[Senate Hearing 112-930]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 112-930
 
        IMPROVING COLLEGE AFFORDABILITY: A VIEW FROM THE STATES

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

                                HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                                   ON

EXAMINING IMPROVING COLLEGE AFFORDABILITY, FOCUSING ON A VIEW FROM THE 
                                 STATES

                               __________

                           SEPTEMBER 13, 2012

                               __________

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                                 Pensions
                                 
                                 
                                 
                                 
                                 

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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                       TOM HARKIN, Iowa, Chairman

BARBARA A. MIKULSKI, Maryland         MICHAEL B. ENZI, Wyoming
JEFF BINGAMAN, New Mexico             LAMAR ALEXANDER, Tennessee
PATTY MURRAY, Washington              RICHARD BURR, North Carolina
BERNARD SANDERS (I), Vermont          JOHNNY ISAKSON, Georgia
ROBERT P. CASEY, JR., Pennsylvania    RAND PAUL, Kentucky
KAY R. HAGAN, North Carolina          ORRIN G. HATCH, Utah
JEFF MERKLEY, Oregon                  JOHN McCAIN, Arizona
AL FRANKEN, Minnesota                 PAT ROBERTS, Kansas
MICHAEL F. BENNET, Colorado           LISA MURKOWSKI, Alaska
SHELDON WHITEHOUSE, Rhode Island      MARK KIRK, Illinois
RICHARD BLUMENTHAL, Connecticut

                      
                                       

             Pamela J. Smith, Staff Director, Chief Counsel

                 Lauren McFerran, Deputy Staff Director

              Frank Macchiarola, Republican Staff Director

                                  (ii)

  




                            C O N T E N T S

                               __________

                               STATEMENTS

                      THURSDAY, SEPTEMBER 13, 2012

                                                                   Page

                           Committee Members

Harkin, Hon. Tom, Chairman, Committee on Health, Education, 
  Labor, and Pensions, opening Statement.........................     1
Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming, 
  opening Statement..............................................     2
Bennet, Hon. Michael F., a U.S. Senator from the State of 
  Colorado.......................................................     3
Bingaman, Hon. Jeff, a U.S. Senator from the State of New Mexico.    38
Alexander, Hon. Lamar, a U.S. Senator from the State of Tennessee    40
Franken, Hon. Al, a U.S. Senator from the State of Minnesota.....    42
Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode 
  Island.........................................................    44

                               Witnesses

Howard, Muriel A., Ph.D., B.A., President, American Association 
  of State Colleges and Universities, Washington, DC.............     5
    Prepared Statement...........................................     6
Longanecker, David A., Ed.D., M.A., B.A., President, Western 
  Interstate Commission for Higher Education, Boulder, CO........    11
    Prepared Statement...........................................    14
Morgan, John G., B.A., Chancellor, Tennessee Board of Regents, 
  Nashville, TN..................................................    18
    Prepared Statement...........................................    20
Preus, Camille, Ph.D., Commissioner, Oregon Department of 
  Community Colleges and Workforce Development, Salem, OR........    26
    Prepared Statement...........................................    28

                          ADDITIONAL MATERIAL

Response by Muriel A. Howard, Ph.D. to questions of:
    Senator Enzi.................................................    51
    Senator Blumenthal...........................................    52
Response by David A. Longanecker, Ed.D., M.A., B.A. to questions 
  of:
    Senator Enzi.................................................    52
    Senator Bennet...............................................    53
    Senator Blumenthal...........................................    54
Response by John G. Morgan, B.A. to questions of:
    Senator Enzi.................................................    55
    Senator Blumenthal...........................................    56
Response by Camille Preus to questions of:
    Senator Enzi.................................................    56
    Senator Bennet...............................................    57
    Senator Blumenthal...........................................    57

                                 (iii)

  


                   IMPROVING COLLEGE AFFORDABILITY: 
                         A VIEW FROM THE STATES

                              ----------                              


                      THURSDAY, SEPTEMBER 13, 2012

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:35 a.m., in 
room SD-430, Dirksen Senate Office Building, Hon. Tom Harkin, 
chairman of the committee, presiding.
    Present: Senators Harkin, Enzi, Bingaman, Hagan, Merkley, 
Franken, Bennet, Whitehouse, Blumenthal, and Alexander.

                  Opening Statement of Senator Harkin

    The Chairman. Good morning. The Senate Committee on Health, 
Education, Labor, and Pensions will come to order.
    As the fall semester began in recent weeks, more than 21 
million students enrolled or returned to college, whether on 
campus or online. While this number sounds impressive, we are 
reminded again on Tuesday by the OECD, the Organization for 
Economic Cooperation and Development, that America continues to 
lag other advanced nations and we now rank 13th when it comes 
to younger adults with degrees.
    As we know all too well, one of the main reasons that 
America has fallen from the top spot is that college has become 
increasingly unaffordable for a growing number of Americans. 
During the August break, I heard repeatedly from students and 
parents across Iowa about the financial squeeze they are facing 
from the spiraling cost of college and, of course, their 
increasing anxiety about the level of student debt. These are 
the real stories of financial hardship behind the statistics 
that we've heard over and over: how student debt has crossed 
the $1 trillion mark; how average loan debt topped $25,000; how 
public college tuition has tripled since the 1980s, outpacing 
both inflation and family income.
    America's system of higher education has been one of shared 
responsibility. Students, families, States, and the Federal 
Government all take a part in funding a college education. But, 
in the past 30 years, we've witnessed a gradual and structural 
realignment of each partner's share of the growing cost of 
college. States are contributing less, while students and their 
families are shouldering a heavier burden, financed largely 
through the Federal Government's financial aid programs.
    This cost shifting means that State and local support per 
student is lower today than it was 25 years ago in constant 
dollars. States collectively spend $6.12 per $1,000 in personal 
income, down from $8.75 just in 1990, though personal income 
has increased by 66 percent over that period. Moreover, States' 
spending on higher education as a share of their budget is 
declining. States now spend an estimated 11.5 percent on higher 
education, down from 14 percent 20 years ago.
    This declining investment means that students have to pay 
more as public institutions try to cover the State cuts through 
tuition hikes. Net tuition accounted for just 23 percent of 
educational revenues in 1986. Today, it is more than 43 
percent. Given the fact that 70 percent of America's college 
students attend public colleges and universities, the national 
implications of this State retrenchment for college access and 
success are obvious.
    Now, for its part, the Federal Government has stepped up 
efforts to help students pay for college. I hope that we can 
all acknowledge that this model of shifting cost is neither 
sustainable nor desirable. To be fair, these trends mask 
significant efforts by some States--admittedly, only a few--to 
increase investments in higher education. I think it also 
obscures the fact that funding alone will not necessarily make 
possible what I hope is our shared goal for each and every 
American to have access to high-quality, postsecondary 
educational opportunities regardless of one's background. While 
funding is essential, smart policies are integral to maximizing 
the impacts of such investments.
    With the committee's previous hearings on college 
affordability, today's hearing will focus on what's being done 
and how it can be replicated or adapted by others to keep the 
dream of higher education alive for students. The previous 
hearing emphasized promising strategies employed by innovative 
colleges and universities to curb the cost while improving 
student outcome. Today, we'll shift our attention to States and 
their policies for improving affordability.
    We are fortunate to have a distinguished panel of guests. 
They will shed light on State efforts, policies, and 
initiatives that hold promise for prioritizing and improving 
college affordability. They will help identify State barriers 
to innovation, efficiency, and effectiveness at both the 
systems and the institutional levels. There is much room for 
progress and improvement when it comes to our system of higher 
education. It seems to me that a consensus is emerging from 
these very productive hearings on the need to break with 
business as usual.
    Increasing college affordability is going to take 
leadership, collaboration among all stakeholders, and a real 
sense of urgency. I look forward to our continuing efforts in 
this regard and our work with our distinguished Ranking Member, 
Senator Enzi, and colleagues on both sides to tackle this 
problem and to ensure that our higher education system remains 
affordable, accessible, and resulted-oriented both for students 
and taxpayers.
    With that, I invite Senator Enzi for his opening remarks.

                   Opening Statement of Senator Enzi

    Senator Enzi. Thank you, Mr. Chairman, and thank you for 
continuing to focus the committee on the increasing challenges 
that students and their families face in paying for college. As 
you were making your remarks, I couldn't help but reflect back 
on some comments by a former Governor of Tennessee and a former 
University of Tennessee president who said that because of 
Federal costs that the Federal Government has shifted to the 
States, the only place that they have flexibility is in how 
much they give to colleges. So we've added to the problem 
somewhat there, too.
    While there's very little left to say about how expensive 
higher education has become, I recently heard a very disturbing 
description of just how high college prices have climbed. 
Earlier this summer, the Finance Committee held a hearing 
focused on higher education provisions in the tax code. During 
that hearing, one of the witnesses explained the following: If 
milk and gas had risen as fast as college prices since 1980, 
gas would be $13 a gallon today and milk would be $23 a gallon.
    This is simply astounding and underscores the urgent need 
for us to begin asking questions about the effectiveness of 
current Federal student programs and how we can do things 
better. We'll be looking to reauthorize the Higher Education 
Act in the next few years and through that look for ways that 
the Federal Government can better serve students. As we begin 
that process, it's important that we consider what's being done 
at the State level.
    For that reason, we've asked our witnesses today to discuss 
a few of the promising innovations already being implemented 
throughout the States. Many of these could and should serve as 
a model for future reforms in the Federal student aid programs 
as we work to reverse the seemingly endless increases in 
college costs.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Enzi.
    As I said, we have an exceptional panel of witnesses here 
today. I want to thank all of you for taking the time to be 
here and sharing your experience. I will start, and I will 
yield to others for introductions.
    I will start by welcoming our first witness, Dr. Muriel 
Howard, president of the American Association of State Colleges 
and Universities. Before becoming president in 2009, Dr. Howard 
was president of Buffalo State College, a campus of more than 
11,000 students, approximately 1,700 faculty and staff, a 
financial operation of more than $214 million.
    Prior to joining Buffalo State, she was the vice president 
for Public Service and Urban Affairs at the University of 
Buffalo, where she served in various leadership capacities over 
a 23-year period. A graduate of the University of New York's 
Richmond College, Dr. Howard holds a master's degree in 
education and a Ph.D. in educational organization, 
administration, and policy from the University of Buffalo. She 
has also received six honorary degrees and many awards for her 
contributions to public higher education, for service to her 
community, and her commitment to diversity.
    We thank you for being here.
    Next, I would yield to our distinguished Senator from 
Colorado for purposes of our next introduction.

                      Statement of Senator Bennet

    Senator Bennet. Thank you, Mr. Chairman, and thank you 
again for holding this important hearing. It's my honor to 
introduce Dr. David Longanecker to the committee. Dr. 
Longanecker has served as president of the Western Interstate 
Commission for Higher Education in Boulder, CO, since 1999. The 
commission is a regional compact among 15 western States which 
seeks to improve access to higher education.
    Previously, Dr. Longanecker served for 6 years as the 
Assistant Secretary for Postsecondary Education at the 
Department of Education. In this role, he developed and 
implemented initiatives that provided more than $40 billion 
annually in student assistance.
    Prior to that, he served as the State higher education 
executive officer in both Colorado and Minnesota. He was also 
the principal analyst for higher education for the 
Congressional Budget Office, and welcome back.
    Dr. Longanecker has worked closely with our Lieutenant 
Governor, Joe Garcia, who serves as the executive director of 
the Colorado Department of Higher Education. This collaboration 
promises exciting developments for the future of higher 
education in Colorado.
    Dr. Longanecker has been an exemplary leader in education, 
both nationally and in Colorado, and I look forward to his 
testimony.
    Thank you for being here today.
    The Chairman. Thank you very much, Senator Bennet.
    I would yield to Senator Alexander for purposes of our next 
introduction.
    Senator Alexander. Thanks, Mr. Chairman, and thanks for the 
series of hearings. It's my privilege to welcome John Morgan 
here. John is one of our most experienced State officials. He 
has worked with the State of Tennessee for 30 years. He has 
been the Controller of the Treasury. He was deputy to our 
Democratic Governor before the election of our new Republican 
Governor, with whom he now works. He is chancellor of the 
Tennessee Board of Regents, which is the sixth largest system 
of public higher education in the country. It has a number of 
4-year institutions and 2-year institutions.
    What I'm especially looking forward to hearing about is the 
system that he and Governor Bredesen put in place and that 
Governor Haslam and he are now implementing, which has our 
State focusing more of our dollars for higher education on 
retaining and graduating students than simply the number who 
are enrolled. One way to save money if you're going to a 4-year 
institution is to stay and graduate in 4 years or 5 years 
instead of 6 years, which is the norm.
    Welcome, Mr. Morgan.
    The Chairman. Thank you very much.
    The next witness will be Dr. Preus. As commissioner of 
Oregon Community Colleges, Dr. Preus provides leadership and 
advocacy with the Governor, the legislature, and other 
statewide stakeholders for Oregon's 17 community colleges, 
seven workforce investment areas, and many community-based 
organizations. Prior to her appointment as Commissioner, Dr. 
Preus held leadership roles in workforce development at the 
local end State levels.
    She has also had private sector experience as a chemist and 
quality control manager with United States Steel. She serves on 
numerous boards across the country and graduated from 
Cumberland Junior College and Middle Tennessee State 
University. She earned a master's in business administration 
from Indiana University and her doctorate from Oregon State 
University.
    We welcome you all, a very distinguished panel. All of your 
statements will be made a part of the record in their entirety. 
What I would ask is that you just give a brief summation in 5 
to 7 minutes. We'll go down the line, and then we'll open it up 
for a dialog.
    Dr. Howard, we'll start with you. Welcome and please 
proceed.

STATEMENT OF MURIEL A. HOWARD, Ph.D., B.A., PRESIDENT, AMERICAN 
 ASSOCIATION OF STATE COLLEGES AND UNIVERSITIES, WASHINGTON, DC

    Ms. Howard. Good morning, and thank you, Chairman Harkin, 
Ranking Member Enzi, and distinguished Senators of the 
committee. As you know, my name is Muriel Howard, and I'm 
president of the American Association of State Colleges and 
Universities, henceforth referred to as AASCU.
    AASCU's membership comprises of approximately 420 public 
institutions that vary by enrollment, size, and mission, but 
are primarily recognized as State comprehensive master's 
institutions. It is an honor for me to appear before you today, 
and I applaud the committee for continuing to examine this 
important subject of college affordability.
    College affordability is the responsibility of four primary 
stakeholders, the Federal Government, State government, 
institutions, and families. The Federal Government has 
strengthened its commitment in recent years with increased 
funding for the Pell grant. And I thank each of you for that, 
especially you, Mr. Chairman.
    Institutions have a responsibility to provide a quality 
education while maintaining reasonable tuition. I am pleased to 
report that public 4-year institutions have been working hard 
to be responsible partners in the college affordability 
compact. These institutions provide substantial grant aid to 
financially needy students, and institutional spending data 
from the past decade illustrates that master's comprehensive 
public colleges and universities have kept overall increases in 
the cost of educating students at roughly the rate of 
inflation.
    So why the dramatic increase in tuition during the past 
several years? Simply put, State investment in higher education 
is on a downward spiral. Per student, State investment in 
higher education has deteriorated over the past 25 years. 
Numerous studies have cited this as the single greatest factor 
in the rise of tuition at public 4-year institutions.
    States, though, can help by investing in student financial 
need-based aid programs. State grant-aid programs award money 
for college, based on financial need, academic merit, or a 
combination of both. Over the past 20 years, there has been an 
increase in awarding more merit-based aid than there has been 
need-based aid. The shift toward merit aid programs is a step 
backward, in my opinion, in addressing college affordability. 
Merit-based programs distribute aid to students from higher 
income backgrounds, awarding taxpayer funds to students who 
would likely have enrolled in college regardless of the 
financial aid.
    States, on the other hand, should provide greater 
flexibility around institutional policies. Flexibility is 
essential when resources are constrained. Greater institutional 
flexibility in setting tuition, financial aid, the procurement 
and sharing of goods and services, and adjusting regulations 
involving capital improvements are critical.
    In the area of tuition policy, it's important for me to 
note that public institutional leaders in 40 States do not have 
complete autonomy to establish their own tuition rate. This 
authority rests in either a State agency or the State 
legislature. Likewise, the institution should have flexibility 
and control to determine how tuition dollars are allocated 
across the campus, including the use of tuition dollars for 
student financial aid.
    States should ensure that students are college- and career-
ready. As the committee knows, 46 States have adopted the 
Common Core State Standards that are designed to better prepare 
students for college and career success. Implementation of 
these standards will reduce remediation costs and time to 
degree, thereby reducing the overall financial burden on 
students. Proper and successful implementation of the new State 
Standards must involve higher education.
    States should also consider mission-driven, flexible, and 
equitable performance-based funding systems. You will soon 
learn much more about that from the Tennessee witness this 
morning.
    Finally, an area where the Federal Government's leverage 
can have an important impact on college affordability is 
through maintenance of effort provisions. The Federal 
Government has pursued this strategy in recent years through 
several legislative vehicles. AASCU's analysis indicates that 
Federal maintenance of effort provisions are successful, and 
that without them States would have reduced public higher 
education funding more dramatically, which would result in even 
higher tuition increases.
    In closing, State funding is the most critical component to 
ensuring college affordability, although I have highlighted 
several non-financial related policies that can also positively 
affect institutions with keeping the overall cost to students 
as low as possible.
    Thank you, and I look forward to the discussion.
    [The prepared Statement of Ms. Howard follows:]
          Prepared Statement of Muriel A. Howard, Ph.D., B.A.
                                summary
    The introduction notes that there are four main actors in higher 
education financing and ensuring affordable college access--Federal and 
State governments, institutions of higher education, and families. The 
primary reason for tuition increases at public institutions is the 
reductions or lack of sufficient increases in State higher education 
funding. Public master comprehensive institutions have held per-student 
costs to the rate of inflation during the past decade.
    Dr. Howard discusses State strategies that can help promote college 
affordability and student success. She notes four specific areas 
including: policies providing State funds in support of students on 
need-based, rather than merit-based, financial aid programs; policy 
reforms that provide greater flexibility to institutions and which in 
turn can generate cost savings and better utilization of moneys; 
implementation of college and career-ready State academic standards; 
and the use of performance-based funding initiatives.
    States should be pursuing policies that award State aid through 
need-based formulas, ensuring better affordability to low-income 
students. Under flexibility, the testimony calls for greater autonomy 
for institutions setting and controlling their own tuition; relief from 
restrictions on the use of tuition funds, including the allocation of 
awarding financial aid; easing requirements within State procurement 
rules for acquiring goods and services; and finally, simplifying the 
requirements associated with the construction of capital projects. 
College-ready academic standards will result in better prepared 
students, which may in turn reduce costs by decreasing the time 
required to degree completion. Finally, performance-based funding may 
be a useful tool, but has not to date demonstrated its relationship to 
affordability.
    The conclusion highlights what the Federal Government can do to 
support the State's role in affordability. Since direct support to 
institutions is the single, greatest factor in tuition prices, the 
Federal Government can encourage continued State support through 
maintenance of effort provisions in legislation. It is suggested that 
education policy should be viewed by State and Federal policymakers in 
a broad 
P-20 context and provide sufficient flexibility while remaining goal 
oriented.
                                 ______
                                 
    Thank you Chairman Harkin, Ranking Member Enzi, and other 
distinguished Senators for affording me this opportunity to speak to 
the States' role in making college affordable. I commend the committee 
for exploring this topic. My name is Muriel Howard and I have the honor 
of serving as the president of the American Association of State 
Colleges and Universities, AASCU. Now in its 51st year, AASCU is a 
national leadership association consisting of some 400 presidents, 
chancellors and system heads of public 4-year colleges and 
universities. The group is diverse in its membership, ranging from 
small, liberal arts institutions enrolling a few hundred students to 
research-intensive universities that enroll tens of thousands of 
students. However, we are mainly recognized as representing the 
comprehensive, master's institutions which include nearly all the 
public Historically Black Colleges and Universities (HBCUs), Hispanic 
Serving Institutions (HSIs) and numerous other Minority Serving 
Institutions (MSIs). AASCU institutions offer affordable access to a 
quality postsecondary education to nearly 4 million students annually.
    College affordability is a responsibility of four primary 
stakeholders: the Federal Government, State government, institutions, 
and families. The Federal Government has strengthened its commitment in 
recent years with increased funding for the Pell grant. I want to thank 
each of you for that commitment, and to extend special appreciation to 
you Chairman Harkin. Families, as the consumer, have a role in paying 
for some portion of the student's college education. Institutions have 
a responsibility for maintaining tuition prices at a reasonable level 
and for working to restrain college costs. Public 4-year institutions 
have been a responsible partner in the compact to mitigate rising costs 
associated with attending college. In addition to awarding substantial 
grant aid to financially needy students, institutional spending data 
from the past decade illustrate that master comprehensive public 
colleges and universities have kept overall increases in the cost of 
educating students to roughly the rate of inflation. This analysis of 
institutional spending, conducted by the Delta Cost Project at the 
American Institutes of Research, indicates that it is these 
institutions that are the most efficient in American higher education, 
with spending-per-degree the lowest of any sector.\1\
---------------------------------------------------------------------------
    \1\ Trends in College Spending, 1999-2009, Delta Cost Project. 
http://www.deltacostproject.org/analyses/delta_reports.asp.
---------------------------------------------------------------------------
    So why the dramatic increase in tuition prices during the past 
several years? The answer leads us to the final major player in 
ensuring college affordability--the States. Per-student State 
investment in higher education has deteriorated over the past 25 years. 
Numerous studies have highlighted this trend and have correctly linked 
it as the single largest reason for the rise in tuition at public 4-
year institutions. I recognize that as the fiscal situation at the 
Federal level has become alarming, States also have been facing 
challenging budgetary circumstances, especially since they must abide 
by balanced budget requirements. However, while State investment is the 
most important factor in maintaining affordable tuition, there are 
other avenues for States to explore that will help ease the financial 
burden of a college education. I will briefly discuss four strategies 
States can utilize to improve college affordability and student 
success.
     state investment in student financial need-based aid programs
    State disinvestment in public colleges and universities and the 
subsequent corresponding increases in tuition prices have raised the 
profile of State grant aid as a vital component in financing a college 
education for low- and middle-income students. State grant aid programs 
award money for college based on financial need, academic merit or a 
combination of need and merit. These programs are typically funded 
through State taxes or lottery revenues. Each State has a unique 
approach to State aid, with some States having multiple grant programs.
    State student aid grants remain a centerpiece of college finance 
for millions of Americans; however, these grant funds are increasingly 
being distributed based on academic merit, as opposed to financial 
need. According to the National Association of State Student Grant and 
Aid Programs (NASSGAP), almost 4.3 million students received a total of 
$9.2 billion in State grants in 2010-11.\2\ Of the State grant money 
awarded that year, 71 percent was need-based and 29 percent was merit-
based. In contrast, in 1992-93, 90 percent of State grant funds were 
awarded at least partially on students' financial circumstances.\3\
---------------------------------------------------------------------------
    \2\ National Association of State Student Grant and Aid Programs 
(2012). 42nd Annual Survey Report on State-Sponsored Student Financial 
Aid: 2010-2011 Academic Year. Retrieved from http://www.nassgap.org/
document_download.aspx?documentID=880.
    \3\ Ibid.
---------------------------------------------------------------------------
    The shift toward politically popular merit-based aid is a step 
backward in the effort to boost college attainment. Unmet financial 
need is still a major hurdle for college enrollment and completion for 
low-income students. Merit-based programs often distribute aid to 
students from higher income backgrounds, awarding taxpayer funds to 
students who would have likely enrolled in and finished college without 
the help of the subsidy. Awarding State grants based solely on high 
school performance remains an inefficient use of precious State 
resources, perpetuates longstanding inequities in American society and 
may be contrary to the fundamental purposes of student financial aid.
    State policymakers should consider the recommendations of a paper 
policy issued this spring by the Brookings Institutions, Beyond Need 
and Merit: Strengthening State Grant Programs. The report calls for 
State grants targeted to students with financial need while also 
requiring students to meet basic academic milestones toward timely 
degree completion. The report's recommendations include the following:

