Discussion of State Appropriation to Eastern Michigan University August 2013

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1 Discussion of State Appropriation to Eastern Michigan University August 2013 Starting in , the Michigan Legislature decided to condition a portion of the state appropriation on how well the 15 public universities perform on certain metrics. This is called performance funding, and the metrics used are: Number of critical skills undergraduate completions (science, technology, engineering, math) Research & development expenditures 6- Year graduation rate Total degree completions (includes graduate degrees) Institutional support (upper level administrative spending) % of total expenses (high=bad) This report will do the following: A. Report the State appropriation for the last several years for EMU and the other Michigan public institutions, and the effect of performance funding on what EMU received from the State in B. A detailed examination of the performance funding metrics C. The correlation between performance funding and the income, race, gender makeup of each institution s undergraduate population. Preview: The evidence is clear that universities like EMU that have more low- income statement, a higher proportion of female students, and higher percentage of minority students are penalized under the State Legislature s performance funding formulas. D. Conclusions on what we can do moving forward A. Report the State appropriation for the last several years for EMU and the other Michigan public institutions, and the effect of performance funding on what EMU received from the State in Below is a summary of higher education funding in the State for the last few years. 1

2 All the publics got hammered in The slight increase in did not nearly recover the losses from the prior year Below is a graph that reports the appropriation per student. The EMU appropriation per Fiscal Year Equivalent student is below the state average Appropriation (EMU did very poorly): The specifics are as follows: The total appropriation is composed of: 2

3 o Base appropriation, based on amounts. $1.243 Billion for all 15 publics o Performance funding, $21.9 million o Performance funding is only 2% of total funding; this % will increase over time We will be using the percentage change in the appropriation (far right column) as the basis for correlation tests with various factors To explain the numbers more fully for EMU: o.789 for EMU = $789,000. o What if EMU had gotten an average increase of 1.8% for ? Result: Due to the performance funding formula for , EMU lost approximately $400,000. This is a conservative estimate. Later, we will analyze the potential loss for Within performance funding, the amounts for each metric are as follows: Critical skills undergraduates, 22.2% of $21.9 million ($4.9 million total) Research & development expenditures, 11.1% of $21.9 million ($2.4 million) Graduation rates, degree completions, and institutional support expenditures: 66.7% of $21.9 million, or $14.6 million (Source: FY : HIGHER EDUCATION Summary Report:, May 23, 2013) 3

4 To put the State appropriation in context for EMU, first, compare the main revenue sources for EMU in 2000 and in As you can see, in 2000, the State appropriation was larger than tuition; by 2012, tuition was much larger as a revenue source (Source: EMU audited financial statements) In 2012, EMU had total revenues of $340 million o 49% is from tuition, and o 19% from the State. o 14% from Grants, 10% Auxiliaries (housing, dining), 8% all other The year- by- year comparison of tuition and the state appropriation tells the complete story of how the state has hurt EMU (amounts in millions, per EMU audited financial statements): 4

5 B. Detailed examination of the performance funding metrics The first metric is the number of critical skills undergraduates. The number is based on an average of 2011 and 2012 graduates. There are several problems with this metric, but one issue is that it is hard to determine what exactly a critical skills area is. The reason this is a problem is that the list of critical skill areas comes from three different sources: (i) Below are the categories that are reported in the actual legislation. The numbers reported are the ones for EMU. The legislature did not publish these numbers and categories; I used the HEIDI data (Higher Education Institutional Data Inventory of the State of Michigan) to report the data. The Legislature claimed that they used these areas. The first question you may ask is why there are 0 graduates in construction trades. We have a strong construction management program in the College of Technology. My best guess is that those graduates are reported in the engineering technologies cell, though I am not certain. One of the action items we hope to happen from this report is that we can meet with the EMU administration and the state legislative analysts to see how they arrived at their numbers. The numbers reported above came from the following categories, which is in the HEIDI data: 5

