Nancy's Proposal on College Education Attainment

Context

Reference to a current Michigan bill or law that relates in some way to your proposal:

Rick Snyder's current proposal to cap tuition increases at 3.8% and the current performance based funding formula provided the basis for my proposal. 

Why this proposal will make a difference in the lives of students of all ages across Michigan, or a significant subgroup (by age, background, economic status, and/or region, etc.) of students in Michigan:

How and where did you learn about the issues underlying your proposal?

I learned about this issue after many caucus discussions relating to higher education affordability in the state of Michigan. I knew that Michigan was one of the most expensive states in the country to go to college, so I wanted to determine why that is and what can be done about it. 

How has your service activity influenced your thinking about this proposal?

Working with young Ann Arbor residents has made me think about their potential to go to college in Michigan one day. These kids who come to 826 Michigan are very bright and receive great resources and education at the K-12 level, and I believe it's important that they receive that same access at the post-secondary level. 

Link to your media artifact(s) giving background on the issue:

My Journal Article

Consultations

Talk directly with at least 3 real live people who have special knowledge about this topic or the impact your proposal would have, and summarize their comments. These may include people appearing in your media artifact (video, podcast, etc.).

CONSULTATION 1: Erin Cox, Reporter for the Baltimore Sun 

The way Maryland allocates funding is basically the opposite of the way it is proposed in Michigan. Each year, the public universities go to the governor and tell him how much they need to increase tuition to fund their programs and initiatives. In response, the government basically “buys down” the tuition by granting them more money to get them to a tuition cap that he determines. The percentage increases in tuition change over the years, but are generally not more than a few percent. This year, the governor wants to set the cap at 2%. The way the Maryland government is structured, all the power is at the top with the governor. He is the one who determines the budget and where funds are allocated. He basically negotiates with the Board of Regents at each school until they can agree on a given funding allotment from the government and tuition increases. This system has been extremely successful and receives a lot of praise from Maryland residents. Under this program, Maryland has gone from being one of the most expensive states in the country to attend public university to average among states in the US. 

CONSULTATION 2: Jarrett: Marketing and Strategic Outreach Manager at the Mackinaw Center for Public Policy 

Jarrett believes that the government spends too much money on higher education in the state of Michigan. He believes that with the current tax and funding allocation, this is taking money from poor residents and giving it to the wealthy. He says this is because only 30% of people go to college in Michigan, and most of these are middle to upper class students. However, all people, regardless of socioeconomic class or potential to go to college pay taxes that are allocated to Michigan public universities. He thinks that taxing everyone for something that only benefits 30% of the population is an unfair allocation of resources.

He believes that this system of funding creates a negative cycle that ultimately drives up the costs of college for a few reasons. Because colleges will continue to get funding from state governments, they have no incentives to decrease costs. Additionally, as access to college education grows, schools have to continue adding more programs, perks, and amenities to compete with each other for talent. This increases costs significantly above the necessary price to educate students.

He used Walmart as an example to illustrate this issue. There are many people in this country with such low incomes that they can’t afford to buy food, and the government looks to help them. If the government provided subsidies to Walmart, would this drive down the price of food, making it accessible to lower income populations? Jarrett argues that this wouldn't’t, and that this mirrors the false demand and supply relationship in higher education funding. Instead, the government would provide food stamps or money to these lower income families that they could use to go to Walmart and buy food at regular prices, and a parallel plan is what he suggests for higher education in the state of Michigan. If you provide students with these vouchers, he argues, they will be allowed to determine their own price sensitivity and whether they want to attend an inexpensive “bare bones” college education, or a premium education like that at the University of Michigan. I told Jarrett about my conversation with Erin and asked him about his opinion regarding “buying down” tuition increases in Maryland. He thinks this is a prime example of misaligned funding programs, as this does not provide Maryland colleges with any incentives to decrease costs.

I then asked him his opinion regarding tuition caps to drive down costs. He thinks the proposed system of removing state funding from schools in Michigan who go above the tuition cap is a good way to put pressure on schools to be smart about their costs. 

