they 
need to stop doing) if their work units/organizations are going to 
become more effective/competitive. METS has conducted performance 
assessments involving more than 5,000 employees.
    A third type of success relates to METS' role as an ``employer 
advocate'' rather than an entity selling training. As a result, METS 
frequently finds itself in the position of talking employers out of 
wasting their limited resources on training programs that have no hope 
of actually changing behavior or affecting the bottom line. Experience 
has shown us that in the majority of instances where the ``presenting 
problem'' is described as a need for training, METS would be doing the 
organization a disservice by simply arranging for the requested 
training. That is because nothing would really have changed in the 
organization, the organization would have received no return on its 
investment, and the organization would be operating under the delusion 
that something had been done to resolve a problem or address an issue. 
METS does not track the frequency with which they discourage potential 
clients from using METS services, but they report that it is a very 
frequent occurrence.
    The METS Center opened last September. Located only one mile from 
our international airport, it is a 43,000 square foot facility equipped 
with more than $4 million of state-of-the-science technology designed 
to enhance training and expand its reach. Since its opening, the METS 
Center has contracts serving more than 13,000 employees. (Note: the 
similarity in numbers served by METS Services and by the METS Center is 
purely coincidental.) Programs offered in the METS Center are 
occasionally offered by METS; more often the facility, or parts 
thereof, is rented by an employer who either provides its own training 
and trainer, or asks that METS provide the trainer.
    As with METS Services, there are several indicators of the success 
of the METS Center. Certainly the number served is one indicator. In 
addition, we are finding that once trainers/facilitators/meeting 
planners realize the implications of the equipment at the METS Center 
and the things that they can do with it, they often expand the basic 
learning objectives for their programs.
    An example is the use of audience response technology which allows 
for instant, immediate, and confidential feedback from the audience. 
Trainers are initially unsure how to incorporate this into their 
training. However, once they are given a few suggestions, they 
dramatically alter the nature of their programs to provide richer and 
more valuable learning experiences. The high cost of audience response 
technology, like that of much of the METS Center technology, makes it 
unaffordable for all but the largest employers. By making it available 
at the METS Center, we allow employers of all sizes to incorporate it 
into their training.
    The availability of other technology similarly enhances what 
clients can do at the METS Center. For example, METS can digitally 
record discussions, so that there is a permanent record of how 
decisions were made, who agreed to do what, and what commitments were 
made at the meeting. As another example, anyone with access to a 
computer and the Internet, anywhere in the world, can watch a 
discussion taking place at METS. It can be watched live, when it 
occurs, or METS can host it on their media site so that people can 
watch it when they choose.
    One of the great successes of the METS Center is that we are saving 
local businesses from having to purchase their own equipment, which 
they might use less than a dozen times a year. Instead, they may rely 
on the equipment at METS and incur costs only when they actually need 
to use the equipment to advance the training and convening requirements 
of their business. This is especially beneficial for smaller companies 
who could not otherwise afford access to this high-tech equipment.
    Overall, we feel very confident that both iNET and METS are 
responding well to the needs of the region. The anecdotal feedback for 
both units has been resoundingly positive; the numbers served are 
impressive, especially in regards to METS; and the units are 
contributing to our fulfilling our roles in regards to preparing, 
sustaining, and providing intellectual capital to serve our region.

    Question 2. Facilitating partnerships between institutions of 
higher education for training and placement of highly skilled workers 
is one of the most critical improvements I believe Congress could make 
in reauthorizing the Higher Education Act. When you first met with 
regional leaders to identify the University's role in assisting the 
local business community, what was the response? How could Congress 
help institutions successfully build partnerships with business, 
similar to what your University has done?
    Answer 2. An important part of the University's overall strategic 
planning is to meet regularly with corporate and community leaders to 
explore the opportunity for partnerships and joint ventures. When these 
meetings were initiated in 1997, it would be fair to say that there was 
interest mixed with skepticism. Universities often have periodic bursts 
of enthusiasm around such initiatives but they often are not sustained. 
However, over the past 7 years, the business community has come to 
trust that the University takes these partnerships seriously and 
delivers on what it promises. Today, there is a high level of trust and 
recognition that the University is serious when it described its intent 
to be an engine for regional economic development.
    In building partnerships with the business community, it is 
important to have a clear understanding of what the University can and 
cannot contribute to economic development. It has been my experience 
that, too often, universities promise more than they can deliver. It is 
out of this concern about sticking to what we can realistically offer 
that we developed our focus on seeding, preparing, sustaining, and 
providing intellectual capital.
    There are several steps that Congress can take to support 
partnerships between universities and the business community. In my 
initial testimony, I emphasized that, both nationally and locally, we 
must do more to support the growth of small and medium sized companies. 
This is where much of our future job growth will occur. Universities 
are sometimes limited in their services to these smaller companies 
because the companies cannot afford to pay the full cost of programs 
and services. In difficult budget times, universities, like companies, 
tend to focus on expanding their revenue centers while reducing their 
cost centers. Currently, universities generate revenue in several ways. 
They teach students who pay tuition. They conduct externally funded 
research and receive overhead funding from the grants. They involve 
themselves in a variety of auxiliary enterprises such as bookstores, 
food service, and other initiatives that produce revenue. And they 
sometimes embark on entrepreneurial activities such as workforce 
development which is the focus of your deliberations. The problem is 
that, in order to make workforce development a revenue producer and not 
a cost center, the focus must be placed on serving large and prosperous 
companies that can afford to pay the full cost of the program. However, 
the need is to serve small and medium sized companies that generally 
require some form of subsidy.
    The Federal Government currently subsidizes the costs associated 
with university involvement in both teaching (student grants and loans) 
and research (overhead expenses). These subsidies allow universities to 
cover the cost of these activities. I believe that Congress should 
consider a similar subsidy that would help support the provision of 
workforce programs and services for small and medium sized companies 
that cannot afford to pay the full cost. Second, I believe that 
Congress should consider funding pilot projects that reflect ``best 
practice'' in university/business partnerships so that others can learn 
what works and why.

    Question 3. You mention in your testimony that your academic 
programs are targeted toward the local workforce needs, based on a 
study of employer responses. Clearly, such a study would cost the 
University a fair amount of resources to complete. Can you expand 
briefly on why that study was deemed a priority for your institution 
and how it has helped your institution match students with available 
high-growth jobs?
    Answer 3. Over the past 140 years, American public higher education 
has received enormous public support because it was viewed by the 
public, not as an end in itself, but as a vehicle for achieving a 
broader set of social and economic priorities. It was these 
universities that brought science to agriculture, provided the 
workforce for industrial expansion, produced research that supported 
everything from national defense to improved health, contributed to 
inter-generational mobility, and pushed back the frontiers of knowledge 
related to nearly every dimension of human life. My point is that 
American higher education has prospered because it has served the 
public interest.
    We made a decision 7 years ago that we were going to align 
ourselves with the needs of our region and build partnerships with 
business and community groups as a core element of our overall 
strategic plan. We felt that, if we became very focused and intentional 
in our support of the region, the region would, in turn, support us. In 
fact, this has been the case. In aligning our academic programs with 
the workforce needs of the region, we have not only served an important 
regional need but we have also been able to generate record levels of 
financial and political support.
    We have determined the region's workforce needs in three different 
ways. First, we collect and analyze regional workforce and economic 
development studies conducted by such groups as the Tri-County Economic 
Development Corporation and the Northern Kentucky Chamber of Commerce. 
There is very little cost involved in this analysis. Second, we use our 
own faculty and staff to test workforce needs in specific employment 
sectors. The cost for this analysis is relatively modest. Third, we 
employ outside consultants to give us in-depth analysis before 
proceeding with a major workforce initiative. For example, we employed 
an outside consultant to study whether we should develop a college of 
engineering. His study indicated that the region had ample access to 
engineering graduates but that we should produce more information 
technology graduates which we have done.

    Question 4. Small businesses offer the greatest opportunity for 
employment and broad skill development. As a former small business 
owner myself, I know that the typical small business does not have the 
resources, personnel or time to seek out partnerships with institutions 
of higher education. How can institutions of Higher Education be more 
responsive to the needs of small businesses?
    Answer 4. Universities have human, programmatic, physical, and 
technological resources that can greatly benefit small businesses, but 
the challenge is to connect the needs of the businesses with the 
appropriate university resources. We have undertaken several 
initiatives to assist with this connection. I will share two of them, 
with the understanding that they exemplify what is possible when 
universities take an active role in regional stewardship.
    iNET, with which you are already familiar, was created specifically 
to connect the needs of the regions' companies, especially high-tech 
companies, with the university's human, physical, and academic 
resources. A good example of an iNET partnership that is serving small 
businesses is the partnership with the Madison E-Zone, a high-tech 
incubator located in nearby Covington, Kentucky. As part of this 
partnership, iNET has:
     Reviewed business plans submitted by entrepreneurs;
     Put together a team of students and faculty to study 
investment criteria and created an assessment tool that is being tested 
in the Kentucky Innovation Center program to determine the readiness of 
entrepreneurs for capital markets and equity investment;
     Critiqued investor presentations of entrepreneurs;
     Identified prospective employees and student interns for 
entrepreneurs;
     Created marketing and business plans for entrepreneurs.
    A second example has been our creation of a call center, NKU 
Connect. Universities are complex organizations, and it is often 
daunting for someone or some entity outside the university to connect 
with the particular office that might be able to serve their needs. To 
overcome this barrier, we are implementing a ``call center,'' staffed 
by persons who can listen to the caller's needs, determine whether the 
university has the necessary resources to respond to those needs (e.g., 
do we have the appropriate expertise) and then follow up to link the 
caller with the university resource. NKU Connect will not serve as a 
switchboard transferring callers to other offices; rather NKU Connect 
provides the follow-through to ensure that the caller--whether a local 
business person, a non-profit agency, or a community resident--is 
either provided with the services they are seeking or understands why 
the service cannot be provided.
    In addition to the challenge of connecting with the university 
resources, small businesses often have a resource challenge in regards 
to providing training and development for their employees. Our 
experience suggests there are a variety of ways in which institutions 
of higher education can respond to this challenge. A college or 
university can:
     Bring together the needs of multiple businesses to create 
critical mass regarding resources. Sometimes one organization will have 
five people who need training on Topic X, another will have three, yet 
another will have four. None of the organizations alone could afford 
the training, but if their resources are pooled, the training can take 
place;
     Underwrite low-cost or free services for start-up or small 
businesses that lack the resources to pay, by using ``excess'' revenues 
generated from the corporations and organizations who can afford to 
pay. Similarly, offer free workshops to address the needs of the 
region's businesses. Workshops provide both education and networking 
opportunities for small businesses.
     Offer small businesses or non-profit entities deeply 
discounted or free entry to training programs that have unfilled seats. 
Registration for training programs can be quite costly, sometimes 
pricing them out of the range of the small businesses in the region. At 
the same time, most ``public training programs'' have seats that go 
unused. Deeply discounting or ``comping'' the registration charge fills 
the seats and serves the small businesses.
     Ensure that owners of small businesses are included on 
University advisory councils. Their membership serves the university by 
ensuring that the small business perspective is represented in 
discussions. At the same time, it serves the small business by helping 
them develop relationships with key people at the university.
     Develop a mechanism for faculty to share their expertise 
with small businesses. This might be done by offering a free or low-
cost consulting service for business start-ups or by providing symposia 
where faculty share cutting-edge research that has direct application 
to local businesses.
    Overall, if universities are to serve small businesses, they must 
be aligned to do this work. The university leadership must emphasize 
the value of this work, there must be a reward structure in place for 
the faculty who donate their intellectual capital, there must be a unit 
that assumes responsibility for coordinating and promoting this work, 
and there must be adequate financial resources to ensure that serving 
small businesses does not draw resources from the university's primary 
mission to educate its students.

    Question 5. As a former small business owner myself and a merit 
badge counselor for the Boy Scouts Entrepreneurship merit badge, I'm 
curious as to why your school has placed such an emphasis on 
entrepreneurship. Can you describe briefly the institution's focus and 
successes with helping students understand the principles of starting 
your own business?
    Answer 5. Our efforts to create impact across campus with 
entrepreneurship education began with the creation of the Fifth Third 
Bank Entrepreneurship Institute at NKU (EI). We formed the EI in 1999 
with initial funding from the Coleman Foundation and then later funding 
from the Fifth Third Bank and Joseph Schmidlapp Foundations. The 
program was founded on a strategy of offering entrepreneurship to 
students who have traditionally been neglected by entrepreneurship 
education. From the start, we chose to offer a minor in Entrepreneurial 
Studies rather than a major so that students from across campus could 
take advantage of the course offerings, and because nearly every 
student at NKU is required to take a minor field of study.
    In addition to the minor, we now offer a graduate specialization to 
our students in the Masters of Business Administration (MBA), Masters 
of Science in Information Systems (MSIS) and Masters of Public 
Administration (MPA) programs. Beginning next fall, we will offer the 
entrepreneurship minor as an online program via the web, which will 
make it available to students regardless of where they live or when 
they are available to take classes.
    Entrepreneurship, creating value through innovation, is one of the 
fastest growing subjects in today's business schools. A number of 
factors are driving this interest; however, the primary force is the 
desire and need to compete creatively in both large and small firms. 
Our entrepreneurship programs seek to address this need in the regional 
community.
    The focus of our academic programs in entrepreneurship is on 
generating ideas based on creativity, opportunity identification, 
feasibility studies, start-up activities and early stage strategies, 
sound business practices, and new initiatives within corporate 
environments. Our overarching goal is to provide enrolled students with 
a unique opportunity to approach their careers from a paradigm based in 
integrated education, business partnerships, and creative solutions to 
business problems. Our programs have a general business and 
entrepreneurship skills content combined with applied research 
opportunities for students.
    Our educational objectives are to build a quality entrepreneurship 
education program by promoting the awareness of entrepreneurship as a 
career, teaching prospective entrepreneur show to establish new 
enterprises, grow, manage and maintain them efficiently, and offering 
the skills necessary to operate entrepreneurially within large, 
established organizations. Our programs provide students with 
contemporary, professional, applied, community-related, economic 
development, and international perspectives.
    Our courses offer the opportunity to combine an entrepreneurial 
mind-set with the management skills necessary to launch and build a 
successful venture. By approaching business management from an 
entrepreneurial perspective, we provide a new paradigm for business 
education, an approach that is based on ``productive'' thinking--
putting together the familiar in new, innovative ways. Thus, our 
entrepreneurship programs offer students exposure to a variety of 
topics. The broader the learning experience, the more creative 
``wells'' the student has to draw from for inspiration. In order to 
encourage this paradigm among students, our curriculum is 
interdisciplinary in nature. For example, subject areas may range from 
legal issues such as intellectual property protection and 
organizational structure to technology issues involved in new product 
or service development to issues of capital acquisition and financing.
    Prior to launching our new minor, we formed a campus-wide 
committee, including faculty from each of our colleges, to develop the 
curriculum for the minor. We were able quickly to gain campus-wide 
support and began to offer our first courses in fall 2000.
    Since the beginning of the Entrepreneurship Institute 3 years ago, 
we have had a number of significant accomplishments. For example, we 
have:
     Maintained strong and consistent leadership and support in 
the EI, the College of Business, and the University;
     Created and utilized an involved advisory council 
comprised of successful regional entrepreneurs and national leaders in 
entrepreneurship education;
     Created working committees of regional community leaders 
to assist with curriculum development, fund raising, program 
development, marketing, strategic visioning and serve as classroom 
lecturers, internship advisors and adjunct professors;
     Raised more than $1 million in grant money and an 
additional $1 million in private donations;
     Created a graduate specialization in Entrepreneurship;
     Began a successful ``CEO!'' student organization on 
campus;
     Expanded staffing of the EI by hiring a second faculty 
member in Entrepreneurship with a third one to be hired to begin in 
fall 2004; hiring an Assistant Director who has an MBA and more than 25 
years of experience as an entrepreneur; hiring a Research Associate; 
and hiring a Coordinator of programs;
     Created the Three Stage Entrepreneurial Assessment Tool 
used by the Kentucky Innovation and Commercialization Center program;
     Created a Rural Center for Innovation, Entrepreneurship 
and IT in Grant County, Kentucky to serve five rural Kentucky counties 
and hired a director to lead that effort;
     Developed and implemented the first annual high school 
contest--The Entrepreneurship Challenge--for students in 9th and 10th 
grades to come to NKU to compete for the chance to participate in a 
national business plan contest;
     Initiated a student created and managed company through 
one of our classes;
     Received an Innovation in Education Award from AACSB, the 
leading accrediting agency for Colleges of Business.
    It is also important to note that in our short history, more than 
half of our graduates with entrepreneurship minors have been non-
business majors.

    Question 6. In one of the two recommendations you make to this 
committee, you recommend appropriate loan counseling for student 
borrowers. Last Fall I introduced the Financial Literacy in Higher 
Education Act, which would encourage institutions to provide much more 
intensive financial literacy training than they currently receive, 
including the necessary skills to manage their student loans and budget 
their income as they leave the institution. Are there examples of 
institutions that you know of that are doing a good job at preparing 
their students with these skills?
    Answer 6. Both the University of California and the California 
State university (CSU) have systems in place to address this issue. For 
more information in this area, you may find the CSU's website http://
www.scumentor.edu, helpful. Another example source for information on 
college costs and loan repayment can be found at http://www.finaid.org/
calculators/. The benefit of your legislation, and the recommendation I 
offered, is that they will both build this information into the 
nation's student financial aid system. This systemic reform is 
important so that many more students can benefit from this knowledge. 
In addition, the recommendations I offered would require the 
institutions to provide students with salary information related to the 
student's course of study. This salary information provides much needed 
context upon which students can make intelligent decisions about the 
amount of debt to incur.