    1. Target State grants to needy students with the potential to 
succeed. By restricting aid to low- and middle-income students, States 
can use their resources most efficiently. The report also encourages 
States to look beyond 18-24-year-old college students to adult 
populations, and possibly implementing a separate program for these 
students.
    2. Consolidate and simplify student grant programs, making them 
easier to understand and navigate by families. The system of 
institutional, State, and Federal aid is complicated, and States should 
make every effort to merge their grant programs and make them 
understandable for students and families.
    3. Use incentives to drive timely degree completion. Provide grant 
aid incentives to students, such as rewarding additional aid at 
specified milestones in earned credits hours. Programs must have well-
designed incentives for students to make progress toward finishing 
their degrees on time. This should not include high GPA requirements.
    4. States that reduce funding for grant programs or make other 
programmatic changes should do so without harming students with the 
most financial need. In States where grant program funding is reduced, 
or program eligibility requirements or other program reforms are 
altered, programs should not change academic requirements that have a 
deleterious effect on low-income and nontraditional student 
participation.\4\
---------------------------------------------------------------------------
    \4\ Brookings Institution State Grant Aid Study Group (2012). 
Beyond Need and Merit: Strengthening State Grant Programs. Brown Center 
on Education Policy at Brookings. Retrieved from http://
www.brookings.edu//media/research/files/reports/2012/5/
08%20grants%20chingos%
20whitehurst/0508_state_grant_chingos_whitehurst.pdf.
---------------------------------------------------------------------------
       greater state flexibility involving institutional policies
    A second area of action that States can take to enhance college 
affordability involves the granting of greater flexibility to public 
colleges and universities on a range of institutional matters. In the 
absence of increases in State operating support necessary to keep 
tuition prices from rising above the rate of inflation, States can 
provide greater autonomy to institutions, helping them in their quest 
to maximize the efficiency and prudent utilization of scarce resources, 
which can in turn help reduce the college cost burden to students.
    One area where flexibility can be most helpful is in the setting of 
tuition policy. The tuition dollars paid for by students and their 
families account for an increasing share of public universities' 
general fund budgets. Greater flexibility and institutional control in 
the setting of tuition rates and the subsequent utilization of the 
tuition revenues allows for more strategic use of these moneys. Yet, in 
40 States, an entity other than the institution has control over such 
policy; many times authority over tuition matters is in the hands of 
State agencies and even State legislatures.\5\ As an example of a new, 
rational approach to tuition policy, lawmakers in New York have 
implemented a plan that allows the State's public universities to raise 
tuition prices moderately over the next several years and to use a 
portion of the revenues strategically in ways that will foster college 
affordability and generate greater institutionally led economic 
development activity. This approach provides students and families with 
more certainty in college planning, and institutions with greater 
assurance in their fiscal planning in the years ahead.
---------------------------------------------------------------------------
    \5\ State Tuition and Financial Aid Assistance Policies for Public 
Colleges and Universities. State Higher Education Executive Officers, 
2010-11. http://www.sheeo.org/finance/tuit/2010-
2011Tuition_and_fees.pdf.
---------------------------------------------------------------------------
    Likewise, public colleges and universities must have sufficient 
flexibility in the allocation of financial aid dollars provided to 
students. AASCU institutions enroll a large proportion of students from 
low-income backgrounds, and therefore strive to maximize the utility of 
grant aid to students. The flexible, strategic use of institutional 
grant aid is essential if our States and the Nation are to meet 
ambitious--and vital--educational attainment goals.
    Another opportunity where States can provide institutions with 
greater latitude which can in turn lead to reduced costs for students 
involves State policies and mandates pertaining to the procurement of 
goods and services. Collectively, public colleges and universities 
spend billions of dollars annually on everything from laboratory 
equipment to energy to insurance; procurement policies and practices 
affect virtually every aspect of campus operations.
    A 2010 study of institutional and State procurement policies and 
practices, conducted by AASCU in collaboration with the National 
Association of Educational Procurement (NAEP), illustrated that some 
States' procurement policies inhibit public colleges' and universities' 
ability to fully maximize purchasing power, generate cost savings, 
enhance product/service quality and improve the efficiency of 
institutional procurement operations.\6\
---------------------------------------------------------------------------
    \6\ Public College and University Procurement: A Survey of the 
State Regulatory Environment, Institutional Procurement Practices, and 
Efforts Toward Cost Containment (April 2010). American Association of 
State Colleges and Universities and the National Association of 
Educational Procurement. http://www.aascu.org/uploadedFiles/AASCU/
Content/Root/PolicyAndAdvocacy/PolicyPublications/
aascunaepfinal%281%29.pdf.
---------------------------------------------------------------------------
    The AASCU/NAEP study offered a number of State policy reforms to 
contain costs and improve productivity in institutional procurement. 
These include allowing institutions to participate in group-purchasing 
consortiums, making institutional participation in State purchasing 
contracts voluntary, allowing institutions to conduct negotiations with 
suppliers beyond the competitive bidding process, and to review, and if 
warranted, increase the minimum dollar threshold for purchases 
requiring State approval and adjust minimum thresholds involving formal 
competitive (sealed) bids. The report features case studies from three 
States--Colorado, Kansas and Virginia--where public universities have 
been granted greater control over procurement matters, allowing the 
institutions to save money and reallocate funds to where they make the 
most impact: in the classroom.
    A final area where greater State flexibility and autonomy can lead 
to improved cost savings, institutional performance and student and 
taxpayer savings is in the area of capital construction. As with 
tuition, financial aid and procurement policies, the framework 
involving oversight of the campus construction process varies 
considerably by State. A common refrain echoed by frustrated campus 
officials is that the maze of State approval processes, regulations, 
mandates and various other administrative requirements often slow 
construction timelines down to a glacial pace. The extent of State 
bureaucratic red tape often dampens the pace at which the positive 
outcomes associated with campus improvements can be realized, among 
them being the creation of jobs and spin-off economic development 
associated with construction projects, and students' and professors' 
ability to use the facilities in a timely manner. Surely, moneys can be 
better spent on supporting the core teaching and learning enterprise 
rather than on the capital construction process, where an overwhelming 
and unnecessary slate of State rules and reporting requirements siphon 
off precious institutional resources.
    In the overarching call for greater State flexibility as it affects 
campus policies and practices, one thing must be made clear: greater 
autonomy in no way should be construed as a diminishment of 
institutional accountability. As stewards of the public's trust, State 
colleges and universities must rightfully account for all resources, 
public and private, in order to fully leverage every dollar in the 
advancement of the teaching, research and service missions of these 
public enterprises.
    increasing college readiness--implementation of the common core 
                            state standards
    A third area where States are demonstrating leadership and which 
holds strong promise for raising students' readiness for and 
participation in postsecondary education involves new college and 
career-readiness academic standards. While nearly all the States have 
adopted the Common Core State Standards, a few have developed their own 
set of standards. The Common Core State Standards are designed to 
better prepare students for success in college. This should lead to 
reduced time-to-degree, thereby reducing the overall cost burden on 
students, and more efficient use of institutional resources. However, 
proper and successful implementation of the new standards by States 
must involve the higher education community and more specifically, 
public institutions of higher education. Ensuring that both K-12 and 
postsecondary faculty have a working knowledge of the standards, 
through strong working partnerships, is essential. In addition, States 
must engage their higher education institutions and systems in the 
development and implementation of learning assessments associated with 
the new curricular standards. It is through these partnerships that 
better curriculum and course alignment will occur, along with 
strengthened pre-service and in-service teacher development programs.
   mission-driven, flexible and equitable performance-based funding 
                                systems
    A final activity that I will discuss involves a more strategic 
State approach in the allocation of institutional operating support. 
Over the last 3 years, many States have developed performance-based 
funding (PBF) systems for public colleges and universities. PBF systems 
tie a portion (or all) of an institution's State funding to performance 
on a series of metrics, such as student retention and degree 
completions. The objectives of these systems are to incentivize 
institutions to address a variety of State strategic goals, such as 
productivity improvement, cost savings and workforce development. While 
this approach to higher education finance is not new, best practices 
gleaned from prior attempts and advances in State data collection have 
led to a series of promising performance-based funding programs. In 
particular, Tennessee and Pennsylvania have innovative approaches that 
account for institutional differences while still driving performance 
improvement. AASCU supports State experimentation with performance-
based funding systems that account for the diverse missions among State 
institutions and that award institutions for boosting measures of 
success for low-income students.
                             in conclusion
    I began my remarks by highlighting that there are multiple entities 
involved in making higher education affordable. The Federal 
Government's role does not merely need to be constrained to student aid 
programs. In the last reauthorization of the Higher Education Act, as 
well as in several other pieces of legislation, provisions have been 
inserted requiring States to maintain a certain level of funding 
support for public higher education institutions. AASCU's own analysis 
indicates that Federal ``maintenance of effort'' provisions are 
successful and that without them States would have reduced higher 
education funding more dramatically over the past several years.\7\ 
Given the strong relationship between State funding for public higher 
education and tuition costs at these institutions, it is clear that 
without these Federal maintenance of effort requirements, tuition costs 
would have increased even more dramatically in many States.
---------------------------------------------------------------------------
    \7\ Update on Federal Maintenance of Effort Provision: Reinforcing 
the State Role in Public Higher Education Financing (July 2012). 
American Association of State Colleges and Universities. http://
www.aascu.org/policy/publications/policy-matters/2012/
MaintenanceofEffort-II
.pdf.
---------------------------------------------------------------------------
    The maintenance of effort provision contained in the Higher 
Education Act is rather weak compared to provisions in other education 
and healthcare measures. As such, higher education is often squeezed 
out of the budget process as States meet Federal funding requirements 
established in P-12 education programs, as well as in meeting Medicare/
Medicaid costs. While there is widespread acknowledgement that higher 
education is a major State economic driver, the reality is that State 
budget priorities center on P-12 education funding, Medicare/Medicaid 
programs, and public safety/corrections before higher education. While 
recognizing there are many views on the subject of maintenance of 
effort, I simply urge Congress to fully understand the interplay of 
these provisions. It is certainly within the Congress' purview to 
remove these Federal requirements; however, if there are to be Federal 
provisions, then they should be treated as equally as possible in order 
to provide States with some flexibility to fund all of them.
    State funding is the most critical component to any State higher 
education activity; however, I have highlighted several other non-
financial related policies that can also have a positive effect on 
assisting institutions with keeping the overall cost burden to students 
as low as possible.
    American higher education is a key generator for economic 
prosperity. We are all well aware of the statistics related to the jobs 
that will require a postsecondary education in the years ahead. States 
and the Federal Government need to examine education in the context of 
a P-20 continuum and invest and implement policies accordingly. There 
is not a one-size-fits-all solution, thus these policies should provide 
needed flexibility while remaining goal-oriented.

    The Chairman. Thank you very much, Dr. Howard.
    Dr. Longanecker.

     STATEMENT OF DAVID A. LONGANECKER, Ed.D., M.A., B.A., 
PRESIDENT, WESTERN INTERSTATE COMMISSION FOR HIGHER EDUCATION, 
                          BOULDER, CO

    Mr. Longanecker. Mr. Chairman and members of the committee, 
good morning, and thank you for the opportunity to be with you 
today.
    For the record, I'm David Longanecker. I'm president of the 
Western Interstate Commission for Higher Education, which is a 
federally chartered interstate compact that has the simple 
mission of trying to expand access to high-quality 
postsecondary education to the citizens of the West. It 
represents the 15 Western States. There are some States that 
think they're western, but they didn't join WICHE, so they're 
not part of the West.
    [Laughter.]
    We're here today to talk about improving college 
affordability. More specifically, I was asked to talk about the 
strategies for improving college affordability that are being 
designed and implemented at the State level, and I'll focus on 
the West.
    The 21st century has really brought a new way of thinking 
about what affordability means, at least at the State level. 
Affordability now refers not only to what students have to pay 
and their families have to pay, but also what the States can 
afford. There have been three waves that really have created 
this change in philosophy from one that's focused almost 
exclusively on students to one that's focused on both students 
and State resources.
    The first is the rapid increase in the demand for higher 
education that has occurred. It has been driven by the needs of 
our Nation for a better educated population and by the 
increasing returns on investment to a college education for 
individuals. But, the result is a much larger share of our 
population going to college than was in the past, and that 
makes the limited funds available to the States to be spread 
more thinly.
    The second wave is really an evolution in the philosophy 
about who should pay for college. Many at the State level now 
see higher education as having great benefits as both a public 
good and as a private good, and, thus, redefining how those 
costs should be shared by students and government has been a 
factor in what has been occurring recently.
    And, third, the exceptional financial difficulties the 
States have faced over the last few years have really required 
that States look at all public services, including higher 
education, in a different way and work on doing more with less. 
To find the right balance between public and private benefits 
and affordability, States are pursuing a number of very 
creative new approaches to maintaining affordability. Some of 
these policies and practices focus on improving the efficiency 
and the effectiveness in the delivery of education, what I'll 
refer to as supply-side activities.
    Perhaps the most popular of those is performance funding. 
Tennessee is sort of a leader in this area, and I'm sure you'll 
hear something about that. It's pretty much all the rage in 
higher education these days. In the West, about half of the 
WICHE States are involved with performance funding. Most of 
those focus on the completion agenda. Some people have said 
they think that the completion agenda is an anti-access agenda 
and an anti-affordability agenda. They're absolutely wrong.
    As Senator Alexander mentioned, if institutions are 
rewarded for performance on the completion of their students, 
they're going to find a way to get their students to completion 
quicker and more likely to completion. Both of those are going 
to reduce the costs and increase the benefits to the students 
who are involved. So from our perspective, it's a very positive 
activity.
    A number of our States, in addition to working on that, are 
working explicitly in their performance agreements to reduce 
equity gaps that exist in higher education. That would be true 
in Colorado and in Nevada. In Washington State, the community 
colleges and technical education system has developed a 
performance-based funding system that rewards students at 
different benchmarks as they progress, because the research 
suggests that students who achieve those benchmarks are more 
likely to complete their education. Oregon is exploring a 
performance-based funding strategy that, if adopted, will tie 
funding to institutions based on their delivering education at 
a highly efficient rate. I'll leave it to Dr. Preus to explain 
that in greater detail for you.
    An alternative to outcomes or performance-based funding is 
incentive funding. Many of the States are using incentive funds 
to encourage institutions to change the way in which they're 
doing business and to be more affordable. In South Dakota, 
while they have eliminated this recently, they were providing 
funding for institutions to adopt a program of studies that was 
developed by the National Center for Academic Transformation 
which promotes the use of hybrid, technology-enhanced 
instruction which proves to have higher student learning at a 
substantially lower cost.
    The California legislature is considering designating a 
special funding stream to enhance student success in the 
California community colleges, specifically, through a variety 
of academic and student support services. So you've got a 
variety of supply-side things.
    On the demand side, we have traditionally at the State 
level focused on need-based student financial aid or, more 
recently, as Muriel indicated, merit-based aid programs. We're 
still using financial aid as a tool, but we're refining that. 
In Washington State, which has had the strongest financial aid 
system in the West, generally, they have a new public-private 
partnership intended to complement their existing need-based 
program which is intended to reward lower and middle-income 
students who participate in STEM fields through combined public 
and private funding.
    In Massachusetts, they have a pilot program they're looking 
at to pay at-risk students to take more credit hours, because 
students who take more credits graduate sooner. The research is 
pretty clear on that. That's an area that's been researched at 
the institutional level by MDRC--found very promising results. 
Massachusetts is looking to see if you can take it to scale at 
the State level.
    A number of States have developed blended programs that 
take the best of merit-based programs and the best of need-
based programs and put them together. The program I like the 
best is Oklahoma Promise Scholarship. From the eighth grade on, 
if you take a rigorous curriculum in a high school and get 
decent--doesn't have to be great--grades and stay like a nice 
person--you don't go get a criminal record--you basically are 
assured that your tuition will be paid. What's very interesting 
is recently, last year, the legislature passed that that 
program has to be funded before any other service of State 
government receives any funding.
    Now you have a combination of supply and demand, the way 
States do that. Some of the States are actually blending the 
two of those and putting both of those together. In the past, 
Washington's finance policies have probably been the most in 
sync of any of the Western States, and they're now making that 
better with their new public-private partnership. They've also 
passed a State law that says if the institutions raise their 
tuition beyond a reasonable level, which they establish, then 
the institutions have a requirement--the public institutions 
have a requirement to fill in the additional financial need 
that that has created for students with assessed financial 
need.
    Oregon is amplifying this program I just mentioned. I think 
it's the most innovative of the new initiatives that are there. 
I'll let Cam talk about that rather than me try to talk about 
it. I think what they're talking about could be a real 
transformation in the way in which we finance our education.
    All in all, the unique times that we face have forced the 
States to become very creative in fashioning ways to preserve 
financial access for their students. While the changes wrought 
by the new approaches are uncomfortable for many, because they 
break the traditional concepts of affordability and of quality, 
they are necessary if we are to assure that the students can 
afford to go to college, given the times we face.
    The unfinished agenda, I believe, is that the various 
partners--the students, their families, the institutions, State 
and Federal Government--need to work more in sync than we do 
today to ensure that the various strategies we are doing blend 
well together and ensure affordability in the world of limited 
resources. The Federal Government could provide a major impetus 
for such partnerships if its major student financial aid 
programs and other programs required a stronger partnership 
between the Federal, the State, and the institutions.
    You've done this very effectively in the past. The old SSIG 
program, at least in its initial incarnation, encouraged the 
States to develop need-based aid programs. You could do it 
again, and I encourage you to do so.
    Thank you.
    [The prepared statement of Mr. Longanecker follows:]
     Prepared Statement of David A. Longanecker, Ed.D., M.A., B.A.
                                Summary
                             affordability
    The 21st century has brought a new way of thinking about what 
affordability means. Affordability now refers both to what students and 
their families can afford and to what taxpayers can afford. The dilemma 
is that the new focus on what the States can afford has tested the 
limits of what students and their families can afford.
            promising state-level supply-side interventions
    The most popular current strategy involves the use of performance 
funding to reward and induce greater affordability. Examples include 
the following:

     Colorado's new Master Plan for Higher Education will 
reward institutions for greater success in reducing equity gaps in 
graduation rates and numbers, as will Nevada's new funding formula.
     The Washington State Community and Technical College 
system has developed a performance-funding process that rewards 
institutions based on the success of their students in achieving 
various persistence benchmarks.
     Oregon is exploring a performance-funding strategy that 
will tie funding to institutions based on their delivering education at 
a highly efficient threshold.
            promising state-level demand-side interventions
    Affordability initiatives have focused on reducing the cost to 
students through financial aid.

     Washington State has embellished its robust State need-
based financial aid program with a new public/private partnership 
intended to reward lower and middle-income students who chose to major 
in STEM fields of study.
     Massachusetts has developed a pilot program to see if 
providing grants to needy students who commit to taking more credits 
each term will enhance their persistence and completion.
     The Oklahoma Promise Scholarship assures eighth graders 
who come from low- and moderate-income families that if they take a 
rigorous curriculum in high school, get decent (but not necessarily 
exceptional) grades, and stay out of trouble they will have their 
tuition paid for at any State institution.
 promising state-level interventions blending supply and demand efforts
    WICHE has encouraged the Western States to integrate all of their 
finance policies, so that they work in sync to assure affordable access 
to and success in high-quality educational opportunities.