CONSULTATION 3: Maria, an in-state student at the University of Michigan.

Having spoken to journalists and policy analysts about this issue, I wanted to consult with someone more directly impacted. As she is a resident in Michigan affected by these tuition increases, I discussed my proposal with Maria and wanted to see what counter arguments she had or issues she could anticipate from a resident’s perspective. Her biggest concern was that this system may draw funding away from schools that need it most and reallocate it to better performing schools like the University of Michigan. This was a valid counter argument which I added and addressed. 

 

Prospectus:

Describe the specific issue or problem, being sure to provide sufficient context so that someone less familiar with the issue has a sense of the bigger picture, but know that your focus here is on a more detailed spelling out of the specific problem or issue that you’ve identified. (250 words minimum)

One of the biggest issues facing the United States is access to affordable post-secondary education. Throughout my time at Michigan and in the Caucus, this has become even more apparent to me. While studying abroad last summer, I was able to study at one of the top ranked and most expensive schools in Germany, and they were absolutely shocked by how much exponentially more expensive our colleges are here. Throughout my time in the Caucus, I’ve been thinking more deeply about why this is, and what we can do to fix it.

College tuition rates and costs of attendance have been on the rise in the US for years. Like I mentioned in my media artifact, the average cost attending a private four-year university this school year was $31,231, as opposed to a yearly cost of $1,832 in 1971. At public, four-year schools, cost of attendance is $9,139 on average compared to $500 (in current dollars) in 1971. This is an increase of 6 percent above the rate of inflation. With skyrocketing costs, college has become inaccessible to many, which is a huge problem for the future and growth of our country.

Coupled with this is an increased importance of a post-secondary degree by employers in the past decade. Nowadays, it’s expected to have a bachelor’s degree to be able to get a well paying professional job. The increased importance and increased cost of a college education is increasingly leading to more economic equality and making it more difficult for lower income families to better their financial situation. Many important issues have been brought to the Caucus, but I believe that the cost of college education is at the foundation of most of these, and the most pressing issue that needs attention.

http://www.cnbc.com/2015/06/16/why-college-costs-are-so-high-and-rising.html

Potential Solutions:

Describe three reasonable, feasible potential solutions or approaches that would help address this problem.

SOLUTION 1:Create specialized college programs to save money on general education requirements

 

One way the state of Michigan could cut down on costs of college is to offer an option for specialized degrees that do not require general education classes. Although many students receive great benefits from a well-rounded liberal arts degree, this type of broad educational background may not be necessary for all students. Allowing students to only take classes that are directly applicable to their future careers will allow them to become prepared to enter the work force while saving money.

The state of Michigan already has existing vocational schools, but these programs could be expanded to offer opportunities for students looking to enter more professional fields. For example, many states have started to adopt vocational programs for computer science and computer programming. Michigan trade schools could add programs in these fields. 

SOLUTION 2: Set the cap of per year tuition increase for pubic universities in the state of Michigan to move with inflation rather than double inflation.

The state of Michigan is proposing to allow a per year increase in tuition for public universities of 3.8 percent, almost double the current rate of inflation. The current cap is 4.2 percent. If schools do not meet this requirement, they will not be eligible for any new performance funding. While reducing the cap to 3.8 percent is an improvement, I do not think public universities should be allowed to increase tuition past the rate of inflation.

Having unexpected tuition hikes above the rate of inflation could make college unaffordable to families that didn’t budget for this increase. Because of this, students could be forced to drop out of college, making the tuition payments they made up to that point useless. 

chrome-extension://oemmndcbldboiebfnladdacbdfmadadm/http://www.michigan.gov/documents/budget/FY18_Exec_Budget_550967_7.pdf 

SOLUTION 3: Expand the MACRO transfer agreement to allow for up to 45 credits to be transferred from a Michigan community college to a Michigan 4 year public university.