                 Prepared Statement of Beth B. Buehlman

    Mr. Chairman, Senator Enzi, and Members of the Committee: As the 
vice-president and executive director of the Center for Workforce 
Preparation (CWP), I am pleased to be here today to discuss the 
relationship between postsecondary education and our nation's ability 
to have a prepared, competitive workforce. The U.S. Chamber of Commerce 
is the world's largest business federation, representing the more than 
3 million businesses and organizations of every size, sector and 
region. CWP, an affiliate of the U.S. Chamber, focuses on workforce 
development and quality education issues. It helps businesses and 
chambers in their communities find, use, and build resources to support 
productive workplaces and develop a skilled workforce.
    Thank you for this opportunity to relate the challenges employees 
and employers face, as together, they strive to maintain a competitive 
American workforce. I would like to cover several points in my 
remarks--a skilled workforce is a bottom line issue for employers to 
remain competitive; postsecondary education is a necessary factor to 
achieving a skilled workforce; traditional concepts of postsecondary 
education may need broadening; and suggested policy considerations for 
the reauthorization of the Higher Education Act to address these 
concerns.
    Across America, employers of all sizes share the view that a 
skilled workforce is essential to maintaining competitiveness. Chambers 
consistently report that workforce development is among the top three 
concerns of their business members. In CWP surveys of small and medium-
sized businesses conducted over the past 3 years, employers report 
difficulty in finding qualified workers due to a lack of skills. Even 
more revealing were their responses when asked about the ability of 
their current workforce in meeting their future skill requirements. 
Within 2 years, about 30 percent of these employers no longer believe 
that the skills of their workforce will keep pace. Business quality, 
productivity and profitability depend on qualified workers who can 
perform on the job today and adapt to the new demands of tomorrow.
    Technology, demographics and diversity have brought far-reaching 
changes to the U.S. economy and the workplace placing increased demand 
on the need for a well-educated and highly skilled workforce. In 1950, 
eighty percent of jobs were classified as ``unskilled"; now, an 
estimated 85 percent of all jobs are classified as ``skilled''. Today 
few working adults have the education and skills required for a 
knowledge economy--only 40 percent of adults in the workforce in 2000 
had any postsecondary degree, associates or higher. In this decade 40 
percent of job growth will be in jobs requiring postsecondary 
education; those requiring associates degrees growing the fastest. 
Hedrick Smith states that, ``60 percent of our corporations are 
prevented from upgrading technologically by the low . . . educational 
and technical skill levels of our workers.'' Clearly, there is a 
greater need for more educated and highly skilled workers than ever 
before.
    One might think the answer lies in simply replacing unqualified 
workers with new, more qualified workers because that has been the 
response over the past 20 years. From 1980 to 2000 the size and skill 
of the workforce grew significantly. Baby boomers were in their prime 
employment years, women entered the labor force in large numbers, and 
the number of college-educated workers more than doubled. However, 
these trends have ended.
    The native-born workforce is aging--no new net growth is expected 
through 2020 in prime age workers. Immigrants and workers staying in 
the workforce longer are expected to account for all net workforce 
growth between now and 2020. Growth in workers with education beyond 
high school between the years 1980 and 2000 was 138 percent. Between 
2000 and 2020 it is projected to be only 19 percent. Most of the 2020 
workforce is already beyond reach of the K-12 system, which means that 
to upgrade skills, employers and workers will need to rely on 
postsecondary education.
    Unfortunately, these findings also suggest that the severity of 
these current workforce challenges is just a precursor to a 
disconcerting forecast for the future. Looking forward, it is estimated 
that sixty percent of tomorrow's jobs, while involving variations of 
current business operations and practices, will continue to reflect the 
rapid advance of technology, requiring skills that are only possessed 
by twenty percent of today's workers. Many of tomorrow's jobs--
estimated at forty percent--don't exist today. These jobs will most 
certainly require a workforce of highly educated workers, utilizing 
skills that have not yet been identified in fields and operations that, 
today, are only being discussed in theory. These forecasts have led 
experts and analysts to project that, in the future, 4 out of every 5 
jobs will require postsecondary education or equivalent training and 
that 75 percent of the today's workforce will need to be retrained just 
to keep their current jobs.
    To correct these deficiencies, remedy the current workforce dilemma 
and alleviate the threat to American competitiveness and our economy, 
we must address the shortage of well-educated and highly skilled 
workers by ensuring employers and their employees have access to 
continuing education and training that is flexible and responsive to 
the rapid changes in the marketplace. Lifetime education and training 
is no longer an option, it is a necessity--for individuals, for 
employers and for the economy.
    Looking ahead, employers and workers are going to place greater 
reliance on postsecondary education to address the ever-increasing 
skill demands of a competitive American economy. When the Higher 
Education Act was first authorized in 1965, a recognized purpose of it 
was the development of the workforce--directly out of high school. What 
these policies did not anticipate is the role postsecondary education 
would have in the ongoing advancement of working adults--or what we 
generally refer to as non-traditional students.
    Mr. Chairman, any meaningful strategy to combat these workforce 
challenges must begin with a comprehensive education and workforce 
development system that incorporates the realities of a global economy. 
We are already attempting to improve our K-12 system, making it more 
competitive with other industrialized nations and leading to a more 
knowledgeable and highly skilled American workforce in the coming 
decades.
    However, it is equally important to note that the deficiencies and 
challenges within the existing workforce--individuals that are beyond 
the reach of on-going K-12 initiatives--also demand immediate 
attention. Absent a sustained investment in a comprehensive educational 
system that is responsive to the needs of employers and their incumbent 
workers, the American workforce will be ill equipped to compete in the 
global economy and American businesses will become less profitable and 
the nation's economic security less certain.
    Thus, the U.S. Chamber supports an education agenda that addresses 
both the long-term objectives of American businesses and workers, as 
well as the more immediate workforce deficiencies that are best 
remedied through reauthorization of legislation currently pending 
before Congress: the Higher Education Act, the Workforce Investment Act 
and the Perkins Vocational and Technical Education Act. Reauthorization 
of these policies would provide employees and employers continuing 
access to essential retraining and educational opportunities.
    Focusing on the reauthorization of the Higher Education Act, as the 
head of the Center for Workforce Preparation I think of at least two 
constituencies, the employers who need skilled workers and the adult 
workers who recognize the importance of postsecondary skills 
development. When one is determining how best to shape legislation with 
the worker in mind, it is critical to have an accurate understanding of 
the make up of the existing workforce and the obstacles they confront 
in the pursuit of their career aspirations.
    These working adults are trying to balance careers, family 
responsibilities, financial and other personal obligations to get the 
education they need to advance in the workforce. They cannot afford to 
reduce their hours on the job and risk losing valuable wages while 
incurring additional expenses, such as tuition and childcare. 
Similarly, employers want and need their employees to keep pace with 
the escalating skill demands of the workplace. Employers, especially 
small and medium-sized, are not able to interrupt their operations for 
employees who are attending classes that make them unavailable during 
normal business hours. We need to examine the policies that we have in 
place. Many only focus on the needs of traditional students, and miss a 
very large group--the non-traditional and working adult students.
    Seventy-three percent of all post-secondary students are non-
traditional students. That is to say, they are not individuals that 
graduate from high school, go immediately to a 4-year college and 
depend on parents for financial support. This large and growing segment 
of our population is mostly comprised of working adults who are seeking 
additional education and training to return to the workforce, remain 
current in their field, increase their earnings potential, pursue 
another job or consider a career change in today's demanding economy.
    In 1999-2000 almost three quarters of American undergraduates were 
nontraditional in some way: More than half (51 percent) were 
financially independent; Almost half (46 percent) delayed enrolling in 
college; 39 percent were adults 25 years of age or older; Almost half 
attended part-time (48 percent); 39 percent worked full time; and Just 
over one-fifth (22 percent) had dependents; 13 percent were single 
parents.
    In 1999-2000 most non-traditional students (82 percent) age 24 or 
older worked. Over 80 percent report that gaining skills to advance 
their current job or future career was an important consideration in 
their postsecondary education. Roughly one-third enrolled to obtain 
additional education required by their jobs.
    Census Bureau data show that monthly earnings increase 
significantly with increased education levels. From 1991 to 1999 the 
number of adults participating in any form of education increased from 
58 million to 90 million. Almost 45 million were taking work-related 
courses and 18 million were seeking formal postsecondary credentials. 
With longer workweeks, there is limited time for education and 
training. It is understandable then that working adults overwhelming 
prefer short, intensive programs and find it difficult to sustain even 
a part-time commitment over a period of 15 weeks--the length of the 
traditional college semester. Employees and employers both are seeking 
curriculums and training programs that impart relevant knowledge and 
skills that have a practical application in the workplace. The 
availability of flexible and modularized programs is key to meeting 
these needs.
    The strength of America's postsecondary education system is the 
diversity and types of institutions providing courses, programs and 
training for adult workers--2- and 4-year, public and private, and non-
profit and for profit. Some institutions are better able than others to 
provide coursework that is relevant to the workplace. Others can adjust 
more quickly to the needs of employers with just-in-time training. 
Regardless, the opportunity for many adult workers to access this 
education and training is limited by some of the provisions of the 
Higher Education Act.
    A number of provisions in the Higher Education Act are outdated and 
limit the ability of postsecondary education institutions to provide 
innovative solutions to America's workforce needs. The reauthorization 
of the Higher Education Act provides an opportunity at a critical 
juncture in the development of the economy for the members of this 
committee and this Congress to modernize it to meet the new competitive 
demands of the 21st century. To meet this objective the committee might 
want to consider: policies that foster collaboration among all types of 
institutions, including 4-year institutions, community colleges and 
proprietary schools; financial aid reforms to help nontraditional 
students obtain access to postsecondary and ongoing education; 
broadened distance learning to accommodate the lifestyles and 
geographic restrictions of nontraditional students; and a strong and 
viable proprietary postsecondary education industry.

Financial Aid Reforms for Less-Than-Halftime Students
    Working adults because they have jobs and often, family 
responsibilities, lack the time, money and flexibility to fit the 
traditional model of higher education. They typically are able to 
attend school on a less than halftime basis and therefore get very 
little financial aid from Federal or State sources. Working adults 
going to school less than half time are unable to receive assistance 
with living expenses that a dependent living in the same household 
would receive. Their expenses could be calculated more generously and 
their incomes more narrowly. Federal Direct Loan and Federal Family 
Education Loan Programs are not available to students taking courses on 
a less than half-time basis. All these barriers limit financial support 
for working adults and thus their ability to participate in 
postsecondary education or training. In addition, consideration could 
be given to year-round eligibility for Pell Grants providing more 
flexible and year round access to postsecondary education. So that 
there is a better estimate of the number of eligible Pell grant 
recipients for appropriations purposes, the committee might want to 
consider having the cost estimates for Pell provided by the Secretary 
of Education with input from the Secretary of Labor.

Modification of Financial Aid Eligibility to Shorter Term and More 
        Flexible Educational Programs and Greater Utilization of 
        Distance Learning
    The ``12 hour rule'' is a barrier to schools developing and using 
distance learning programs. This rule requires full-time students to be 
in a classroom for at least 12 hours each week to be eligible to 
receive student aid. In order to meet the needs of adult workers, this 
provision might be modified to include shorter credential programs, 
modularization of courses, open entry/open exit programming and 
distance learning. In addition, the ``50% rule'' that requires an 
institution to offer no more than 50 percent of its courses on-line, 
limits opportunity for adult learners. On-line delivery of programs is 
an effective way to reach adult workers that may not have access, time 
or ability to enroll in traditional classroom settings. Technology is 
making rapid changes to the workplace, and it has great potential to 
reach new learners and create new educational opportunities.

Incentives for Institutions That Develop Programs and Schedules for 
        Working Adults
    Programs that lead to degrees are often campus bound or have 
prerequisites that are difficult to meet. Programs that require 60 to 
75 credit hours are daunting when the student can take only three or 
four credits at a time. This perspective is exacerbated by the fact 
that adult workers may have industry-recognized certificates or 
credentials that are not recognized by traditional postsecondary 
institutions for credit toward a degree. Consideration should be given 
to applying the competencies developed through the certification 
programs toward traditional college credit. Additionally, because 
evening and weekend classes are not perceived as rigorous as more 
traditional scheduling by accreditation bodies, these courses are often 
offered for non-credit, denying working adult students the ability to 
accumulate credit toward a degree.

Establish Flexibility for New Collaboratives to Deliver Services
    As we face shortages of workers in specific fields such as 
healthcare and teaching, as we approach the possibility of millions of 
retirements from the Baby Boomer generation and as the need for working 
adults to increase their workplace skills becomes acute, new ways of 
delivering these services must be created. With the qualified teacher 
requirement under No Child Left Behind Act, teachers need access to 
professional development courses and may not have the time or the 
ability to travel distances to receive this training. Similarly in 
healthcare, access to training is critical. In addition to better on-
line coursework access, classroom instruction schedules and locations 
must be flexible enough to accommodate work schedules of employed 
adults. Within communities across the country there are community 
colleges, proprietary schools, and other education and training 
programs, available to meet these needs. However, more traditional 4-
year institutions may be geographically less available and require 
significant travel time in order to attend. In these situations, 4-year 
institutions may want the flexibility to collaborate with other 
educational entities in communities to deliver programs and services. 
Such flexibility may require a redefinition of eligible institutions 
and other considerations in order for students to remain eligible to 
receive financial aid and other supports.

Examine Differences Across Institutions and What Impact Different 
        Treatment by Federal and State Law has on Serving Adult Working 
        Students Efficiently and Effectively
    The Higher Education Act has multiple definitions of institutions 
of higher education and distinguishes for-profit and non-profit and 
public institutions. These multiple definitions are confusing and fail 
to recognize the maturation of for-profit institutions and their 
contributions. These distinctions also limit the ability of students to 
transfer credits they earn at for-profit institutions to other 
institutions. If students are required to retake courses, the cost of 
education increases. Private sector postsecondary institutions have 
developed focused, market-responsive and innovative approaches that 
result in immediate and effective improvements in the workforce. Their 
success demonstrates how free enterprise goals can harmonize with a 
public mission: to provide career-focused degree and non-degree 
programs for students seeking educational and economic advancement and 
to provide American business and industry with a skilled and 
knowledgeable workforce.
    These are just a few broad recommendations to align postsecondary 
education with the needs of employers and adult workers to become more 
skilled and remain competitive. Attached to this testimony are two sets 
of policy recommendations. One is from the Education, Employment, and 
Training Committee, the policy committee for the U.S. Chamber of 
Commerce. The other is from a partnership that the Chamber has formed 
with Corinthian Colleges, Inc., DeVry Inc., and Kaplan, Inc.
    I want to thank the committee for this opportunity to testify, and 
I would be happy to answer any questions you may have at the 
appropriate time. Thank you, Mr. Chairman.

   Response to Questions of the HELP Committee From Beth B. Buehlmann

    Question 1. I think you've hit the target with your discussion of a 
skilled workforce being essential to competitiveness. In your 
estimation, is higher education adapting sufficiently quickly to the 
needs of the workforce in the next two decades, and if not, how might 
Congress create appropriate incentives for institutions of higher 
education to focus more on the workforce preparation activities?
    Answer 1. Our policies in terms of adult workers are outmoded. They 
continue to primarily focus on traditional students, providing little 
or no options for non-traditional students, i.e. adult workers. There 
are two populations that higher education needs to address:
    1. Students entering postsecondary institutions directly from high 
school --Often high school students do not know why certain courses are 
being taught and they perceive that colleges or employers do not place 
much importance on the kinds of courses they are taking. Students must 
see the practical application of their learning because if they cannot 
clearly see how classroom studies translate to specific job functions 
and career progression, the lessons are forgotten as soon as they are 
taught. Postsecondary institutions must also understand that a large 
number of students entering college directly from high school are at a 
disadvantage due to a disparity between high school graduation 
requirements and college entrance standards.
    2 Adults in the workforce--Many restrictions in the policy hinder 
adult workers' ability to further their education and advance in the 
workplace. Financial aid restrictions for less than \1/2\ time 
students, Federal Pell grant regulations, the 50% rule with respect to 
distance learning, the inability to transfer certificate/credentials 
into college credit, lack of modularized courses all contribute to the 
barriers adult workers face when enrolled in postsecondary education.
    The reauthorization of the Higher Education Act (HEA) should allow 
collaborative efforts among postsecondary institutions to bring 
education to the students, including involvement by community colleges 
and 4-year institutions. For example, collaboration of this nature 
would be instrumental in bringing professional development courses to 
teachers to help them in meeting the ``highly qualified'' standard 
under the ``No Child Left Behind'' Act.

    Question 2. The Center for Workforce Preparation (CWP) conducted a 
survey of small and medium business and found that these employers had 
difficulty in finding qualified workers due to lack of skills. How can 
institutions of Higher Education do a better job of partnering with and 
meeting the needs of small businesses--where the real opportunity in 
America lies?
    Answer 2. Institutions of higher learning can work with chambers of 
commerce to become more labor market-responsive. Chambers are able to 
aggregate the needs of small and medium-sized businesses. Chambers 
working with proprietary schools is one good example of this type of 
partnership. These companies, comprising a now maturing industry, have 
identified the needs of business and have developed focused, market-
responsive and innovative approaches that result in immediate and 
effective improvements in the workforce.
    However, solving the workforce dilemma requires more than one 
solution and no one institution can do it alone. There must be 
collaboration with communities to help them identify and understand 
their resources and how to connect with them to serve the needs of 
local businesses. For example, Washington State has developed an on-
line resource that enables community colleges to connect course 
offerings to local businesses based on skills needed.
    The higher education community should be encouraged to become more 
active in workforce investment boards and ask chamber executives to 
serve on higher education boards and committees. This collaboration is 
important because it is a way to foster partnerships and increases the 
awareness of local labor market information and the needs of employers 
in communities.

    Question 3. Your comments today are very similar to comments that 
Chairman Alan Greenspan made to the Banking Committee a few weeks ago 
when he described a skilled workforce as the most important component 
of the changing economy. He asserted that the bulk of job creation over 
the next several years will be largely in the areas of highly skilled 
jobs, which is what you have also argued in your testimony. Do you 
anticipate that the next generation of available jobs are going to be 
high-wage to accompany their high-skilled nature?
    Answer 3. Technology, dempgraphics and diversity have brought far-
reaching changes to the U.S. economy and the workplace, placing 
increased demand on the need for a well-educated and highly-skilled 
workforce. In 1950, 80 percent of jobs were classified as 
``unskilled''; now, an estimated 85 percent of all jobs are classified 
as ``skilled''. Census Bureau data show that monthly earnings increase 
significantly with increased education levels. Working adults 
understand that without opportunities, they will be stuck in low-income 
jobs and many are working to change that. From 1991 to 1999 the number 
of adults participating in any form of education increased from 58 
million to 90 million. Almost 45 million were taking work-related 
courses and 18 million were seeking formal postsecondary credentials. 
Workers need opportunities for advancement. Employers need skilled, 
qualified workers to fill tomorrow's high-skill jobs. Higher education 
is vital a link between those two needs.
    In addition, if immigration is to play a role in filling the job 
deficiency, we must accommodate the needs of immigrants by focusing on 
literacy and English as a Second Language education. The Committee for 
Economic Development (CED) issued a brief from the business perspective 
regarding America's workforce after the Baby Boomers and the role of 
immigration in trying to fill the worker gap. For example, 14 percent 
of native-born workers are high school dropouts, while 37 percent of 
immigrants are high school dropouts (2000 census). If we are concerned 
about the skills of the workforce as well as the demographics, it is 
clear from these figures that immigration is not the only solution to 
the worker shortage we are facing. Not only is the potential number of 
workers leaving the workforce larger than other generations, it is the 
quality of their education and experience that will be lost--a loss of 
social capital as well as human capital. Immigrants are generally 
younger and do not have the 'social capital' of American workers, even 
if they are highly educated (CED Brief: ``America's Workforce After the 
Baby Boomers''; www.ced.org).
    Section 127, the Hope Credit and Lifetime Learning tax credit are 
outside of HEA but they need to be reviewed and modified in the context 
of providing incentives to employers and adult workers that encourage 
and participate in continuing education. Small and medium-size 
businesses, where 75 percent of new job growth will occur, are 
especially affected because they do not have the infrastructure that 
big businesses have to develop and provide training programs for their 
employees. There is a need to give individuals and employers options 
for advancement and change in the workplace. A recent survey conducted 
by Household International in December 2003 and featured in USA Today, 
reveals that 62 percent of men and 82 percent of women value tuition 
reimbursement and skills training over other non-pay benefits offered 
by employers.

