Reforming Florida Higher Education

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1 Reforming Florida Higher Education A Report For Governor s Blue Ribbon Task Force On Higher Education Reform By Tom Auxter President, United Faculty of Florida (UFF) July 26, 2012 What does reform mean in Florida higher education? In Florida, it is easier to start with what reform is not. In our state, reform is not reorganizing the structure of higher education. Florida higher education is already organized to succeed in its mission. More reorganization is not reform; it is a waste of time and resources. We are already headed in the right direction and need to invest without delay in what we already know works. Certainly, this was clear by 2009 when the major stakeholders in higher education gathered at the Florida Atlantic University (FAU) Jupiter Campus to see if they could forge a consensus on priorities and funding. Dave Spence, President of the Southern Regional Education Board (SREB), was invited to speak at the beginning of the meeting. 1 He emphasized that Florida already has the structure it needs to succeed. Florida, he said, is a model for the entire nation in how to design a system that gives students maximum access to higher education at the lowest cost. You have the best community college and transfer system in the nation. The integration of academic curricula across higher education means that Florida produces community college graduates who enter public universities or colleges with acceptance of academic credits already earned. In this articulation system, community college graduates are ready to begin the last two years of a bachelors program without retaking courses and without the need for remedial work. 1 SREB is dedicated to finding reforms that work in the 16 Southern states that are SREB members. It also publishes research on best practices. It is funded by major foundations and by several corporations.

2 The effectiveness of the Florida system became clear to stakeholders by It recently became clear to citizens across the state when they heard the news that the U.S. Chamber of Commerce ranked Florida first in the nation in access and affordability. As Dean Colson, chair of the Florida Board of Governors, said when the results were published, Florida was the only state in the nation to achieve an A for both four-year and two-year public institutions in the Student Access and Success category. Florida scored another first place rating in the category of Efficiency and Cost-Effectiveness with the cost of a university degree set at only $46, The median national cost for a degree is more than $68,000. Only one other state also had a cost of less than $50,000. Only five other states had a cost of less than $55,000. In other words, our investment in higher education is used to reap efficiencies which are extremely beneficial to Florida and to its higher education system. Florida s investment is wellspent and pays off in graduates with less debt incurred. Now, both SREB and the U.S. Chamber of Commerce single out Florida as a model for other states to follow. What does this mean for reform? It means we have already developed the structure -- and proven its value through documented results -- for a model higher education system. Reforming the system cannot mean reorganizing the system, and it cannot mean making it more accessible and effective in comparison with other states. Reforming Florida s system means designing a mechanism for funding that builds on this foundation. We need to identify where more funds can best be used as they become available and increase the production of degrees within a verifiably effective system. Reform also means asking how much more we could do if funds were available for the task. What are the economic benefits of higher education? There was already a consensus among the stakeholders in 2009 that answering the question requires creating a knowledge-based economy that draws heavily on the contributions of higher education. The problem is that Florida s economy currently depends on tourism, new housing sales, and agriculture. Because tourism and new housing only thrive when families have a significant amount of disposable income, Florida is prone to deeper recessions than those states, e.g., North Carolina, that have already diversified their economies. This is why Florida is first to enter a recession when disposable income declines and is last out of a recession when the nation finally has enough extra income to pay for things like tourism and new housing. 2. National Center for Education Statistics (NCES), U.S. Department of Education.

3 North Carolina started making the transition decades ago -- away from an economy based on tourism, housing, and agriculture. North Carolina decided to diversify its economy through the development of its universities in the Research Triangle, thereby drawing research dollars to the state and spawning commercial enterprises through research-based innovations. At the same time, the state expanded enrollment in universities. Legislators and opinion leaders were clearly expecting to educate a workforce that measures up to the task of working in these new businesses. They were also hoping to prepare citizens who will be up to the task of governing in a growing economy. We have seen why investing in a knowledge-based economy is the best path out of a recessionprone state economy. What steps can we take to implement this kind of reform? The first step is to restore the funds cut in the past five years from what has proven to be a very efficient system that serves a critical economic need in the state. About a third of state support for the universities disappeared during this time. As Dean Colson said, restoring funds is money well-spent. We know Florida s accountability system works well in producing graduates at affordable costs. If the evidence from the SREB report and/or the evidence from the Chamber of Commerce rankings are not enough to convince us that the investment is worthwhile, then consider the following. A study conducted this year by a team of economists at the University of Florida (UF) and Florida State University (FSU) found that the universities generate $52 billion annually for the state s economy. 3 Seven per cent of the state s economic activity comes from universities. However, this figure does not include all the wealth generated by a university in a Florida city. For example, sports events and cultural activities draw thousands -- often for an entire weekend. This fills up motels and restaurants and adds customers to stores and vendors -- making it possible for businesses to survive in a weak economy. A point that needs emphasis in Florida now, with its recession-prone economy, is that universities insulate communities against the worst of recessions. What is the economic benefit that graduates generate? The study found that each university graduate earns an additional $1 million in salary over a lifetime compared with a high school graduate. That means more dollars coming into the state economy and more taxes paid by someone who is employed and not dependent on state social services or expensive law enforcement remedies. 3 University of Florida News, February 13, 2012.