Currently, through the MACRO program, Michigan residents can transfer up to 30 credit hours of general education requirements from Michigan community colleges to a list of Michigan 4 year public universities. This program helps students save on tuition and gives them extra time to prepare for the rigor of a four-year University. I think this program would be expanded to allow students to transfer 45 credits. This way, students will receive additional cost savings while still obtaining the core of their education at the 4 year University.

https://www.macrao.org/Publications/MACRAOAgreement.asp

Reaction or advice from a Topic Coordinator:

You must solicit a critique from a topic coordinator, and explain the impact that advice has had on the final draft of this proposal.

During the town hall, I discussed my proposal with Orian, a topic cordinator. He encouraged me to look into the root causes of tuition increases in Michigan to provide more context and support for my proposial. These became very helpful in crafting my final proposal and understanding how to create a funding system that incentivixed universities to be efficient with funding. 

Research process:

Describe your research process — indicate who you talked to (including but not limited to consultants), what you read, what your thinking was, how it changed over time, and how your consultants changed your thinking. This description of your research process definitely could include “dead ends,” or ideas you had that didn’t ultimately bear fruit.  In short, we want to know what you did and how it led to your legislation, and we also want you to give us a window into your thought process.

I first started out my research by looking at different problems facing the public university system in Michigan and the most apparent issue was rising costs. I looked into potential solutions for this and the tuition cap seemed the most feasible and logical solution. The state 2018 proposed fiscal budget allowed me to get a better sense of the performance based funding formula and current allocation system. After meeting with one of the MSC professors at office hours, he was able to point me in the direction of some good research. Another professor pointed out to me that according to the Michigan state constitution; the government cannot force the universities to set certain tuition rates. This is why, I realized, the government had to get more creative and remove government funding as an incentive. I looked at the Michigan Association for Higher Universities to get more information about tuition caps. I contacted CEO David Hurley but didn’t get a response, but I also contacted David Jesse, a reporter who spoke to Mr. Hurley about his views on tuition caps. We were in touch briefly but not long enough for a full consultation. Additionally, I spoke with a topic coordinator Orian who advised me to look into the root causes of tuition increase to provide more context for my proposal. I also wanted to see what other states were doing regarding tuition caps and if there was anything Michigan could mirror. I contacted Erin Cox, a reporter for the Baltimore Sun regarding Maryland’s tuition funding system. It is very different than Michigan’s, and something I considered proposing (see consultation for details). After doing more research, I found an article by Jarrett Skorup regarding the flaws in higher education funding. He had very different views from most of what we’d discussed in the caucus, so I thought his insights would provide a different perspective to my proposal (see consultation). After speaking with him, I changed my mind about mirroring Maryland’s system and realized that focusing on incentivizing universities to use funds efficiently was the key to a successful proposal. That is why I decided to combine tuition caps with a revised performance based funding formula for my proposal. 

Author contributions:

Please delineate--in detail--who made what contributions to the process and to the finished proposal? Who took on which responsibilities in researching ideas, drafting language, etc.?

N/A 
 

===FORMAL PROPOSAL===

The sections below should comprise your final proposal language, submitted for consideration by your peers and potential inclusion in the MSC Platform.

Preambulatory clauses

These set up the PROBLEM, but not the solution.

WHEREAS.... Since 2003, tuition more than doubled at almost every Michigan University and increased by more than 150 percent at several schools, which is higher than the rate of inflation. 

WHEREAS.... Public university tuition is also increasing much faster than Pell Grant funding. In 2003, the average Pell Grant covered from 40% to 66% of tuition, but by 2015, it covered less than 40% of tuition at nearly all Michigan universities and less than 30% at three. 

WHEREAS.... Because of the tuition increases in Michigan, the state’s average tuition cost is now the sixth highest in the nation and second in the Midwest.

WHEREAS...  Schools like Oakland University and Eastern Michigan University exceed the current cap because the performance based funding allocation system rewards them less than a tuition increase would. 

http://statenews.com/article/2016/09/new-report-finds-big-spike-in-michigan-colleges-tuition-rates-since-2003

http://www.mlpp.org/back-to-school-report-rising-tuition-and-weak-financial-aid-create-more-student-debt

(Add more "Whereas" clauses if necessary.)