    Question 4. Your discussion of nontraditional students is 
especially interesting. How significant of a barrier is the 50% rule in 
facilitating the needs of the developing workforce?
    Answer 4. The perception is that the 50% rule is a barrier. The 
Education, Employment and Training Committee (EETC), the policy 
committee for the U.S. Chamber of Commerce, unanimously agrees that 
bricks and mortar is not the answer. There is no available money to 
build new educational facilities. The focus should be on meeting needs 
in a variety of innovative ways.
    The 50% rule is an artificial barrier. Technology changes rapidly 
and through it learning can be brought to the people. Distance learning 
should be viewed as another education delivery system. Technology is 
pushing the learning curve and the rule is obsolete in an age where 
technology is such a large part of people's work and personal lives. If 
we require workers to use technology, how can we place limitations on 
learning? The 50% rule originally came about because of correspondence 
courses. Times have changed. In this new information age, the demanding 
high-tech global economy is creating newer and more innovative 
opportunities that require technological skills and knowledge. Our 
education delivery systems must keep pace if we are to remain 
competitive.

    Question 5. As you mentioned in your testimony regarding 
nontraditional students, many working adults would prefer shorter, more 
modularized courses that would reduce the amount of time they would 
have to spend in a single course. I understand that the University of 
Phoenix is one of a few institutions of higher education that is 
pursuing this route. Are you aware of any others, and what can you say 
about their success? Is this becoming a trend in higher education, or 
are institutions slow to accept changes of this nature?
    Answer 5. Institutions of higher education are beginning to 
understand the roles they must play in responding to the economy and 
their local labor markets. For instance, NOVA Southeastern University's 
Center for Continuing and Professional Studies (CCPS) is an expanded 
presence built on the foundation of the Office of Continuing Education 
and NSUCommuniversity. Both early units are incorporated with a dynamic 
infrastructure of programs designed for enriching personal and 
professional development. The CCPS develops, implements and maintains 
quality assurance for non-credit, non-degree, continuing education 
opportunities; professional development courses, seminars, workshops 
and programs; certificate programs for professionals; and profession-
specific provider status for license renewal and continuing education 
credits. The CCPS hallmark is independent and interdependent course and 
program availability. Each of the programs and courses is cross-
marketed and packaged to meet the personal and professional needs of 
participants.
    Proprietary schools such as Kaplan and Corinthian College are 
moving toward the idea of more accessible, modularized courses for 
working adults. Kaplan College Online enables students to earn an 
accredited college degree on their terms without job interruptions, 
travel expenses or hours spent searching the campus map. Students are 
able to study anytime, anywhere. Corinthian Colleges, Inc. is one of 
the largest postsecondary education companies in North America and 
serves the large and growing segment of the population seeking to 
acquire career-oriented education. The objective of the company is to 
fulfill the ever-growing educational needs of individuals seeking to 
obtain relevant, career-training skills in a number of marketable 
fields.

    Question 6. A recent GAO report asserted that providing financial 
assistance to less than half-time students, who are currently 
ineligible for aid, would have uncertain impacts. Are you familiar with 
that report and could you comment on its conclusions?
    Answer 6. Concerns about high default rates may be unfounded when 
it comes to adult workers because the GAO report is looking at students 
receiving a degree at the completion of their coursework, when the 
majority of adult workers do not necessarily require a degree to 
complete their studies and meet their intended goals as well as the 
needs of their employers. Working adult learners are in school to gain 
knowledge that will help them advance in the workplace. A degree is not 
necessarily the only desired end result. We need to find other ways to 
measure success or impact than just by number of degrees earned.
    Institutions of higher learning are limiting access to a very large 
number of individuals who enroll in school for a specific purpose and 
have a context for their learning. Modifying financial support to 
nontraditional students is only part of the solution. We have to change 
the entire culture in terms of providing support to less than half-time 
students. Reforms must take the whole package into consideration. 
Financial and support needs are not the same for adult learners and 
traditional students. Relatively few student support services are 
available to adult workers in the evenings and on weekends. 
Nontraditional students need more convenient access to services such as 
career counselors and key librarians. Even something as simple as not 
having convenient parking office hours for students to get parking 
passes while on campus on the weekends or after hours are things that 
can easily discourage nontraditional students from pursuing higher 
education. When faced with these obstacles, from their perspective, the 
message is clear: adult learners--NOT wanted.
    Finally, there are so many other areas of quality control in the 
law that the GAO's concern is a non-issue. A separate funding stream 
can be developed to provide financial aid for currently ineligible 
less-than-halftime students. The Secretary of Education recommends 
providing estimates for Pell. A more accurate estimate would result if 
it was jointly provided by the Secretary of Education and the Secretary 
of Labor.

    Question 7. The issue you raise in adult learners being able to 
transfer credit is one that I believe is critical in the current 
discussion of reauthorization. The House has introduced legislation 
that would facilitate better transfer of credit between institutions of 
higher education. Are you familiar with that proposal and could you 
comment on the House approach?
    Answer 7. Yes, I am familiar with the proposal and I believe that 
it is important to broaden traditional accrediting for nontraditional 
students by developing policies to promote the transfer of academic 
credits between institutions. Turning industry-recognized certificates 
into credits should also be allowed. This would be especially helpful 
for military spouses who need to be able to transfer their credits to 
other institutions when their families are relocated by the military.
    For courses not leading to a degree, but necessary to advance in 
the workplace and validated by an employer, a program should be 
designed to provide Federal student financial assistance through short-
term, low interest loans; employer incentives and tax policies. In 
addition, a panel could be created to study how to structure a system 
that provides students who have successfully earned several recognized 
certificates the option of creating portfolios that are accepted as 
official records/transcripts of coursework and grades that can be used 
toward obtaining a degree, and make recommendations to the Secretary of 
Education. Because CWP has experience in convening various stakeholders 
to address challenges in education, the workforce and other related 
issues, the Center could be a potential organizer of this panel.

    Question 8. You mention in your testimony that facilitating 
partnerships between 4-year institutions and other institutions of 
higher education in local communities could be beneficial for helping 
adult workers to receive advanced skill training. Can you expand on 
your recommendation as to how Congress could facilitate these types of 
partnerships between institutions for skills training?
    Answer 8. There are barriers to collaboration between institutions 
of higher learning. We need to look at policies to facilitate 
collaboration between 4-year institutions and other postsecondary 
institutions. Much of this must be done at the State level because of 
the role of States in licensing institutions of higher education. One 
option would be to have waiver authority at the State level for 
institutions of higher learning that want to collaborate. National 
accrediting agencies need to be part of this discussion so that 
appropriate accreditation measures are used.
    If there is a duplication of services, which institution receives 
credit for the student? This is important to determine because public 
institutions receive some of their State financial support based on 
Full Time Equivalency (FTE).
    Another recommendation is to form a national blue-ribbon panel to 
discuss the issue. A variety of stakeholders could be convened to look 
at barriers and make recommendations for two States to demonstrate 
this. CWP could convene this panel with businesses and accrediting and 
licensure bodies representing institutions included on the panel.

                Prepared Statement of Diana G. Oblinger

    Mr. Chairman and Members of the Committee: My name is Diana 
Oblinger and I am the Executive Director of Higher Education for the 
Microsoft Corporation. I want to thank you for the opportunity to 
appear today to provide a perspective on how higher education is 
preparing the workforce. I have spent my career either in higher 
education or working with it, so I believe I have a perspective on 
American colleges and universities, both from the ``inside'' as well as 
the ``outside.''
    Higher education has helped shape the socio-economic structure of 
American society. Higher education is critical in preparing the 
workforce for today, but especially for tomorrow. However, before I 
talk about how we are doing, let me say a few words about what we 
should be doing. I believe there are three things that citizens, 
employers, parents and students are asking of higher education. Those 
are to: Develop a skilled workforce; Provide social mobility; and 
Encourage an active and engaged citizenry.
    Skilled workforce. The competent, creative and continuously 
learning individuals created by U.S. higher education have redefined 
what a ``skilled workforce'' means. College is almost a pre-requisite 
in today's workplace. And, according to the Association of American 
Colleges and Universities (AAC&U) report, Greater Expectations, future 
jobs and careers will require higher levels of education than in the 
past. That education must enable individuals to be able to discover 
what one needs to know rather than just having static knowledge. AAC&U 
and many others have concluded that the type of employees needed in a 
knowledge-based economy are college educated people with mental agility 
and adaptability.
    Social mobility. For a country founded on the principles of equity, 
the opportunity to better oneself is a deeply held belief. As society 
has changed, that opportunity increasingly depends on access to quality 
education. Study after study has shown a strong correlation between 
education level and economic success. A post-secondary education 
enables people to interact with others from outside their sphere of 
childhood experience and to reposition themselves, sometimes recreate 
themselves, intellectually, socially, politically and economically. The 
United States has used higher education to encourage social mobility. 
For example, the first college to admit women as well as men was 
Oberlin College (1830). In 1847, the City College of New York was 
established to serve students from low-income families. The Land Grant 
Act (1862) provided for the education of the sons and daughters of the 
working class. In the mid-1800s, the first historically black colleges 
were created. The GI bill transformed access to higher education after 
World War II. And in the late 1960s we took another major step with the 
expansion of the community college movement.
    Active, informed and engaged citizens. Society also needs active, 
informed and engaged educated citizens. According to Jefferson, a 
democracy's success flows directly from the thoughtful participation of 
an informed and enlightened citizenry. Unless citizens are sufficiently 
educated, self-government is not possible. As a result, he felt it was 
imperative that the Nation ensure that suitable education be provided 
for all of its citizens.
    We expect that, in the process of their education, students will 
acquire the information and attitudes necessary to become good citizens 
and uphold a strong democracy. We have also learned that those who are 
well-educated participate more in their communities and vote more 
often. More importantly, an education grounded in civic responsibility 
helps citizens evaluate issues, making them better able--perhaps even 
more willing--to contribute to improving society.
    To a great degree, personal and professional success depends on an 
excellent education. And social well-being is tied to a well-educated 
populace. Although the benefits of higher education accrue to 
individuals, higher education ultimately is not a private good--it is a 
social, cultural and economic imperative for the nation as a whole. If 
education is an imperative, then we have the responsibility to not just 
ask how strong our educational system is, but to explore what we might 
do to make it even stronger.

                           HOW ARE WE DOING?

    We are fond of saying that American higher education is the envy of 
the rest of the world. The United States has been--and remains--first 
in the developed world in terms of the percentage of its population 
with an undergraduate or graduate degree. But, will that--and what it 
promises--continue?
    Access to post-secondary education is a good predictor of future 
achievement. Although the United States once sent the highest 
percentage of high school graduates to college, other countries have 
surpassed us in the past decade. In 2001 the United States ranked 13th 
out of 26 Organization for Economic Cooperation and Development (OECD) 
countries for entry rates into 4-year institutions; for 2-year 
enrollments we ranked 10th out of 26 developed countries. The point is 
not that the United States is doing poorly but that other countries are 
doing better and better.
    Unfortunately, significant numbers of high achieving, low-income 
students are not going to college. The highest achieving low-income 
students attend college at the same rate (78 percent) as low achieving 
high-income students (77 percent), according to the Education Trust. 
Looking only at students in the highest quartile in standardized tests, 
those from the most affluent families are more than twice as likely to 
go to college compared to those form the poorest families. When the 
Educational Testing Service compared college-going rates among high 
school students from high vs. low income families, they found rates of 
80 percent vs. 44 percent for 4-year attendance and 14 percent vs. 23 
percent for 2-year attendance.
    The number of students who attend college is linked, in part, to 
the affordability of education. This is particularly true for low 
income and minority students. A recent study estimated that for every 
$1,000 increase in tuition at a public institution, there was a 
corresponding decrease in enrollment of 4.4 percent for high-income 
students and 7.2 percent for low-income students. The National Center 
for Public Policy and Higher Education estimates that a quarter of a 
million prospective students were unable to attend college due to 
rising tuition or cuts in admissions and course offerings last fall.
    Of course, getting students into college is only one part of the 
challenge. Equally important is the capacity of post-secondary 
institutions to retain students and ensure that they successfully 
complete a degree--or whatever their individual goal might be--in 
reasonable time. Unfortunately, gains in college completion have not 
kept pace with gains in enrollment. What is unclear is the degree to 
which this represents the current enrollment and goal patterns of 
students. As more lifelong learners have entered the educational 
system, their goal is not necessarily to complete a degree, but to 
acquire the courses or skills needed for a new job or a promotion. The 
challenge of understanding completion rates has been exacerbated by 
students attending multiple institutions--sometimes simultaneously.
    However, it is important that we not just focus on where we might 
improve. We should also acknowledge the world-class education that so 
many of our college and university students receive. The last decade 
has seen increased attention being paid to effective learning 
environments, such as problem-based learning or undergraduate research, 
and to student services as well as a range of other programs that are 
designed to improve education. Our colleges and universities--and all 
the individuals who work in them--continue to be major contributors to 
so much that is good in our society.

                           WHAT HAS CHANGED?

    In the last decade, the United States society has changed 
enormously with the proliferation of new technologies, the 
intensification of globalization and shifting demographics resulting in 
more students seeking a postsecondary education. To keep up with these 
changes, society's demands on higher education have changed to include 
lifelong learning; the assurance that students are gaining more 
sophisticated skills; a curriculum that encourages cultural sensitivity 
and global awareness; as well as access and real academic attainment 
for a larger share of the population.
    Who are our students?
    The undergraduate population has changed dramatically in the past 
decade. What was once considered the ``traditional'' student--some one 
who enrolls in college immediately after high school, lives on campus, 
studies full-time and depends on parents for financial support--is now 
the exception, not the rule; in 1999-2000, just 27 percent of 
undergraduates met these criteria.
    In contrast, the NCES found that nearly three-quarters of 
undergraduate students had one or more of the following ``non-
traditional'' characteristics: Delayed enrollment between graduation 
from high school and entry into college; Part-time college attendance 
for at least part of the academic year; Full-time employment while 
enrolled; Financial independence from parents; Children or other 
dependents (other than spouse); Single parenting responsibilities; and 
High school completion through a GED or other alternative means.
    The student population is also much more diverse than it once was. 
For example, 39 percent of all postsecondary students were 25 years or 
older in 1999 compared with 28 percent in 1970. Women now represent 56 
percent of the student population versus 42 percent in 1970, and one-
third of currently enrolled college students define themselves as non-
white. Nine percent of undergraduates have a disability, and for the 
first time, a significant number of students speak a language other 
than English at home.
    This diverse student population brings to college a set of life 
experiences quite different from those of most administrators, staff 
and faculty at colleges and universities. Plus, the experiences and 
expectations adult learners have may be significantly different than 
those of younger students.
    The ``Net Generation,'' students born in or after 1982, have never 
known life without the Internet. IT is integral in their work, 
communication, entertainment and education. Most say they could not 
function without the Internet--it is as essential to them as oxygen. 
From their earliest years, they learned to sort through and manage vast 
amounts of information. Rather than viewing computers as machines for 
analysis and data processing, they view technology as a natural 
extension of their lives: for work, entertainment and learning. They 
also bring with them a new set of skills and expectations due to this 
comfort with technology.
    The patterns can be seen emerging among teens. Much of what they 
want from the Net relates to learning--either formal or informal 
learning. For example, 100 percent of teenagers report they search for 
information about college, careers and jobs online. Seventy-eight 
percent say that they use the Internet as an aid to learning. Students 
conduct research on the Internet to help them write papers and complete 
class assignments; they correspond with teachers and classmates about 
school projects; they also participate in online study groups and take 
online classes.
    Perhaps the most striking difference with prior generations is 
their comfort with the Internet as a communication channel; teens use 
the Net for communication and community. Sixty percent of teens say 
they use the Internet as their primary tool for communication. Fifty-
six percent indicate they prefer e-mail or instant messaging to the 
telephone when communicating with friends and relatives. Although it 
may seem surprising on the surface, consider that the Internet is a 
technology most teens simply assume is available in much the same way 
that Baby Boomers always assumed there would be a telephone in the 
house.

How Do Students Learn?
    Learning for the Net generation, and, perhaps, for many generations 
to come, is not synonymous with school. The accessibility of the 
Internet has created a pervasive learning environment in which young 
people have anytime anywhere access to learning material in a variety 
of formats. They often fashion their own ``curriculum'' based on their 
ability to assemble accessible material.
    Service expectations are high for this generation. Having grown up 
in a customer-service environment, they expect services that are 
tailored to their needs. They look for choice, immediacy and 
customization. These expectations apply to recruitment and admissions, 
food service and housing options as well as on- and off-campus 
interactions.
    NetGen students favor different learning styles. For example, their 
learning preferences tend toward teamwork, experiential activities, the 
use of technology and engagement. This generation learns by doing. 
Having grown up in the age of multimedia, they want to engage all their 
senses. Their strengths include multitasking, a goal orientation, a 
positive attitude and a collaborative style. They are also very 
community-oriented and are socially conscious. Students believe that 
science and technology can be used to make the world a better place; 
they want what they do to make a difference.
    The contrast between student and faculty teaching/learning 
preferences may be significant. To many of us, students communicate in 
a language we don't completely understand; we are not facile with 
instant messaging and text messaging. Nor are we as comfortable with 
their interactive approach to learning or their use of complex montages 
of images, sound and communication. Many students are pushing learning 
into new dimensions.

                            WHAT MUST WE DO?