     Washington has traditionally balanced a comparatively high 
tuition structure at both the 2-year and 4-year level with a strong 
need-based financial aid program.
     Arizona integrated policies that sought to assure that the 
State's three public universities would have sufficient funding to 
thrive through the combination of State support and tuition revenue and 
that increases in tuition would be matched dollar for dollar by 
institutional funds for students with financial need (defined as Pell 
grant recipients).
     Oregon's recently adopted Shared Responsibility Program 
creates a State policy based on an overall higher education financing 
partnership with the State, the student, the student's family, the 
Federal Government, and the institutions of higher education.
                                 ______
                                 
        State Efforts to Assure Affordability in the New Normal
    Good morning and thank you for the opportunity to testify before 
you today. I am David Longanecker, president of the Western Interstate 
Commission for Higher Education (WICHE), a federally chartered 
interstate compact of the 15 Western States with the mission of 
expanding access to high-quality postsecondary education for the 
citizens of the West.
    We are here today to talk about ``improving college 
affordability''--more specifically, to talk about the strategies for 
improving college affordability that are being designed and implemented 
at the State level. WICHE is very pleased to have the opportunity to 
join in this discussion because there are a number of very promising 
State initiatives in the West and elsewhere dedicated to making college 
more affordable.
    But in addressing this set of policy initiatives, we must first 
define what we mean by ``affordability.''
    Since about the turn of the century, we at WICHE have been looking 
at the concept of affordability in a new way--and very differently than 
it had been defined in the last century.
    Traditionally, the concept was quite simple. Affordability meant 
colleges charge tuition that was affordable to those citizens who 
wished to be students. The standard policy response, therefore, was to 
keep tuition as low as possible. Many States even imbedded the concept 
that college should be either free or as close to free as possible in 
State law. This was particularly true in the West, where the traditions 
of private higher education are not as strong as in other regions of 
the country and where most higher education was provided with public 
funding through public institutions.
    In the middle of the last century both the Federal Government and 
the States embellished the original concept in two important ways. 
First, through the Higher Education Act of 1965 and amendments of 1972, 
which established most of the current array of Federal student aid 
programs, the Federal Government recognized that individual 
affordability varied, depending upon a family's financial 
circumstances, and public policy responded by developing the concept of 
need-based financial aid. Second, it recognized that costs other than 
tuition (living expenses, books, fees, etc.) also affected 
affordability and needed to be taken into account. Following the 
Federal lead, State public policy also recognized these two qualifying 
conditions to individual affordability and universally established 
State-level need-based financial aid programs.
    Truth be told, however, the States were not nearly as committed to 
this new concept of affordability as the Federal Government was. Many 
of the States created their need-based programs only to receive the 
matching Federal funds available through the State Student Incentive 
Grant Program (SSIG). While every State ostensibly established a 
``need-based'' program, only about a dozen established robust efforts. 
In the West only California and Washington established serious need-
based grant programs; most States continued to abide by the original 
concept, equating affordability with low tuition.
    The 21st century has brought a new way of thinking about what 
affordability means, at least at the State level. Affordability now 
refers both to what students and their families can afford and to what 
taxpayers can afford. Three factors have shaped this new concept of 
affordability. First, the rapid increase in the demand for higher 
education, driven by our Nation's need for more well-educated people in 
the workforce and the increase in individual returns on investment from 
higher education, has strained budgets and pushed legislators to look 
at how much their States can afford to pay. Second, an evolving change 
in philosophy about who should pay for higher education has shifted 
policy in a number of States from an assumption that higher education 
is primarily a public good that should be paid for primarily with 
public funds to a political philosophy that assumes that higher 
education has great benefits as both a public good and a private good 
and that its cost should be more equally shared by students and 
government. Some have seen this as a shift toward the privatization of 
public higher education, but in truth it is more of a balancing of 
costs between beneficiaries. Third, the exceptional financial 
difficulties that States have faced as a result of two recessions in 
quick succession at the beginning of this century have created what is 
commonly referred to as the ``new normal,'' in which all public 
services, including higher education, must do more with less and in 
which evidence-based results are the metric. The result of these three 
new ways of thinking about affordability in higher education has led to 
State policy that relies more significantly on students paying a larger 
share of the costs of college.
    The dilemma, of course, is that the new focus on what the States 
can afford has tested the limits of what students and their families 
can afford--and it is concern about this aspect of affordability that 
you are really focused on today. I just encourage you to recognize that 
affordability is now confounded by the financial limits of State 
government than it traditionally has been.
    Today, I will share with you some of the most promising State 
policies and practices intended to assure higher education 
affordability, as we now define it. Some of these policies and 
practices are supply-side interventions, focusing on changing 
institutional behavior. Others are demand-side interventions, focusing 
on changing student behavior. Yet others combine interventions focused 
both on institutional (supply-side) and student (demand-side) 
behaviors.
            promising state-level supply-side interventions
    It should be acknowledged that many of the activities of States to 
increase productivity and efficiency in order to maintain affordability 
have been fostered by the generous support of Lumina Foundation and the 
Bill & Melinda Gates Foundation. A Lumina Foundation project, 
originally dubbed ``Making College Affordable,'' provided substantial 
funding to a bevy of States, which have provided the test bed for many 
of the affordability initiatives referenced below. The Complete College 
America organization has furthered these efforts by engaging more than 
half of the States in developing clear metrics and methods for 
improving their productivity.
    Perhaps the most popular current strategy, both at the State 
legislative and governance level, involves the use of performance 
funding to reward and induce greater affordability. Examples include 
the following.

     Many States are adopting performance funding strategies 
that will reward institutions for graduating more students. While this 
may not appear to be an affordability strategy, it truly is. 
Institutions realize that students who can't afford college are much 
less likely to enroll in the first place and less likely to graduate if 
they do enroll. Thus, for the institutions to reap the rewards of 
graduating more students they must assure students that higher 
education is affordable. In the West Colorado's new Master Plan for 
Higher Education will reward institutions for greater success in 
reducing equity gaps in graduation rates and numbers, as will Nevada's 
new funding formula.
     The Washington State Community and Technical College 
system has developed a performance-funding process that rewards 
institutions based on the success of their students in achieving 
various persistence benchmarks. Again, while this may not seem like 
affordability policy, it is, because students who persist at higher 
rates reach their educational goals quicker and thus more affordably.
     Oregon is exploring a performance-funding strategy that, 
if adopted, will tie funding to institutions based on their delivering 
education at a highly efficient threshold, comparable to the most 
productive competitors in the higher education marketplace.

    Other States are providing incentive funding for institutions that 
adopt programs designed to focus on affordability.

     South Dakota provided funding for institutions to adopt 
programs developed by the National Center for Academic Transformation, 
which promotes the use of hybrid (technology-enhanced) classroom 
instruction that has demonstrably increased student learning at a lower 
cost.
     The California Legislature is considering designating 
special funding to enhance student success in the California Community 
Colleges through a variety of academic and student support services.
            promising state-level demand-side interventions
    Traditionally, affordability initiatives have focused on reducing 
the cost to students through financial aid, and this remains fertile 
ground for State policy innovations and interventions.

     Washington State, which traditionally has had one of the 
most generous and economically rational sets of State finance policies, 
has embellished its robust State need-based financial aid program with 
a new public/private partnership intended to reward lower and middle-
income students who chose to major in STEM (science, technology, 
engineering, and math) fields of study.
     Massachusetts has developed a pilot program to see if 
providing grants to needy students who commit to taking more credits 
each term will enhance their persistence and completion. This program 
will test whether such pay-for-performance approaches--which have 
worked at the institutional level, according to some research--can be 
taken to scale at a State level.
     A number of States have developed blended programs that 
combine the best principles of both need-based and merit financial aid 
programs. The Oklahoma Promise Scholarship, for example, assures eighth 
graders who come from low- and moderate-income families that if they 
take a rigorous curriculum in high school, get decent (but not 
necessarily exceptional) grades, and stay out of trouble they will have 
their tuition paid for at any State institution. A unique feature of 
this program is that legislature is required to fund this program 
before considering the budget of any other State services.
 promising state-level interventions blending supply and demand efforts
    WICHE has encouraged the States with which it works to integrate 
all of their finance policies, so that they work in sync to assure 
affordable access to and success in high-quality educational 
opportunities.

     In the past, Washington's finance policies were perhaps 
the most in sync. The State has traditionally balanced a comparatively 
high tuition structure (high by Western standards) at both the 2-year 
and 4-year level with a strong need-based financial aid program. As 
mentioned above, the State has recently enhanced this approach with a 
new public/private partnership program--the Washington Opportunity 
Scholars--to assure even greater affordability for students seeking 
degrees in the urgently needed STEM fields of study. It has placed a 
requirement in legislation that institutions that increase tuition 
above recommended levels must meet the additional financial need that 
such action causes.
     Similarly, Arizona in the early years of the new century 
adopted integrated policies that sought to assure that the State's 
three public universities would have sufficient funding to thrive 
through the combination of State support and tuition revenue and that 
increases in tuition would be matched dollar for dollar by 
institutional funds for students with financial need (defined as Pell 
grant recipients).
     Oregon's recently adopted Shared Responsibility Program is 
perhaps the most innovative new initiative to blend supply- and demand-
side strategies. Built upon a similar program in Minnesota, Oregon's 
program creates a State policy based on an overall higher education 
financing partnership among the following players.

          The State, which is responsible for supporting the 
        public good.
          The student, who as the principle beneficiary of the 
        education is responsible for contributing what she/he is able 
        to provide.
          The student's family, which has an obligation to 
        contribute what it reasonably can before it asks others to do 
        so.
          The Federal Government, which is a significant 
        partner through the Pell Grant Program, the Direct Student Loan 
        Program, and the Federal Hope Tax Credits and Deductions.
          The institutions of higher education, which have a 
        responsibility for operating as efficiently as possible to 
        sustain affordability.

    This program fashions a partnership that defines in policy the 
expected responsibility of each of these five partners and specifies 
how the sum of their contributions will equal the desired whole. 
Originally conceived primarily as a financial aid policy, the program 
is now being viewed as the framework for all higher education funding: 
State appropriations, tuition revenues, and State-based and privately 
provided financial aid.
  concluding remarks: a changing world for affordability at the state 
                                 level
    The unique times we face, dubbed the new normal, have forced the 
States to become quite creative in fashioning ways to preserve 
financial access for their students, using a variety of new approaches. 
While the changes wrought by new approaches are uncomfortable for many 
because they break from traditional concepts of affordability, they are 
necessary if we're to assure our students that they can afford to go to 
college, and they're sufficient to the task. Observing these changes in 
the West has been particularly interesting. The recent economic 
distress hit many of the Western States more severely than of the rest 
of the Nation, while affecting others much less. Yet the affordability 
change agenda is nearly universal in the West in one fashion or 
another. Those States most significantly impacted by the economic 
downturns of the new century have focused primarily on supply-side 
approaches, forcing greater productivity and efficiency reforms among 
their institutions of higher education or combined supply- and demand-
side interventions. States that have weathered the recent economic 
malaise will have also focused on improving affordability. Alaska and 
Wyoming, for instance, have maintained their traditions of low-tuition 
but created new, blended financial aid programs that reward students 
for preparing well for college and performing well while in college, 
with a particular focus on the most financially needy students.
    The unfinished agenda, however, is for the various partners--
students, families, institutions, and State and Federal Governments--to 
work more in sync to ensure that their various strategies blend well 
and assure affordability in a world of limited resources. The Federal 
Government could provide a major impetus for such a partnership if its 
major student financial assistance programs required a stronger 
partnership between Federal and State governments and institutions. 
With limited resources at every level of government, it simply makes 
sense to assure that these partners, along with students and their 
families, work together as a team to win the higher education 
affordability game.

    The Chairman. Thank you very much, Dr. Longanecker.
    Mr. Morgan, please proceed.

STATEMENT OF JOHN G. MORGAN, B.A., CHANCELLOR, TENNESSEE BOARD 
                   OF REGENTS, NASHVILLE, TN

    Mr. Morgan. Good morning, Chairman Harkin, Ranking Member 
Enzi, and members of the committee. I appreciate very much the 
opportunity and the invitation to be here. I am the Chancellor 
of the Tennessee Board of Regents. As Senator Alexander noted, 
it's the sixth largest higher education system in the country. 
We're comprised of 13 community colleges, 27 technology 
centers, and six public universities literally located across 
the State. On a combined basis, we have in excess of 200,000 
students in our system this fall.
    We're one of two higher education systems in Tennessee. The 
other is the University of Tennessee system, which governs the 
four UT institutions and their activities. As was noted, your 
fellow committee member from Tennessee was president of the 
University of Tennessee system from 1988 to 1991, and it is 
especially an honor for me to be here with him today. I suspect 
he's the one responsible for me being here before you today. So 
if you don't like what I have to say, you can blame him.
    [Laughter.]
    The Complete College Act of 2010 may be the boldest attempt 
by any State yet to focus the energies and resources of its 
public higher education enterprise on meeting the State's 
development needs. Implicit within the Complete College Act is 
the acknowledgement that the higher education funding structure 
must support the State's priorities. However, the fiscal 
reality within which we operate has been one of severely 
reduced State funding over recent years.
    Tennessee students now cover almost two-thirds of the cost 
of their education at our public institutions. About 20 years 
ago or so, that was about the State's share. The implication of 
this trend, if it continues, will be detrimental to our higher 
education aspirations. As resources have diminished, 
expectations for our systems have grown. The Complete College 
Tennessee Act included several important elements aimed at 
transforming our public higher education system into a more 
efficient, effective, and outcome-focused enterprise.
    Perhaps most importantly for today's discussion, the 
Complete College Act called for our coordinating board, the 
Tennessee Higher Education Commission, to create a formula to 
allocate available State funding to public higher education 
institutions based on outcomes. Historically, Tennessee, like 
most other States or many other States, based the allocation of 
State appropriations mostly on enrollment. Typically, it was 
the number of students enrolled on the 14th day of the fall 
semester. The incentive was pretty clear: Enroll as many 
students as you can each year.
    In some ways, the new outcomes-based formula turns the old 
system on its head. Attachment A of my written testimony shows 
the outcomes upon which the formula is built, one set for 
community colleges and a similar but appropriately different 
set for universities. These outcomes are weighted differently 
across institutions, thereby recognizing differences in 
institutional missions.
    As you can see in the examples, the outcomes formula is 
heavily weighted around student retention, progression, and 
ultimate success. And, importantly, as Dave said, it's the 
numbers of students meeting benchmarks, the numbers of 
credentials awarded, not just the rates of success. Access and 
enrollment are still important.
    One very important aspect of the outcomes-based formula 
that, frankly, I neglected to note in the written testimony is 
that student success outcomes based on progression and awards 
attributable to students from low-income households defined as 
Pell eligible and adult learners earn 40 percent premium 
compared to other students. It's heavily weighted toward 
dealing with students that, in order for us to meet our goals, 
we have to be more successful with. These are students who, 
historically, we have been least successful with.
    So we're changing. We're adopting strategies that we 
believe will lead to student success. A few examples: Our 
community colleges are piloting cohort-based programs modeled 
after the successes of our Tennessee Technology Centers. Our 
institutions are implementing a variety of intentional and 
intrusive student advising approaches, including early alert 
and intervention systems, default curriculums for undeclared 
majors, degree mapping, individualized graduation plans--a 
whole host of strategies.
    The performance of our presidents in our system is being 
evaluated on progress toward completion goals and improved 
outcomes. Working with the UT system and several private 
institutions, we've developed 49 universal transfer pathways in 
29 academic disciplines that guarantee seamless transition from 
2-year programs to 4-year universities. There are many more: 
Our participation in Access to Success, Completion Academies, 
the Degree Compass technology that's being deployed at Austin 
Peay State University. A whole host of strategies are being 
employed.
    We continue to work closely with Complete College America, 
and we agree with their assertion that time is the enemy. 
Students who must drop out are less likely to return and 
complete their degrees and certificates. If the time to earn a 
4-year degree, Senator, could actually be 4 years or less, then 
everybody wins. If students come prepared and with credits 
already earned through dual credit, dual enrollment programs at 
their high schools or prior learning credits for adult 
learners, then they are much more likely to finish and finish 
faster. We are aggressively expanding those programs in 
Tennessee. All of this activity is really being driven by the 
outcomes-based formula.
    We very much appreciate your attention to this important 
subject, and we appreciate the help that you can provide at the 
Federal level. A few ideas are included in my written 
testimony. From reviewing the testimony of the other panelists, 
they have better ideas than I had. It is important that we 
think about Federal financial aid in a more flexible way, that 
we're able to support program structures that we know will work 
better than the past and traditional practices, and that's not 
always easy.
    In closing, thank you for the opportunity to be here, and 
I'll be happy to respond to any questions that you may have.
    [The prepared statement of Mr. Morgan follows:]
               Prepared Statement of John G. Morgan, B.A.
                                summary
    In January 2010, the Tennessee General Assembly enacted the 
Complete College Tennessee Act, arguably the boldest attempt by any 
State in the country to focus the energies and resources of its public 
higher education enterprise on meeting the State's development needs. 
Implicit within the CCTA is the acknowledgement that the higher 
education funding structure must support the State's new priorities.
    While student fees have increased at the institutions, growth in 
enrollment, declining State funding, and cost inflation have combined 
to produce real reduction in funds available to the institutions to pay 
for educational services. Yet, as resources have diminished, 
expectations for the outcomes of our system and the institutions have 
grown. The result of the convergence of these circumstances is to 
require every decision about resource allocation at every level to be 
viewed through the lens of its impact on outcomes.
    Many elements of the CCTA have direct impact on college 
affordability by improving operating efficiencies, reducing time to 
degree and focusing resources on strategies that lead to greater 
success.
    But perhaps most importantly, the CCTA called for the creation of a 
formula to fund public higher education based on outcomes like 
increasing the numbers of degrees, diplomas and certificates awarded. 
As important as increasing the numbers of students with credentials is 
ensuring productivity as well as quality. Academic standards, integrity 
and quality must continue or be enhanced. It's quality of the workforce 
that will drive the economy, not just the number of people with 
degrees.
    However, a significant challenge exists for TBR and its constituent 
institutions. To be successful in meeting their goals, every 
institution must be more successful with students who have historically 
been least successful reaching their education goals, particularly low-
income first generation students, adult learners and under-represented 
minorities. Helping these students will require more hands-on, high-
touch and high-tech efforts, all of which also translate to high cost.
    Despite our challenges, we are on the right track. With the right 
resources and the right conversations--like the one we're having 
today--Tennessee can lead the way in workforce development and economic 
growth.
                                 ______
                                 