6 52.BUSINESS, MANAGEMENT, MARKETING, AND RELATED SUPPORT SERVICES , HISTORY Total CMU 0 0 3, , ,468 Eastern Michigan University 04.ARCHITECTURE AND RELATED SERVICES AREA, ETHNIC, CULTURAL, GENDER, AND GROUP STUDIES COMMUNICATION, JOURNALISM, AND RELATED PROGRAMS COMMUNICATIONS TECHNOLOGIES/TECHNICIANS AND SUPPORT SERVICES COMPUTER AND INFORMATION SCIENCES AND SUPPORT SERVICES EDUCATION ENGINEERING ENGINEERING TECHNOLOGIES AND ENGINEERING RELATED FIELDS FOREIGN LANGUAGES, LITERATURES, AND LINGUISTICS FAMILY AND CONSUMER SCIENCES/HUMAN SCIENCES LEGAL PROFESSIONS AND STUDIES ENGLISH LANGUAGE AND LITERATURE/LETTERS BIOLOGICAL AND BIOMEDICAL SCIENCES MATHEMATICS AND STATISTICS MULTI/INTERDISCIPLINARY STUDIES PARKS, RECREATION, LEISURE, AND FITNESS STUDIES PHILOSOPHY AND RELIGIOUS STUDIES PHYSICAL SCIENCES PSYCHOLOGY HOMELAND SECURITY, LAW ENFORCEMENT, FIREFIGHTING & REL PROT SERV PUBLIC ADMINISTRATION AND SOCIAL SERVICE PROFESSIONS SOCIAL SCIENCES TRANSPORTATION AND MATERIALS MOVING VISUAL AND PERFORMING ARTS HEALTH PROFESSIONS AND RELATED PROGRAMS BUSINESS, MANAGEMENT, MARKETING, AND RELATED SUPPORT SERVICES HISTORY Total EMU 0 0 2, , ,216 As you can see, there is not construction management line here either. Ferris State University Also notice how the two lists do not match up. This is problematical. 01.AGRICULTURE, AGRICULTURE OPERATIONS, AND RELATED SCIENCES COMMUNICATION, JOURNALISM, AND RELATED PROGRAMS However, the IPEDS (Integrated Postsecondary Education Data System) of the U.S. Department of Education has several hundred of what are called CIP codes (Classification of Instructional Programs). There is a CIP code for construction management ( ), and EMU had 40 graduates with this CIP code in Those 40 graduates hopefully showed up in the final numbers for EMU. HFA/SFA 48 2/21/2013 Next question: How does EMU compare to other institutions on this metric? Funding for this metric is $ per completion; therefore, EMU received ($340.45)(642) or $218,573 in additional funding. There are a couple of ways to look at this: (1) EMU had an average of 642 critical skill degrees, out of 2,998 average degrees conferred. If we compare this to the state peers who are in a fact- finding peer group (Source: FY : HIGHER EDUCATION Summary: Conference Report, May 23, 2013) (2) If we compare the funding EMU received relative to its size, the following results: 6

7 Research & development expenditures To be eligible for this funding, a university had to be classified as one of the top categories of research per the Carnegie classifications ( There are three top research classifications, based on research grants and expenditures: RU/VH (research university very high): UM, MSU, and Wayne State are in this category. 108 nationally RU/H (research university high): Michigan Tech and Western Michigan are here. 98 nationally DRU (doctoral research university): Central and Oakland qualify here. 88 nationally How can EMU move to the DRU category? The classification is a mixture of several metrics. Carnegie has a spreadsheet that details the process, which can be accessed from the website above. A summary is as follows (Source: Carnegie classification site above) Research & development (R&D) expenditures in science and engineering; R&D expenditures in non- S&E fields; S&E research staff (postdoctoral appointees and other non- faculty research staff with doctorates); doctoral conferrals in humanities fields, in social science fields, in STEM (science, technology, engineering, and mathematics) fields, and in other fields (e.g., business, education, public policy, social work). These data were statistically combined using principal components analysis to create two indices of research activity reflecting the total variation across these measures (based on the first principal component in each analysis) Bottom line: EMU gets nothing from this source of funding. The total for the 7 universities that received funding was $2.4 million 7