    In light of the changes in technology, the economy, and the student 
population, colleges and universities must continue to adapt to better 
serve the needs of their students and the community at large. In order 
to adapt, colleges and universities must ask a series of difficult 
questions. A colleague of mine from Brown University, Frank Newman, 
says that we should ask:
    Can we out think the rest of the world?
    Do we make it possible for students to succeed?
    Will our students get all A's and still flunk life?
Can We Out Think the Rest of the World?
    Employers look for workers who can adapt their skills and knowledge 
to a quickly changing array of situations. It is no longer sufficient 
to bring to a job a static set of technical aptitudes or knowledge; 
instead employees must continuously develop new skills, competencies 
and approaches as companies take advantage of new opportunities and new 
technologies. In short, employees must learn how to learn, how to 
assess what they need to know, and how to obtain and apply those new 
skills.
    Being able to ``out think the world'' may be the most important 
competitive advantage. To do that will require that we consider what 
makes individuals successful--in the short and long term--which is a 
complex task.
    Successful intelligence. The goal of education is more than just 
knowing things. Facts matter; but facts are not sufficient. Learners 
must be able to solve problems, transfer learning from one situation to 
another and ``learn to learn.'' Education must also prepare learners 
socially, not just intellectually. The concept of successful 
intelligence illustrates the desired outcomes of education. Coined by 
Robert Sternberg, ``successful intelligence'' encompasses analytical 
intelligence, creative intelligence and practical intelligence. 
Analytical intelligence--knowing facts, answering questions and solving 
problems--has always been a strength of U.S. education. But with 
innovation and discovery driving much of the economy, creative 
intelligence is required as well. Creative intelligence means 
individuals can conceptualize new products, design experiments to test 
theories and resolve social conflicts. Practical intelligence, the 
ability to get things done and to get along with others, is critical as 
well. All three are important to individuals and organizations.
    Beyond successful intelligence, there are certain skills that 
graduates need. Companies like Microsoft are defining the competencies 
their employees need, how they can assess their level of competence as 
well as how they can improve. Let me mention a few.
    Communication and interpersonal skills. Communication skills are 
often cited as an essential skill. However, the communication skills 
needed 25 years ago are not sufficient for today's environment. In 
addition to writing, speaking and listening, today's list might include 
negotiation skills, being able to provide feedback, give encouragement, 
delegate responsibility and share recognition.
    Strategic perspective. Taking a strategic perspective involves 
seeing the ``big picture,'' understanding the underlying forces that 
influence the system. It also involves the ability to sense change, to 
identify opportunities for future development, to define future 
direction and to manage the process of change.
    Creativity. In an increasingly complex world, individuals need the 
ability to see patterns, find new alternatives and create viable 
solutions to problems. Creativity has become an important skill. 
Creativity allows individuals to define and redefine problems in 
different ways. Being creative is more than having ideas. It also 
implies being able to analyze and evaluate ideas, make a decision and 
translate that idea into a practical accomplishment.
    Results-oriented. Whether in college, at work or in personal life, 
achieving results is important. Being results-oriented involves 
developing and implementing plans as well as achieving positive, 
concrete results. To achieve results, one must be able to make 
decisions, work as a member of a team, communicate and problem-solve.
    Intentional learners. Beyond a list of specific skills, attitude is 
important. The Association of American Colleges and Universities 
(AAC&U) has concluded that students should be intentional learners 
``who can adapt to new environments, integrate knowledge from different 
sources and continue learning throughout their lives.'' They advocate 
that learners be: ``Empowered through the mastery of intellectual and 
practical skills; Informed by knowledge about the natural and social 
worlds and about forms of inquiry basic to these studies; and 
Responsible for their personal actions and for civic values.''
    More specific skills are described, such as communicating, 
interpreting and evaluating information from a variety of sources, 
being able to use quantitative and qualitative analysis to solve 
problems and demonstrating the ability to deal with change. Beyond 
intellectual skills, they also advocate that students develop a deep 
understanding of global and cross-cultural communities, natural, social 
and technical worlds and the history and values underlying U.S. 
democracy.
    But that learning is not just theoretical. They suggest that the 
greatest impact will occur when students apply their skills to the 
world's significant problems.
    Also recognized is the importance of social responsibility and 
ethical judgment. Intellectual honesty, taking responsibility and being 
an active citizen who understands the consequences of ones actions and 
decisions are cited as examples.
Do We Make It Possible to Succeed?
    Admission to college is only the first step to student success. A 
great deal else will be required for students to graduate.
    According to the National Center for Educational Statistics (NCES), 
our success in graduating students is uneven, at best. Only 7 percent 
of low-income students who begin college immediately after high school 
graduate by the time they are 24 years old. In fact, 29 percent of 
African Americans and 31 percent of Hispanics leave college before 
completing their first year. It is unclear how many return and the 
number who reach their ultimate educational objective.
    NCES has identified several risk factors associated with students 
not completing their degrees. These include part-time enrollment, 
having children, delaying college enrollment after high-school and 
working full-time during college. The more risk factors a student has, 
the less likely he or she is to complete the first year in college or 
to graduate. While early outreach programs, grants and learning support 
communities have proven to be effective in helping at-risk students 
successfully complete a degree, the implementation of these programs is 
uneven. When students are asked to explain why they have left school, 
they cite bureaucratic hurdles related to financial aid, poor 
counseling regarding academic choices and inability to manage 
conflicting demands.
    Unfortunately, there are a number of problems that some students 
encounter: incorrect advice, financial difficulties, inadequate college 
preparation, poor study skills, and so on.
    We know that there are a number of programs that help ensure 
students success: early outreach, academic support, retention, 
remediation, and early warning programs, to name a few. These programs 
have proven to increase graduation rates for first-generation students 
as well as low income or minority students.
    One of the most important pre-requisites to college success is 
adequate high school preparation. Large numbers of students enter 
college unprepared. Nearly half of all college students need some form 
of remediation. This is symptomatic of inadequate high school 
preparation and oftentimes, of weak expectations of what these students 
can achieve. Recently, we have come to embrace the understanding that 
all students can learn. Those who need remedial assistance are not 
incapable; too often, it is that we haven't helped them find the path 
to successful learning.
    One of the best ways of ensuring that students succeed is to remove 
the barriers to their success. For many, the greatest barrier is the 
fixed time schedule of a traditional course. Programs designed for 
adult learners or distance education programs, such as those at Rio 
Salado College in Phoenix Arizona, remove many of the barriers to 
education for adults.
    For others, the barrier may be not recognizing prior learning. For 
an individual who has retired from the military or another profession, 
completing an entire 4-year curriculum to be able to teach in K-12 
schools presents a formidable barrier. Western Governors University 
(WGU) has designed programs to remove such barriers. WGU is nation's 
first competency-based, fully accredited online higher education 
institution. It was designed to meet the needs of non-traditional 
students whose jobs and family obligations prevent them from attending 
daily college courses or relocating to earn a new degree.
    Making students successful means we must have a range of programs 
and options available. Students have their own unique backgrounds, 
aspirations and difficulties. It would be a disservice to treat all of 
them the same.
    Although I've spoken about student success, that is not necessarily 
synonymous with graduation for all students, particularly in an era of 
lifelong learning. Some students come to college--or return there--to 
acquire specific skills or courses. Graduation is not their goal. This 
may be increasingly true in the future as individuals stay in the 
workforce longer and workers seek alternative careers that provide them 
with increased earning power and personal flexibility.
Will Our Students Get All A's and Still Flunk Life?
    College is not just about preparing for a job, it is also about 
preparing for life. But, being an engaged and enlightened global 
citizen requires much more than simply reading and writing. Global 
awareness and cultural sensitivity are increasingly important in our 
world.
    The rationale goes beyond a desire for everyone to ``get along.'' 
The way we view situations and solve problems is based on our cultural 
perspective; what we see depends on what we have learned to look for. 
Our cultural perspective can constrain or enlighten. For example, 
someone from a western culture tends to think of medical remedies from 
a pharmacological point of view. Someone from Asia might consider a 
different set of remedies, such as acupuncture, herbal treatments, and 
so on. Most disciplines are situated in socially constructed contexts. 
If we only know and understand a single cultural perspective, our 
ability to interact globally is impaired, whether that be the ability 
to develop worldwide products, solve public health crises or find 
peaceful resolution to conflicts.
    Scientific and technical literacy is also important to do well in 
life. Without an understanding of science and technology, how can 
individuals make reliable decisions about complex issues such as global 
warming or the safety of genetically engineered food? Just teaching 
science is not enough; students must be able to apply it to their 
lives, use the principles to reason with and be comfortable finding 
new, reliable sources of information.
    Education is linked to being an active, informed and engaged 
citizen. Our democracy depends on civic participation. This goes well 
beyond voting; it is about being involved in the community and about 
having the ethics and the will to do the right thing.
    It is important to remember that although a large part of the 
higher education experience is about the workplace, the workplace 
exists in a much larger context--it exists in the context of 
communities striving to improve the quality of life for all citizens. 
The workplace exists in the context of an increasingly diverse culture. 
And, the workplace exists in a world that cannot turn back the clock on 
globalization. Education helps people enlarge their perspective rather 
than narrow it.

                               CONCLUSION

    What we have been talking about are expectations. Great 
expectations are a hallmark of our times. Putting a man on the moon was 
a great expectation that shaped an earlier generation. Erasing 
inequities, curing cancer and preserving our environment are emblematic 
of the great expectations that drive society today.
    Change is also a hallmark of our times. Many of the changes that 
define our times--such as globalization--have been catalyzed by 
information technology (IT). Technology has stimulated the economy and 
improved lives by enabling breakthroughs in existing industries as well 
as the creation of new industries. It has changed where, how, what and 
when we learn. And it has led to a new type of worker whose value 
hinges on education, creativity and the use of IT.
    In the United States, we have great--and greater--expectations of 
higher education. Higher education is a critical element in how we 
fare--as individuals and as a society. We all share the responsibility 
to be certain that higher education can help us actively compete with 
the rest of the world, ensure student success and be prepared for a 
life of active citizenship. A strong higher education system is 
critical if we are to be prepared for the future.
    Response to Questions of the HELP Committee From Diana Oblinger
    Question 1. Testimony from the other witnesses has identified how 
important partnerships between businesses and institutions of higher 
education are for preparing the workforce with necessary skills. Can 
you comment in more detail on partnerships that Microsoft has created 
with institutions of higher education and the success of those 
partnerships?
    Answer 1. Microsoft works with higher education institutions to 
help them prepare students for the global workforce. This includes 
traditional students as well as displaced workers. Several examples are 
included below.
    Microsoft IT Academy. The Microsoft IT Academy is a worldwide 
membership alliance with accredited academic institution that choose to 
participate. The program helps schools and colleges prepare students 
with computer skills required for jobs in the 21st Century. These 
skills range from basic desktop skills required for all citizens and 
workers today to people working in IT careers such as help desk 
support, developers, programmers and network administrators. The 
program offers roadmaps to careers, industry certifications, discounted 
lab licensing, courseware and certification exams, as well as faculty 
training. Technical information and information about new technology 
and technology that is under development is also provided so 
instructors can incorporate the latest information into the curriculum. 
The Microsoft IT Academy was launched in November 2002; there are 
currently 1,600 member institutions, worldwide. For more information 
about Microsoft IT Academies visit: http://www.microsoft.com/education/
msitacademy/default.asp?ID=ITApHome.
    Future Professors Pilot: Future Professors is an incubator project 
to help prepare future professors to teach effectively in the 21st 
Century. The project involves graduate students and their mentor 
professors who develop innovative and effective instructional models 
using technology in their disciplines. Throughout the academic year, 
project outcomes are documented and reviewed. At the end of the pilot 
in June 2004, the scholars and professors will publish one or more 
journal articles that describe their experiences with integrating 
technology in the classroom so that others can learn from their 
experience. Microsoft hopes through this project and others to inspire, 
support and demonstrate to professors and future professors how to use 
technology to support learning outcomes. For more information, visit 
http://www.microsoft.com/education/?ID=FutureProfessors.
    Model Professional Development. To successfully educate students 
for the 21st Century, it is vital that educators have access to 
professional development and be able to effectively integrate 
technology into the curriculum. To achieve this end, Microsoft has 
established the Model Professional Development program. This showcases 
programs that illustrate exemplary professional development along with 
the implementation of technology as a teaching tool. The program is for 
both higher education and K-12 professionals. For more information 
visit: http://www.microsoft.com/education/?ID=ModelPD.
    Partners in Developer Learning. Through Partners in Developer 
Learning, Microsoft is fostering the growth of the IT workforce 
worldwide by offering resources to students and faculty in higher 
education to develop their technical expertise. In its first year, the 
pilot program provided software, training, curriculum content, grants 
and scholarships to students and faculty in several countries around 
the world. There are multiple components to the program. For example, 
the MSDN Academic Alliance (MSDN AA) makes it easier and more 
affordable for academic labs, faculty and students in Computer Science, 
Engineering and Information Systems to get Microsoft developer tools, 
platforms and servers for instructional and research purposes. A 
Curriculum Repository, which contains actual course content that has 
been used in the classrooms, is provided as a teaching resource for 
faculty. Faculty development is conducted throughout the year to keep 
interested faculty abreast of upcoming technology innovations. Other 
program components include a student programming competition and an 
online community.
    Thurgood Marshall Scholarship Fund Technology Initiative. Through 
the Thurgood Marshall Scholarship Fund (TMSF) 45 member Historically 
Black Colleges and Universities (HBCUs) are receiving a $15 million 
software grant to support the Thurgood Marshall Scholarship Fund 
Technology Initiative. The initiative will upgrade technology at public 
HBCUs to ensure these students are provided with a continuum of 
learning bolstered by technology, giving graduates the skills needed to 
succeed in today's workplace. In addition to software for the TMSF, 
Microsoft will provide technical assistance in the development of the 
technology initiative. The goal is to enable the schools to upgrade 
their computers, increase efficiencies and help the TMSF expand 
technology training programs offered to students. The hope is that 
Microsoft's donation and technology expertise will be a catalyst to 
securing additional funding from other corporations that are committed 
to ensuring improved technology programs in public HBCUs.
    United Negro College Fund. Microsoft has contributed nearly $100 
million in cash and software to support the United Negro College Fund's 
(UNCF's) efforts to strengthen technology access and infrastructure at 
member colleges and universities. In one phase of the program, 
Microsoft provided software and computers to the TRIO Upward Bound 
program at Xavier University and five New Orleans public schools. The 
programs helps Americans overcome class, social and cultural barriers 
to higher education by providing the academic strength, skills and 
motivation necessary for post-secondary education success. Other 
programs have been focused on providing technology enrichment for 
faculty, administration and students. Other efforts have helped 
campuses implement wireless networks and upgrade software in computer 
science labs.
    Cybersecurity partnership with EDUCAUSE/Internet2 Security Task 
Force. Computer and network security has become a critically important 
issue. Virtually everyone in education (K-12 and higher education) as 
well as the workforce must be aware of good security practices and 
adopt them. IT personnel, whether help desk workers, programmers or 
technical architects, must understand security. Microsoft has been 
working closely with the EDUCAUSE/Internet2 Security Task Force to 
foster practical solutions and strategies for enhancing cyber security 
in campus environments. Activities, to date, have ranged from a 
significant end-user awareness campaign to technical modifications. 
What was initially a collaboration involving only Microsoft has 
expanded to include a number of other companies, recognizing that it 
will take broad cooperation to ensure a secure campus environment.

    Question 2. Microsoft is an excellent example of the changing 
workforce. Many of the jobs within your company were nonexistent 10 
years ago. How has Microsoft helped prospective employees and its 
current employees maintain adequate skills for success in the 
workforce?
    Answer 2. Microsoft has defined the competencies they seek in 
employees. These competencies can be used as a guide in recruitment and 
hiring, in professional development and in evaluation. For example, 
competencies include categories such as individual excellence, being 
result-oriented, teamwork and long-term approach. Within the category 
of individual excellence, specific attributes include items such as 
being action-oriented, having creativity, and the ability to deal with 
ambiguity. Being results-oriented is considered very important in 
business. Specific attributes might include decision-making, a drive 
for result and problem-solving skills. Teamwork has become important in 
all walks of life. Skills that foster teamwork are ones like 
communication skills, interpersonal skills, negotiation and conflict 
management as well as the ability to foster diversity.
    Employees are also provided with clear examples of the competency, 
questions they may ask themselves to monitor their own development as 
well as suggested activities that can be used to learn on the job. For 
example, if an employee wanted to monitor their own decision-making 
skill, a set of questions might be asked:
    How much time do I have to make this decision?
    What are the consequences of a bad decision?
    Have I failed to consider any important tradeoffs?
    Who am I neglecting to involve in the decision?
    To encourage self-development, ``coaching'' is provided. For 
decision-making, reminders might include:
    Before making a decision, ask ``What is the big picture?''
    Force yourself to make decisions within a specified time period 
even when all data may not be available.
    Manage risk; be sure you understand the implications of your 
decision.
    Career and professional development is an ongoing process at 
Microsoft. Emphasis is placed on aligning individual development plans 
with Microsoft's business plan. The philosophy is that developing one's 
career requires the person to view their development as a path rather 
than a point in time or a job. An annual process that reinforces this 
is the mid-year review. One of the main purposes of Microsoft's mid-
year review process is for managers and employees to discuss career 
goals, professional development opportunities and to track progress on 
the individual's development plan.
    To help guide employees in their careers, job matrices are defined. 
These allow employees to see job descriptions for various categories of 
positions (e.g., development, sales). They are designed to make it easy 
for individuals to see how responsibilities and requirements change 
from one position to the next, enabling individuals to establish career 
plans. A number of tools are provided, as well, for areas such as self-
analysis or skills gap analysis.
    To facilitate individual development, training opportunities are 
available through the company, many being online. Tuition assistance 
programs make it possible for employees to pursue education outside 
Microsoft at accredited colleges and universities. Mentor programs 
exist, as well. Some focus on career mentoring (typically helping 
someone prepare for advancement) and others on peer mentoring (sharing 
knowledge with a peer such as a new employee).

    Question 3. You co-authored a book entitled What Business Wants 
from Higher Education, which I find to be a fascinating subject. Based 
on your previous research on the subject and the views you've expressed 
in that book, what role can Congress play in matching the needs of 
businesses with institutions of higher education?
    Answer 3. I have three suggestions based on recent work with higher 
education.
    The first is to sponsor an effort to define the competencies needed 
for the 21st Century. This could build on existing work in higher 
education and the business community. The effort should also look at 
any gaps that exist between current competencies and what is needed. 
The risk to individuals and the economy of not closing these gaps 
should also be explored.
    The second is to assemble a national database of effective 
practices. A great deal has been learned about how to improve education 
through the use of information technology, but there is no single, 
trusted repository that supports faculty who are working to improve the 
quality of student learning.
    The third is the creation of a competitive grant fund. One of the 
most important stimuli behind the creation of America's great research 
and development enterprise was the establishment of a competitive 
grants process. Through the National Science Foundation, the National 
Institutes of Health and other organizations, competitively awarded 
research grants provide scientists with the funds and the competitive 
environment that has been the foundation of much of our innovation and 
competitive advantage. There is no comparable program focused on the 
science of learning or of the application of learning science and 
technology to college and university instruction. If we are to continue 
to have the world's greatest system of higher education, we must invest 
in both basic and applied research.