    The combination of passage and implementation of the Complete 
College Tennessee Act and the First to the Top Act have propelled 
Tennessee to the forefront of the national conversation about education 
reform.
    In January 2010, the Tennessee General Assembly enacted the 
Complete College Tennessee Act (CCTA). The CCTA is arguably the boldest 
attempt by any State in the country to focus the energies and resources 
of its public higher education enterprise on meeting the State's 
development needs. Together with the First to the Top and Race to the 
Top initiatives, Tennessee has enacted a range of measures designed to 
spur improvement in Tennessee's education pipeline--specifically, 
improving student performance and graduation rates at both the high 
school and college levels. The central idea of the CCTA, advanced by 
the prior administration and readily embraced by Tennessee Governor 
Bill Haslam, is that in order for Tennessee to thrive in the global 
economy, the education and skill levels of Tennesseans must improve 
significantly. Implicit within the CCTA is the acknowledgement that the 
higher education funding structure must support the State's new 
priorities.
    If successfully implemented, the CCTA will prove to be the most 
transformative and visionary legislation affecting Tennessee's public 
higher education systems in recent times. History has proven that a 
more educated citizenry results in a society with faster economic 
growth and a more stable democracy. Today, more than ever, we need a 
renewed focus on higher education.
    Options available to students abound with the growth of proprietary 
schools. Unfortunately, while the for-profit institutions are growing, 
the public institutions that fueled the growth of college credentials 
after World War II have suffered through years, sometimes decades, of 
State-level funding cuts. Many are no longer State-funded, but State-
supported. Total State support for higher education nationally fell by 
7.6 percent from the 2011-12 fiscal years, according to a report from 
Illinois State University and the State Higher Education Executive 
Officers. The report also indicates a reduction in the per-student 
spending by States--to reach the lowest point in some 25 years. 
(Chronicle of Higher Education, ``State Support for Colleges Falls 7.6 
percent in 2012 Fiscal Year,'' 2012.)
    In Tennessee alone, State funding for public colleges, universities 
and technology centers decreased by almost 30 percent for the Tennessee 
Board of Regents (TBR) universities since 2008, shifting more of the 
funding burden to students. At all 46 institutions, including community 
colleges and technology centers, funding has been cut an average of 24 
percent. As State support for higher education has declined and, 
despite improved efficiencies, the share of the cost paid by students 
has increased--thus, so has the price. Tennessee students now cover 
about 67 percent of the cost of their education at public universities, 
and some 60 percent at community colleges. The implication of this 
trend, if it continues, will be detrimental for all Tennesseans.
    This is the reality of today's economy and today's funding climate, 
and therefore the new ``fiscal reality'' of the operating environment 
for Tennessee's public higher education. In the past several years in 
the TBR alone, we have opened the door to access for more students. 
Enrollment in our six comprehensive universities and 13 community 
colleges has grown 26.4 percent from 2001 to 2011.
    To meet the demands of serving more students with fewer resources, 
greater operating costs, changing technologies and greater 
expectations, Tennessee's institutions look dramatically different than 
in years past. Within the last 2 years alone, our universities have 
eliminated, among others, degree programs in foreign languages, 
English, music education, Africana studies, women and gender studies, 
human sciences, aerospace education, and industrial engineering, and 
they have terminated dozens of concentrations or certificates to 
address decreased funds and changing demands. While student fees have 
increased at the institutions, growth in enrollment, declining State 
funding, and cost inflation have combined to produce real reduction in 
funds available to the institutions to pay for educational services. At 
the TBR, we have become more efficient and effective in delivering our 
services. In fact, on average, the total revenue per student (before 
inflation) at our universities in 2011 was 4 percent less than in 2008. 
During the same period, the impact at our community colleges was even 
greater, averaging almost 9 percent less per student. In other words, 
students are covering more of the financial burden for their education 
at public colleges and universities in Tennessee than ever before, even 
as our institutions are becoming more efficient.
    Yet, as resources have diminished, expectations for the outcomes of 
our system and the institutions have grown. The result of the 
convergence of these circumstances is to require every decision about 
resource allocation at every level to be viewed through the lens of its 
impact on outcomes. Every day, at every TBR institution, including the 
central office, the focus is on deploying resources in a way that will 
make a real difference and lead to real results.
    We are on the right track. With the right resources and the right 
conversations--like the one we're having today--Tennessee can lead the 
way in workforce development and economic growth.
    Tennessee's Governor has set a clear goal to increase the number of 
postsecondary degrees awarded annually by 26,000 by 2015. Today that 
goal is more important than ever. Unless Tennessee can make progress 
toward achieving a more educated population, the skilled and high-wage 
jobs we need for our economy to grow will likely move to, or more 
likely be created in, other places that have the best prepared 
workforce.
    In order to meet this challenge, the CCTA included several 
important elements aimed at transforming our public higher education 
system into a more efficient, effective and outcome-oriented 
enterprise. Many of these elements have direct impact on college 
affordability by improving operating efficiencies, reducing time to 
degree and focusing resources on strategies that lead to greater 
success.
    For example, the University of Tennessee and TBR systems have 
together developed and implemented the Tennessee Transfer Pathways, a 
transfer policy that ensures community college students can readily 
transfer credits in defined programs to public universities. The TBR 
has evolved our community colleges into a comprehensive system, thereby 
enhancing the statewide role that community colleges can play in 
providing postsecondary education for recent high school graduates and 
adults. The new system for Tennessee's Community Colleges will, over 
time, result in significant cost efficiencies as well as educational 
programming that is more effective and responsive to economic and 
workforce needs. TBR's public universities have a more defined focus on 
institutional mission to help avoid future unnecessary program 
duplication.
    But perhaps most importantly, the CCTA called for the creation of a 
formula to allocate available State funding to public higher education 
based on outcomes like increasing the numbers of degrees, diplomas and 
certificates awarded. The Tennessee Higher Education Commission has 
developed a Public Agenda for Higher Education centered on improving 
student outcomes and created changes to support its implementation--
most notably developing the new outcomes-based funding formula. Funding 
for public higher education is now heavily weighted toward student 
success measures like these.
    Attachment A lists the outcomes that are incorporated in the 
outcomes based formula for our universities and community colleges. As 
can be seen, the outcomes for both groups of institutions are heavily 
influenced by student progress and success. The outcomes are the same 
for all of the State's universities, however the weights assigned to 
each outcome for each university can vary based on the mission of the 
institution. For example, the weight assigned to the research outcome 
for the University of Tennessee at Knoxville is 15 percent while 
research is only weighted at 10 percent for Austin Peay State 
University. Similarly, as the example shows, outcomes are weighted 
differently among the community colleges.
    The outcomes-based formula has created the most tangible and 
strongest incentive for our institutions to focus on strategies that 
contribute to student success and to align financial resources to fund 
those strategies.
    As a result, virtually every activity taking place at the TBR 
central office and at each of its institutions is centered on improving 
the outcomes that have been identified by the THEC Public Agenda and 
the CCTA. It is no longer sufficient for the Board of Regents to view 
its responsibility as one of policy management and the safe guarding of 
assets. On the contrary, ultimately, the Board is responsible for the 
system's success in achieving the goals of the Public Agenda.
    The CCTA and the Public Agenda establish clear linkages between the 
economic development needs of the State and the legitimate aspirations 
of the State's public higher education systems. In short, the Public 
Agenda declares that by 2025, the State's workforce must have levels of 
educational attainment at least equal to the national average. The 
Public Agenda assigns expectations for contributions to this goal from 
the TBR, UT and the private/proprietary higher sector.
    For TBR to meet its current expectation, the system as a whole will 
need to produce 43,202 credentials in 2025. This represents an almost 
60 percent increase in annual awards over our 2010 baseline. To achieve 
this goal, the system must increase its outcomes by roughly 3 percent 
per year, particularly challenging in light of demographic trends that 
reflect a changing population with an increased number of the types of 
learners who face the greatest challenges.

     More low-income students will be entering our schools. 
From 2007-11 median annual household income declined by 9.8 percent 
nationwide. Hispanic and white households saw a 4.9 percent and 4.7 
percent decrease, respectively, while Black household median annual 
income decreased 9.4 percent (Sentier Research, ``Household Income 
Trends During the Recession and Economic Recovery,'' 2011.).
     Demographic projections predict major growth in 
underrepresented minority groups. Nationwide, it is projected that the 
Latino and Black populations will grow by 137 percent and 15 percent, 
respectively, between 2010 and 2050 while the White population will 
decrease by 9 percent (National Population Projections, U.S. Census 
Bureau. Released 2008; NCHEMS, Adding It Up, 2007).
     White individuals (aged 25-29) attain bachelor degrees at 
twice the rate of black individuals and three times the rate of 
Hispanics (39 percent vs. 20 percent and 13 percent, respectively), and 
young people from the highest income quartile earn bachelor's degrees 
at seven times the rate of children from the lowest income quartile (79 
percent vs. 11 percent by age 24). (Sources: NCES, Condition of 
Education, 2010 and U.S. Census Bureau, Educational Attainment in the 
United States: 2011; PostSecondary Education Opportunity, ``Bachelor's 
Degree Attainment by Age 24 by Family Income Quartiles, 1970 to 
2010.'')

    Simply put, for TBR and its constituent institutions to be 
successful in meeting their goals, every institution must be more 
successful with students who have historically been least successful 
reaching their education goals, particularly low-
income first generation students, adult learners and under-represented 
minorities.
    Helping these students will require more hands-on, high-touch and 
high-tech efforts, all of which also translate to high cost. Tomorrow's 
successful students will require more direct and personal attention--
advising, counseling and directing them toward the successful 
completion of their goals.
    TBR institutions are learning from success stories within the 
system. The Tennessee Technology Centers, for example, have always 
served these underrepresented demographic populations to a larger 
extent. Yet the Technology Centers have demonstrated dramatic success 
in helping students complete their academic programs through a variety 
of techniques that are now being piloted at other programs around the 
country:

    1. Most students enroll in defined cohort-based programs with 
strong structures and limited options. Students register for programs, 
not courses. Class schedules are pre-determined and set daily so 
students can plan outside work and life commitments around a set daily 
time commitment. Students don't have to pick and choose which classes 
they take and when, so they only take the courses they need. As a 
result, more finish and finish faster.
    2. Students are provided a cost list including books and supplies, 
so they aren't surprised with unexpected expenses.
    3. More than 80 percent of the Tennessee Technology Center students 
are eligible for State or Federal grants, or both, which covers the 
cost of their education and often provides additional money for living 
expenses. The TTCs don't participate in the loan program, and the 
students graduate debt free.

    Similar cohort programs are being tested at Tennessee's community 
colleges and may be considered for public universities as well.
    And as important as increasing the numbers of students with 
credentials is ensuring quality. Academic standards, integrity and 
quality must continue or be enhanced. It's quality of the workforce 
that will drive the economy, not just the number of people with 
degrees. Implicit in Public Agenda's attainment goal is the need for 
the credentials to be a result of high quality instruction and relevant 
to the needs of Tennessee's 2025 economy.
    In some ways, having a clearly established, albeit aggressive, goal 
is liberating. The system and its institutions are able now to pay 
attention to efforts that matter. Priorities are realigned. For the TBR 
system office, this means that the focus now is on empowering staff to 
engage in activities that will promote outcomes. The result is an 
evolving redefinition of the relationship between system and 
institution. The system interest is less about regulating and more 
about helping each institution meet its goal of increasing relevant, 
high quality, outcomes.
    Among the changes implemented so far, the TBR has:

     Established progress toward completion goals and improved 
outcomes under the new funding formula as the basis upon which 
performance of university and college presidents will be assessed.
     Joined with 10 other higher education systems and multi-
campus institutions as members of the Education Delivery Institute, a 
joint effort of The Education Trust and Achieve, Inc. designed to 
assist in the successful implementation of higher education reform 
agendas.
     Created within TBR the Completion Delivery Unit, a small 
group focused on assisting TBR system operating units and institutions 
with the development of their ``completion plans,'' identifying 
strategies to be pursued, establishing expectations of results for each 
strategy and providing a framework for the campuses and the system to 
monitor progress in meeting delivery goals in near ``real-time.''
     Through a partnership developed with the Tennessee 
Business Roundtable, Complete College America, Tennessee Higher 
Education Commission and the University of Tennessee, enabled 16 TBR 
institutions and two UT institutions to voluntarily participate first 
in the Nation State-level College Completion Academies, a convening of 
teams from the institutions, national experts and facilitators designed 
to engage institutions in the development of completion plans 
incorporating best practices. Governor Haslam addressed the first 
academy and facilitated a session in the second academy.
     Embarked upon the development of a central data repository 
and data warehouse that will put real-time information in the hands of 
managers throughout the system with which they can make decisions and 
evaluate performance. This has been identified as an essential pre-
requisite to system and institutional success.
     Began system-wide, institutional participation in the 
Access To Success (A2S) initiative. A2S is a joint effort of the 
National Association of System Heads and the Education Trust that works 
with 22 public higher education systems that have pledged to cut the 
college-going and graduation gaps for low-income and minority students 
in half by 2015. TBR has been part of this initiative since 2007 but 
has not, until recently, engaged institutions in the initiative. The 
goals of A2S align well with the needs of the TBR system to address 
future challenges as demographic characteristics of our populations 
change.
     In collaboration with THEC and UT, developed 49 universal 
transfer pathways in 29 academic disciplines providing our community 
college students with clear and certain transfer opportunities to 
public (and many private) 4-year intuitions.
     With assistance from Lumina Foundation grant funding, 
engaged in a series of pilot programs designed to expand the use of 
cohort programs and block schedules in community colleges as 
contemplated by the CCTA. Early indications are that where feasible, 
utilizing cohorts and block schedules will result in significant 
improvements in retention and completion. Expansion of this effort into 
the 4-year environment may be warranted.
     Established the Office of Community Colleges and named a 
vice-chancellor for Community Colleges to manage the process of 
evolving the community colleges into a comprehensive community college 
system. Also, with the help of a Gates Foundation grant, TBR conducted 
a ``business process analysis'' designed to identify opportunities for 
process standardization across the community college system using best 
practices. As this effort continues, it is expected to result in 
significant efficiencies and will help position the community college 
system as the primary source for significant increases in enrollment 
and affordability in public higher education in Tennessee.
     Developed programs that will drive more students into the 
lower-cost options available at the community colleges first, then 
encourage the continuation of educational achievement by making defined 
program course transfers seamless from community colleges to 
universities.
     Encouraged the creation of innovative programs to help 
with student success. For example, Austin Peay State University 
developed the Degree Compass software and application that uses 
technology to successfully pair current students with the courses that 
best fit their talents and program of study for upcoming semesters. 
Using predictive analytics, the system recommends a course which is 
necessary for a student to graduate, core to the university curriculum 
and their major, and in which the student is expected to succeed 
academically. Recently, the system gained national attention and played 
a central role in Tennessee's successful Completion Innovation 
Challenge application, which received a $1,000,000 award from Complete 
College America and the Gates Foundation to support implementing Degree 
Compass at three other campuses in Tennessee.

    The passage of the CCTA creates an environment wherein 
effectiveness, efficiency and sustainability of high quality results 
are essential if the TBR and its institutions are to thrive. The 
outcomes-based formula creates an absolute incentive to pursue only 
those activities that are believed to produce results. Constant 
evaluation of performance in real-time and a willingness to abandon, or 
modify, strategies that aren't working is becoming the ``normal course 
of business'' for Tennessee's institutions.
    The outcomes-based formula introduces an entirely new dynamic in 
terms of transparency. How well each institution is performing will be 
readily apparent as a result of THEC's funding allocation 
recommendations each year. Historically, accountability within the 
higher education environment has been elusive. This is no longer the 
case in Tennessee.
    The historical need for the TBR and THEC to monitor and encourage 
elimination of low-producing programs has been eliminated. There is no 
incentive to continue to allocate resources to a low-producing program 
or a non-productive service unless there is a very real indirect 
benefit to the institution as a whole and a return on investment that 
justifies the expense.
    In this environment, the role of the system office is one of 
helping institutions in creating and utilizing systems and frameworks 
for continuing evaluation and in helping identify interventions that 
might help improve the outcomes of any given strategy. The system 
office also has an interest in making sure that institutions don't 
engage activities such as unnecessary duplication of programs that will 
result in inefficient use of resources on a system-wide basis.
    Implicit in the CCTA and the outcome formula approach is that if 
colleges and universities can improve their results, funding will 
follow. But there is no guarantee that will hold true.
    The result of today's new fiscal reality is that higher education 
will continue to be in a difficult funding environment. Although 
understandable in context, the system's historical practice of relying 
on tuition and fee increases to meet institutional spending needs is 
unlikely to be sustainable.
    It appears that Tennessee, like other States, has reached a point 
at which tuition increases that exceed general inflation rates will be 
counter-productive to achieving completion goals as a system. The 
potential political response to further significant fee increases is 
concerning as well. Current political and economic environments make it 
more likely that government-imposed limitations (whether at the State 
or Federal level) may be seriously considered. While there is a 
legitimate government oversight role in the management of the public 
higher education systems, statutory solutions to complex and multi-
dimensional financial issues--just some of which are mentioned here--
are not likely to give full recognition to the unintended consequences 
that uniformly applied policies will hold for individual institutions.
 Suggestions For How The Federal Government Can Encourage And Support 
   States In Efforts To Increase Education Attainment While Ensuring 
                             Affordability
    1. More need-based funding available to students at both the State 
and Federal level is needed. Aid allocations reflect that scholarship 
and grant aid is gradually shifting from fewer need-based awards to 
more merit-based awards. In Tennessee, approximately $90 million is 
awarded from lottery scholarships to students from households whose 
expected family contributions exceed full cost of attendance. A similar 
amount would cover the gap to fully fund assistance for eligible need-
based students. As the number of students who need financial support 
grows, we see a shift to more funding going to students whose families 
have demonstrated the ability to pay, and a growing number of students 
whose families do not have the means to pay cannot afford to enroll 
without expensive student loans.
    2. Federal incentives for States to keep their funding for public 
higher education stable or increasing is needed. The Federal 
requirement of State maintenance of effort funding for American 
Recovery and Reinvestment Act dollars provided a real benefit to 
colleges and universities. Ever-shrinking State funding levels threaten 
to reduce the amount of money available in the funding formula, 
creating an environment where institutions are competing in a zero-sum 
game for a piece of an ever-shrinking funding pie instead of striving 
for growing funding incentives.
    3. Federal financial aid policies need to more closely align with 
best educational practices at the States levels. Military veterans who 
require learning support are often blocked from receiving funding for 
the types of support and techniques that have proven more effective 
than traditional classroom-based developmental courses because they are 
considered ``independent study programs.'' Individual study 
incorporated into a for-credit class that is supplemented by technology 
support taught in laboratories with instructors should qualify for 
Veterans Administration support, but it currently does not. Regular 
financial aid policies structured solely around traditional semesters 
and terms don't conform well for alternative scheduling that successful 
cohort-based programs sometimes require--allowing students to start and 
stop at different intervals. Those ``non-standard terms'' result in aid 
award difficulties.
    4. Federal recognition that increasing prices and tuition rates 
greater than the rate of inflation are the result of decreasing State 
funding allocations is needed. Statutory solutions to complex and 
multi-dimensional financial issues--just some of which are mentioned 
here--are not likely to give full recognition to the unintended 
consequences that uniformly applied policies will hold for individual 
institutions.
                              Attachment A

   Formula Outcomes and Example Weights Based on Institutional Mission
------------------------------------------------------------------------
                  Universities                       APSU        UTK
------------------------------------------------------------------------
                                                               Research
                                                   Masters   university/
             Carnegie classification                medium    very high
                                                  (percent)    activity
                                                              (percent)
------------------------------------------------------------------------
Students Accumulating 24 hrs....................        3.0         2.0
Students Accumulating 48 hrs....................        5.0         3.0
Students Accumulating 72 hrs....................        7.0         5.0
Bachelors and Associates........................       25.0        15.0
Masters/Ed Specialist Degrees...................       20.0        15.0
Doctoral/Law Degrees............................        0.0        10.0
Research and Service............................       10.0        15.0
Transfers Out with 12 hrs (good academic               10.0         5.0
 standing)......................................
Degrees per 100 FTE.............................       10.0        10.0
Six-Year Graduation Rate........................       10.0        20.0
                                                 -----------------------
  Total.........................................      100.0       100.0
------------------------------------------------------------------------


 
------------------------------------------------------------------------
        Community colleges          Dyersburg    Nashville     Average
------------------------------------------------------------------------
                                   Associates/  Associates/
                                      rural     urban multi-
     Carnegie classification          medium       campus
                                    (percent)    (percent)
------------------------------------------------------------------------
Students Accumulating 12 hrs.....          6.0          4.0          5.0
Students Accumulating 24 hrs.....          7.0          5.0          6.0
Students Accumulating 36 hrs.....          7.0          6.0          6.0
Dual Enrollment..................          5.0          5.0          7.0
Associates.......................         10.0         20.0         15.0
Certificates.....................         10.0         20.0         13.0
Job Placements...................         10.0         10.0          9.0
Remedial & Developmental Success.         20.0         10.0         12.0
Transfers Out with 12 hrs (good           15.0         10.0         13.0
 academic standing)..............
Workforce Training (Contract               5.0          5.0          6.0
 Hours)..........................
Awards per 100 FTE...............          5.0          5.0          8.0
                                  --------------------------------------
  Total..........................        100.0        100.0        100.0
------------------------------------------------------------------------


    The Chairman. Thank you very much, Mr. Morgan.
    Now we turn to Dr. Preus.

    STATEMENT OF CAMILLE PREUS, Ph.D., COMMISSIONER, OREGON 
  DEPARTMENT OF COMMUNITY COLLEGES AND WORKFORCE DEVELOPMENT, 
                           SALEM, OR

    Ms. Preus. Good morning and thank you for the invitation, 
Mr. Chairman, Ranking Member Enzi, and distinguished members of 
the committee. For the record, my name is Camille Preus. I am 
the director of the Department of Community Colleges and 
Workforce Development for the State of Oregon.
    Never has education been more important to the lives and 
fortunes of Americans, Oregonians, or our local communities. 
Yet, in Oregon, we are falling behind. Our current generation 
of young adults, those 25 to 34, are less educated than their 
parents' generation, and few are earning certificates, 
credentials, and degrees beyond high school.
    Each year, well-paid jobs requiring only a high school 
diploma are replaced by new jobs that increasingly require 
postsecondary preparation. Over the next decade, in Oregon, 61 
percent of all jobs will require technical certificates, 
associate degrees, or higher levels of education. Making 
postsecondary education accessible and affordable to increase 
the skills of Oregonians and Americans is an imperative.
    I'd like to set a little Oregon context, if I might. There 
are encouraging signs of progress in our State. We marshaled 
some strong bipartisan support in the 2011 session to address 
these challenges and opportunities head on. Oregon established, 
I believe, the most aggressive high school and college 
completion goals in the country. They are, by 2025: 40 percent 
of our population would have a bachelor's degree; 40 percent of 
our population would have an associate's or professional 
credential; and that the remaining 20 percent would have earned 
a high school diploma or its equivalent. We refer to these 
targets as the 40/40/20 goal.
    Oregon also set a most ambitious education reform agenda. 
We want to create a coordinated education system, we want to 
focus State investment on outcomes, and we want to build 
statewide support systems. The unified student-centered system 
of public education from preschool through graduate school, 
what we call P-20, connects the educational sectors to achieve 
the State's educational outcomes. When I refer to P-20, I'm 
referring to education for children from birth through their 
education career, including early learning, K-12, community 
colleges, undergraduate, and graduate programs.
    One key investment area within the P-20 system is 
postsecondary access and affordability. To reach our 40/40/20 
goal of educational attainment, the State must be strategic in 
generating a college-going culture across the education 
continuum and in making and honoring the promise that 
postsecondary education will be within reach of all learners 
who achieve a high school diploma.
    In Oregon, we have the Shared Responsibility Model. It's a 
four-step approach to affordability. The model involves four 
steps that enable all students to cover the cost of college 
attendance. The model assumes that the student, as the primary 
benefactor of the education, bears the first and most 
significant responsibility for paying for college. So step one 
is the student share. A defined student contribution spells out 
the amount every student would contribute to his or her 
education. It's based on their decision to attend a community 
college, a 4-year public or private university in Oregon.
    The family share for both dependent and independent 
students is determined by an established financial need-based 
formula of incomes and assets, family structure, and attendance 
patterns. Families with greater resources are expected to cover 
the remaining cost. Middle-income families are expected to 
contribute some. Families with very low or no resources are 
expected to contribute much less or nothing.
    The Federal share--the same need formula determines how 
much aid, if any, the Federal Government will provide or 
replace some or all of the family contribution. As the final 
partner, the State assists only when there is a remaining need 
not covered by the other partners. These grants--in Oregon 
called the Oregon Opportunity Grant--support the student's 
choice by reflecting a differential cost of public 2-year and 
4-year colleges and public universities. If a student chooses 
an eligible 4-year independent college or university, they 
receive assistance as well, but not any more than they would if 
they went to a public university.
    The implementation of the Shared Responsibility Model in 
Oregon has increased State investment in need-based aid. It has 
also increased the number of students eligible for receiving 
State financial aid, which has nearly doubled, and enrollment 
continues to increase.
    In closing, Oregon's educational attainment goal of 40/40/
20 is more than just a series of numbers. It represents an 
aspirational goal for degrees and certificates. It also 
represents a commitment to increasing the socio-economic 
benefits for all of our citizens. Connecting student learning 
along the P-20 education continuum is an important step in 
increasing the number of students who successfully complete 
high school and enter college. But, equally important, it is a 
promise of college as accessible and affordable.
    Thank you very much.
    [The prepared statement of Ms. Preus follows:]
               Prepared Statement of Camille Preus, Ph.D.
                                summary
    Never has education been more important to the lives and fortunes 
of America, Oregonians and our communities. Yet, In Oregon, we are 
falling behind. Our current generation of your adults--ages 25-34 is 
less educated than their parents' generation, with fewer earning a 
certificate or degree beyond high school. Each year, well-paid jobs 
requiring only a high school diploma are replaced with new jobs that 
increasingly demand postsecondary education, technology skills and 
advanced training beyond high school. Over the next decade 61 percent 
of all Oregon jobs will require a technical certificate, associate's 
degree or higher level of education.
    The Oregon Context. There are encouraging signs of progress across 
Oregon. Marshaling strong bipartisan majorities in 2011, the Oregon 
Legislature addressed these challenges and opportunities head on.
    Oregon established the most aggressive high school and college 
completion goals of any State in the country; by 2025, we must ensure 
that 40 percent of adult Oregonians have earned a bachelor's degree or 
higher, that 40 percent have earned an associate's degree or 
postsecondary credential, and that the remaining 20 percent have earned 
a high school diploma or its equivalent. We refer to these targets as 
our ``40/40/20'' goal.
    Oregon set a most ambitious education reform agenda:

     Create a coordinated public education system.
     Focus State investment on achieving student outcomes.
     Build statewide support systems.

