Testimony of Dr. Valerie Lewis

Hearing on "The College Cost Crisis Report: Are Institutions Accountable Enough to Students and Parents"

House Education and the Workforce Committee
Subcommittee on 21^st Century Competitiveness

     Mr. Chairman and Members of the Subcommittee:

     Thank you for the invitation to address the issue of college costs and, specifically, Rep. Boehner’s and McKeon’s paper on "The College Costs Crisis". My name is Valerie F. Lewis and I am commissioner of higher education in Connecticut, a state that is known for its high quality and high cost postsecondary education. Only our community colleges are considered low cost, so access and affordability are issues at the forefront of my concerns and those of my citizen board. I also am serving this year as president of the State Higher Education Executive Officers (SHEEO) whom I represent here today. The jobs of SHEEOs nationwide, whether with statewide coordinating or governing boards, are focused almost everywhere these days on what researcher Jane Wellman has called the "double whammy" of the fiscal and demographic crises, the latter caused by the waves of new students knocking on our doors. So, first, I applaud your intense interest in the subject of college costs. It is only when our states and nation focus on this subject long enough to recognize its complexity that we stand a chance of developing stable policies that will support the academy and our students into the long future.

     I share your concern over the growing price of admission to college and to the level of education that is fast becoming basic to success in the workplace and in life. The nation badly needs to maintain the vision that qualified students of all ages and backgrounds should be encouraged to reach their maximum potential regardless of ability to pay. Students should not, by default, have to attend the cheapest institution or to make the choice not to attend college at all. But such a vision needs to be grounded in a reality of sufficient resources to meet the sharply growing and increasingly diverse set of learners who bring to colleges and universities increasingly different educational needs, interests and goals.

     The definition of "sufficient resources" is always difficult and contested. But, generally today, higher education in my state and in most others is being told to do more with less. Enroll more students, respond to critical workforce needs with new or expanded programs, partner with industry in research and technology transfer, stem the brain drain, build the pipeline of students prepared to succeed, make better teachers, embrace technology across the curriculum, retain students to graduation in greater numbers – all of these are advocated by higher education’s various publics and by academe itself. But the notion of doing all these while simultaneously reducing budgets is at best a dream and at worst a nightmare. While, as a commissioner, I believe that we can do far more with our state resources, I am aware that many forces have propelled expansion of both higher education services and cost.

     In fact, a recent SHEEO report noted four parallel trends impacting higher education simultaneously:

Each of these trends spawns reassessments of the proverbial three-legged stool-questions about resources:

     Let me talk about state support first, because dramatic changes in this area have catapulted the discussion of costs to consumer to the crisis stage. The current economic climate has left many states with few choices but to reduce support for higher education, even in knowledge that state support is proportionately the largest funding source for the public college enterprise . While I would agree with the point made in "The College Cost Crisis" paper that the economy is only one of several factors in cost growth, it is a major factor and one unlikely to turn around, given the competition for state funds by entitlement programs and especially by spiraling health care budgets. Actually, in my own state, every effort was made this session to keep harm to higher education to a minimum because of widespread understanding that our colleges and universities must serve increasing numbers of students. But the budgets of our public institutions still are down 2.2 percent from expenditures last year, with state financial aid programs down more than 8 percent, and we would be deeper in the hole if it were not for the fact that our faculty and staff agreed to a year’s salary freeze. Other states, as you know, are facing double digit decreases in state support and it is this fact that has resulted in sharp tuition increases rather than the rates of the 90’s that generally paralleled rising costs for labor. With labor costs our biggest budget expense – ranging from 70 to 80 percent – what we pay our highly educated workforce is an integral factor in budgets, but also an integral factor in our success. In this arena, we parallel the needs of business to compete for and to keep talent, so the focus of our greatest efforts must be on how to make the most of our workforce’s time and creativity in making productivity gains.

     The residual question when state budgets for higher education decline therefore is: can or should we expect colleges to be able to react to these reductions without passing on costs – in part or full – to the consumer, especially when consumer demand is high? Budgets typically are passed as students are packing their bags to go, or go back to college, without enough time devoted to thoughtful reduction scenarios like reallocation, program elimination, or collaborations that limit institutional responsibility. Nor are there quick and simple solutions to untying the binds of collective bargaining, faculty role, responsibility and tenure definitions, and student time-to-degree processes, all of which have great impact on costs to the consumer, to the state and to the nation.

     No one, least of all SHEEOs like me, would suggest that higher education does not need to engage in serious work to address cost containment and greater productivity. I would be the first to admit that there are instances of institutions and systems that are spending beyond average, but, in general, boards of trustees are trying hard to find balance in the three-legged stool of finance. There is widespread worry, however, that states and, perhaps the nation, are moving toward a privatization model for higher education without a clear understanding or full discussion of the potential consequences of such change.

     It is this array of complex issues that have been a focus of my state and four others that are this year engaged in a Lumina Foundation -supported study of how best to integrate tuition, fee and financial aid policies and how to find the appropriate balance of individual versus societal responsibility for cost. Connecticut actually is one of thirty states that place responsibility for public college tuition and fee policy with its coordinating or governing board. Many, like my state, have decentralized actual tuition setting to campus or system boards, but within a frame of state policy. In Connecticut that means that in any year no public college student may have tuition increased by more than 15 percent and institutions must set aside 15 percent of collected tuitions for need-based financial aid as a means to maintain access. While our maximum change factor is certainly higher than inflation, we have weighed the fact that affordability without availability is an empty promise.

      So what can the federal government do, given its reasonable concern for keeping college affordable and simultaneously keeping American higher education the most sought after in the world for its quality and diversity? To my mind, there is no question that the federal government, as a pivotal finance partner, must join with states in seeking return on investment by:

     As a nation, we need for all of higher education, but particularly for our public colleges and universities, to continually recognize that they are servants of the public good. As many have said, our mission is to improve lives. If we fail at this, there is every reason to reduce public investment. Conversely, if we succeed, both the individual and our society flourish, so let’s emphasize again what can be done: use incentives, not regulation, to drive improvement in accountability and moderate cost; use a multi-faceted approach to increasing strong preparation for college; use financial aid as a tool for expanding opportunity; use the bully pulpit to keep all of us in higher education on task.

     Thank you very much for the opportunity to speak with you today. I would welcome your questions.