    Question 4. In 2000 you wrote an article for the EDUCAUSE Review 
regarding distance learning and its potential to spur a transition 
within the field of higher education. Do you still see distance 
learning as a major catalyst for change in higher education, and can it 
help shift the focus of higher education more directly to workforce 
development?
    Answer 4. First, it may be helpful to define workforce development. 
To me, workforce development is not about preparing for a single job, 
it is about developing--and redeveloping--one's capabilities throughout 
an entire lifetime. As such, workforce development might be considered 
as synonymous with lifelong learning.
    Distance education (originally through correspondence courses) was 
designed to make lifelong learning accessible to those who could not 
enroll at a campus full time. As technologies changed, we moved into an 
era where distance education or distance learning was delivered via the 
Internet rather than a course pack sent through the mail. Today, we use 
the term e-learning to refer to Internet-based distance learning.
    In the early days of e-learning, much of the focus was on the 
technology or the ``e'' part of e-learning. That was perhaps 
appropriate given our understanding of the technology at the time. In 
the past decade we have learned a great deal. Today, I would define e-
learning as the use of information technology to facilitate learning. 
Such a definition focuses on the potential of e-learning to bring 
quality education to individuals wherever they are physically and at 
whatever point in their learning they happen to be, thereby making it 
possible for every member of society to acquire the intellectual skills 
and expertise needed to become a productive member of a knowledge-based 
economy.
    E-learning can enable those in higher education to prepare 
individuals to become more productive members of the knowledge economy. 
Technology has the potential to enhance learning processes and to 
extend learning to those who might not otherwise have the opportunity. 
It can facilitate critical parts of the learning experience--such as 
dynamic representations of complex ideas, peer interaction, feedback, 
and access to resources--and scale the experience to an ever-broadening 
audience of learners.
    Two examples may illustrate the point. One deals with what are 
called multimodal interfaces for interacting with computing devices. 
Basically, these interfaces allow the extension of sensory capability, 
allowing an individual to ``feel,'' hear, smell or see. For example, 
students can practice angioplasty using a simulated patient. As the 
catheter is inserted, the student ``feels'' the resistance at different 
points. Simultaneously a visual display shows the progress of the 
catheter as it moves toward the heart. When the catheter enters the 
heart, the ``pull'' of the heart beat can be felt. Such uses of 
technology in the learning process are vital to many disciplines.
    Simulating laboratory experiences provides another example. 
Specially designed software enables students to conduct virtual 
chemistry and biochemistry experiments. Data are generated as students 
manipulate the virtual laboratory equipment: increasing the temperature 
on the hot plate, slowing down the stirring motor, or adding more of a 
chemical substance produces a unique set of results. Another student 
using a different temperature or a different chemical concentration 
will generate different data. The lab experience is equally available 
to students on--or off--campus.
    Perhaps more important, IT provides tools that challenge us to 
rethink the delivery of education, making it more relevant to all 
generations of learners. E-learning can help us make education richer, 
more accessible, and more convenient. IT has provided us with the 
richest array of learning tools in our history.

    Question 5. As the only employer directly represented on this 
panel, is the current approach to higher education sufficient to 
prepare the modern workforce with the necessary skills? Looking to the 
future, how important will higher education be in ensuring that your 
employees have a chance to expand their skills to meet the needs of the 
changing workforce?
    Answer 5. Higher education is critical in preparing the workforce 
for today--and tomorrow. Students, parents and employers look to our 
colleges and universities to prepare them for life--not just for their 
first job but for a career path that may develop into disciplines that 
weren't even known at the time they began college.
    Although American higher education has been the envy of the world, 
there is more we can--and should--do. Many of those recommendations are 
pointed out in reports that have come from higher education, such as 
the Greater Expectations report, so there is a fairly widespread 
recognition that more can be done.
    Part of that emerging agenda deals with how we define what it means 
to be educated. Employers are asking that students be better prepared, 
not just in the skills that are ``easily'' taught (science, 
mathematics, history) but in the skills and competencies that are 
needed in the workplace: negotiation skills, an appreciation of 
diversity, the ability to foster cross-group collaboration, and so on. 
This does not imply that colleges should add a course in each skill 
area. It implies that the development of such skills must be woven into 
the curriculum or integrated through co-curricular activities. In fact, 
out-of-class activities may be the most important venue for the 
development of these complex competencies.
    There appears to be a growing trend of employers wanting to know 
that prospective employees can apply what they've learned to real-life 
situations. Some colleges are experimenting with experiential learning 
tied to industry certifications; students graduate with a degree as 
well as an industry certification. Although not appropriate in all 
disciplines, we applaud this type of experimentation from the higher 
education community.
    Higher education is important in that it provides us with our 
understanding of how people learn, what motivates one person but 
discourages another and how to apply theory to practice. There is a 
great deal more we need to know if we are to remain competitive as a 
workforce. For example, what is the best way to ensure that a skill 
just learned will be applied correctly to another problem, in a 
different setting? How do we measure complex competencies? What 
learning approaches are best for older workers vs. those that work well 
for recent high school graduates?
    There are other areas worth considering, as well. For example, 
business would like to see better integration of technology skills for 
the workforce into degree programs. There is also a definite need to 
increase math and science skills. And, we still need to do a better job 
recruiting and retaining women and minorities in fields such as 
science, technology and engineering.
    We must not forget the importance of ensuring that students with 
disabilities receive an education. We hope that colleges will support 
the development of computer skills for persons with disabilities. 
Microsoft is interested in employing diverse populations, including 
persons with disabilities.
    Although higher education is about more than preparing students for 
a job, some highly effective programs have been created when higher 
education institutions work closely with industries to ensure that 
their degrees, certificates and programs link with career paths. 
Community and technical college are typically very effective in these 
collaborations at the local level.

              Prepared Statement of Ellen O'Brien Saunders

    Mr. Chairman and Members of the Committee: On behalf of the State 
of Washington, I would like to thank you for inviting me to discuss the 
connections among higher education, workforce development and economic 
vitality. I serve as the Executive Director of the Workforce Training 
and Education Coordinating Board, Washington State's Workforce 
Investment Board and its State Board for Vocational Education. The 
Board is responsible for analyzing the State's workforce needs, and 
developing strategies to meet them, including creating a workforce 
development system that benefits workers, students, and employers as 
well as our economy as a whole.
    I am especially pleased to appear before the Health, Education, 
Labor, and Pensions Committee since this offers me an opportunity to 
extend our appreciation to you for the fine work you did on S. 1627, 
reauthorization of the Workforce Investment Act (WIA). The Workforce 
Investment Act has provided a critical framework for Washington State's 
workforce development system. Indeed, you will hear in my testimony of 
important ways that State and local leaders have used WIA to create a 
more demand-driven, responsive, and comprehensive system of services 
and investments. The improvements you made in the current law are 
exactly that, improvements, and we look forward to putting them into 
action.
    At some point soon, you will also be taking up reauthorization of 
the Carl D. Perkins Vocational and Technical Education Act. There is no 
way to overemphasize the importance of career and technical skills 
education to our nation's future. Making sure that the Federal 
investment drives excellence in career and technical education is our 
overarching goal for the reauthorization discussion, and we'll be 
prepared to discuss Washington State's perspectives when the time is 
right.
    For clarity in today's discussion, I should note that the phrase 
``workforce development'' throughout my presentation includes all 
education and training aimed at employment or employability. The 
State's workforce development system therefore, encompasses 
institutions and organizations that: (1) deliver education and/or 
training; (2) provide support services to help people enter and advance 
in the labor market and succeed in school; and (3) provide funding for 
education or training. (See Appendix A for a list of programs 
included.)

                     THE CONTEXT: WASHINGTON STATE

    In 1991, Governor Booth Gardner and the Washington State 
Legislature formed the Workforce Training and Education Coordinating 
Board (Workforce Board). The Board's membership enables it to develop 
policy and program innovations that respond to the needs of customers. 
Three of our members represent business' interests, three represent 
labor's, and three are the heads of the State agencies with major 
responsibility for workforce development programs--our Employment 
Security Commissioner, the Executive Director of the State Board for 
Community and Technical Colleges, and the elected Superintendent of 
Public Instruction. Current representation from business includes Don 
Brunell, President of the Association of Washington Business and 
current representation from labor includes Rick Bender, President of 
the Washington State Labor Council, AFL-CIO. This membership brings the 
interests of customers and providers to the table as decisions are 
made, and is echoed throughout the State in other venues.
    Every 2 years the Workforce Board develops High Skills, High Wages: 
Washington's Comprehensive Plan for Workforce Development. This plan 
communicates our shared vision:
    A workforce development system that offers every Washingtonian 
access to high quality academic and occupational skills education 
throughout his or her lifetime, effective help to find work or training 
when unemployed, and the personalized assistance to make progress in 
the labor market.
    The Workforce Board ensures that workforce and economic development 
linkages are a major focus of High Skills, High Wages. To frame our 
plan, we begin with analyses of our economy and our labor force. We 
rely on a number of data resources for our data--among them our State's 
excellent Labor Market and Economic Analysis branch (the Bureau of 
Labor Statistics' local partner), and the Census Bureau. We also 
conduct our own scientific survey of employer needs and practices 
which, with the assistance of the Association of Washington Business, 
is sent out to nearly 12,000 employers in the State making it the most 
comprehensive in the State.
    In 1999, Governor Gary Locke issued Executive Order 99-02 to 
implement the Workforce Investment Act. In it, he charged the workforce 
development system with the following goals:
     To close the gap between the need of employers for skilled 
workers and the supply of Washington residents prepared to meet the 
need.
     To enable workers to make smooth transitions so that they 
and their employers may fully benefit from the new, changing economy by 
putting in place a coherent strategy for dislocated and incumbent 
worker training.
     To assist disadvantaged youth, persons with disabilities, 
new labor market entrants, recent immigrants, and other low-wage 
workers to move up the job ladder during their lifetimes by developing 
a wage progression strategy for low-income workers. Specific progress 
will be made in improving operating agencies and reducing the earnings 
gap facing people of color, people with disabilities, and women.
    In 2000, as we developed our plan, we added a fourth goal:
     To integrate workforce development programs to improve 
customer service.
    To accomplish these goals, High Skills, High Wages includes an 
Action Agenda, which give each of the State level partners lead 
responsibility for specific strategies to ensure both progress and 
accountability.
    At the local level, Washington State has 12 local area Workforce 
Development Councils (WDCs) that serve as the local Workforce 
Investment Boards. Each Council, in consultation with chief local 
elected officials, oversees WIA Title I-B activities, including One 
Stop Centers, coordinates local area workforce development services, 
and provides outreach to employers. Governor Gary Locke has required 
all WDCs to include at least two postsecondary and two secondary 
education representatives to tighten the connections between education 
and WIA functions. The Councils use their leadership to ensure a link 
with local economic development strategies. Each Council has a 
Governor-approved local Unified Plan that includes an assessment of 
local employment opportunities and skill needs, and sets forth goals, 
objectives, and strategies for the local workforce development system 
consistent with High Skills, High Wages. The strategic role of local 
Workforce Development Councils makes them the counterpart to the State 
Workforce Board at the local level, building on what is required by 
WIA. Given this new responsibility, we have formed an entirely new 
state-to-local and local-to-state set of relationships.
    The employer community recognizes the critical importance of 
providing postsecondary training. Governor Locke's Competitiveness 
Council, consisting of some of the top business leaders in our State, 
recently concluded that human capital is the key to economic 
competitiveness. The Workforce Board's own 2003 survey of employers, 
conducted with the assistance of the Washington Association of 
Business, shows that employers are having difficulty finding qualified 
workers with postsecondary education and training even during slow 
economic times. Forty-five percent of employers who attempted to hire 
someone in the previous 12 months reported difficulty finding qualified 
job applicants. While there were shortages at all postsecondary levels, 
the largest number of employers reported difficulty finding job 
applicants with a vocational certificate or associate degree. The type 
of skills that employers had the greatest trouble finding were job 
specific skills; for example, they wanted to hire a registered nurse or 
a carpenter and could not find one. After job specific skills, 
employers had the most difficulty finding job applicants with good 
general workplace skills, such as work ethic, problem solving, 
teamwork, and communication skills.
    Within this context, how do higher education, workforce development 
and economic development connect--especially, what are the specific 
innovations in Washington that are linking the two?

              TARGETING OUR RESOURCES TO ECONOMIC CLUSTERS

    ``. . . geographic concentration of interconnected companies, 
specialized suppliers, service providers, firms in related industries, 
and associated institutions (for example, universities, standards 
agencies, and trade associations) in particular fields that compete but 
also cooperate.'' (Michael Porter, On Competition, Harvard Business 
School Press, 1998)
    In order to promote economic vitality across our diverse State, 
Washington has adopted a cluster strategy. By targeting workforce 
development resources to key sectors of local economies, the public 
sector can make a positive, measurable difference, as opposed to 
spreading scarce resources so thinly that their effect is virtually 
unnoticeable.
    High concentrations of related companies and suppliers within a 
geographic region suggest a cluster. Examples in Washington State 
include: agriculture and food processing, aerospace, marine services, 
and information technology. The central and southeastern areas of 
Washington have an obvious cluster in agriculture and food processing, 
for an unusually large number of employers and jobs in agriculture and 
food processing are located there compared to the number of such 
employers and jobs in other areas of the nation, and there is a large 
network of related firms and institutions. These resources create an 
advantage in competing in the agriculture and food processing market 
compared to other geographic areas. If supported, a cluster of firms 
increases the likelihood of further growth in that industry, including 
the spin-off new businesses. To the extent that the educational 
``suppliers'' have innovative, current, and flexible programs, the 
industry will be strengthened as it competes around the world. This is 
higher education's critical role in creating and sustaining economic 
vitality and job growth.

Coordinating Our Investments
    In order to strategically target State workforce development 
resources to key sectors of our economy, the State Board for Community 
and Technical Colleges (SBCTC), the Workforce Board, and the Employment 
Security Department (ESD), began coordinating their investments in 2002 
to meet the workforce needs of key industries.
    The agencies coordinated four Requests for Proposals (RFP) which 
reflect four stages of demand-driven workforce development. The first 
stage is to create an Industry Skill Panel, including business leaders 
in a key economic sector so that they will identify critical skill 
needs and identify solutions. (See the following section on Industry 
Skill Panels.) The second stage is to use the Panel to develop industry 
skill standards for the key occupations in their sector. The third 
stage is to develop new training programs that prepare workers to meet 
the standards. And the fourth stage is to actually provide the 
training.
    All RFPs included common elements to enhance coordination and to 
take advantage of the synergistic effect of the funds working together. 
The common required criteria have included:
     Regional Proposal: Proposals have to be for a specified 
geographic region of the State.
     Economic Analysis: Proposals have to demonstrate the 
importance of the economic sector to future economic opportunities in 
the region.
     Industry-driven: The proposals have to provide evidence 
that the projects would meet the needs of a key area industry and 
demonstrate involvement of local industry leaders.
     Partnership of Key Stakeholders: Employers, labor, 
training providers, workforce development councils, economic 
development councils, and other appropriate stakeholders have to be 
partners in the proposals.
    In all, since 2002, we have deployed $11 million in a combination 
of State general funds and Workforce Investment Act Funds.
    By linking our resources to economic clusters, we are focusing 
precious State and Federal resources on sectors where the market has 
already demonstrated that Washington has a competitive edge over other 
areas of the nation. Targeting public resources in this manner will 
help ensure that they are invested where they are likely to deliver the 
greatest return to our economic growth.
    We will continue this coordinated approach to targeting workforce 
development and higher education resources, and will build upon it by 
including additional sources of support. As part of Governor Locke's 
Joint Economic Vitality Cabinet, these agencies are currently working 
with the Departments of Community, Trade and Economic Development, 
Ecology, Agriculture, and Transportation to pilot cluster-based 
approaches to economic vitality.

Industry Skill Panels: Organizing the Demand
    Begun by Governor Locke and the Legislature in 2000, and sustained 
since then through investments from WIA, Industry Skill Panels are 
public-private partnerships comprised of business, labor, and education 
(including community and technical colleges) that organize to meet the 
existing and future workforce needs in key industries. These panels 
provide forums for discussion with multiple stakeholders vested in a 
particular industry. Skill panels create industry-driven teams that 
find solutions for short-, mid- and long-term challenges and 
opportunities for an industry's workforce. They foster an environment 
of knowledge sharing among individuals who take action, make 
investments, and make recommendations for immediate and future action 
for policy changes necessary to keep an industry's workforce, and 
therefore the industry, competitive.
    Three types of industry skill panels are emerging in Washington 
State:
     Crisis Driven; i.e. agriculture and food processing, 
health care and aerospace
     Industries in Transition; i.e. information technology, 
marine services, construction, electronics, manufacturing and energy
     Emerging Industries; i.e. computer game software 
development and biotechnology
    Although Washington skill panels are less than 3 years old, a few 
tangible results include:
     The development of a variety of tools, products, and 
materials such as curricula, skill standards, assessment tools, and new 
apprenticeship programs.
     A renewed interest from local media on workforce and 
economic development topics and achievements.
     Industrial or regionally centered research that has 
provided credible information for both the public and private sector to 
use to find solutions for skill gaps. Shared instructional design and 
curricula, resulting in the ability of industries with multiple 
locations to use courses that are consistent throughout the State.
    Skill panels are important strategic investments, aligning 
workforce and economic development strategies. Washington State's 
investment in skill panels is relatively small. It is intended to be 
seed money to assist companies and their supplies in an industry in a 
local region to organize themselves to identify and meet their 
workforce needs. Facilitators of skill panels are local workforce 
development councils, community colleges, business associations and 
community-based organizations. Virtually all skill panels have used 
funding from the Workforce Board to leverage additional financial 
support from other public or private resources. Moreover, private 
investments are being made on a continuing basis. These investments 
take the form of cash, executive time, wages, benefits, and travel.
    An important local partner in many Industry Skill Panels is the 
local WorkSource Center (the One Stop). To strengthen their 
contribution to key sectors even more, the State will use a small 
Department of Labor Technical Assistance and Training grant to deepen 
selected Centers' knowledge of their communities' workforce needs. The 
attention you have given to employer engagement in S. 1627 is very 
supportive of our goals and directions. Finally, we are pleased to be 
one of the sites for the Workforce Innovation Networks (WINs) project 
hosted by the Center for Workforce Preparation of the U.S. Chambers of 
Commerce, Jobs for the Future, and the Center for Workforce Success of 
the National Association of Manufacturers. This project is directed to 
engaging employers more deeply with the workforce development system, 
and we anticipate that it will strengthen the system's responsiveness 
to employer needs.
    Since 2001 Washington State has invested in 33 industry skill 
panels in the following industries: Construction, Information 
Technology, Health Care, Energy Technology, Electronics, Manufacturing, 
Marine Services, Food Processing and Agriculture, Biotechnology and 
Computer Game Software. Today, over 300 business partners are actively 
engaged in this effort. Fifteen programs were created in 2002--2003 in 
six different industries, including curriculum development and 
improvement. In addition skill standards were developed in three 
industries--energy, computer game software and electronics. These tools 
will result in postsecondary programs tailored to meet the real skill 
needs of industry.

Centers of Excellence
    ``Centers for Excellence'' are broadly defined as places that 
industries can rely on to understand their particular needs and 
interests, to help solve their skill-related problems, to help ensure a 
continuing flow of new entrants, and to provide a source of upgrading 
its existing workforce. Centers are a ``one-stop shop'' for the firms 
that comprise a cluster, so that educators and trainers are able to 
more efficiently stay abreast of changes in technology and employment 
and develop special resources for employers. (State Board for Community 
and Technical Colleges, Fall 2003)
    The State Board for Community and Technical Colleges (SBCTC) is 
supporting its 34 community and technical colleges as they meet the 
dynamic changes required in these times of high unemployment and 
diminishing resources. For the 2003--2005 biennium, it targeted 
$1,398,100 for workforce program start-up or expansion of high demand 
programs linked to economic development. Successful awardees responded 
to local economic development needs. Six ``Centers for Excellence'' 
were funded in the following industries: Process Manufacturing, Power 
Plant Operations and Generation, Materials Technology in Manufacturing, 
Center for Manufacturing Excellence, Agriculture, Allied Health 
Technologies. These centers will develop depth in their knowledge of 
industry skill needs and will share that expertise, including 
curricula, within the college system. The employers on 14 Industry 
Skill Panels are positioned to partner with these Centers. Through the 
Centers for Excellence initiative, Washington State's investments will 
go further, and postsecondary programs across the State will produce 
graduates fully prepared to take advantage of the job opportunities 
available in these industries.