    The unified, student-centered system of public education from pre-
school through graduate school (P-20) connected the educational sectors 
to achieve the State's educational outcomes. (The ``P-20'' term refers 
to the education of children from birth through their education career 
including early learning programs, the K-12 system, community colleges, 
and the undergraduate and graduate programs of universities.)
    One key investment area within the P-20 system is postsecondary 
access and affordability. To reach our 40/40/20 educational attainment 
goal the State must be strategic in generating college-going culture 
across the education continuum, and in making and honoring, a promise 
that postsecondary education will be within reach for all learners who 
achieve a high-school diploma.
    A Four-Step Approach to Affordability. The shared responsibility 
model of the Oregon Opportunity Grant involves four steps that enable 
all students to cover the cost of college attendance. The model assumes 
that the student, as the primary beneficiary of the education, bears 
the first and most significant responsibility for paying for college.
                         step 1: student share
    The defined student contribution spells out the amount every 
student would contribute to his or her education, based on the decision 
to attend a community college, a 4-year public or private college or 
university in Oregon.
                          step 2: family share
    The family share for both dependent and independent students is 
determined by an established financial need formula based on incomes 
and assets, family structure and attendance patterns. Families with 
greater resources are expected to cover the remaining costs, middle-
income families are expected to contribute some of the remaining costs, 
and families with very low to no resources are expected to contribute 
much less, or nothing.
                         step 3: federal share
    The same need formula determines how much aid, if any, the Federal 
Government will provide to replace some or all of the family 
contribution. Students whose families earn less than $40,000 in pre-tax 
income and assets are eligible for a Pell grant (up to $5,550 
currently). Middle-income families with Federal tax liability are often 
eligible for one of the Federal education tax credits for tuition paid 
the prior tax year.
                          step 4: state share
    As the final partner, the State assists only when there is a 
remaining need not covered by the other partners. These grants (Oregon 
Opportunity Grants) support student choice by reflecting the 
differential costs of public 2-year and 4-year colleges and public 
universities. Students who choose eligible 4-year independent colleges 
and universities receive assistance as well--but no more than their 
public counterparts.
    The implementation of the Shared Responsibility Model has increased 
State investment in need-based aid. The number of student's eligible 
and receiving State financial aid has nearly doubled and enrollment has 
increased across all post
secondary sectors.
    Oregon's educational attainment goal of 40/40/20 is more than a 
series of numbers--it represents an aspirational goal for degrees and 
certificates but it also represents a commitment to increasing the 
socio-economic benefits to all citizens. Connecting student learning 
along the P-20 education continuum is an important step in increasing 
the number of students who successfully complete high school and enter 
college but equally important is the promise of college as accessible 
and affordable, as with Oregon's Shared Responsibility Model.
                                 ______
                                 
    Good Morning, Mr. Chairman and other distinguished members of the 
committee. My name is Camille Preus, I am the commissioner of the 
Oregon Department of Community Colleges and Workforce Development. 
Today however, I am here representing the State of Oregon and all of 
our 24 public postsecondary institutions. We appreciate the invitation 
to join the committee as you focus on successful policies, initiatives 
and strategies, designed and implemented at the State level, to improve 
college affordability.
    I believe one such successful policy is Oregon's need-based 
financial aid program known as the Shared Responsibility Model. Before 
I discuss the Shared Responsibility Model policy it is important to 
explain the context.
    Never has education been more important to the lives and fortunes 
of America, Oregonians and our communities. Yet, in Oregon, we are 
falling behind. Our current generation, of young adults (ages 25-34), 
is less educated than their parents' generation and fewer of them are 
earning a certificate or degree beyond high school.
    Each year, well-paid jobs requiring only a high school diploma are 
replaced with new jobs that demand postsecondary education, technology 
skills and advanced training beyond high school. Over the next decade 
61 percent of all Oregon jobs will require a technical certificate, 
associate's degree or higher level of education. This proportion of 
high skill jobs will only accelerate by 2025. Today, Oregonians with an 
associate's degree earn at least $5,000 more per year than those with 
only a high school diploma. Those with a bachelor's degree earn 
approximately $17,000 more per year. Eighty-nine percent of family wage 
jobs, paying more than $18.00 per hour, will require a technical 
certificate/associates degree or higher level of education.
    Employment rates also highlight the need for higher education; the 
national unemployment rate for adults with a college degree is 4.4 
percent--half the 8.8 percent unemployment rate for those with only a 
high school diploma and one-third of the 13.2 percent unemployment rate 
for high school dropouts.
    Education however, is not just about improving personal income and 
job security. Higher levels of education are associated with better 
health, longer lives, greater family stability, less need for social 
services, lower likelihood of involvement with the criminal justice 
system, and increased civic participation. All are benefits not only to 
the educated individuals and their families, but also to healthy, 
thriving communities.
    The Oregon Context. There are encouraging signs of progress across 
Oregon. At every level of education in Oregon, leaders, faculty and 
teachers are pioneering new practices that enable students to achieve 
their potential as lifelong learners and contributors to our economic 
and civic life.
    In 2011 the Oregon Legislature addressed these challenges and 
opportunities head on, marshaling strong bipartisan majorities to 
enact:

     Senate bill 253 which established the most aggressive high 
school and college completion goals of any State in the country; and,
     Senate bill 909 which called for the creation of a 
unified, student-centered system of public education from pre-school 
through graduate school (P-20) to achieve the State's educational 
outcomes.

    Senate bill 253 defines our goal: by 2025, we must ensure that 40 
percent of adult Oregonians have earned a bachelor's degree or higher, 
that 40 percent have earned an associate's degree or postsecondary 
credential, and that the remaining 20 percent have earned a high school 
diploma or its equivalent. We refer to these targets as our ``40/40/
20'' goal.
    Senate bill 909 created the Oregon Education Investment Board 
(OEIB) and charged it with the responsibility, across P-20, to ensure 
that all public school students in the State reach the established 
educational outcomes. The ``P-20'' term refers to the education of 
children from birth through their education career including childcare 
and early learning programs, the K-12 system, community colleges, and 
the undergraduate and graduate programs of universities.
    There are three key strategies in the initial OEIB plan to reach 
the 40/40/20 goal:

     Create a coordinated public education system, from 
preschool through college and career readiness to enable all Oregonian 
students to learn at their best pace and achieve their full potential. 
At the State level, this will require better integration of our 
capacities and smarter use of our resources to encourage and support 
successful teaching and learning across the education continuum.
     Focus State investment on achieving student outcomes. 
Oregon defines the core educational outcomes that matter for students, 
their families and our State:

          All Oregon children enter kindergarten ready for 
        school.
          All Oregonians move along the learning pathway at 
        their best pace to success.
          All Oregonians graduate from high school and are 
        college- and career-ready.
          All Oregonians who pursue education beyond high 
        school complete their chosen programs of study, certificates, 
        or degrees and are ready to contribute to Oregon's economy.

     Build statewide support systems. It is not the State's 
role to deliver education, but rather to invest in and support the 
institutions and providers across the State that do. To succeed, the 
State must engage educators and leaders, students and families, 
communities and employers to achieve the educational excellence 
envisioned for Oregon students. The State will continue to set 
standards, provide guidance, conduct assessments and coordinate support 
and resources to its public educational pathways.
    The three strategies are overlapping, driven by student learning 
outcomes and aimed at transforming the State's approach to education. 
Under the leadership of Governor Kitzhaber, the State is also 
transforming its approach to the budget, leveraging investment in 
innovations and rewarding success.
    A key investment area is postsecondary access and affordability. To 
reach our 40/40/20 educational attainment goal the State must be 
strategic in generating a college-going culture across the education 
continuum, and in making and honoring a promise that postsecondary 
education will be within reach for all learners who achieve a high-
school diploma.
                    the shared responsibility model
    The average tuition and fees to attend a State university in Oregon 
today, represents 11.3 percent of median family income in the State, a 
doubling of the percentage paid 30 years ago when many of today's 
leaders went to college. In the last few years, the State-student share 
of college costs shifted from the State covering 51 percent in 2001 to 
covering only 31 percent in 2010, with students picking up the balance 
through higher tuition. As a result, Oregon students from low- and 
middle-income families are borrowing more, working more, taking a 
longer path to graduation, or simply giving up on college altogether.
    Oregon realized it could not afford to put college education beyond 
the reach of so many Oregonians, when as stated earlier, more jobs in 
our economy require postsecondary training or a degree. In 2007 the 
Oregon Legislature passed, with wide bipartisan support, Senate bill 
334 enacting the Shared Responsibility Model for the Oregon Opportunity 
Act. This bill restructured the need-based Oregon Opportunity Grant 
into a shared responsibility and partnership among students, their 
families, the Federal Government and the State to meet college costs 
and increase educational attainment statewide.
    Addressing the Public Interest. Oregonians recognize the benefits 
of postsecondary education. Students develop better skills, job 
prospects and earning potential, while the State benefits from a more 
productive and diverse workforce, better-paying jobs, and higher 
income, tax-paying citizens. Oregonians believe that even if students 
have no family resources to pursue postsecondary education, they should 
at least be able to work their way through college.
    But today, working one's way through college is no longer an option 
for most students. In 1965, an Oregon student could work approximately 
half-time at a minimum wage job year-round and pay for a year at a 
public university. A current student attending a community college 
would have to work 36 hours a week, 44 hours a week for a student 
attending a public 4-year university or 90-hours a week for a student 
attending an independent university, year round to do the same.
    A Four-Step Approach to Affordability. The shared responsibility 
model of the Oregon Opportunity Grant involves four steps that enable 
all students to cover the cost of college attendance. The model assumes 
that the student, as the primary beneficiary of the education, bears 
the first and most significant responsibility for paying for college. 
The contributions of other partners--family/household, Federal 
Government, and the State are based on the resources it takes to close 
the ``affordability gap'' for each student.
                         step 1: student share
    The defined student contribution spells out the amount every 
student would contribute to his or her education, based on the decision 
to attend a community college, a 4-year public or private college or 
university in Oregon: $5,700 per year for a community college student; 
and $8,700 per year for a 4-year college/university student (public or 
private).
    Each student would decide the best personal strategy by combining 
one or more of several options to cover their share of postsecondary 
costs: working, borrowing (student loans), savings, private 
scholarships, Federal work-study, institutional grants, etc. For 
example, working at a minimum wage job during the summer and part-time 
during the school year would cover $5,700 of the community college 
contribution or a smaller percentage of the 4-year contribution 
($8,700).
                          step 2: family share
    The family share, for both dependent and independent students, is 
determined by an established financial need formula based on incomes 
and assets, family structure and attendance patterns. Families with 
greater resources are expected to cover the remaining costs, middle-
income families are expected to contribute some of the remaining costs, 
and families with very low to no resources are expected to contribute 
much less, or nothing.
                         step 3: federal share
    The same need formula determines how much aid, if any, the Federal 
Government will provide to replace some or all of the family 
contribution. Students whose families earn less than $40,000 in pre-tax 
income and assets are often eligible for a Pell grant (up to $5,550 
currently). Middle-income families with Federal tax liability are often 
eligible for one of the Federal education tax credits for tuition paid 
the prior tax year.
                          step 4: state share
    As the final partner, the State assists only when there is a 
remaining need not covered by the other partners. These grants (Oregon 
Opportunity Grants) support student choice by reflecting the 
differential costs of public 2-year and 4-year colleges and public 
universities. Students who choose eligible 4-year independent colleges 
and universities receive assistance, but no more than their public 
counterparts.


                         more aid = more access
    Beginning in 2008 the State doubled the annual State commitment to 
the Oregon Opportunity Grant from $34 million in the fall of 2007 to 
$72 million in the fall of 2008. The average award amount in 2008 was 
$2,600 for a community college student, nearly double the $1,398 from 
2007. Today the Opportunity Grant is funded at just under $100 million 
with awards to more than 56,000 students.
    The gap between the cost of attendance and resources to pay for 
college has also dropped for a full-need student since the 
implementation of the Shared Responsibility Model. The need gap for a 
community college student has decreased by half and for a student 
choosing a 4-year public institution the gap has been reduced from 
$8,874 (2004-5) to $3,776 today.
    The Shared Responsibility Model design also helped middle-income 
families afford college--up to $70,000 for a family of four, previously 
capped at $31,000. College savings plans do not reduce the grant award.
    Another key aspect of the Shared Responsibility Model is statewide 
outreach. Leveraging the Federal College Access Challenge Grant, 
secondary and post
secondary partners launched an aggressive ``get-the-word-out'' campaign 
that included advertising on TV and radio, mailings and posters 
targeted to student, parents and counselors and community outreach 
visits statewide sponsored and supported by cross-sector education 
groups. This resulted in an increase of eligible applicants from 41,800 
in 2007 to 74,694 in 2008 and 155,103 estimated for 2011-12.
      how can the federal government encourage and support states 
                           in affordability?
    There are a number of ways in which the Federal Government can help 
States provide education at a lower cost. First, it should be noted 
that the maintenance of effort (MOE) requirements included in the 
American Recovery and Reinvestment Act (ARRA) concerning expenditures 
for public higher education did in fact serve to sustain funding at a 
time of tremendous fiscal duress. This had a direct impact in 
maintaining educational services and in limiting community college 
tuitions. Although the Federal Government is no longer supplementing 
State education budgets, other means of exerting similar leverage 
should be explored.
    In addition, the Federal Government should consider regulating 
public institutions of higher education differently from other sectors 
of higher education, particularly for-profit institutions. The reason 
for this is obvious--public institutions are funded and regulated in a 
fashion that is fundamentally different, and infinitely more exacting, 
than what's generally provided for-profit colleges. Community colleges 
are accountable to taxpayers and the broader public; for-profit 
colleges are accountable to their owners, usually shareholders. As a 
result, community colleges have been subjected to a regulatory 
apparatus that is entirely inappropriate to their nature.
    The Federal Government also could help States in their efforts to 
be more efficient by aligning the various reporting requirements that 
it imposes on institutions of higher education. These requirements 
differ for various programs, such as the HEA and the Workforce 
Investment and the Carl D. Perkins Act, and these in turn differ from 
information that States themselves require. A concerted effort needs to 
be undertaken to eliminate these inefficiencies. Many community 
colleges have only one individual who is responsible for meeting all 
reporting requirements. Sometimes States becoming directly involved in 
providing needed information. In addition, the Federal Government needs 
to be much more aggressive in ensuring that appropriate State 
educational entities have access to data that will enable them, in 
concert with institutions, to identify the earnings of students after 
they have left institutions. These data in turn will help colleges to 
maximize resource allocation.
    Many States are leading efforts to overhaul remedial education, 
often through modular courses. Unfortunately, this new approach has led 
to complications in the area of return of Title IV funds and standards 
of satisfactory academic progress. We urge the committee to place 
special attention on all the positive changes taking place in this 
area, which could well lead to much higher success rates for our 
students.
                               conclusion
    Oregon's educational attainment goal of 40/40/20 is more than a 
series of numbers--it represents an aspirational goal for degrees and 
certificates but it also represents a commitment to increasing the 
socio-economic benefits to all citizens. Connecting student learning 
along the P-20 education continuum is an important step in increasing 
the number of students who successfully complete high school and enter 
college but equally important is the promise that college is accessible 
and affordable, as in Oregon's Shared Responsibility Model.