Operative clauses

These describe in detail, the solution you are proposing (not the problem itself; those should go in the "Whereas" clauses above).

THEREFORE BE IT RESOLVED....

1. The tuition cap in the state of Michigan should be set at the rate of inlfation. If schools in Michigan do not comply with the tuition cap, they will lose funding from the state government. 

2. The performance funding formula should give 33% proportional to each university’s share of total operations funding, 18.1% based on weighted undergraduate completions in critical skills areas, and 43.3% based on comparisons with Carnegie classification peers or three-year improvement on four metrics weighted by full-time equivalent undergraduate students: six-year graduation rate, total degree completions, institutional support as a percentage of core expenditures, and percentage of students receiving federal Pell grants.

(Add more "Resolved" clauses if necessary.)

Counter-arguments:

What are three reasonable arguments against this proposal?

1.Counter: Schools such as Eastern Michigan University and Oakland University have increased tuition above the cap (8.2%) because they would rather have the increased tuition revenue than government assistance. Decreasing the cap could make more schools follow in their path, increasing tuition for students.

Refutation: Because of this concern, I propose a combination of decreasing the tuition cap and adjusting the performance based funding formula. From my consultation with Jarrett, he made me realize that under the current system, there is no incentive for universities to cut costs and be more efficient. They will either receive funding from the government or they will increase tuition to generate more revenue. If a larger percentage of funding allocation was determined by performance and the tuition cap was lower, this would force underperforming universities to cut costs or lose students to other universities.  

2.Counter: Schools may be raising tuition at high rates because they need additional funding for a new program or to better existing programs. Denying them government funding will hurt them when they need the money.

Refutation: If schools invest money in the short term in programs that they believe will better the quality of their school, this would be reflected in the new performance based funding formula and they would receive more funding in the following years to make up for it. This method forces schools to make the difficult decisions of whether increased costs will provide directs benefits to their school and allow for a more efficient allocation system. The goal is that this system will put pressure on schools, forcing them to use funds more efficiently and ultimately better the public university system in Michigan. 

3.Counter: The performance based funding model hurts schools that need the funds most to improve.

Refutation: The performance based funding formula actually rewards schools that show an improvement in performance. Because of this, struggling schools often have the biggest opportunities to grow, allowing them to be eligible for more funding. The basis behind this model is to reward schools that are doing the right things and punish those who aren’t. This will force poor performing schools to reevaluate how they are running their programs and allocating funds. This also will help the better-run schools to become more accessible to students in the state of Michigan. 

Costs and funding:

What will your proposal cost (in direct expenses, lost tax revenue, lost economic opportunity, and/or non-monetary costs)? How will you pay for your proposed legislation? Where will/could the funding for your proposal come from?  Who might object to dedicating resources to your proposal (competing interests)?  

My proposal will not require additional costs from the government. It will only change the formula by which the same amount of funding is allocated to universities in Michigan. 

References:

These can include websites or other information you have found about the issue.

http://www.baltimoresun.com/news/maryland/politics/bs-md-hogan-tuition-20170110-story.html

http://mhec.maryland.gov/Pages/pressroom/pressrelease.aspx?PRID=201732

http://statenews.com/article/2016/09/new-report-finds-big-spike-in-michigan-colleges-tuition-rates-since-2003

http://www.mlpp.org/back-to-school-report-rising-tuition-and-weak-financial-aid-create-more-student-debt

http://www.freep.com/story/news/local/michigan/2015/07/13/michigan-university-tuition-increases/30053397/

http://www.freep.com/story/news/local/michigan/2017/02/07/gov-rick-snyder-recommends-increase-michigan-universities/97584618/ 

http://www.theoaklandpress.com/general-news/20160907/tuition-at-most-of-michigans-public-universities-has-more-than-doubled-study-finds and here: http://www.mlpp.org/back-to-school-report-rising-tuition-and-weak-financial-aid-create-more-student-debt 

http://www.michigan.gov/budget/ 

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Total votes: 21

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