Health Care: An Industry in Crisis
    A powerful example of the power of partnerships targeted to meet 
industry demand is health care.
    As in many other States, the health care personnel shortage is at a 
crisis level in Washington. Health care facilities are operating with 
critical staff shortages even though we have one of the higher 
unemployment rates in the country. So critical is the shortage that the 
industry has resorted to importing workers from other countries and 
utilizing temporary employment agencies for regular staffing needs. 
These expensive short-term responses have not been adequate to fill the 
gap between supply and demand, and cannot be sustained over the long 
run. While health care employers search for staff, a large number of 
Washington State's health care training programs are turning away 
qualified students because the programs lack the capacity, faculty and 
clinical sites to train them. Fifty-six programs offering nursing and 
allied health training reported waiting lists in 2001.
    To address this issue, four State representatives requested the 
Workforce Board in 2002 to convene a Task Force to include 
representatives of health care employers and employees, labor, State 
agencies, and education and training organizations, including community 
and technical colleges and 4-year colleges and universities. The 
Workforce Board is using WIA funding to support the work of the Task 
Force. (See Appendix B for membership.)
    The Task Force has developed an action plan last year whose goals 
are:
     Increasing the number of people entering health care 
professions.
     Increasing the capacity of health care education and 
training programs.
     Modifying State regulations and statutes to alleviate the 
shortage.
     Considering rural health care workforce issues.
     Increasing the racial and ethnic diversity of the health 
care workforce.
     Being accountable by monitoring its own progress.
    A year later, in its December 2003 progress report, the Task Force 
cited significant progress:
     For the 2003-05 biennium, the Legislature appropriated 
$11.8 million that will expand capacity by an estimated 2,000 full-time 
equivalent students in health care programs at 2- and 4-year 
institutions.
     The Legislature passed Substitute House Bill 1189 allowing 
hospital districts to reimburse employees for education and training 
and travel costs for interviews.
     Substitute Senate Bill 5966 reduced barriers for dentists 
from other States to practice in Washington.
     All 12 Workforce Development Councils have established 
health skill panels with initial financial support from the Workforce 
Board. These panels of local employers, education, labor, and 
government representatives develop local solutions to address health 
care shortages. Two examples suggest their accomplishments. In the 
Tacoma/Pierce County area, its health skill panel and Tacoma Community 
College developed a Diagnostic Medical Sonography program to meet the 
high demand for these imaging specialists. In North Central Washington, 
the skill panel is targeting incumbent health workers who live some 
distance from their local community college campuses and bringing 
classes to their workplace in a School-at-Work model.
     Washington State focused it $3 million Federal award for 
surpassing performance targets for workforce development programs on 
health care (see following section).
     Local health skill panels in Seattle-King County, 
Northwest Washington, Snohomish County, and Tacoma-Pierce County 
workforce development areas successfully collaborated to capture a $2.4 
million U.S. Department of Labor awarded H1-B grant to train 294 
incumbent workers at institutions of higher education to fill high-
demand health care positions in nursing, specialized imaging 
technology, and radiologic technology.
     The U.S. Department of Health Resources and Services 
Administration awarded the Pierce County Health Services Career Council 
a $683,100 grant to improve the skills of registered nurses by 
developing and implementing a shared residency program for 535 nurses. 
The curriculum addresses issues of diversity, cultural competence, 
service to underserved populations, and mentoring. The project, which 
includes Pierce and Tacoma Community Colleges and Clover Park Technical 
College, also aims to recruit 165 nurses who have not been in practice 
and prepare them to return to patient care.
     Because of new apprenticeships developed in health care 
occupations, the Department of Labor's Office of Apprenticeship 
Training, Employer and Labor Services, selected Washington State to 
pilot specialty apprenticeships in certified nurse assistant and 
licensed practical nurse as alternative pathways to complement 
traditional education programs.
Workforce Incentive Act Section 503 Incentive Grants
    As you know, the Workforce Investment Act provides that those 
States that surpass their performance targets in WIA Title I-B, the 
Adult Education and Family Literacy Act, and the Carl D. Perkins 
Vocational and Technical Education Act are entitled to an incentive 
grant. For PY 2001 performance, Washington received $3 million in 
Section 503 incentive grant funds. This provision is especially 
beneficial as we work to create a ``system'' out of separate State and 
Federal programs. We have noted with appreciation that S. 1627 retains 
it.
    Washington's State Plan for workforce development States that 
Washington will allocate any Section 503 incentive funds to local WDCs 
``for system building initiatives, not activities that pertain only to 
a particular program.'' Washington State chose to direct all of its 
Section 503 incentive grant funds to support workforce development for 
health care occupations.
    The Workforce Development Councils, in coordination with K-12 and 
community and technical college stakeholders, are using the funds to 
support education and training projects addressing regional health care 
personnel shortages. As shown in Appendix C, a significant portion of 
the $3,000,000 will be used to increase the capacity of community and 
technical colleges to deliver health care training programs.
    This Section 503 planning process has brought these leaders closer 
together and has resulted in increased recognition of their mutual and 
complementary roles in developing our workforce system. As a State 
community college leader said, ``the increased local collaboration 
initiated by this policy will benefit us well into the future.''

State Investments in High-Demand Fields of Study
    In order to expand higher education capacity in fields of study in 
high demand by employers, Washington State earmarks higher education 
funds for enrollments in high-demand areas.
    Until fairly recently, the State budget process contained no 
mechanism to direct student enrollments to areas demanded by employers. 
The result at the non-baccalaureate level was flat enrollment in many 
of these fields.
    This began to change in 1999. In the 1999-2001 biennial budget, 
Governor Locke proposed to target growth and the Legislature earmarked 
funding for 500 full-time equivalent students (FTEs) for fields of 
study where employer demand exceeded the supply of graduates. No such 
funding was included in the 2001-03 biennial budget. But, in the 2003-
05 budget, funding is once again provided for 500 high demand FTEs at 
4-year institutions. In addition, the Legislature appropriated $12.609 
million for high demand programs at community and technical colleges.
    The fields of study that are in increasing demand by employers tend 
to cost more than the average for higher education. This is for two 
main reasons: (1) Changes in technology often underlie growing employer 
demand and the same, often costly, new technology may be required to 
teach high demand fields. (2) The workforce shortages in high demand 
fields tend to push up compensation and therefore increase the faculty 
salaries necessary to compete with salaries in the private sector. The 
more expensive nature of high demand fields creates a disincentive for 
higher education institutions to expand their enrollments in these 
fields. While employers have frequently helped by contributing 
equipment, faculty, or other resources, they cannot, and should not, be 
expected to cover the full cost differential. Having a more adequate 
supply of students prepared in high-demand fields will benefit more 
than just the employers and students directly involved. The Legislature 
has recognized this cost differential by funding high-demand FTEs at an 
enhanced rate.

Worker Retraining: Smoothing Workers' Transitions
    Not only do we create workforce development strategies to support 
our key industries, we also recognize that economic change is 
continuous and that global competition and changing technology can have 
serious downsides for workers. Washington State has long been committed 
to assisting dislocated workers, and has developed one of the best sets 
of policies in the nation for responding to worker dislocations. In 
1993, the State created the Worker Retraining program that pays the 
State's share of the cost of retraining dislocated and long-term 
unemployed workers at community and technical colleges and private 
career schools. While most of the money pays for training, the program 
also helps with childcare, transportation, and some financial 
assistance for workers who have exhausted their unemployment benefits.
    From the beginning, the program was integrated with the Job 
Training Partnership Act (JTPA) and now the WIA Dislocated Worker 
program. Typically, the State will first contact dislocated workers 
through Rapid Response services, and JTPA/WIA will provide case 
management, assessments, career and education counseling, help with 
tuition, and provide job search assistance.
    With the advent of WIA in 1998, Pell grants became the first option 
for funding tuition. For dislocated workers, however, Pell grants are 
often not available, because the workers do not meet the financial need 
requirements and often work part-time and go to school part-time. Pell 
grants are not authorized for part-time students. Washington State is 
now looking at options for creating a State financial aid program for 
low-wage workers who are part-time students.
    Finally, in 2000, Washington created the Training Benefits program 
that provides up to 73 additional weeks of unemployment benefits for 
dislocated workers who enroll in retraining. This financial assistance 
is key to enabling many workers to stay in retraining long enough to 
complete a certificate or degree in a high demand technical program.
    The Worker Retraining program has grown from 7,161 students in 
1993-94 to 13,836 in 2001-02. In the fall of 2002, enrollments were up 
59 percent from the previous fall. WorkSource (One Stop) Centers were 
experiencing barriers enrolling dislocated workers into retraining 
because the community and technical colleges were already full. To 
address this capacity problem, the State took advantage of WIA's 
flexibility to contract for additional training slots.
    On an FTE basis, Worker Retraining students represent about one-
sixth of the colleges' total workforce education efforts. The growth of 
the Worker Retraining program has been a major factor why workforce 
education at the community and technical colleges has grown over the 
past decade. The increased demand for the Worker Retraining program is 
due not only to the current economic recession. The long-run trend is 
for more dislocations to occur due to ever more rapidly changing 
technology and increasing international competition. Responding to 
these economic changes means that higher education must have the 
capacity to retrain dislocated workers who need new skills. This will 
be an increasing need in the future.
Preparing A Workforce With the Basics: Adult Basic Skills Education
    Our community and technical colleges are the primary institutions 
in our State to provide adult basic skills (i.e. literacy) instruction 
to the growing population of recent immigrants and others who need 
basic instruction in English. This is the fastest growing mission area 
of our 2-year colleges, having grown 100 percent over the last decade. 
This growth is putting a financial strain on our colleges since 
students do not pay normal student tuition. Providing this education, 
however, is critical if we are to enable recent immigrants and others 
to be good citizens and productive workers. The most successful 
programs, as shown by the Workforce Board's evaluations and national 
research, are those that combine adult basic skills instruction with 
occupational skills training.

         TOOLS FOR DECISION-MAKING: ACCOUNTABILITY FOR RESULTS

    Evaluation is a critical component in the development of the type 
of workforce Washington State desires. The Workforce Board is tasked 
with this responsibility and biennially evaluates the performance 
results of the training programs provided by the community and 
technical colleges, private career schools, apprenticeship, worker 
retraining, Vocational Rehabilitation, secondary career and technical 
education and the Workforce Investment Act. We provide data to policy 
makers to assist them with their investment decisions, and to program 
managers for continuous improvement.
    The latest evaluation of the State's workforce development system 
found that:
     All workforce development programs are estimated to boost 
participants' lifetime earnings and public tax revenues by amounts 
exceeding program costs.
     Post-program employment rates among former program 
participants vary from 60 to 92 percent. They have remained stable 
during the past 2 years despite the recession.
     In programs serving adults, 68 to 92 percent of employed 
former participants reported they were working in jobs related to their 
training. Placement in training-related jobs increased during the past 
2 years for four of the 10 programs.
     Hourly wages and quarterly earnings of program 
participants increased significantly during the past 2 years for almost 
all programs.
     Over 85 percent of employers reported they were 
``somewhat'' or ``very satisfied'' with the overall quality of work by 
former program participants.
    Program results of particular interest to the Health, Education, 
Labor and Pensions Committee's work in higher education are:

Community and Technical College Job Training
    There are 34 community and technical colleges in Washington State, 
all of which provide job preparatory training. This training provides 
students with the skills required for specific occupations. (The 
definition of ``job preparatory training'' does not include students 
who intend to transfer to a 4-year college, worker retraining, students 
who enroll to raise their basic skills, or working adults who take a 
few courses to improve their skill for their current jobs.) It is 
supported through State appropriations and student tuition; colleges 
also use Carl D. Perkins Vocational and Applied Technology Education 
Act funds to improve programs and student success.
    The Workforce Board obtained information on almost 16,700 job 
preparatory students, 51 percent of whom received degrees or 
certificates, up from 45 percent in 2000. Overall, 94 percent indicated 
they had met their educational objectives; satisfaction with the 
quality of teachers, length of training and interaction was over 90 
percent in all instances. Employers were equally impressed and 92 
percent said they were either ``somewhat'' or ``very satisfied'' with 
the overall productivity and job-specific skills of these new 
employees. As for employability, 78 percent had reported employment in 
the Northwest during the third quarter after leaving the program. Their 
median wage was $13.17 per hour, with annualized earnings of $24,180. 
These results are 16 percent higher than for those who left in 1997-98 
and 25 percent higher than 1995-96.
    Our evaluations further show that job preparatory training has 
strong positive short-term net impacts on employment, wages (an 
additional $2.59/hr), hours worked (40.4/hrs per quarter), and earnings 
(mean quarterly increase of $1,470). Projected participants benefits to 
age 65 outweigh public costs by a ratio of over $16 in participant 
benefits per public dollar invested in college training. Finally, the 
public benefits as well through increased taxes. (See Appendix D.)

Private Career Schools
    There are over 325 private career schools and colleges in 
Washington State, approximately 250 of which are licensed by the 
Workforce Board. (Either the Higher Education Coordinating Board or the 
State's Department of Licensing regulates the remainder.) Most students 
who attended programs at schools licensed by the Board said their 
skills improved substantially (between 60 and 70 percent depending upon 
the course of study undertaken) and overall 80 percent said they were 
satisfied with the training they received. Eighty-eight percent of 
employers said they were either ``somewhat'' or ``very satisfied'' with 
the overall quality of work of these new employees. Eighty-seven 
percent of career school students were employed 6 to 9 months after 
leaving their programs and were earning a median wage of $11.24/hr, a 
20 percent increase over the median wage reported 2 years earlier. 
Among students who completed their programs, the training substantially 
increased employment and raised earnings.

        TOOLS FOR DECISION-MAKING: STUDENTS, PARENTS, EMPLOYERS

    Enrollment in postsecondary education is an important decision, one 
that should be based on the best information possible--program 
requirements, costs, future employment possibilities, expected earnings 
and suitability to one's skills and interests.
    Washington State has several tools in place to help students of all 
ages make informed decisions:

Where Are You Going?
    The Workforce Board publishes Where Are You Going? a career guide 
providing information on more than 320 occupations in Washington State, 
on various schools and training programs, financial aid, and other 
related information relating to preparing for employment. Supported by 
Perkins funding, over 165,000 were distributed last year through high 
schools, WorkSource (One Stop) Centers, worker retraining sites, 
community and technical colleges, and community-based organizations. 
This publication is of great assistance to our students as they prepare 
to leave high school, but more guidance needs to happen at earlier ages 
so that students make the right choices during high school.

Consumer Report System
    Washington State has developed a consumer report system to inform 
the public about occupational training programs, including their 
results. (The system fulfills the requirements of WIA, but ours was 
under development before WIA was enacted and was facilitated by years 
of interagency collaboration to create a performance accountability 
system.) Community and technical colleges, private career schools, and 
4-year colleges and universities participate in the consumer report 
system. The system is made up of two websites: Job Training Results 
(www.jobtrainingresults.org) and the Eligible Training Provider List. 
(www.wtb.wa.gov/etp).
    The training programs on the Eligible Training Provider List (ETPL) 
have met the State's minimum performance standards for completion rate, 
employment, and earnings of former participants. These training 
providers can serve people who are eligible for financial assistance 
for occupational training, including not only WIA Individual Training 
Account voucher recipients, but also dislocated workers with Trade 
Adjustment Assistance, which in Washington State includes many 
dislocated Boeing employees. The State Legislature also applied the 
ETPL to the State's Training Benefits program; that is, programs must 
be listed in order for dislocated workers to use Training Benefits 
while they study.
    Participation in the Eligible Training Provider List is voluntary, 
but even so, the ETPL currently has over 350 training providers 
offering over 2,200 training programs throughout the State. Programs at 
all 34 community and technical colleges in the State are listed as are 
those at 222 private career schools, and 70 private and public 4-year 
institutions and their branches. Worker retraining sites, community-
based organizations, and apprenticeship programs are also included. The 
Workforce Board revisits the policy on standards for inclusion on the 
ETPL each year. We are gratified that S. 1627 allows States the option 
of continuing the ETPL; we have found it very useful.
    The second part of the consumer report system is Job Training 
Results (www.jobtrainingresults.org) where anyone can see the actual 
performance results of specific training programs of interest. If a 
customer finds a program of interest on the ETP List, he or she can 
link directly to www.jobtrainingresults.org to find out about its 
results, such as employment and earnings as well as information about 
the students who participated such as their prior education level, 
race/ethnicity, gender and age. Detailed program information is also 
included, such as tuition rates, length of program, and school contact 
information. www.jobtrainingresults.org provides a wealth of 
information about hundreds of training programs in one, user-friendly 
website. Programs at all Washington State community and technical 
colleges and a growing number of private career schools and 4-year 
institutions have chosen to be part of the www.jobtrainingresults.org 
website.
    A strong feature of the Washington State consumer report system is 
that the performance information for all programs is calculated in the 
same way by the State. Therefore, when consumers look up, for example, 
the earnings results for different programs, $25,000 at program X means 
the same as $25,000 at program Y. We believe that consistent 
information should be available to potential students so they can make 
informed decisions.

                               CONCLUSION

    In conclusion, I would like to thank you for the opportunity to 
share Washington State's perspectives--and actions--on the connections 
among higher education, workforce development, and economic vitality. 
I've only sketched the tip of a very deep iceberg of policies, 
programs, and partnerships designed to respond to our needs. Our 
country's need for a workforce more highly skilled than those of our 
competitors and more able to thrive in a knowledge economy is not 
``news'' to you. Our challenge is huge, and we are ready to work with 
you as you continue to craft national solutions and responses.
    In my remarks today, I hope I have been able to communicate a 
couple of themes:
    In Washington State, we are determined to align our workforce and 
higher education investments toward our economic future.
    We are committed to using the Federal resources we receive wisely, 
responsibly, and creatively.
    We believe that partnerships, whether Federal/State/local, public/
private, business/labor, or education/business, are critical to making 
our investments go further, strengthening the ties among leaders with 
common goals, and improving our outcomes.
    Again, thank you for your attention.
    
    
    
                      Statement Laura Palmer Noone

    Mr. Chairman and Members of the Committee, the University of 
Phoenix would like to thank you for your willingness to accept this 
written testimony. The importance of the work of this committee cannot 
be overstated. Never has the link between education and workforce 
preparedness been more critical.