    The Chairman. Thank you, Dr. Preus.
    Thank you all very much, both for your verbal statements 
which were very provocative in terms of getting us thinking, 
but also for your written statements. We'll start a round of 5-
minute questions now.
    Dr. Howard, I have some questions on the tuition setting 
flexibility that you seem to advocate. It seems to me if we 
allow institutions to set their own tuition without any caps, 
aren't we risking revenue maximizing tuition policies to hurt 
low-income students the most? Even New York, the example you 
cited, implies some caps by the State when you referred to 
moderate increases. How do you strike a balance between greater 
institutional autonomy and flexibility in setting tuition while 
preserving affordability and access?
    Ms. Howard. Well, I think we have to have all the 
stakeholders involved in this process to try and come forward 
with a tuition policy that is rational, predictable, and 
manageable. States are all in different places in terms of 
their levels of tuition. I think States that look at the 
economic model--how much families are contributing, how much 
aid is available--are able to come forward.
    For example, New York just came out with a predictive model 
where tuition will go up by X percent over the next 5 years. 
Two and a half percent of that tuition increase must go back 
into need-based aid. Families know for the next 5 years what 
tuition will cost them. The model is rational because all the 
stakeholders were involved and looked at what the State was 
able to do. Therefore, the State committed to an MOE, a 
maintenance of effort provision, that they would provide, which 
then keeps the tuition at a level that's predictable and 
manageable, and it's sort of not just going up and down based 
on how the State income is faring or its economic situation.
    I'm not advocating for tuition to spiral out of control by 
institutions just willy nilly setting their own tuition, but to 
have a model that's rational, predictable, and manageable for 
all stakeholders.
    The Chairman. Let me get to something else here. In the 
previous hearing that we had, we had representatives of 
colleges. Some of them were talking about how the different 
colleges have instituted different policies, like procurement 
policies, textbooks, things like that, that have really cut 
costs dramatically. It occurred to me then that why aren't 
other colleges looking at what some successful colleges have 
done and start to replicate it.
    I asked about it on the State level. We've seen some State 
efforts that seem to be moving in the right direction, in terms 
of procurement policies and other things like that. Why don't 
we see more States replicating successful efforts--I think, Dr. 
Howard, you mentioned Colorado, Kansas, Virginia--to enable 
colleges and universities to streamline their operations? Why 
aren't we finding more other States sort of replicating this? 
What's the problem?
    Mr. Morgan.
    Mr. Morgan. Senator, that's exactly what we're doing in 
Tennessee. Several national organizations have completion 
agendas and pretty broad agendas, and we're part of, I think, 
just about all of them. One of the things that Complete College 
America does, for example, is bring States together in what 
they call Completion Academies to share best practice. That has 
been extraordinarily valuable for us in Tennessee in terms of 
identifying strategies that have worked other places that can 
work in Tennessee.
    That's more designed around completion, but it also bleeds 
over into operational issues as well. We are just now going 
through a process in our system based on experiences in other 
States of implementing a system-wide procurement model that 
will really allow us to leverage our system--all the 
institutions that we have, some 46 institutions--so that we can 
group purchases and achieve the economies available.
    We are also cooperating with the University of Tennessee 
system to see if there's opportunities to bring the total 
higher education spend in Tennessee to the table as we 
negotiate with vendors for textbooks and for other kinds of 
equipment, supplies, and so forth. We're very much about the 
business of doing that.
    I think what you would find across the country is that 
States are heavily engaged in a kind of unabashed theft of 
ideas from one place to another. I'm very interested in the 
Oregon Promise Program that we're going to hear more about 
probably as we talk. So I think that is happening. I think it's 
happening in a very productive way.
    The Chairman. My time has run out, but I'll recognize Dr. 
Longanecker.
    Mr. Longanecker. Yes, I believe there's--and this is really 
strange for me to say, because I'm generally noted in the 
community as a pessimist. But on this, I'm fairly optimistic. 
The performance funding activities that are going on are all 
focused on trying to improve the efficacy or the efficiency of 
the system. What that does is it forces institutions to then 
think about ways they can collaborate to do this.
    Programs developed by our sister organization in the 
Midwest--the Midwest Higher Education Compact, which does a lot 
of collective purchasing. We've actually joined with them now. 
We provide a master property insurance program that saves the 
system in Nevada over $1 million a year by participating in 
that. There is a great deal of energy on this. The programs of 
the National Center for Academic Transformation have really 
started to transform many institutions. I think Tennessee is 
using that in a substantial way to provide higher quality 
education, as measured by student outcomes, for a lower price. 
I think there really are some wonderful things happening.
    When I was a Fed back in the old days, in the last century, 
there was--we always wondered why the great ideas that FIPSE 
had weren't done by other folks. I think one of the reasons 
that replication was so difficult is that there were really no 
financial incentives for doing that. The money was OK. Change 
is hard, so you do it first. It wasn't tough times. These are 
tough times.
    There's really a change in the attitude of the institutions 
themselves all the way down into the faculty. For the first 
time, I think, faculty are a significant part of the 
discussions about the change agenda. I'm reasonably optimistic, 
which is a strange place for me to be.
    The Chairman. Thanks, Dr. Longanecker.
    Senator Enzi.
    Oh, I'm sorry, Dr. Howard. Did you have a comment?
    Ms. Howard. Well, actually, I was going to basically echo 
some of the statements that David has just mentioned. But, I do 
want to say that I think States can do more. I think our 
initial focus when institutions begin to experience a drop in 
State support--that the focus was on the institution. I think 
your last round of hearings brought forward a lot of those 
innovations that occurred, because, at first, we were looking 
at institutions to generate ways to reduce costs.
    Now, I think, States are really fully at the table and 
helping more. I think it may seem that States are coming to 
this a little later, but I think that was simply because our 
focus was initially at the institutional level. But they are 
leading now.
    The Chairman. Thank you very much.
    Senator Enzi, thank you.
    Senator Enzi. Thank you, Mr. Chairman.
    Dr. Longanecker, when I was in the Wyoming legislature, I 
was a delegate to the WICHE.
    Mr. Longanecker. I know. You and your fellow Senator are 
the only two WICHE Senators we have.
    Senator Enzi. I remember being in San Francisco at a 
meeting when Governor Geringer of Wyoming and Governor Leavitt 
of Utah announced the Western Governors University. Among all 
the college presidents, the main conversation was, ``Well, what 
do we do with out-of-state students?'' And there's always that 
kind of a tuition discussion as well. I appreciate all the 
ideas that you put forward, and we'll have some specific 
questions on more detail on some of those. I appreciate the 
broad range of universities and colleges that you're 
representing with that. You mentioned Dr. Preus and her 
comments.
    I was fascinated by your comments on student share. I'm not 
so sure that we haven't gotten away from that a little bit and 
think that everything should be provided for them. Can you tell 
me a little bit more about how that student share is based on 
the level of the school that they choose?
    Ms. Preus. Mr. Chairman and Ranking Member Enzi, there is a 
formula. I dare say it might be too complicated for the 
committee meeting timeframe. We do a cost of attendance for the 
community colleges, the 4-year publics, and 4-year independent 
or private institutions. Then there's an expectation that a 
community college student would not have to secure a loan in 
order to afford tuition, which at the current rate is about 
$3,200 a year for tuition. University and independent 
university choice would require a minimum of $3,000 borrowing.
    What we try to do is use a formula where the student would 
work approximately 30 hours during the school year and full-
time during the summer. That dollar amount becomes the 
student's share. Then for the university, it's that share, 
which is right now $5,700, plus $3,000 in borrowing, so $8,700 
for a 4-year university. That's how we establish the share.
    Senator Enzi. It appears that that would make them have 
some consideration on where they decided to go. I'll have some 
more written questions for you on that one, too.
    The main question that I have for all of you, actually, is 
what steps can the Federal Government take to improve 
affordability or maybe, more important, what ways the Federal 
Government is impeding your efforts to improve affordability, 
access, and completion? And that may take a much more detailed 
answer than you might be able to give here. But, if you can, 
just give me a brief answer on that and then follow it up in 
your written responses.
    Mr. Morgan. If I could, I'll give you one example, and this 
is actually one that there's some hope that we're going to work 
through this. One of the things we've done in Tennessee is 
significantly redesigned our remedial and developmental 
education programs. Many students come to us--70 percent or so 
will come to us with some need for supplemental or what we now 
call learning support needs. VA benefits don't pay for 
remediation developmental education in ``independent study.''
    Well, what we've discovered in Tennessee through this 
reinvention of our remedial and developmental curriculum is 
that emporium models, using math labs with tutors and faculty 
in a very structured way--but it's an individualized study. We 
would argue it's not independent study at all. We've been going 
back and forth now for months with the VA about being able to 
use their benefits to pay for that methodology, which has 
proven to us to be far superior to the old models of 
remediation and developmental instruction.
    There are other examples. We're moving toward cohorts, 
which are continuous enrollment programs, in our community 
colleges and may well begin looking at that in our 
universities. The Pell system doesn't really fit that very 
well, and it's difficult to figure out how to use the Federal 
financial aid that is available to support those kinds of what 
we consider to be more successful, more innovative practice.
    Senator Enzi. Thank you.
    Anyone else?
    Mr. Longanecker. I'd like to jump in on that. I mentioned 
some of that. I think we need fairly radical change when you 
get around to reauthorization next year in some regards. We 
talk about a partnership. Right now, the partnership is the 
feds pay, everybody else takes. There isn't a stake in the game 
for the other principal actors.
    I think to the extent that you could build in a reasonable 
partnership, a real partnership, it would be useful so that 
institutions have a stake in the student's success and there's 
some value in that; so that the State has some stake in the 
student's ultimate success and there's some value in that; so 
that we're working together. Too often, I think the Federal 
Government has tried to substitute for inaction by States or 
institutions. Institutions don't share in some of the 
exceptional costs, the default rates and others that are a part 
of the game.
    The States don't share in the cost, particularly now that 
we don't have an SSIG program. That was a clever little 
program. Before it was passed, almost no States had need-based 
programs. Within a few years, every State did. It wasn't 
designed well for the future, and so it faded away, as I think 
it well probably should have. The idea of building in 
partnerships and stakes--if States don't want to go along, 
well, to hell with them. I mean, let their citizens suffer. The 
States that struggle and do a good job, then they should 
benefit from a partnership--a little hard for a Federal 
Government to say.
    We're beyond the point where I think we can expect--I mean, 
I talked about the States changing their concept of 
affordability. You're in the same place. I mean, come November, 
you're going to be facing a huge set of difficult choices about 
what you fund and what you don't fund. We're going to have to 
find ways in which we work closer together as institutions, 
State and Federal Governments, and as families.
    I think the student share concepts that are built into the 
Oregon Shared Responsibility Model are really exceptional. They 
recognize the reality of what students do today, and they also 
call loans loans, not financial aid. That's a student's 
contribution. They're going to have to pay it back. It's in the 
student's share, not in the financial aid. Loans are not 
financial aid. College work-study is not financial aid. It's 
work. We should recognize, though, and admit that. They're 
benefits.
    They're certainly good things to have. But we sell them in 
the financial aid packaging as though we were giving a great 
gift to the students. The unfortunate part is the students 
sometimes think it was a gift and don't realize what the loan 
is, and so we get ourselves in trouble.
    Ms. Howard. I would still like to encourage you to continue 
to look at the maintenance of effort provision. I think in the 
Higher Education Act now, it's still rather weak compared to 
some provisions in other education and healthcare measures. 
Higher education is being squeezed out at the State level when 
the States look at P-12 and they look at the needs they have to 
meet in terms of healthcare, ET cetera. Higher education is the 
entity that's really being squeezed out.
    I think the maintenance of efforts provisions have worked. 
States understand them. The States that have maintained those 
provisions are the ones that--my institutions are saying that 
they are developing robust partnerships. I think at the State 
and Federal levels, higher education really needs to be looked 
at as a part of the overall economic driver within communities, 
and they're not kind of these stand-alone institutions that 
should be treated just like any regular State agency.
    Higher education is really the engine that is going to help 
us satisfy the goals that you've heard some of my colleagues 
mention and help us be competitive in the future. I think 
continuing to ask States to maintain some effort--families and 
institutions cannot do this alone. We're going to get through 
the efficiency and effectiveness measures. We're going to be 
very good at that. We're going to be innovative.
    States are going to come along and help push us some more 
to be more efficient and, hopefully, will give us more policies 
that will allow us to be more efficient and effective, because 
I still think States have not done everything they can do in 
terms of giving campuses more leeway in terms of deciding how 
to move dollars from one line item to another, how to use 
capital investments and resources to generate savings, how to 
do more things at the local level so that it isn't strained out 
over a long period of time, which ends up costing the 
institution more.
    Maintenance of effort has been really important and 
successful, and we need to strengthen that measure going 
forward in the Higher Education Reauthorization Act.
    Senator Enzi. I have far exceeded my time. I will do some 
followup in writing and hope that you will provide more 
answers, because this is a great panel and great answers. I 
appreciate it.
    The Chairman. It's a great panel, and this topic is at the 
top of our list, because we've got to work on this next year on 
the reauthorization of the Higher Education Act.
    Senator Bingaman and then Senator Alexander.

                     Statement of Senator Bingaman

    Senator Bingaman. Thank you all for being here. Let me ask 
about the whole impact of technology on all of this that you 
folks are doing and that we're talking about here. It strikes 
me that in higher education, just as in a lot of other aspects 
of our lives, technology is dramatically changing the models 
that are available to folks. I mean, I read in the newspaper--I 
haven't taken these courses yet, but there are a lot of very 
high quality courses that you can take online.
    Now, more and more, universities are agreeing that they 
will set up systems or they'll hire folks to essentially do 
monitored testing to see whether you've actually mastered the 
substance of the course and whether or not you passed the 
course. You don't get college credit for it. They're not going 
to give you a university credit toward a degree. They'll give 
you a certificate that says you passed the course, basically.
    This is a type of individualized instruction that seems to 
me to sort of undermine the whole concept of universities and 
community colleges and everything, the way we've always thought 
of it. It gets harder and harder for folks to justify paying 
$30,000, $40,000, or $50,000 a year for tuition and devoting 4 
or 5 years of their life to going and being on a campus when 
they can sit at home or anywhere and take these online courses 
and get credit--not get credit, but get at least an 
acknowledgement that they have mastered the substance of what's 
being taught.
    I think, Dr. Longanecker, you talked about hybrid and 
blending programs and that kind of thing. I guess I'm just 
interested in any insights any of you can give me as to how you 
folks are accommodating to this. I mean, if I was worried about 
my ability to afford college, and I was just out of high 
school, I would be looking seriously at what are the options 
for getting some course work accomplished through these 
alternative ways that are either no cost or low cost, and then 
trying to find somebody who would acknowledge that I took the 
courses and passed them. I don't know if any of you have 
insights.
    Dr. Longanecker, I'd be interested in your thoughts.
    Mr. Longanecker. Sure. Clayton Christensen, who is sort of 
the guru of disruptive technology, has written a book about 
higher education and has suggested that, basically, the changes 
in the delivery of higher education are the disruptive 
technologies in higher education. I think he's absolutely 
right.
    There's really two elements to this. One is the technology 
and the use of that in the instruction, and the other is the 
movement more toward assessment of competence rather than seat 
time as the measure of student learning, if you will. You put 
those together, and they have the potential of sort of 
radically reforming or destroying education as we know it. My 
sense is that what's going to happen is it's going to be 
reformed, not destroyed.
    These are going to help us do a much better job, and we're 
already seeing it. I think it's Maryland--they require that 
students take a portion of their education online. In Idaho 
now, they're actually requiring that of elementary and 
secondary students. There's a presumption that that will be an 
integral part of the way in which we learn, and it already is.
    We find that most of the students who are taking online 
courses in our public universities are actually students in the 
university who could have taken the course on campus but maybe 
they had something else they wanted to do during that time, or 
they heard it was a better course, or some of them maybe heard 
it was an easier course. I don't know.
    By and large, there are a lot of reasons why people are 
sort of blending things together. Some are taking totally 
online. Some are taking blended courses. There's still great 
value in the seminar and in the laboratory science course 
that's on campus and whatever. I think what you're going to see 
is a radical transformation.
    Senator Bingaman. Am I also right, though, that as this 
transformation occurs, there ought to be some opportunities to 
save money?
    Mr. Longanecker. Yes, there are. In fact, for the first 15 
or 20 years of online, we didn't save money. We were learning. 
It really wasn't--it was mostly an add-on, and it actually cost 
us. But we are seeing technology advancements now that allow us 
to save substantial money. I mentioned the National Center for 
Academic Transformation, and they're saving money. Texas is 
developing a $10,000 degree that involves the use of 
technology. It's a different type of education.
    Frankly, my three children got regular college degrees, and 
I think there is value in the contact and in the campus and in 
the community experience that's part of college. I hope we 
don't lose that. I don't think we will, because I think many 
people believe there's value in that. There are two substantial 
benefits from the changes that are occurring. One is it will 
reduce the cost of all college. The second is it will make 
college much more available to a much larger share of the 
population than we have traditionally reached.
    The Chairman. Thank you, Senator Bingaman.
    Senator Alexander.

                     Statement of Senator Alexander

    Senator Alexander. Thanks, Mr. Chairman. I want to thank 
you and Senator Enzi for these hearings. I think they've really 
been very helpful and on a subject we all care about, which is 
making it easier to afford college. I'm going to focus on one 
word. I listened for it very carefully at our last hearing, and 
it didn't come up until I mentioned it. I haven't heard it 
today, although Dr. Howard almost said it. The word is 
Medicaid.
    We all seem to agree that the reason tuition is up is 
because State funding is down. I know that based on my own 
experience. Thirty years ago when I was Governor, 70 percent of 
the cost of going to college in Tennessee was paid by the State 
and 30 percent by the student. If we increased tuition by 3 
percent, we increased the State's share by 3 percent. That was 
just kind of understood.
    Today, as Mr. Morgan has said, it's the reverse. Now, why 
is that? Well, the main reason for that is because the cost of 
Medicaid in the Tennessee State budget 30 years ago was 8 
percent, and the cost today is closer to 25 percent. That's 
true everywhere in the country. This isn't President Obama I'm 
talking about. This has been happening for 30 years.
    Just to give you an example of it, I came to Washington to 
see President Reagan 30 years ago and said,

          ``Mr. President, this is squeezing--Medicaid is going 
        to squeeze everything out of our budget, and I won't be 
        able to afford to fund higher education properly. Why 
        don't you take all of Medicaid, Mr. President, and 
        we'll take all of K through 12 at the State level.''

    He agreed with that and mentioned it in his State of the 
Union. Nobody else agreed with it.
    If we had done that at the time--and I'm just using this to 
show an example of the problem--the States would have come out 
about $5 billion ahead. In other words, if all the 
responsibility for Medicaid had been in Washington, and all the 
responsibility for K through 12 had been in the States, the 
States would have come out about $5 billion ahead 30 years ago.
    If that were true today, if all the growth of Medicaid over 
the last 30 years had been in Washington, and the growth of K 
through 12 had been in the States, States would come out ahead 
to date $92 billion a year. I mean, the State of Tennessee 
would have $2 billion more to spend, roughly, and I can 
guarantee you that much of it would go to higher education.
    Why is that? It's because the Federal Government requires 
the States to spend money on Medicaid through maintenance of 
effort formulas that are in the healthcare law and in Medicaid 
and other mandates. They extend all the way to 2019. If you 
tell the Governors and legislators they have to spend it on 
healthcare, it won't be there to spend on colleges and 
universities.
    I don't like maintenance of effort. I'm opposed to one for 
higher education. If so, why do we have Governors and 
legislators? Why don't we just have a Washington Congress that 
says, ``All right. Tennessee spends this much on roads, this 
much on prisons, this much on''--and we can all go home. We 
don't need Governors or legislatures. It's the maintenance of 
effort for Medicaid that has gotten higher education into the 
mess it's in today, in my judgment.
    Turn it around the other way. What if the States and the 
legislatures got together and tried to get a pledge from 
Senator Corker and me that we'd never spend less than X on 
roads in Washington? We wouldn't tolerate that, and they 
shouldn't tolerate a maintenance of effort from here.
    That's my view of it. I think the first thing we can do to 
make it easier to afford college is to stop ordering States to 
spend a certain amount on healthcare and leave Governors and 
legislatures free to do what they want to do. You'd see a lot 
fewer examples of what happened in Tennessee 2 years ago when 
Medicaid spending went up 15 percent and higher education 
spending went down 15 percent. Had they been free to spend it 
as they wished to, I'm sure it would have been more even.
    Now, Mr. Morgan, you've watched the State of Tennessee for 
about the same time I have, over the last 30 years. You've been 
with Democratic and Republican Governors. Let me ask you two 
quick questions. One is what's the tuition today in your 4-year 
colleges and in your community colleges?
    Mr. Morgan. Senator, our tuition today in our 2-year 
colleges is about $3,600 a year. It's about twice that, about 
$8,000 a year, at the universities.
    Senator Alexander. Do you have any comment over the 30 
years on the effect that the increase in State spending for 
Medicaid has on the reduction in State money available for 
higher education?
    Mr. Morgan. There is absolutely no doubt, Senator, that 
over the years the increased cost of healthcare, mostly 
represented in the Medicaid program, has crowded out other 
State purposes. I think it's just true. Particularly, in a 
State like Tennessee--and I don't want to get into a tax reform 
conversation. But in a State like Tennessee, where our tax base 
really is not very elastic--in fact, it is inelastic. As the 
economy grows, the tax base doesn't. That has created 
particular problems for us in order to keep up with mandatory 
spending on things like Medicaid.
    Other issues, though, have also contributed to that. It's 
not just Medicaid. But Medicaid certainly is the largest. In 
the last few years, in the last 5 or 6 years, the rate of 
growth in what we now call our TennCare program was not as 
great as it had been in prior years, although, as you note, a 
couple of years ago was a pretty big hit, and we expect that to 
continue now--kind of back on trend for the next few years. It 
will make it much more difficult to fund higher education.
    Higher education doesn't have constitutional protection in 
Tennessee. Prisons and K-12 systems in Tennessee do have 
constitutional protections, either based on historical 
litigation or exclusive provisions in our State Constitution. I 
wish we had maybe a little constitutional provision for higher 
education.
    Senator Alexander. Thanks, Mr. Chairman.
    The Chairman. Thank you, Senator Alexander.
    Senator Franken.

                      Statement of Senator Franken

    Senator Franken. Thank you, Mr. Chairman, and thank all of 
you.
    Dr. Longanecker, one of my top concerns I hear about from 
students in Minnesota, after concerns about how to pay for 
college, is a concern that they really don't necessarily 
understand the true cost of college. I hear this also, not only 
from people all over the country, but from school counselors, 
who are overwhelmed as it is, but get these aid letters that 
are just really hard for them to sort out, let alone for the 
parents of the student or the student.
    Currently, every postsecondary school uses its own 
financial aid award letters, making it really impossible for 
students to compare letters to each other. I mean, if you look 
at them, they'll use different names to describe the same 
thing. Sometimes a loan won't even be listed as a loan. It'll 
just have a code. And this is an award letter. Very often, you 
don't think of an award as something you have to pay off with 
interest, you know.
    I've introduced bipartisan legislation to require colleges 
to use a uniform financial aid award letter with common names 
and common terminology. Do you see the value in this type of 
legislation?
    Mr. Longanecker. Yes, I do. In fact, Secretary Duncan and 
the Department have come up with a recommended letter to the 
communities----
    Senator Franken. That's voluntary, though.
    Mr. Longanecker. Voluntary. The dilemma I think we've got 
right now is, in most cases, they aren't intentionally non-
communicative. But we're dealing here, for the traditional 
college student, with a person who has very modest 
understanding of personal finance. So unless you have a clear 
representation of what the award is, it can be really 
misunderstood.
    I mentioned earlier that many students don't understand 
what a loan is when they go to college. They get a loan, and 
there's no payment with that loan, and they presume that that's 
the way it's always going to be. It was a loan without 
repayment, if you will. Or they're told that there'll be 
repayment afterwards. Sometimes that's a loan that's accruing 
interest. They don't understand what that means.
    I have a personal story. My brightest daughter--I have 
three wonderful daughters. My brightest daughter was going to 
law school, and they gave her all the money she needed to go to 
law school. And she says, ``Look at this. This is wonderful. 
I'm going to take out all these loans. It's going to be 
great.'' And I'm saying, ``No, you aren't. Look at the interest 
rates on those.'' She says, ``Well, I don't have any interest 
while I'm in school.''
    Well, of course, she did. She didn't have to pay it. But it 
was accruing. She's going to owe twice as much when she got out 
of law school as she thought she was going to owe. This is an 
extremely bright person. They hadn't explained all of that to 
her. They were making sure she could afford to go to college. I 
think it's very important that we have a standard way----
    Senator Franken. And, once again, this is your brightest 
daughter.
    [Laughter.]
    Mr. Longanecker. Yes, that would have been my brightest 
daughter.
    Senator Franken. I think that underscores the point.
    Mr. Longanecker. Yes. She is a smart little bugger. I think 
it's really important that they know. I know the Secretary is 
trying to do it through voluntary means, because he doesn't 
have the capacity to do it through a requirement. I think it 
would be interesting and useful to have----
    Senator Franken. I wonder who would have that ability to do 
that.
    Mr. Longanecker. The U.S. Senate could pass a bill on it.
    Senator Franken. Oh, that's why I introduced the bill. I 
mean, you said that traditional students----
    Mr. Longanecker. Non-traditional students face the same 
dilemma. You're coming back to school. It's been a long time 
since you've been there. If you come from a low-income family, 
you often have a real strong aversion to certain kinds of 
assistance. You really need something that clearly lays it out. 
Now, that doesn't mean they'll all know exactly what you said 
or listen to what you said. That's the other side.
    Senator Franken. Well, if we have a common form that names 
everything the same so you can compare apples to apples----
    Mr. Longanecker. Yes.
    Senator Franken [continuing]. Also, that says how much 
you're going to owe in addition to this--because very often, 
the letters will just have what aid you have, meaning what 
grants and what loans you have. It won't say how much more you 
have to pay--and also to have something that says how much 
you're going to have to pay per month to pay off these loans. 
And if you have that, it would be much, much easier for 
students.
    This is something I hear from students all the time who are 
in the middle of it, in college, or students that have 
graduated and didn't realize the level they were going to pay. 
And instead of saying, ``Oh, you should have been smarter,'' 
why not just make a uniform financial aid letter that everyone 
can understand. I have very, very smart guidance counselors who 
wrote me and thanked me, because they said, ``This is very hard 
for me, and this is my job, let alone how hard it is for the 
student.''
    Mr. Longanecker. Yes. I think, again, not everybody will 
get it. But we ought to give them the capacity to get it.
    Senator Franken. Yes. I think that's obvious. Thank you.
    I know I've gone over my time, Mr. Chairman.
    The Chairman. Thank you very much.
    Senator Whitehouse.