4 Although Florida currently has an unemployment rate of almost 10%, those who have a B.A. or B.S. degree are much less likely to be unemployed; the unemployment rate is cut in half. Those who have only a high school diploma are four times more likely to be unemployed than someone who went on to complete a four-year degree. What difference would better funding make? For students, it would mean more classes open for enrollment so they can sign up for courses needed to complete a degree. Hiring more faculty is critical for improving how the system works. It is inefficient when we have a skeletal staff of faculty in most departments to teach all the courses across the range of specializations required to finish a program with the knowledge necessary to be proficient -- either for entering a career or pursuing graduate studies for a career later. When one faculty member gets a grant, or is on leave, a specialization taught only by that person must be covered by someone who is not a trained specialist. Otherwise, the course is not offered for a year -- depriving students of an opportunity to achieve competency in an area required for proficiency in a field, or delaying their graduation until the next year. We waste time and money in Florida when students have to stay an extra semester or year because there are not courses open for them to get what they need to graduate on time. It wastes the time they could have been productive after an early graduation, and it wastes the money they have to pay back when extra student debt is incurred because of the delay. It is also very inefficient to have universities and colleges fund the infrastructure to offer degrees, and then not have the funds to provide enough extra classes for more students who are qualified and seeking admission to programs for which we already pay the start up costs for launching. The consequence is that the student/faculty ratio at Florida universities is much worse than their counterparts in other states, and we suffer in national rankings and competitiveness as a result. The problem is compounded by salary compression. What is it, and what is the effect? Salaries become compressed when the longer faculty members stay in Florida, the worse their salary becomes in comparison with their counterparts in other states. Compare the salary of a Ph.D. who accepted a job in Florida at market rates a decade ago with the salary of a counterpart (someone who also got a Ph.D. from the same institution the same year, but accepted a job at the same starting pay at a comparable university in a different state). After ten years, the salary of the faculty member staying in Florida is typically $10,000 behind the salary of the counterpart. For each decade after, that faculty member is an additional $10,000 behind. Someone who stays in Florida for thirty years will have a salary $30,000 behind the salary of a counterpart. The effect is to drive faculty away from Florida. The result is a brain

5 drain away from Florida universities at just the time faculty are desperately needed to move the state toward a more diversified and productive knowledge-based economy. FSU President Eric Barron explained to the Task Force on June 25, 2012 that because Florida is a state that generally does not give salary raises after setting the starting pay at market rates, universities in other states easily make attractive offers to pick off talent in Florida. He spoke about the most recent round of outside offers made to 58 arts and sciences faculty members. All but eight accepted the offers, which averaged $20,000 more than their salaries at FSU. After five years of budget cuts in Florida, there are no funds to keep talented faculty here. They re letting us become the farm team for other states, he said. News reports tell us that the situation is just as bad, or worse, in business school disciplines. 4 Jennifer Proffitt, a FSU professor and Vice President of United Faculty of Florida at FSU, also emphasized the seriousness of the problem. She discussed a survey of faculty taken by UFF in May 2012 and what it revealed about why faculty are leaving FSU in record numbers. Faculty believe they are not rewarded for their loyalty, their efforts, and their accomplishments. For more than a decade, it has been very hard to keep faculty when salaries are so low. But now, when the legislature actually is reducing state contributions to retirement plans 5 and even reducing salaries to pay for retirement benefits previously covered, we see the straw that breaks the camel s back for many faculty previously committed to staying. Today, it is hard to find faculty who are not looking for jobs elsewhere, or being recruited for jobs elsewhere, because the level of dissatisfaction is so high. Their colleagues in some other places they know about are not treated like this, and now Florida faculty are thinking it may be time to join them. 4 Tallahassee Democrat, June 2, 2009 and November 27, At FSU, for example, 74% of faculty are enrolled in the Optional Retirement Plan (ORP), a defined contribution plan. This past spring, the Florida Legislature passed HB5005, which cut state contributions from 7.42% to 5.14% and will cost participating faculty members tens of thousands (and in some cases hundreds of thousands) of dollars in retirement benefits. Faculty in the UFF-FSU poll cited this as devastating to morale, and some commented that this was effectively the last straw, prompting them to begin looking elsewhere for employment. (Other faculty saw 3% subtracted from their Florida Retirement System (FRS) defined-benefit plan the previous year and have reacted in similar ways.)

6 In short, the restoration of state funds cut in the last five years is the sine qua non condition for reforming Florida higher education. There are no reforms that can take root without improving the student/faculty ratios, and there is no way this can happen without restoring the one third of budget funds that were cut by the state legislature in the recent past. This would be a step toward reversing the downward spiral and declining national rankings that threaten the entire university system and also compromise student access and quality in the college system. This will begin to address the problems students face when they are looking for courses and working toward graduation. But it will not address the problem Florida has with retaining faculty talent. Faculty salaries have not been competitive for three decades. The debilitating brain drain we now suffer cannot be fixed without investing in the talent Florida expects to retain and help build a knowledgebased economy. We waste enormous amounts of time and money recruiting talent, only to see them leave within a few years (the farm team system). The inefficiency and waste in this system will remain with us until we decide to retain faculty on a competitive basis. Students, parents, and alumni also want to know their higher education dollars are a good investment, and they want to see the value of the degrees in which they invested continue to appreciate. The state also needs to protect its citizens investments in higher education by providing funding sufficient to make the degree recognized as a meaningful achievement in the future. New funding, not just restoration of recent funding cuts, is what it will take to rev up the economic engine that Florida hopes will drive the economy. It will take nothing less than this to be economically competitive on a global scale. Now is the time to invest in Florida s universities and colleges.