                       THE UNIVERSITY OF PHOENIX

    The University of Phoenix enrolls over 200,000 working adult 
students in degree programs nationwide at our network of campuses as 
well as through online delivery. The admissions standards of the 
University require students to be at least 21 years of age and to be 
either currently employed or temporarily unemployed. In this manner, 
the University can ensure that the serious, working adult student can 
complete his or her courses with peers and be able to apply the 
knowledge gained back to the workplace.
    In existence for only a brief 28 years, there are already over 
282,000 graduates of the University of Phoenix.
    The University's degree programs are at the associates, bachelors, 
masters and doctoral level in the disciplines of business and 
management, technology, health and human services, counseling, nursing, 
education, and criminal justice. The University's model of education 
focuses on the needs of the working adult, by holding classes in the 
evening or online, attending school year round, and enrolling students 
throughout the year. The academic delivery model provides sequential 
coursework for students to attend one course at a time for 5 or 6 weeks 
until degree completion. Class size is small, with an average of 14 
students per class in the physical campuses and an average of 11 
students per class online. In addition students are required to be part 
of a learning team (two to five students) who meet outside of the 
classroom to work together on group projects and problems, thereby 
enhancing the competency of working together as a group.
    The University strives to make the academic experience as 
convenient for students as possible which then results in more time for 
the student to focus on the course content. Courses are located close 
to students' home or office (to minimize drive time) and administrative 
support is available both at the facility and through the Internet. 
Virtually all support systems are available to the students through the 
Internet, including library, academic advisement, financial advisement, 
and learning resources.

                   STUDENT DEMOGRAPHICS ARE CHANGING

    Recent statistics tell us that only one in six college students is 
traditional--an 18-22 year old living on campus, attending classes full 
time, with primary financial support from a parent. Clearly, what has 
been our notion of the traditional student is becoming by virtue of 
dwindling percentage, the non-traditional student. Contrast this with 
the fact that nearly 40 percent of the students attending college today 
are 25 or older and it is clear that the face of the college campus 
today has changed. \1\
---------------------------------------------------------------------------
    \1\ Digest of Educational Statistics, http://nces.ed.gov/programs/
digest/d02/tables/dt176.asp
---------------------------------------------------------------------------
    Adult students are returning to college in record numbers for a 
variety of reasons, but nearly all of them are economic. A college 
education is rapidly becoming the union card for entry into today's 
market place. Forty-eight of the top fifty paying jobs in America 
require a bachelor's degree.\2\ An individual with a bachelor's degree 
can expect to earn over a million dollars more during his or her 
lifetime than a counterpart with only a high school education.\3\ 
Finally, unemployment is much lower among educated adults. Clearly, 
there are many reasons for adults to consider returning to school.
---------------------------------------------------------------------------
    \2\ U.S. Department of Labor, Bureau of Labor Statistics
    \3\ U.S. Department of Education, Annual Earnings of Young Adults 
by Educational Attainment, http://wdcrobcolp01.ed.gov/CFAPPS/ERIC/
resumes/records.cfm?ericnum=ED430322
---------------------------------------------------------------------------
                       A WORKFORCE IN TRANSITION

    From the post World War II baby boom (1950) to the age of the 
personal computer (1991), the percentage of skilled workers in the 
workforce increased by 25 points. Between 1991 and 2000, it is 
estimated that the same sector of skilled workers increased by another 
20 percent.\4\ Conversely, manufacturing jobs have declined from 40 
percent at the end of World War II to less than 18 percent at the close 
of the 20th century. During the same period, the service sector 
increased from 14 percent to 35 percent. In 1959 only 20 percent of 
workers between the ages of 30 and 59 needed some college; today that 
number is 56 percent and rising.\5\
---------------------------------------------------------------------------
    \4\  21st Century Skills/Jobs Report, Jan. 1999; U.S. Bureau of 
Labor Statistics.
    \5\  U.S. Bureau of Labor Statistics
---------------------------------------------------------------------------
    Newspaper reports tell us that some jobs are migrating overseas. 
For example in the field of information technology, it is estimated by 
the year 2008, the IT workforce situated in the United States will be 
25 percent smaller than it is today. Yet, the IT jobs that will remain 
in the United States will be more important than ever. Those jobs will 
be in architecture, strategy, project management and business 
processes. These jobs require higher education.\6\
---------------------------------------------------------------------------
    \6\  Overby, S. (December 15, 2003). The Future of Jobs and 
Innovation, CIO Magazine
---------------------------------------------------------------------------
    Our economy is changing and churning. Research shows that the 
average adult will change careers--not just jobs--three to four times 
in his or her lifetime. These types of shifts often require education 
and/or training; hence many adults consider returning to school in 
order to re-career or upgrade their skills for promotions. Based on a 
2003 alumni survey, 33 percent of students attributed a recent job 
change or promotion to their degree earned at the University of 
Phoenix.

               THE PARTNERSHIP WITH BUSINESS AND INDUSTRY

    A key component of ensuring a qualified workforce is a strong 
partnership between the academic community and the business community. 
This partnership starts with meeting the needs of both the student and 
his or her employer. Nearly 90 percent of University of Phoenix Alumni 
asserted that their education adequately prepared them for the 
workplace.
    Support by the business and industry community is a good indicator 
of the level of support for higher education. Approximately 48 percent 
of our students receive some level of tuition reimbursement from their 
employers, with the percentage substantially higher among those 
industries where tuition reimbursement is more common. Major 
corporations such as AT&T, Boeing, Intel, Motorola, and Verizon have 
sent thousands of employees to the University of Phoenix.
    Approximately 95 percent of the 2002-2003 graduates of the 
University of Phoenix were employed in the following sectors: 
Technology 19.7 percent, Manufacturing 14.1 percent, Health Services 
12.3 percent, Government/Military 11.9 percent, Education 11.1 percent, 
Other Services 10.9 percent, Banking/Finance 9.1 percent, and 
Communications/Media 5.0 percent.
    Another important aspect to partnerships with business and industry 
is the recognition and valuation of company training programs. 
Institutions that understand that not all learning occurs inside a 
classroom can evaluate prior learning for equivalence to college 
coursework. Through articulation agreements and evaluations of 
coursework by faculty, the University of Phoenix has reviewed or is 
currently reviewing training materials from 355 businesses and provides 
these credit recommendations to the employees of those companies. A 
total of 14,837 company-sponsored training courses have been evaluated 
through this process. By considering prior learning in this manner, 
student/employees are able to minimize the duplication of instructional 
material and complete their programs as expeditiously and efficiently 
as possible.

                             ACCESS IS KEY

    It appears that one of the real issues before the committee is 
about creating an environment where adults can take responsibility for 
their own futures through access to education. Access, according to the 
National Education Association (NEA) Higher Education Research Center, 
is comprised of four components: geographical, legal, academic, and 
financial. It is the last of these four that is of primary concern to 
this committee.
    Financial access can come through a variety of means. For example, 
at the University of Phoenix, a majority of our students participate in 
student financial aid--either through loans, grants, or scholarships. 
Yet, the loan limits, especially for first and second year students, 
have not been raised for years. The combined subsidized and 
unsubsidized loan limit for first year independent students is $6,625 
per year. This amount does not cover the cost of continuous enrollment 
for the first academic year and students must find alternate funding to 
cover the shortfall.\7\ This may result in students having to 
temporarily drop out until they can obtain the additional non-Federal 
limited resources. They must then re-enroll when eligible to receive 
the next financial aid disbursement. When this sort of artificial break 
in attendance occurs, it is not only disruptive to the students' 
academic progress, but these students are less likely to return to 
class than a student who has been the beneficiary of continuous 
enrollment. It is impossible to cultivate a prepared workforce without 
the ability to financially access the institutions that have classroom 
space readily available.
---------------------------------------------------------------------------
    \7\ For example, at the University's Online program, a financial 
aid disbursement would mandate completion of four courses but the 
amount disbursed will pay for only three courses' tuition.
---------------------------------------------------------------------------
    Even more vexing to the plight of these students is the fact that 
loan limits for the 4 years of attendance at an academic institution 
are tiered. First year combined limits (subsidized and unsubsidized) 
for independent students are $6,625, while second year students may 
have a combined limit of $7,500. Third and fourth year students enjoy a 
combined loan limit of $10,500. When working adults return to school, 
they already have financial obligations--a home mortgage, car payments, 
etc. They are classified as independent and thus cannot qualify for 
PLUS loans, which allow dependent student families to qualify up to the 
costs of attendance. Similarly private loan programs rarely assist 
these students because the independent students won't meet the debt-to-
income ratio or credit scoring criteria. While the costs of attendance 
are generally equal for students across the years of college, the 
funding levels are not. Hence, the current loan policy restricts non-
traditional students from obtaining a degree and by extension, limits 
the ability of U.S. workers to upgrade their workplace skills and 
employability.
    Minority students are hardest hit by these economic shortfalls. 
Today minority students make up 30 percent of college enrollment (and 
nearly 40 percent of the enrollment at the University of Phoenix.) Most 
of these students are first generation collegians and 20 percent were 
themselves or have a parent born outside the United States. This may 
translate to lack of early awareness or ability to save for college.
    Although it would be easy to assume that education costs have 
outpaced inflation, one must also take into consideration the source of 
funding. A public institution charging resident rates is actually 
subsidizing the cost of attendance. That subsidy comes through State 
allocations as well as through endowment funds. Nearly all States have 
had to tighten budgets, leading colleges to seek other revenue sources. 
As a last resort, many colleges have had to increase tuition rates to 
cover the shortfall.

                               CONCLUSION

    We know we must have an educated workforce. The National Center for 
Educational Statistics directly relates the increase in educational 
attainment to worker productivity. The statistics cited above support 
the need for a better-educated workforce. This committee can help to 
achieve that goal by providing more funds to those in need of 
assistance to obtain or further a college education. Thank you for 
considering this testimony and thank you for allowing the University of 
Phoenix to be part of this important national discussion.

    Statement of the Coalition for a Competitive American Workforce

    In recent years, enterprising, market-oriented postsecondary 
education and training companies have evolved to supply the demand for 
educated and skilled employees and to rectify workforce deficiencies. 
These private sector postsecondary institutions have developed focused, 
market-responsive and innovative approaches that result in immediate 
and effective improvements in the workforce.
    Proprietary postsecondary education companies offer working adults, 
irrespective of their financial means, access to quality, affordable, 
convenient and flexible educational opportunities. In addition, the 
industry provides employers more realistic options, such as the ability 
to work with proprietary companies in a cooperative effort to develop 
timely, relevant and flexible studies and programs, for addressing 
deficiencies and improving the quality of their employees.
    The Coalition is a partnership of the U.S. Chamber, Corinthian 
Colleges, Inc., DeVry Inc., and Kaplan, Inc. These three companies are 
leaders among the market-oriented, innovative companies that contribute 
to the nation's economic development. Like other private enterprises, 
they operate to make a profit for their shareholders. They employ 
thousands of instructors, job placement counselors, admissions 
representatives, and other personnel. They pay Federal, State and local 
taxes. They have grown by accessing private and public capital markets 
and by reinvesting the income generated from providing educational 
services to students. Their success demonstrates how free enterprise 
goals can harmonize with a public mission: to provide career-focused 
degree and non-degree programs for students seeking educational and 
economic advancement and to provide American business and industry with 
a skilled and knowledgeable workforce.
    These companies provide a vital means by which both those seeking 
to enter the workforce and those needing to retrain or upgrade 
knowledge and skills can better their lives. They have the potential to 
do so on a wider scale and believe that the reauthorization of the 
Higher Education Act, as amended (HEA), provides the opportunity to 
expand the services of for-profit schools to nontraditional students to 
meet the new competitive demands of the 21st Century.
    Critical financing that enables individuals to pay for the 
education and training offered by these companies comes from the 
student financial assistance programs authorized by the HEA of 1965. 
These programs include guaranteed student loans, direct loans from the 
Federal Government, and Pell Grants for those with substantial 
financial need. The HEA's goals of expanding access to postsecondary 
education and training, improving its affordability, and demanding 
accountability for institutions' use of the public's funds match well 
with the focus and achievements of the members of the Coalition.
    The following factors should be modified in the reauthorization of 
the Higher Education Act to better serve non-traditional students as 
well as our nation's ability to maintain a competitive workforce.

Remove Restrictions on the Availability of Financial Aid to Students in 
        Online Education Programs
    The HEA currently equates online education with correspondence 
schools and imposes arbitrary 50% rules that impede the offering of 
fully online education programs. The Web-Based Education Commission, 
the U.S. Department of Education, and Congress itself have all found 
that online education is an effective method of delivery of education 
and training that leverages the power of technology to create new 
educational opportunities, especially for working adults who cannot 
afford to stop their lives and enroll in traditional colleges and 
universities. Outmoded restrictions in the HEA should be removed and 
the student financial assistance programs should be opened up, with 
appropriate safeguards, to those who enroll in quality online 
educational programs.

Repeal of the ``90-10'' Rule
    The HEA requires for-profit enterprises, like the institutions 
operated by the members of the Coalition, and them alone, to obtain at 
least 10 percent of their revenues from sources other than the student 
financial assistance programs. Non-profit and public institutions, even 
though they are advantaged through favorable tax treatment and public 
subsidies, are free to secure all their revenues from HEA programs. 
This 90-10 rule had the ostensible purpose of curbing abuses and 
providing an indication of educational quality. Yet, the rule has been 
incoherently applied. And, most importantly, it has created perverse 
and counterproductive incentives that conflict with the HEA's aims. 
Experience under the rule shows that it measures not institutional 
integrity and quality, but the socio-economic status of students. 
Simply put, the more needy an institution's students, the more they 
will qualify for Pell Grants and other forms of financial aid. The more 
aid they receive, however, the more the institution is at peril of 
violating the 90-10 rule. And, the consequence of violating the rule is 
that the institution and its students cease to be eligible for the 
critical financial aid programs. Thus, the rule incentives institutions 
either not to serve the most needy students or to raise their tuition--
results that are contrary to the purposes of access and affordability 
in the HEA.
    Increase loan limits and allow year-round eligibility for Pell 
Grants. Limits on the amount of loans that students may take out to 
finance their education and training have not been increased in over 10 
years. Furthermore, the HEA currently specifies loan limits for first 
and second-year students that are significantly lower than the limits 
for third and fourth-year students. First-year students are especially 
affected, with a limit that is less than half of third and fourth-year 
students. Yet, tuition is the same for all these students, and students 
in the early stages of education and training need more and not less 
help to ensure that they will succeed. Similarly, non-traditional 
students, who are now the majority (73 percent), need access to 
education and training on a year-round basis, not on the old September-
May schedule of the traditional academy. Pell Grants should be 
available to these students throughout the year.

Treat For-Profit Institutions and Their Students Equitably
    The HEA currently has multiple definitions of institutions of 
higher education and distinguishes for-profit from non-profit and 
public institutions. These multiple definitions are a source of 
confusion and fail to recognize the maturation of for-profit 
institutions and the contributions they make to the education and 
training of students. These distinctions and other unfounded 
discriminatory practices also impede the ability of students to 
transfer the credits they earned at for-profit institutions to other 
institutions. The ability to transfer credits is more than a matter of 
equity. By requiring students to retake courses, the cost of education 
is driven up. And, the ability of the postsecondary educational system 
to efficiently respond to workforce needs is constrained. For-profit 
institutions should be recognized in the HEA as full and equal 
participants in its programs, and anticompetitive rules and practices 
should not be allowed to substitute for an examination of what students 
have actually learned and achieved.

               Statement of the U.S. Chamber of Commerce

    Education is directly related to successful participation in the 
workforce. Education and training are not keeping pace with the 
changing workplace. According to a report from the National Commission 
on Mathematics and Science Teaching for the 21st Century, sixty percent 
of all new jobs in the early 21st century will require skills that are 
possessed by only 20 percent of the current workforce. The Higher 
Education Act of 1965 (HEA) is one way to begin to address some of 
these issues that are of interest to the business community.
    Previous efforts to hold institutions of higher education 
accountable have not been successful because they have focused on post-
participation factors such as graduation rate and placement in jobs 
related to areas of study. The Higher Education Act provides funding 
for Pell grants--a significant Federal investment of funds. Pell grants 
form the foundation of student financial assistance, and are the 
gateway to participation in higher education without which many 
students would not attend. Access to higher education is not the only 
measure of success for the Pell grant program. What needs to be 
measured is the success with which Pell grant recipients continue to 
make progress toward degrees. Many of the students who receive Pell 
grants are at risk and may not persist in their education without a 
supportive learning environment. If institutions of higher education 
can demonstrate an increase in the persistence rate of students 
receiving Pell grants, then this reflects a supportive learning 
environment where all students can succeed.
    Both businesses and educational institutions face the problem of 
how to hire, retain, train, and advance employees. Teacher and 
administrator retention is a serious issue that underscores quality. 
Therefore, it is necessary to strengthen initial teacher preparation 
programs as one way of addressing the retention issue and providing all 
students with highly qualified teachers. Alignment needs to be 
developed among the quality teacher provisions of No Child Left Behind 
(NCLB), State teacher licensure standards, State program standards, and 
State K-12 academic standards. Teachers must possess subject area 
competence and be cognizant of the student academic standards against 
which they will be judged.
    In addition, educational institutions must attract nontraditional 
teacher and administrator candidates. Alternative routes to 
certification should be encouraged as a way to meet hiring needs. 
However, quality control measures must be in place to ensure rigorous 
standards.
    Distance learning can provide increased flexibility in the delivery 
of educational services to a diverse population. It is a tool to meet 
the educational and training demands of nontraditional and incumbent 
workers. As a retention and advancement tool, distance learning has the 
potential to create opportunities that allow individuals to increase 
their skills. Additionally, the use of distance learning will relieve 
some of the pressure on overburdened facilities and reduce the 
potential cost for new facilities.
    Higher education is a significant part of the pipeline that 
provides opportunities for life long learning to obtain knowledge and 
skills necessary to participate and advance in the workplace. 
Therefore, higher education must be aligned with K-12 education 
standards and the skills necessary to function and compete in the 
workplace.
    In the 108th Congress, the following principles should be 
considered as they reauthorize the Higher Education Act of 1965.
    1. Accountability for results--retention and graduation--from the 
Federal investment in student financial assistance, particularly Pell 
Grants. Similar to the concept of annual yearly progress in NCLB, 
require institutions of higher education to document annual increases 
in retention rates for students receiving Pell Grants over the life of 
the legislation. To be eligible to receive Pell Grants, students must 
already be making adequate academic progress as defined by the 
institution.
    2. Transparency of requirements--alignment between high school 
graduation requirements, State academic achievement standards, and 
postsecondary entrance requirements to increase understanding of what 
is needed to transition from high school to postsecondary education in 
a competitive admissions environment and to increase the likelihood of 
student success once they are admitted. Alignment also is necessary 
between postsecondary education and workplace requirements.
    3. Initial teacher preparation--NCLB provides for reform of 
professional development for teachers and school administrators, 
involving State licensure/certification agencies and local school 
districts. Initial teacher preparation must be addressed through HEA, 
and where possible support and be consistent with NCLB. Therefore the 
following points are suggested as a framework for reform in the HEA:
     Include teacher preparation entities as partners in reform 
efforts, including teacher and administrator induction programs;
     Align initial teacher preparation program requirements 
with certification and achievement standards for K-12 students leading 
to highly qualified teachers;
     Establish high quality alternative routes to certification 
to recruit nontraditional teacher and administrator candidates;
     Encourage collaborative efforts among employers, local 
education agencies and teacher preparation providers to assist 
individuals (with content knowledge, especially those close to 
retirement) in moving from their current employment into teaching; and
     Support the collection of data and information regarding 
program and certification requirements that will assist States in 
developing reciprocal agreements and aid teacher mobility.
    4. Distance Learning--in order to reduce the pressure to construct 
new facilities, to continue to provide access and control costs, to 
accommodate more nontraditional students (military, working, older, and 
part-time), and to meet demands for incumbent worker training and 
skills upgrading, broaden the flexibility of institutions to offer 
certificate and degree-granting programs through expanded distance 
education programs. This flexibility should be broad enough to allow an 
institution to grant degrees to students who accumulate credit hours 
from multiple institutions recognized by the degree-granting 
institution.
    5. Certificate Programs--for courses not leading to a degree, but 
necessary to advance in the workplace and validated by an employer, 
design a program to provide Federal student financial assistance 
through short-term, low interest loans; employer incentives, and tax 
policies. In addition, create a panel to study how to structure a 
system that provides students who have successfully earned several 
recognized certificates the option of creating portfolios that are 
accepted as official records/transcripts of coursework and grades that 
can be used toward obtaining a degree, and make recommendations to the 
Secretary of Education.