                    Statement of Senator Whitehouse

    Senator Whitehouse. A quick editorial point and then two 
questions. The editorial point is that at the tail end of all 
that confusion, people are often left stuck with enormous 
amounts of debt. One of the dirtiest deeds that was done to 
American students was squirreled away in the so-called 
Bankruptcy Reform Act, where they made student loans non-
dischargeable which shoveled buckets of money into the pockets 
of the lenders who had lent at a rate that presumed that was 
not the case. It was kind of a surprise attack on the students.
    I don't think anybody has put their fingerprints on that 
provision since then. But there it lies, and students have this 
additional burden that ordinary borrowers don't have as a 
result.
    My two questions--the first is about Pell grants. Could you 
each just touch very briefly on how important you think Pell 
grants are in the financing strategy for college of lower 
income families?
    Ms. Howard. Well, certainly, I think it has played a real 
important role in helping millions of individuals to be able to 
obtain an education in this country.
    Senator Whitehouse. We have one really important.
    Ms. Howard. Right.
    Mr. Longanecker. I'd say it's really, really important, but 
not for every Pell grant recipient. That's one of the areas I 
think there needs to be some reform in. For the students who 
have the most need, it makes the difference in whether they go 
to college or not. The way the program works, whenever we 
increase maximum, we also bring in a new population of more 
middle-income students. I know there's a lot of concern about 
the middle-income students today. They aren't nearly as 
vulnerable as that most-needy student, and we may need to think 
about targeting better in the future.
    Senator Whitehouse. Mr. Morgan.
    Mr. Morgan. Pell grants are essential to our lower income 
students being able to go. There's just no question about it.
    Senator Whitehouse. Dr. Preus.
    Ms. Preus. Extremely important.
    Senator Whitehouse. OK. Really important, really, really 
important and essential, and extremely important. Good. My 
other question is one that I invite you to take for the record, 
if you like, because in 2 minutes and 45 seconds, I'm not going 
to get answers to this from everybody. But it has to do with 
what many of you were saying about accountability and, 
particularly, how it's measured.
    A woman who is a single mother in South Providence and who 
decides that she's going to improve her economic situation and 
go to CCRI and start taking credits might very well start off 
signing up for a bunch of credits and being optimistic. Then 
she'll go in, and she'll find out, ``I was a little over-
optimistic about how much time and energy I could devote to 
this. I'm going to have to drop a credit or so.'' And then 
maybe in the next term, there's a childcare issue, so she drops 
out entirely.
    But she comes back again and takes another credit and then 
maybe two more. In the meantime, she is learning skills and has 
refocused her life, and, sure enough, boom, along comes a job 
in the field that she's interested in. She gets that job. She's 
got her economic foothold. So no more credits. She's satisfied. 
For her, that CCRI experience was a success: ``I moved from 
where I was not happy to a job where I am happy.''
    When you look at her career from a purely university-based 
perspective, she dropped credits, she missed semesters, she 
never graduated, and she looks like a failure. In her life, 
it's a success. Mission accomplished: ``I have a foothold job 
that gets me into the economy where I want. I can take care of 
my child, and I'm on my way.''
    Who does the best job of figuring out what real success is 
in terms of ultimate job placement? And how should we be 
looking at that question?
    Mr. Longanecker. Well, I'm really glad you asked that 
question, because I think that is a success. Most of the people 
who face those same dilemmas don't ever get to the point of 
success. I think there are two or three things. One is we need 
to find a way in which we define success, both in terms of the 
completion of the education and in terms of why it was we 
completed the education, so moving into the workforce.
    I think this is really a great example of where the Federal 
Government needs to bring together the activities of the Labor 
Department and the Department of Education and, if you will, 
perhaps the IRS or the Social Security Administration so that 
we can determine whether the people have achieved the success 
that we want them to. We're involved at WICHE with a four-
state--we're working with four States to essentially blend 
their education data bases and their labor data bases, their UI 
data bases, so we can look at the success of students.
    Now, we'll be able to do some really good policy work on 
that. But we won't be able to look at individuals because the 
privacy laws don't allow us to do that.
    Senator Whitehouse. My time is up. If anybody else would 
like to add thoughts in terms of an answer, I'd love to hear 
from you.
    This has been a really terrific panel, and I want to thank 
the Chairman for bringing you all here together--an impressive 
panel.
    The Chairman. We'll start a second round here. I'm sorry 
that Senator Alexander left, and I don't mean to speak in his 
absence. But I did want to respond a little bit on the Medicaid 
issue. An article in the Washington Post this summer, dated 
July 3d, quoting Kaiser Family Foundation, said that,

          ``Despite beliefs that Medicaid is claiming a larger 
        share of State budgets, the share of State general fund 
        dollars for Medicaid has remained fairly stable, 
        increasing from 14.4 percent in 1995 to 15.8 percent in 
        2010.''

    The most recent up-tick is largely due to the recession. I 
mean, who gets Medicaid--poor people and people who are out of 
work. The idea of maintenance of effort--the CBO estimated that 
if we repealed the maintenance effort, there would be 300,000 
people added to the ranks of the uninsured, and that 400,000 
beneficiaries would be pushed out of Medicaid and CHIP, two-
thirds of whom would be children.
    Again, if they're kicked out, it's like they don't 
disappear. They still get sick. They still have to be taken 
care of. They're going to be a bigger burden if the sicker they 
get, that's when they show up at the hospital or the emergency 
room. I hope we're not trying to pit poor kids against college 
students. It's poor kids. How do you get Medicaid? You've got 
to be really poor. So I hope we're not going to try to pit poor 
kids against college students.
    The other thing I want to say about this is that--and I 
don't have the data now, but I've seen it in the past--that 
States in the past 20 or 30 years, when times are good, cut 
taxes. Governors love to run on cutting taxes. So they cut 
taxes. Then when they hit bad times, they can't raise taxes in 
bad times. Then you get into another cycle of good times and 
you want to cut taxes even more.
    We have had a decreasing level of State revenues over the 
last 20 to 30 years in general funds. What do the States do? 
Lotteries, casinos--that's where they're making their money 
now. And who plays the lottery? Who goes to the casinos? Poor 
people. You don't see rich people at these casinos. Well, you 
see them in Las Vegas maybe. They might go there for other 
reasons besides just gambling.
    When I hear States crying about their budgets and stuff, I 
say,

          ``Well, show me what your revenues have done over the 
        last 20 or 30 years. How are you collecting your 
        revenues? Where are they going, and your budgets?''

    You can't just say that just because--and the other thing 
is this 30 years--and Senator Alexander was right about this--I 
don't know if he alluded to this or not, but that we have a 
growing number of poor people in this country in the last 30 
years. Look at it. Just look at the data.
    There was a graph in the paper the other day about more and 
more income going to the top one-fifth--I forget what it was--
like 50 percent of our income is now going to the top one-fifth 
of income earners, and less than 5 percent going to the bottom 
fifth. That's what's eating us up. It's this lack of revenues 
and the fact that we have a growing population of poor people 
in this country.
    I didn't mean to get off on all that. But I just wanted to 
respond to that. Mostly, what I'm interested in, though, is 
pursuing--as I said, this is a great panel. We have the Higher 
Education Act next year. I think there's a lot of things we can 
do. I feel strongly that maintenance of effort is something 
that we really, really have to maintain.
    Also, we've got to look at how we can incentivize States to 
do the kinds of things you're doing in Tennessee or what you're 
doing in Oregon, which really kind of gets my curiosity about 
how you have a seamless system and how you encourage these kids 
to get through the seamless system from community colleges to 
colleges.
    The other thing we need to tackle is pay for performance. 
Well, what is performance? Is it 4 years? Well, you know, I 
went to a 4-year college. But it took me one extra quarter to 
finish because I changed my major. So I didn't have enough 
credits in my new major. I needed to go another--we were on the 
quarter system at the time, so I had to go an extra quarter.
    There's a lot of that that goes on, where kids go to 
college, thinking they're going to do something, and find out 
that's really not where their aptitude lies. They change, and 
it requires them to go to school for an extra semester or so. 
Second, there's a lot of kids who go to college and because of 
economic situations they drop out. They go to work for a while, 
save some money, and go back to school.
    Sometimes it does take longer than 4 years. I don't know 
what the proper--is it 5 years? Is it 6 years? A lot of people 
seem to have settled on 6 years. I don't know what the proper 
cutoff is for some kind of pay for performance, for getting 
these kids through in a short period of time. We know it saves 
money. That I know. The shorter period of time you're in 
college, the more money you save.
    How do you accommodate these other things I spoke about in 
terms of finances, in terms of illnesses, in terms of changing 
your major? Once you start writing in exceptions, where do you 
end? So who's got the answer for me?
    Mr. Longanecker. I've got the answer. One of the real 
advantages of these new outcomes-based funding programs like 
Tennessee has is they provide all the right incentives to the 
institution, but they don't tell the institution exactly how to 
do it. For example, the institution knows now that they aren't 
going to get paid for that person until he or she graduates. I 
mean, they're not going to get as much money. They're going to 
try and do everything they can to get that person to graduate.
    The way you get a person to graduation is you break down 
those barriers, so that you have a childcare program for this 
person that was mentioned, so that she doesn't have to drop out 
of school.
    The Chairman. That costs money.
    Mr. Longanecker. Yes, it costs money. But it's worth it 
because you're going to get some money, and you're going to get 
it sooner. It really allows the institutions to find the one 
that fits their circumstances best. And you'd better believe 
they'll follow it. They sure followed us on enrollments. We 
said we wanted enrollments, and we got enrollments. We 
particularly got enrollments on the 14th day, not necessarily 
on the 30th day. A lot of students have dropped courses by 
then.
    There are a lot of the right incentives if you pay for 
performance. Now, some States have sort of done a half a loaf, 
and it's not bad. They've said they're not going to pay on 
graduates, but they're only going to pay for completed courses. 
Well, then, you provide a disincentive for--gosh, that bright 
daughter I was talking about used to always sign up for 24 to 
27 credit hours, because she knew she was going to drop the 
ones that didn't seem to be as fun, or she couldn't get the 
ones she really wanted so she signed up for others, hoping 
she'd get into the ones she wanted.
    There was a lot of gaming that went on. That served her 
pretty well for convenience, but it sure cost the State of 
Virginia, which is where she was going at that time, a lot of 
money, because those courses got counted in their formula.
    The Chairman. Mr. Morgan.
    Mr. Morgan. One thing I would add to that--and I agree with 
everything David said. But we can also structure our offerings 
in ways that are much friendlier to students who have outside-
education obligations. They have families. They have work 
careers. They have other balancing acts that they have to 
perform. Historically, we haven't been very flexible in the way 
we structure programs.
    We're looking very hard--and the outcomes-based formula 
drives us to look very hard--at how we craft programs that will 
fit the needs of individuals. Frankly, that's something we can 
learn from proprietary schools, because they've done a pretty 
good job at building programs that fit people's real-life 
needs. We just didn't do that very often in public education. I 
think we're doing that now.
    Perhaps in Senator Whitehouse's example of the person who 
kind of comes and goes and finally gets what they need, had we 
had the right program structure on the front end, it may have 
been a much quicker route for that individual to be able to get 
to an ultimate result that would put them in the economy at the 
place they want to be. There are a lot of things that we can do 
better.
    There's just one other point I'll make and then stop. In 
difficult budget times, historically, student services has been 
one of the first things to be cut. In an outcome-based world, 
suddenly student services becomes one of the last things you 
want to cut, because having adequate services that can really 
reach out to students, identify the problems that they have, 
counsel them about the career choices that they need to make so 
maybe they don't waste a quarter or a semester or a year 
exploring--if they had a little more guidance up front, they 
might have gotten on a path that would have led to a quicker 
completion and, therefore, saved resources.
    One of the things that we're seeing in our system is that 
focus on outcomes has really developed a strong interest on the 
part of all the stakeholders at the institution in having the 
right student services available at the right time.
    The Chairman. Thank you, Mr. Morgan.
    Dr. Howard.
    Ms. Howard. I just wanted to say that I also want us to 
keep in mind that our students today, on average, at many of 
our campuses are 23, 24, 25, 26 years of age, and they have 
other real-life responsibilities. This sort of perfect 
perspective we want to have in terms of how they move through 
their educational experience is not going to be as achievable 
for all adult learners. They're going to be, in the future, one 
of the largest groups that we educate in this country.
    We are trying to adjust and be prepared for everyone that's 
going to be coming through higher education, and that's a big 
challenge for us. Many of our colleges and universities are 
beginning to have their own e-university within the walls of 
the traditional university so that we do have this hybrid world 
that students can take advantage of to garner the education 
that they need.
    We have one system in Pennsylvania that's starting to look 
at a lot of the courses that are out there online and will look 
at how to evaluate and judge those courses as to whether they 
have quality and merit and students can take advantage of them 
and receive college credit for them. That'll be another 
lifeline that students can have in that State, for example, to 
begin to move forward with their education.
    I was listening to him describe the student that he was 
talking about. Although she's happy now, it doesn't mean she's 
not going to hit the wall later, that her job or her career 
isn't going to require her to go back and receive additional 
education if she decides she wants to move up in that 
organization or she wants to change jobs again.
    I do think in terms of higher education we're going to have 
to have a more expansive view of it and stop looking at it as 
an end and a beginning. I think we're all going to be involved 
in continuing education the rest of our lives when we look at 
the society that we're developing and how competitive it is. I 
do think we need to be sensitive to that and develop as many 
pathways as we can for individuals to be able to garner a 
higher education. We are working on that, and we also are 
looking at how we can make it most cost-effective, especially 
for our students.
    We don't have a pat answer for you today, whether it should 
be four or six or whatever, because our population has changed. 
When I went through college, everybody was 17, and everybody 
traveled as a class. Very few of our students now and in the 
future are going to be coming in as a group and then complete 
as a cohort at the end. We have to be prepared for it when 
people have to go off in terms of other roadways. So I hope we 
won't lock ourselves back into a view that's kind of 25 years 
old that everyone's going to go through in the same amount of 
time and in the same way, because it won't happen.
    The Chairman. Thank you very much.
    Senator Enzi.
    Senator Enzi. Thank you, Mr. Chairman. I think this has 
been an extremely valuable panel. I've made pages and pages of 
notes here and additional questions. Our work is really going 
to be cut out for us. I mean, not only do we have to do the 
Higher Education reauthorization, but we have to fix No Child 
Left Behind.
    The Chairman. We've got to redo that, yes.
    Senator Enzi. The Workforce Investment Act should have been 
done 6 years ago. I complain about it every year.
    The Chairman. You've worked very hard on that.
    Senator Enzi. I did hear the comment that we needed to 
redesign remedial. That fits in with fixing No Child Left 
Behind. If we don't bring them out of high schools better, then 
they won't need the remedial courses. High schools have to be 
somewhat responsible for that as well as colleges when it comes 
to the cost, I think.
    I think we're going to have to pursue this technology a lot 
more, and it's going to be interesting--the age of those of us 
who will be making the law, compared to the age that really 
understands technology. I've said in my office, if the 
computers break down, we'd just go find a kid on the street, 
give him a movie ticket for fixing it, and it's done in 30 
minutes. It's not quite that simple, and that isn't really how 
we do it.
    Recently, I was in Sweden, looking at their educational 
system. In preschool, they're using i-Pads and doing 
educational programs, and that goes all the way up. As they get 
a little bit older, they communicate between each other doing 
team projects, which I hated when I was in school because there 
was always somebody that was the weak link that still got 
credit for my work. But when they're using computers, just two 
people linked up, the teacher can go back and check and see who 
is doing the work. That has some advantages to promoting 
teamwork, I think.
    It was just fascinating to watch the ways that they were 
able to use this that I'd never even envisioned before. They 
didn't write stories. They filmed stories. We're going to have 
to adjust to that level of technology as we're making the new 
laws for this. The teachers liked the system once they adjusted 
to it, because it freed them up to work with the kids that 
actually needed help, and the kids that were really good were 
just zooming along on their own. Somehow we're going to have to 
adjust to that so we can allow others to adjust to it.
    I have a whole range of questions, but we don't have the 
time to cover them. I will submit them in writing to you and 
would appreciate answers. You've just been a real treasure 
trove of information for us. There are a lot of areas we need 
to explore yet before we do the Higher Education 
reauthorization. I just want to thank you for your 
participation today and your great answers.
    The Chairman. Thank you very much, Senator Enzi. And I'll 
just join you in thanking the panel, all of you, for being here 
and for all the work you do. As you can see, this is of great 
importance to this committee, because this is something we have 
to tackle next year.
    We'll leave the record open for 10 days, until September 
27. I want to thank all my colleagues for all their hard work 
on this issue and other issues before the committee.
    Also, to all of our witnesses who are here, we hope that 
you will be available to us and to our staffs for 
correspondence and other types of information as we move along 
this fall and next year into the Higher Education Act 
reauthorization. Thank you very much for the work you do. 
Thanks for being here. The hearing is adjourned.
    [Additional material follows.]

                          ADDITIONAL MATERIAL

   Response by Muriel A. Howard, Ph.D., to Questions of Senator Enzi 
                         and Senator Blumenthal
                              senator enzi
    Question 1. At our last hearing, we heard from president Tom Snyder 
of Ivy Tech, who described how his institution is looking to maximize 
operating efficiencies and cut costs. In what ways are States 
encouraging institutions to find operating efficiencies and cut costs? 
In what ways do State laws and policies impede institutions' ability to 
cut costs?
    Answer 1. Given the dramatic rate of State disinvestment in public 
higher education in recent years, public colleges and universities have 
worked relentlessly to identify and implement cost containment 
strategies, which have led to improved operational efficiencies and 
productivity, while protecting students from additional tuition 
increases. Public, master's-level comprehensive universities remain, on 
a cost-per-degree completion basis, the most efficient sector of 
American higher education. Yet these institutions continually strive to 
reduce spending while maintaining academic quality. In an analysis of 
institutional cost-cutting efforts, detailed in Cost Containment: A 
Survey of Current Practices at America's State Colleges and 
Universities, AASCU found top sources of cost containment to include 
energy management, auxiliary operations (i.e., housing/dining), 
distance/online learning, and efficiencies in administrative staffing 
(see Appendix A, p. 33 of the report for a full listing).
    Enhanced operational flexibilities for public college campuses is 
another avenue for further cost reduction. These include changes to 
capital construction processes, data reporting, regulatory burdens, and 
overly prescribed rules regarding institutional purchasing activities. 
Regarding the latter, an AASCU study found a number of State policy 
reforms that could lead to significant cost savings in purchasing goods 
and services; savings that can be reallocated to core teaching and 
learning pursuits. Recommendations on State procurement policy reforms 
are articulated in the Executive Summary (p. 8) of the report, Public 
College and University Procurement: A Survey of the State Regulatory 
Environment, Institutional Procurement Practices, and Efforts Toward 
Cost Containment.

    Question 2. As you are aware, Congress will be taking steps to 
reauthorize the Higher Education Act in the next 2 years. With this in 
mind, how can steps now being taken by the States serve as a model for 
us? What types of things are being done in the States that can and 
should be incorporated into Federal efforts to improve affordability, 
access and completion?
    Answer 2. As I highlighted in my testimony, States are providing 
institutions with some flexibility of State procurement requirements, 
as well as other State regulations, in order to allow institutions to 
achieve cost-saving efficiencies. The Federal Government should examine 
how Federal policies influence institutional costs and look at 
minimizing their footprint in those areas.

    Question 3. In your written testimony, you discuss the need to give 
institutions more autonomy. However, given that public institutions are 
State agencies, how much autonomy is too much? Where should States draw 
the line?
    Answer 3. One of the greatest attributes of the Nation's higher 
education system is its incredible institutional diversity. Just as our 
institutions possess distinct missions, so too do our States provide an 
array of governance and oversight approaches involving public 
postsecondary systems. Some States have strong, centralized systems 
(Wisconsin, New York, North Carolina), while others provide 
considerable autonomy (Colorado, Michigan, Virginia). In all States, a 
general consensus among university leaders is that greater flexibility 
to public universities can help maximize their ability to meet several 
important objectives. These include cost containment, revenue 
enhancement, operational efficiencies, economic development through 
public-private partnerships, and college affordability (through 
strategic tuition and financial aid policies).
    It must be underscored that college and university leaders and the 
governing boards remain adamant about ensuring full accountability for 
taxpayer-provided State appropriations and student-paid tuition 
dollars. Institutional flexibility--granted through enhanced State--
autonomy--and accountability--are not mutually exclusive. Both autonomy 
and accountability are ideals that can be realized through sound public 
policy measures and effective governance.
                           senator blumenthal
    Question 1. Dr. Howard, thank you for being here today. I am 
curious about the portion of your testimony when you suggested that 
States give greater flexibility to institutions as a strategy to 
increase college affordability. One of the main things that you call 
for is greater institutional flexibility in setting tuition policy, 
which you say will allow States to maximize efficiency and increase 
affordability.
    Can you elaborate on the connection between institutional 
flexibility in setting tuition and college affordability?
    Answer 1. As I mentioned in my testimony, in 40 States, 
institutions do not have the ultimate authority to establish their 
tuition rates. In many States, the State legislature has the ultimate 
control creating a challenging dynamic. The legislature will simply 
legislate a higher tuition when they are not able to increase State 
funding to institutions. Giving institutions more control over this 
function and allowing them to determine tuition price should result in 
tuition-setting policies at public 4-year institutions that are more 
sensitive to student-consumer costs.