8 Graduation Rates, degree completions, and administrative spending The largest component of performance funding is based on three metrics, and it is the area where EMU definitively is losing appropriation dollars due to institutional factors. The three metrics are graduation rate, degree completions, and administrative spending. For each of these three metrics, universities score 0, 1, 2, or 3: 3 if improvement over three years 2 if in the top 20% 1 if above national median 0 otherwise EMU s ratings were: 0 for graduation rate 3 for degree completions 0 for institutional support Total score = 3 Here are the scores for these metrics ( source: FY : HIGHER EDUCATION Summary: Conference Report, May 23, 2013) 8

9 Graduation Rates 6- year graduation rate: Each institution is compared to national Carnegie peers.it is not clear how peers are selected; there are several ways to do this on the Carnegie site Here are the graduation rates for the Michigan publics. The score is based on the 2008 to 2011 rate. Given EMU s 2012 rate is down to 37%, we will likely get a ZERO for this metric in Source: (IPEDS) A deeper look at EMU s graduation rate, per the Common Data Set Source: EMU Office of Institutional Research and Information Management, or IRIM) Of course, the rates per the common data set are slightly off from the rates per IPEDS. EMU submits all of this data to the U.S. Department of Education, one wonders why they are not the same, which is discouraging Still, the results here are discouraging, as the graduation rate is low and not moving up The common data set also reports the one- year retention rate: How many students who were on campus in fall of 2011 returned for fall of This also gives some insight into graduation rate. Source: EMU Office of Institutional Research and Information Management, or IRIM) 9

10 Total Degree Completions This metric includes both undergraduate and graduate completions. The number of completions is measured against Carnegie peers, though it is hard to determine how that is done. Nevertheless, EMU does seem to show improvement in this area over time: Source: EMU 2012 Fact Book Breaking this down by College: Source is EMU 2012 Fact Book 10

11 Administrative Spending The last category that affects the state appropriation is administrative spending. Specifically, the metric used is: Numerator: Institutional Support Expense per IPEDS Denominator: Total Core Operational Expenses per IPEDS Institutional support is defined by IPEDS as: Expenses for general administrative services, central executive- level activities concerned with management and long range planning, legal and fiscal operations, space management, employee personnel and records, logistical services such as purchasing and printing, and public relations and development. Also includes information technology expenses related to institutional support activities. The graph below reports institutional support as a percent of total expenses for (most recent year available per IPEDS) 11

12 Looking closer at EMU for the last five years, using IPEDS data: The appropriation was based on 2007 to 2010 results; the 2011 percentage is a bit lower than in 2010, but it is hard to tell if EMU will get a score above 0 for Final result: How much did EMU s low scores on graduation rates and administrative spending cost the university in lost appropriation? Bottom Line: These deficiencies cost EMU $364,800 conservatively, and as much as $1 million. The realistic loss is closer to ½ a million. This is the loss per year. The loss for was $400k. 12

13 C. The correlation between performance funding and the income, race, gender, and age composition of each institution s undergraduate population In Michigan, the public universities have very different student populations, and the characteristics we examined are income, gender, race, and the percent of students that are part- time. The data below is all from IPEDS, and is for the academic year. Income: Using IPEDS data, we reported the percentage of undergraduate students that receive Pell grants, which is a federal program that supports lower income students and their family s pay for college. Race: We used two metrics here (both from IPEDS) o Percent of undergraduate students that are white o Percent of undergraduate students that are African- American Gender: Percent of undergraduate students that are female (IPEDS) Results: EMU ranks 3 rd in the state in the % of students receiving Pell Grants, at 44%; the average in the State is 37%. EMU has the 3 rd highest proportion of women undergraduate students, at 59% EMU has the 2 nd lowest white student percentage in the state, at 63% EMU has the 2 nd highest percent of African- American students, at 22%. o Some of these institutions have very homogenous populations o At UM- Ann Arbor, there are significant numbers of Asian students, which explains the relatively low percentages of white (66%) and African- American (4%) students 13