      Statement of the American Association of State Colleges and 
                              Universities

    The American Association of State Colleges and Universities 
(AASCU), The United States Student Association (USSR), and The Public 
Interest Research Group (PIRG) appreciate the opportunity to respond to 
the committee's request for recommendations regarding the 
reauthorization of the Higher Education Act (HEA). On behalf of 
students nationwide, as well as the more than 430 public colleges, 
universities, and university systems in the AASCU membership, the 
following comments and recommendations draw heavily on AASCU's 2003 
Public Policy Agenda, which has been approved by the Association's 
membership.

                   EXPAND ACCESS TO HIGHER EDUCATION

    AASCU firmly believes that need-based aid is the most effective 
Federal tool for promoting access and opportunity and encouraging 
persistence and completion. Research by the Department of Education has 
consistently shown the importance of aid in extending access to 
disadvantaged groups, as well as the adverse impacts of excessive work 
and consumer debt on persistence and completion.
    Federal policy should continue to target the greatest share of 
resources on the neediest students, and should be sufficient to enable 
even the poorest students with no parental resources to finance a 
baccalaureate degree as a resident student at an AASCU institution. 
AASCU supports substantial increases in Federal grant funds and 
institutional flexibility in setting maximum subsidized loan amounts to 
minimize excessive work and consumer borrowing by students, 
particularly low-income students. Data from the National Center for 
Education Statistics (NCES) indicate that students working less than 15 
hours per week had better persistence rates than those working the 
average, which was 22 hours per week in Academic Year 1999-2000.
    To make this goal possible, AASCU estimates that Federal grant and 
loan resources will have to cover approximately two-thirds of the total 
cost of attendance of the lowest income student, which averages about 
$13,000 per year at a public 4-year institution. NCES data indicate 
that low-income students are much more likely to receive Federal 
student aid funds than State or institutional funds. But those students 
who receive significant funds from non-federal sources may be able to 
reduce their loan and work responsibilities.

Federal Grants
    AASCU maintains that Pell Grants are the most efficient and 
effective delivery mechanism for ensuring broad higher education access 
and opportunity. We will continue to advocate increases in the maximum 
award for the Pell Grant program, in which approximately half the 
recipients have family incomes so low that they have no expected family 
contribution under the Federal statute. Keeping the focus of Pell 
Grants on the financially needy should be one of the most important 
objectives in HEA reauthorization.
    The Federal Supplemental Education Opportunity Grant Study (CWS) 
programs also provide essential need-based student assistance, 
promoting timely program completion with minimal student indebtedness.
    Because these programs are discretionary budget items, and Congress 
appropriates funding for these items on an annual basis, they must 
compete for funding with other domestic discretionary spending, which 
restricts funding growth. AASCU proposes that the Pell Grant 
authorization be modified to change the way that the program is managed 
and funded. Specifically, once Congress has set the Pell Grant maximum, 
AASCU proposes that funding be provided, even if program estimates 
change, without the need for a supplemental appropriation.
    AASCU supports the Leveraging Educational Assistance Partnerships 
(LEAP) program as an important Federal-State link in providing need-
based aid to students. Additionally, AASCU urges the Congress to 
consider changes in the program formula that would provide a more 
meaningful incentive for States with little or no need-based aid 
programming to strengthen their efforts in this area.

Federal Loans
    Since the Federal Family Education Loan Program and the Direct Loan 
Program receive mandatory funding through the Federal budget, loan 
volume has increased more dramatically than Pell Grant funding in 
recent years. Annual loan volume increased from $36 billion in fiscal 
year 1998 to $55 billion in fiscal year 2002. The median debt of 
graduates of public institutions more than doubled between 1993 and 
2000. According to the NCES median debt for low-income dependent 
graduates increased from $6,400 to $15,000, while median debt for low-
income independent graduates jumped from $7,600 to $18,000. Over the 
same period, the portion of students borrowing increased from 38 
percent to 60 percent.
    Moreover, there is increasing evidence that the debt-to-income 
ratio for many students leaving public 4-year institutions exceeds 10 
percent in the first few years after leaving college; 10 percent is 
widely regarded as a reasonable limit to ensure that borrowers can 
repay their loans without excessive financial hardship. Data from the 
Department indicate that 31 percent of borrowers from public 4-year 
institutions entering repayment in 1997 had debt-to-income ratios above 
10 percent.
    A recent study by Nellie Mae indicates that debt is causing more 
hardship for low-income borrowers than for other borrowers, stating 
``Pell recipients who left school without completing a degree are much 
more likely than other noncompleters to report that loans played a 
significant role in this decision.'' Additionally, ``borrowers who 
received Pell Grants face more difficult financial circumstances after 
graduation, as well as starting salaries, current earnings, and current 
household incomes that are all significantly lower than those reported 
by other borrowers. As a result, Pell recipients have higher average 
payment-to-income ratios than borrowers who came from higher-income 
families.''
    Therefore, AASCU advocates the following to help students manage 
and minimize their debt burdens:
     AASCU calls for the elimination of all up-front fees in 
the Federal student loan programs.
     AASCU supports extension of repayment (when appropriate) 
for both the FFEL and Direct Loan programs.
     AASCU advocates income-contingent repayment for borrowers 
in both the FFEL and Direct Loan programs, to help those with debt-to-
income ratios so unfavorable that they cannot afford to cover interest 
payments on their debt.
     AASCU firmly believes that borrowers should receive 
periodic information from lenders, servicers, guaranty agencies, and 
the Department of Education, as appropriate, recommending that they 
review their payments relative to their current financial 
circumstances, to remain in good status on their payments. Moreover, 
such information would help students to avoid unnecessary extension of 
repayment and interest payments as their financial circumstances 
improve.
     AASCU, joining with the U.S. Public Interest Research 
Groups (PIRG), and the United States Student Association (USSA), 
recommend that the current aggregate borrowing limits in the Federal 
student loan programs be maintained, and propose that alternatives to 
increases in aggregate limits be considered and implemented. Such 
alternatives include flexibility in the first and second years on 
annual limits, and the creation of a zero interest loan program for 
students who have need beyond current annual loan limits. Any proposal 
along these lines would effectively target students who require 
additional assistance, and ensure that the extra loan burden they 
undertake would not significantly raise their overall debt burden.
    Additionally, AASCU calls on the Department of Education to focus 
on issues related to borrower default.
    AASCU supports changes to the Federal loan programs to eliminate 
default by ensuring that the Department of Education, the guaranty 
agencies, and the lenders maintain contact with all borrowers after 
they leave college, and place borrowers in an appropriate repayment 
plan. We believe that the Federal Government has the tools to make sure 
that no borrower in good faith is 270 days delinquent on a Federal loan 
without making a payment based on a repayment plan appropriate to the 
borrower's financial circumstances. If the borrower has sufficient 
income and/or assets and is not willing to make payments in good faith, 
we believe the government's authority to attach wages, retain Federal 
income tax refunds, or sue is sufficient to begin the repayment 
process.
    AASCU further recommends more in-depth study of the causes of 
default, as more than 50,000 borrowers from public 4-year institutions 
currently lapse into default each year. While it is clear that lenders 
and guaranty agencies often have trouble locating borrowers after they 
leave school, AASCU calls on the Department of Education to determine 
what role ``skips'' (borrowers unable to be located by lenders and 
guaranty agencies) play in total defaults. If the Department needs 
further authority to locate borrowers after they leave college, AASCU 
supports legislative changes to provide such authority.
    AASCU joins with the recommendations of other higher education 
associations to the Department of Education, dated February 28, 2003, 
in advocating for the repeal of provisions in current law that result 
in larger payments to guaranty agencies in the event of borrower 
default. Further, AASCU agrees that the key role of the guaranty 
agencies should be to assist student and parent borrowers to 
successfully complete loan repayment, and recommends the following 
steps to achieve this goal: strengthen the guaranty role in providing 
early and aggressive management/default prevention programs; increase 
the use of performance incentives linked to the borrower repayment; and 
retain and expand the Secretary's current authority to enter into 
Voluntary Flexible Agreements with guarantors and encourage the 
development of best practices.

Tax Proposals
    While AASCU believes that the Federal tax code should not be viewed 
as a primary mechanism for delivering student financial aid, we offer 
several recommendations to better align existing HEA and non-HEA 
programs with the goals of higher education access and opportunity.
    AASCU, working with PIRG, USSA, and other groups, will actively 
pursue legislation that would provide a tax credit for student loan 
interest paid by low-income borrowers.
    AASCU working with PIRG, USSA, and other groups, will advance a 
proposal to establish a Federal tax exemption for loan forgiveness 
proceeds for borrowers after 25 years of repayment in the income-
contingent repayment program.
    AASCU believes that untaxed interest earnings from prepaid tuition 
plans, college savings plans, or Coverdell Education Savings Accounts 
should not be considered as income and therefore excluded in the 
calculation of expected family contribution (EFC).
    AASCU will advocate for changes in the HOPE and Lifetime Learning 
Tax Credits that will make them more accessible to the neediest 
students, including refundability, expansion to non-tuition expenses, 
and removal of the offset against Pell and SEOG awards. However, AASCU 
believes that Federal financial aid programs that more directly benefit 
the neediest students (i.e. Pell Grants) are a higher policy priority 
than expansion of tax benefits.
    AASCU will continue to pursue the repeal of the current 
administrative and reporting provisions of the HOPE and Lifetime 
Learning Tax Credits, and replace them with a reporting structure that 
is simpler and less burdensome for institutions.
    State colleges and universities are becoming increasingly reliant 
on private gifts to support their infrastructure and activities. 
Therefore, AASCU supports proposals in the President's fiscal year 2004 
budget that:
     Would permit individuals to transfer proceeds from an 
Individual Retirement Account (IRA) tax-free to charitable and other 
non-profit organizations, and
     Would allow taxpayers that do not itemize deductions on 
their Federal income tax returns to claim a deduction for charitable 
contributions.

                    COLLEGE COSTS AND AFFORDABILITY

    AASCU commends Congress for the study of college costs mandated by 
the 1998 Amendments to the Higher Education Act (HEA). The study, 
conducted by the National Center of Educational Statistics (LACES), 
found that changes in State appropriations are the dominant factor 
affecting changes in public college and university prices. LACES also 
commissioned a volume of papers by distinguished economists and college 
presidents on the factors involved in setting tuition at public and 
independent institutions. AASCU has found these to be extremely useful 
in detailing the financial pressures on colleges in recent years, as 
well as the choices that States and institutions make to provide 
educational opportunity at affordable prices.
    The shift in the financing of public higher education has been 
widely documented by those concerned about how students finance higher 
education. Bruce Johnstone, now professor of economics and higher 
education finance at SUNY Buffalo, was president of SUNY institutions 
for 9 years, and chancellor of the SUNY System for 6 years, and, during 
his tenure, had to cut faculty, staff, and operating expenses, totaling 
approximately 20 percent of the full-time faculty and staff of the 
state-operated system. Johnstone wrote in 1999, ``Rising tuition in the 
public sector is overwhelmingly caused by the withdrawal of State tax 
revenue and a shift in the relative cost burden from the taxpayer to 
students and parents.'' Indeed, State spending on higher education as a 
share of personal disposable income fell more than 17 percent from 
fiscal year 1981 to fiscal year 2001.
    In spite of significant increases during the last decade, tuition 
at public 4-year institutions averaged $4,081 in Academic Year (AY) 
2002-2003 for in-state students, which is manageable for most middle-
class families. State investment in 4-year institutions totaled $63.6 
billion in fiscal year 2003 to provide the major support for public 
higher education.
    Non-tuition expenses, however, add another $10,000-$12,000 for 
dependent residential students, and more than that for independent 
students with dependents.
    Federal and State student aid is essential to providing access for 
low-income students if public 4-year institutions are to be affordable 
for these students.

                             ACCOUNTABILITY

    AASCU recommends that the Department of Education make fuller use 
of existing research and program data (e.g. persistence of Pell Grant 
recipients and beginning postsecondary students) to assess program 
efficacy before contemplating any new reporting mandates, and to 
carefully examine current institutional data collection with the goal 
of eliminating collections that yield data of little or no utility. 
Moreover, AASCU strongly encourages the Department of Education to 
recognize the central role of the States in establishing the mission of 
public institutions and promoting program integrity and accountability, 
and to work with the States to maintain appropriate and complementary 
roles.
    AASCU offers the following comments regarding changes in HEA that 
would reduce unproductive regulation and promote institutional 
innovation while maintaining an appropriate level of accountability for 
Federal funds:
     Generally speaking, AASCU strongly advocates for a 
reduction in the number and scope of Federal regulations. We believe 
that the current ``one size fits all'' approach to gatekeeping and 
oversight should be replaced by a system of equitable and appropriate 
regulation of participating institutions by type and control. Such an 
approach would allow the Department of Education to focus its limited 
enforcement resources on problem schools, and alleviate the unnecessary 
burdens imposed on other institutions.
     AASCU calls for revisions to HEA provisions (e.g. those 
pertaining to return of Title IV funds) that are unduly harsh on many 
high-risk, low-income students who used Federal funds to attempt 
postsecondary education and who have left school, including 
servicemembers called to active duty.

             IMPROVE OUR NATION'S TEACHER TRAINING PROGRAMS

    AASCU strongly recommends that Title II of the Higher Education Act 
be aligned with relevant provisions of the No Child Left Behind Act 
(NCLB). This alignment must cover the preparation of all school 
personnel. The key to increased alignment is the role of the States in 
two areas--licensure, which was addressed in NCLB, and teacher 
preparation program approval, which should be addressed in the Higher 
Education Act.
    For this reason, AASCU recommends that resources should be provided 
through Title II of HEA to States for three purposes:
    1. Implementing reforms that aid teacher preparation programs in 
preparing teachers and other school personnel who are highly qualified, 
as required by NCLB and consistent with the applicable State's approved 
plan for implementing NCLB;
    2. Reforming State teacher preparation program approval standards 
and processes, as such reforms should aid in aligning K-12 competency 
standards, teacher licensure standards, and teacher preparation program 
standards; and
    3. Allowing States to use their funds in support of the activities 
authorized under section 2113 (C) of NCLB.
    In addition to the State grants, AASCU recommends continuation of 
the partnership grants. However, the definition of ``eligible 
partnership'' should be modified to parallel the definition of 
partnership found in Title II of NCLB. The required partners should be 
a private or State institution of higher education and the division of 
the institution that prepares teachers and principals, a school of arts 
and sciences, and a local educational agency (LEA), with priority given 
to high-need LEAs. The partnership grants should have three required 
activities: (1) implementing reforms to strengthen and enhance teacher 
preparation programs so that new teachers are highly qualified; (2) 
providing high quality clinical experiences, which should be done in 
collaboration for the benefit of classroom teachers, institutional 
faculty, and teacher candidates; and, (3) supporting professional 
development for all school personnel.
    The Teacher Recruitment Grant program and the Preparing Tomorrows 
Teacher to Use Technology program (PT3) should be reauthorized. AASCU 
stands ready to work with Congress to address any concerns pertaining 
to section 207.

               PROMOTE QUALITY EDUCATIONAL OPPORTUNITIES

    AASCU supports current law that calls for the Federal Government to 
determine the legal authority of an institution to operate within a 
State, the accreditation status, and the administrative capacity and 
financial responsibility for institutions that expect to qualify for 
participation in programs under the Higher Education Act. The Federal 
Government should continue to exercise oversight through its current 
role of recognizing agencies or associations that perform the function 
of assessing the quality of education.
    Accreditation works well, but it could be improved. The acceptance 
of status quo will not maintain the public trust. To reinforce higher 
education's commitment to maintain this trust, AASCU recommends that 
accreditation reports of institutional reviews be made public either by 
the review authority or the institution. The assurance afforded by 
accreditation is essential, especially for the most at-risk and 
economically disadvantaged populations. Agencies or associations 
responsible for assessing the quality of education under voluntary 
self-regulation must step up their efforts to streamline and strengthen 
accreditation.
    New challenges for the current system are present in the growth of 
distance education. AASCU supports the proposal in the February 28, 
2003 letter of the higher education associations that the Distance 
Education Demonstration Program authorized in HEA Section 486 become 
the prototype for a permanent program for non-traditional delivery of 
higher education:
    ``The Higher Education Act should permit and support a carefully 
monitored expansion of programs that use innovative means to deliver 
education programs, while ensuring continued program integrity . . . ''

               SIMPLIFY THE STUDENT FINANCIAL AID PROCESS

    AASCU supports the elimination of non-germane aid eligibility 
requirements, such as those related to drug convictions and Selective 
Service registration.
    AASCU encourages Congress to review carefully the operation of the 
Performance Based Organization (PBO) in modernizing the systems for 
delivering student aid and the repayment of student loans.
    promote student academic preparation for postsecondary education
    AASCU advocates for increased funding of the TRIO and GEAR UP 
programs, specifically:
    Expansion of those programs to reach community-based organizations 
and other groups that serve underrepresented students, and
    Aid to colleges and universities for tracking and providing support 
systems for under prepared college students.
    Funding for these programs is important to increasing the college 
readiness of high school students, as well as the persistence and 
completion of at-risk college students.
    Additionally, AASCU urges policymakers at both the Federal and 
State levels to take a long-term, comprehensive approach to 
developmental education, creating a State/Federal partnership 
initiative to provide resources for institutions enrolling a 
significant number of academically at-risk students.
    As the Senate prepares to take up this important legislation, 
AASCU, USSA and PIRG stand ready to work with policymakers to promote 
college access and success for the nation's students.

    [Whereupon, at 11:25 a.m., the committee was adjourned.]

                                    