    Question 2. How specifically do you envision institutions using 
such flexibility to foster affordability?
    Answer 2. The most common method by which institutions utilize 
tuition policy to increase student access is through allocating a 
portion of tuition revenues for need-based student financial aid. 
Institutional need-based aid is an effective college affordability 
strategy for low- and lower middle-income student populations; a group 
whose success in postsecondary education is paramount to national 
economic and workforce goals.
    Further, flexible tuition policies can facilitate college 
affordability and student success. These include policies involving 
out-of-state students whose revenues are used to subsidize the cost of 
resident students, and differential tuition policies, which charge 
prices that more accurately reflect the costs associated with academic 
programs.
 Response by David A. Longanecker, Ed.D., M.A., B.A., to Questions of 
          Senator Enzi, Senator Bennet and Senator Blumenthal
                              senator enzi
    Question 1. At our last hearing, we heard from president Tom Snyder 
of Ivy Tech, who described how his institution is looking to maximize 
operating efficiencies and cut costs. In what ways are States 
encouraging institutions to find operating efficiencies and cut costs? 
In what ways do State laws and policies impede institutions' ability to 
cut costs?
    Answer 1. States are using general approaches to encourage their 
systems of higher education to find operating efficiencies, thus 
cutting costs.

     The first, whether intentional or not, is the age-old 
technique of starving the beast. Simply by reducing funding, either in 
absolute levels as has been the trend in the West or in funding level 
``per student,'' States have forced institutions to find ways of 
providing their services for less. While institutions will contend that 
these ``draconian'' actions are decimating higher education, in actual 
fact institutions have found ways to manage well within reasonable 
cuts. In fact, one of the salutary impacts of this is the recognition 
of the value of marginal revenues from tuition (even without tuition 
increases), which for most institutions are sufficient to cover the 
marginal costs associated with new students, thus making new students 
attractive as revenue producers, thus, not surprisingly, we see 
unanticipated FTE student increases. Now, we hear that these new 
enrollments are exacerbating the funding crisis, when in truth they 
provide marginal revenues that are helping the institutions.
     The second general approach, much more intentional, is 
through performance funding, which provides strong incentives for 
institutions to redirect their funds to those goals reflected in the 
public agenda that drives performance funding reward and away from 
peripheral activities that excite the institution but no one else.
     The third general approach is incentive funding, which 
pays institutions for entering into new activities that evidence 
suggests will increase productivity. For example, South Dakota and 
Tennessee have provided seed funding to encourage institutions to adopt 
the blended instruction concept pioneered by the National Center for 
Academic Transformation. Incentive funding and performance funding are 
often thought of as the same thing, but they are far from being the 
same. Performance/Outcomes funding pays for a desired outcome and comes 
after the fact. Incentive funding pays for an input that is likely to 
provide the desired outcome and comes before the outcome is produced. 
They can often complement each other, but they are distinctly different 
strategies.

    Question 2. As you are aware, Congress will be taking steps to 
reauthorize the Higher Education Act in the next 2 years. With this in 
mind, how can steps now being taken by the States serve as a model for 
us? What types of things are being done in the States that can and 
should be incorporated into Federal efforts to improve affordability, 
access and completion?
    Answer 2. As I mentioned in my testimony, I believe the Higher 
Education Act could be re-crafted to create a more active partnership 
between the Federal Government and willing States. Given the primary 
responsibility that the States have constitutionally to provide 
education, such a partnership makes more sense than having the Federal 
Government try and cover for States' lack of adequate attention to 
assuring access to success in higher education. Doing this would be a 
radical departure, because currently the Federal Government essentially 
disregards whether States support the Federal goals in postsecondary 
education or not. The argument against the partnership approach I 
propose is that not all States care much about educational opportunity 
for all, and the citizens of those States would be harmed if the feds 
didn't step in. I argue that, while it is true that not all States are 
equally committed to equal opportunity, we are well pass the huge 
disparities of the civil rights era when the Higher Education Act was 
initially passed in 1965, and that the Federal Government simply can't 
afford and shouldn't afford to bail out States that don't do their 
share. If States chose to screw their residents, that is unfortunately 
their prerogative and the Federal Government shouldn't try and provide 
cover for them. Rather, the Federal Government should share its 
precious few dollars with States that share the national vision.
    I noted in my testimony that I believe Oregon's ``design for shared 
responsibility'' best captures this philosophy. Oregon's design 
includes students, their families, philanthropy, institutions, and 
State and Federal Governments as shared partners in ensuring access to 
success for their students. Students, as the principal beneficiary of 
the education are expected to contribute what they reasonably can 
toward their education, and this student contribution can be provided 
from current work, savings from past work, loans predicated on future 
work, and/or earned scholarships. Families are expected to contribute, 
as they should before they expect other taxpayers to do so. 
Philanthropy's contribution is encouraged and incentivized because it 
goes to reward the student (in the student's share) for the student's 
effort to prepare well for college and does not replace the 
contribution of government. Institutions partner by keeping their costs 
and tuition under control, and the State and Federal Governments cover 
the remainder in grant aid because everyone else is tapped out. Note 
that much of what we currently call student aid is actually considered 
part of the student's contribution in the Oregon scheme. College Work 
Study is considered a portion of the student's earned contribution, and 
student loans, likewise, are considered part of the student's earned 
contribution, albeit from future earning, not current earnings. Indeed, 
in the Oregon plan, the amount students are expected to borrow is 
predicated on their projected earnings. It's a smart idea in which the 
feds could benefit from looking at and perhaps emulating or partnering.
                             senator bennet
    I particularly liked your reference to Washington State's model of 
public/private partnerships. That's exactly the kind of collaboration 
we need so that we can provide more opportunities for kids to pursue 
important STEM fields in this 21st century economy.

    Question 1. Are there best practices that have been developed in 
Washington State that we can try to replicate in other States?
    Answer 1. First and foremost, thank you, Senator, for your kind 
introductory remarks.
    With respect to the question above, the matching plan in Washington 
is, indeed, a plan that could be replicated elsewhere and is indeed 
being looked at by a number of States. The dilemma is finding a scheme 
that is attractive enough to attract significant private sector 
engagement. In Washington, the idea for this matching program actually 
came out of the private sector, with leadership coming from Microsoft, 
Boeing, and Costco, and the goal is to have a program that brings in $1 
billion in private sector funds to match $1 billion in public funds. 
The dilemma is that, despite the private sector leadership on 
philosophy, the dollars haven't followed. To date the fund has about 
$20 million in private sector contributions, which when combined with 
the public sector funds, yields mighty slim pickings for distribution 
to students.
    Alaska and Wyoming in recent years have used portions of their 
largess from gas, oil, and coal fee revenues to fund new ``endowed'' 
State-aid programs. It might have been interesting if they had 
established an enduring matching component to keep both the State and 
the private sector engaged, rather than essentially eliminating the 
need for this portion of the public agenda to be ``taken care of '' and 
no longer worthy of their concern.

    Question 2. For example, how can Colorado work with companies who 
need STEM graduates like Lockheed Martin to partner with schools like 
Colorado School of Mines or Red Rocks Community College?
    Answer 2. I'm currently intrigued by an idea being shopped in 
California to build on the Federal loan program, and its income 
contingent repayment options, to try and ``partner'' by buying down 
student loans for students staying in California. In general, I think 
this idea of intentionally building on the Federal programs has great 
merit.
    Another grossly underutilized strategy in American higher education 
is the use of cooperative work-study. I'm not talking here about the 
usual use of the Federal dollars for college work-study, but rather 
programs pioneered at institutions like Northeastern University and 
Cleveland State University, where large portions of the student body, 
particularly in fields like Engineering, engage in intentional 
partnerships between their University and local industry to provide 
remunerated employment that imbeds the clinical part of their education 
and thus is an integral part of their degree program. Such programs 
have multiple benefits, including a wonderful way for students to pay 
for their education, an opportunity for the firms involved to gauge 
whether they want to hire these students (substantially reducing 
recruitment costs), and a much greater likelihood that these students, 
once educated at public expense in your State, will remain in-state 
because they'll have time to grade in a firm within the State.
                           senator blumenthal
    Mr. Longanecker, thank you for being here today. I applaud the work 
that you have done with the Western Interstate Commission, and I hope 
it continues. I was hoping you could speak further to the importance of 
the Pell grant. I am a strong supporter of the Pell grant, and believe 
it is a critical baseline for many students in need.

    Question 1. I know that the western United States has a significant 
investment in public education, and I'd like to hear your thoughts on 
the ways the Pell grant has supported public institutions, and ways in 
which the program can be improved.
    Answer 1. Despite the rhetoric of some, the evidence is clear that 
Pell grants make it possible for many people to attend college that 
would not have done so without these grants. I prefer not to think 
about the ways in which Pell grants help institutions, because they are 
intended to help students, not institutions, but without doubt many 
institutions that serve large numbers of Pell grant recipients would 
not be able to remain in business if the students didn't have the 
grants that make it possible for them to attend college. While many 
focus on the dependency of for-profit institutions on Pell grant 
recipients for the resources they bring, the case is no less true for 
more community colleges, 4-year public universities, and less selective 
private colleges.
    What we now know, however, is that while Pell grants have made 
access possible, they have not contributed as much as is needed in 
promoting persistence and completion of Pell grant recipients. I 
believe the evidence is strong that adding kickers in the Pell grant 
program for students who achieve above expectations would lead to 
performance above current levels. Indeed, for a few years we had this 
with the Academic Competitiveness and Smart Grants, which provided 
students additional funds if they took a rigorous curriculum in high 
school and/or majored in a STEM field. We know from research that 
taking the right curriculum in high school is absolutely key to 
postsecondary success; nonetheless, we dropped the ACG and Smart Grants 
programs because institutions didn't like them and because States 
didn't like having to provide a viable high school curriculum. We also 
know from research that greater academic intensity (taking more courses 
and credit hours) leads to success, but we have no incentive for 
students to take more courses and to become more intensively engaged. 
In fact we ludicrously define ``full-time'' as 12 hours of study, 
though no student could receive an Associate Degree in 2 years or a 
Bachelor Degree in 4 years if they took 12 hours per term. Furthermore, 
students whose Pell grant students perform exceptionally well are 
treated no differently in the Federal programs than institutions whose 
Pell grant students never graduate. We need to imbed within the Pell 
grant programs incentives for students, institutions, and States to 
partner in achieving greater access to success, rather than 
accommodating access to failure.
    Response by John G. Morgan, B.A., to Questions of Senator Enzi 
                         and Senator Blumenthal
                              senator enzi
    Question 1. At our last hearing, we heard from president Tom Snyder 
of Ivy Tech, who described how his institution is looking to maximize 
operating efficiencies and cut costs. In what ways is Tennessee 
encouraging institutions to find operating efficiencies and cut costs? 
In what ways do State laws and policies impede your ability to cut 
costs?
    Answer 1. The implementation of the Complete College Tennessee Act 
of 2010 provided the greatest encouragement for institutions to find 
operating efficiencies and reduce costs. As mentioned in my testimony, 
a critical component of the CCTA is the revised funding formula that, 
for the first time, emphasizes outcomes instead of enrollment. The 
outcomes funding formula drives priorities within our institutions and 
encourages accountability and measuring what is important--student 
success.
    As a result of the new funding formula and other components of the 
CCTA, our institutions are striving to improve efficiencies and help 
students manage their costs more effectively by (1) helping them 
complete their education goals faster, thus saving tuition dollars, and 
(2) consolidating services and operations.
    Here are some specific examples:

    1. Helping students complete their education goals faster.

    a. Developing articulation agreements across our public 
institutions.
    b. Creating the Tennessee Transfer Pathways, a set of 49 universal 
pathways in 29 academic disciplines. The pathways define a clear 
roadmap of courses guaranteed to transfer to all of Tennessee's public 
and many private institutions.
    c. Launching a ``Finish Faster!'' initiative to create structured 
learning communities at institutions across the system. The initiative 
includes cohort, block scheduling and accelerated programs that provide 
predictable scheduling to minimize completion time. A total of 175 
structured-learning community programs are being offered in our 
community colleges.
    d. Creating and implementing the Degree Compass software that helps 
students stay focused on the courses they need and will be successful 
in completing.
    e. Encouraging the development of dual credit and dual enrollment 
programs that allow high school students to complete college credits 
before they graduate.
    f. Identifying completion points embedded within degree programs by 
offering certificates for students as they complete academic 
milestones.

    2. Consolidating services and operations

    a. Coordinating an e-procurement system to create efficiencies of 
scale and negotiate lower pricing for products and services.
    b. Developing a consolidated system for all 13 of Tennessee's 
individual community colleges across the State.
    c. Creating a marketing plan for Tennessee's Community Colleges to 
relay a consistent message and enhance the image of the 2-year schools 
to encourage more students to begin their college careers at a 
community college.
    d. Encouraging campuses to consolidate academic units where 
possible and eliminate low-producing programs.

    The greatest impediment to our progress in all of these areas has 
been the lack of a comprehensive financing strategy for higher 
education in Tennessee. Annual reductions in State funding for higher 
education and a lack of need-based aid for students are significant 
barriers to achieving our attainment goals. The former has contributed 
to a consistent rise in tuition, and the latter has kept many able 
students from completing their education goals.

    Question 2. As you are aware, Congress will be taking steps to 
reauthorize the Higher Education Act in the next 2 years. With this in 
mind, how can steps now being taken by the States serve as model for 
us? What types of things are being done in the States that can and 
should be incorporated into Federal efforts to improve affordability, 
access and completion?
    Answer 2. When funding is tied to accountability and measurable 
outcomes, it allows the State to guide priorities. Tennessee has the 
advantage of a current Governor who has demonstrated his commitment to 
increasing educational attainment as well as prior leadership that laid 
important groundwork through the CCTA. While Tennessee's approach has 
yet to be fully tested and may not be appropriate for other States, a 
Federal expectation that States should establish data-driven, 
performance-based approaches would be appropriate. The difficulties in 
implementing such a policy would be numerous, especially creating 
parity with private schools. However, it may be worth considering.
    Changes in guidelines that regulate financial aid to encourage the 
implementation of alternative-schedule programs (those that run beyond 
the traditional fall and spring semester periods) may also allow 
institutions to focus more on providing the program formats that 
students need and demand.
    While controversial and perhaps unrealistic, requiring all 
institutions that receive Federal aid directly or through student 
financial assistance to be accredited by agencies that use criteria at 
least as rigorous as the Southern Association of Colleges and Schools 
(SACS) and Council on Occupational Excellence (COE) would be a major 
step forward.
                           senator blumenthal
    Mr. Morgan, thank you for your testimony. I appreciate you sharing 
the experience of Tennessee and its ambitious efforts to address the 
issue of college affordability. I was particularly struck by the 
efforts you described to reduce the time it takes for each student to 
complete a program of study and receive a degree. One of the major 
factors that increases a student's time to degree is the fact that many 
students do not graduate from high school fully prepared to enter 
higher education. As I talk to educators and employers in my home State 
of Connecticut, I constantly hear that students who have practical 
working experience are much more likely to successfully transition into 
an institution of higher education. Because of these conversations, I 
am planning to introduce legislation that would expand high-quality 
internship and pre-apprenticeship programs in secondary schools.

    Question 1. Can you speak to the way in which practical working 
experience can prepare a student to enter an institution of higher 
education? What role can internships and pre-apprenticeships play in 
reducing time to degree?
    Answer 1. While I cannot provide evidence related to internships 
and apprenticeships at the secondary school level, our TBR institutions 
have many examples of the value of internships and cooperative 
education programs for enrolled students. Community college allied 
health programs require students to spend time in health care and 
emergency response agencies. Our education programs embed student 
teachers in secondary schools. Engineering programs offer cooperative 
training that allows students to work full-time at a company in the 
midst of their academic plans. These programs, and many more like them, 
have resulted in students who are more employable and better prepared 
to enter the workforce. Students who participate develop both soft 
skills and the hands-on training needed for their careers, refine their 
interests, focus their studies in the fields they want to pursue, and 
better understand the work environment.

    Question 2. One of my great concerns surrounding college costs 
deals with transparency. I have heard time and time again that many 
students aren't adequately presented with the costs they will face, and 
end up saddled with debt that they are unable to repay. I was pleased 
to see from your testimony that the Tennessee Technology Centers are 
leading in transparency, by, for example, providing up-front lists of 
non-tuition costs such as books and supplies. What more can the Federal 
Government do to promote disclosure and standardization, so students 
know what to expect financially?
    Answer 2. This issue is important--particularly as students compare 
public institutions with proprietary schools. In Tennessee, students 
can easily enroll in a proprietary program with the ease of a form and 
signature. Disclosure is critical as students consider their options; 
they need clarity and understanding of the difference between grants, 
scholarships and loans.
    While I am not familiar with the details of Senator Franken's 
proposal as discussed in the hearing, the concept of requiring a 
uniform disclosure to students receiving loans that illustrates likely 
monthly repayment obligations and total repayments over the loan life 
is worth further consideration.
Response by Camille Preus to Questions of Senator Enzi, Senator Bennet 
                         and Senator Blumenthal
                              senator enzi
    Question 1. At our last meeting, we heard from president Tom Snyder 
of Ivy Tech, who described how his institution is looking to maximize 
operating efficiencies and cut costs. In what ways is Oregon 
encouraging institutions to find operating efficiencies and cut costs? 
In what ways do State laws and policies impede your ability to cut 
costs?
    Answer 1. The community colleges in Oregon are chartered by the 
State but are independent jurisdictions with locally elected board 
members. This statement is by way of explanation and context, not an 
excuse. Given the ``great recession,'' Oregon like many other States, 
has reduced its State support for postsecondary education resulting in 
many negative impacts such as increases in tuition, reduction in 
program offerings. These funding reductions have also generated a 
number of administrative and service efficiencies as institutions look 
to balance increasing student success with reduced revenue. 
Efficiencies within the institutions include actions such as 
centralizing and streamlining student services, eliminating 
redundancies in data collection and reporting. At the State level we 
have incented institutions to reduce program development costs by 
underwriting development of new programs across institutions, expanding 
and sharing on-line program delivery, disseminating and instituting 
promising practices.

    Question 2. As you are aware, Congress will be taking steps to 
reauthorize the Higher Education Act in the next 2 years. With this in 
mind, how can steps now being taken by the State serve as a model for 
us? What types of things are being done in the States that can and 
should be incorporated into Federal efforts to improve affordability, 
access and completing?
    Answer 2. Institutional accountability no longer represents 
responsibility for a student only while s/he is enrolled in your 
institution. Stakeholders, institutions, and policymakers now want to 
know how the student educated in one educational sector did in the next 
step of the educational journey. One way to track student progression 
is through the exchange of data from one educational institution to 
another. Currently, FERPA allows this exchange to systematically happen 
in only one direction, forward, a high school may send student record 
information to a college but the college would need to obtain 
permission from student to send his or her college information back to 
the very high school from which s/he graduated. Oregon is adapting its 
educational structure to create a more seamless Pre-K through 20 system 
including accountability across all educational organizations. A 
Federal change to existing FERPA guidelines to explicitly allow the 
sharing of student data backward down the education pipeline would 
greatly assist in the tracking of student preparedness and progress.
                             senator bennet
    Question 1. You mentioned development of a coordinated pre-school 
through graduate school system of public education in Oregon.
    1. What types of issues have you focused on in early and K-12 
education in order to make sure that students are college- and career-
ready?
    Answer 1. For early learning, the key issues are ensuring that 
children are raised in stable and attached families and are receiving 
the foundations necessary to guarantee they are arriving at 
Kindergarten ready to learn. The creation of ``early learning 
coordination hubs,'' and focus on implementing some early screening and 
assessment of risk factors for children, are aimed at ensuring 
communities are able to coordinate and deliver more services to 
families based on their needs. At the K-12 level, several issues emerge 
in the area of ensuring students are college- and career-ready--
certifying students are reading at grade level in elementary school, 
engaging and empower parents (particularly parents in underserved 
communities) to support students in reading and in creating a sense of 
future for their children, exposure in middle grades to college 
culture, to career and vocational opportunities, hands-on learning, 
problem solving and higher levels of problem solving. Important work is 
also being done to confirm that high school students have access to 
college credits and real world experiences, such as internships, by 
more effectively bridging the 11-14 grades.

    Question 2. For example, in Denver, the Children's Corridor works 
to make sure that all children are prepared for college and their 
careers by providing a variety of affordable health, wellness and 
education services to support each child. What would we need to do to 
bring this kind of coordination to scale?
    Answer 2. In Oregon, the Early Learning Council is currently 
working on a Global Children's Budget that will be presented to the 
Oregon Education Investment Board and Legislature in October 2012. This 
budget describes the State investment necessary to support the health, 
wellness and educational services for all early learners in Oregon.
                           senator blumenthal
    I was particularly struck by the portion of your testimony when you 
described the rapid growth of high skill jobs. Unfortunately, the 
degrees and certificates offered by our higher education system do not 
always reflect the prevalence of these emerging industries. I hear 
about this trend all the time as I travel across my home State. 
Connecticut employers frequently tell me that they can't find graduates 
with the skill sets that are required to enter emerging, high-growth 
industries. For that reason, I introduced the Community College 
Innovation Act, a bill that would encourage community colleges to 
develop job training programs that lead to an industry-recognized 
credential in a high-growth industry.
    Question 1. Do you see a need to expand job training programs that 
encourage students to enter high-growth industries?
    Answer 1. It is critical to the health of our economy that 
community colleges offer high-quality technical training programs in 
high-growth industries. Indeed, it is a fundamental part of our 
mission, in an ongoing effort to respond to local and regional economic 
needs. However, this work presents constant challenges, both in the 
identification of the most promising opportunities, when only a limited 
number can be addressed and in identifying resources to meet them. 
Compared to traditional transfer programs, technical training programs 
are generally far more costly to deliver, as they usually involve 
expensive technology and must have limited class sizes. For these 
reasons, and because of the extreme negative impact from recent funding 
cuts in Oregon and virtually on all community college campuses across 
the Nation, additional financial support is needed to expand these 
important efforts. Therefore, the Community College Innovation Act 
would be extremely beneficial to our institutions if it were enacted 
and subsequently funded. The Federal Government also can play a 
constructive role by ensuring that community colleges and State 
agencies have the wage/earnings data they need to evaluate the impact 
of their training programs.
    Thank you again for the opportunity to appear before the committee 
and please do not hesitate to contact me if I can be of further 
assistance.

    [Whereupon, at 12:17 p.m., the hearing was adjourned.]

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