14 We next want to examine if these factors are associated with the performance funding awarded by the legislature for To do this, we will examine the correlation between the above factors and the percentage change in the state appropriation from to The variable was reported above, and here are the percentage changes for the 15 public institutions. The data is sorted alphabetically. Source: Michigan Legislature, FY : HIGHER EDUCATION Summary: Conference Report, May 23, 2013 The next step is to see how this percentage change in the appropriation is correlated with the various factors described above: Conclusions: The more lower- income students, the LOWER is the appropriation The more white students, the HIGHER is the appropriation The more African- American students, the LOWER is the appropriation These factors clearly hurt EMU, which serves more lower- income and African- American students than most other state universities. It is not appropriate to penalize EMU and similar institutions for serving these populations. In fact, EMU should be rewarded for serving these students, and some states, notably Minnesota, actually increases the appropriation based on minority degrees granted. 14

15 Technical notes: A multivariate regression would yield the same results as individual factor correlations Several of the above factors are highly correlated with each other It would be appropriate to report significance measures for these correlations In terms of gender, the critical skills degrees are major areas that have traditionally attracted more male students. To test this hypothesis, we examine the correlation between the % of students that are female with the percentage of funding that was awarded based on the critical skill degrees. Result: Correlation = Conclusion: The higher percentage of female students, the LOWER is the appropriation. Our belief is that awarding appropriation dollars based on some degrees vs. other degrees does not make any sense. To suggest that a Psychology degree or English degree is worth less than a Math degree diminishes the role of higher education in our society. Of course it is great if students get degrees in math and related fields; it is also great if they get degrees in English and other fields. The EMU mission statement is as follows: EMU enriches lives in a supportive, intellectually dynamic and diverse community. Our dedicated faculty balance teaching and research to prepare students with relevant skills and real world awareness. We are an institution of opportunity where students learn in and beyond the classroom to benefit the local and global community Source: 13_nodates.pdf This mission statement does not suggest that certain degrees are worth more than others; the State Legislature is losing sight of the goal of higher education, which the AAUP states is to: ensure higher education s contribution to the common good. ( The last two factors to examine are: Percent of undergraduate students that are part- time: Percent of total undergraduate students that are part time (IPEDS) Percent of undergraduate students that are over age 25 (IPEDS) These two variables are highly correlated with each other Conclusions: The more part- time students, the LOWER the appropriation The more older students, the LOWER the appropriation These are both populations served by EMU and similar schools. It seems problematical to penalize a university for serving these groups of students. 15

16 D. Conclusions and potential actions Potential actions: 1. We can lobby the state legislature and educate them that their measures have very negative effects on universities that serve important populations such as low income students, women and minorities. If the legislature will not listen, we certainly can take a more public stance on these issues. 2. We have been saying for years that EMU has a bloated administration: this bloat is now hurting our university in more ways than the misallocation of resources and priorities. The EMU state appropriation is now lower due to our bloated administration. The EMU- AAUP claim that there are too many administrators making too much money has now been proven true. Unfortunately. What can we do? We can continue to press the administration to put more resources into the core mission, and less into activities that do not further than mission, such as athletics. 3. In terms of critical skills, we can point out how basing the appropriation on this metric in Michigan hurts universities that have a large percentage of female students, which is s not appropriate. 4. What can we do to increase the graduation rate? We at the AAUP have pleaded with the President and Provost to include the faculty in the process of coming up with solutions to these important issues. The President and Provost have never responded. What they have done is hire a consultant. The report is at sep_ pdf The report contains a host of tables about the general economic condition of the region. The conclusions are on page 80. Curiously, it suggests that EMU expand programs and geographical outreach. However, the report did not suggest a move to greatly expand online programs. According to the President s statement in Detroit Crains, the way forward for EMU is to push online programs, especially in the College of Business. See strategy- of- new- buildings- classes- attracts- students- freshmen- gpa- # We stand ready to work with the administration on how to increase graduation rates, confer more degrees, and move resources away from upper- level administration. If this happens, it will mean a higher appropriation for the university, lower tuition increases, and more spending on the core academic mission for our students. We all win. 16

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