Colleges Get Helping Hand in Obama’s Budget

We’re not naïve. We’re not optimistic that the Obama higher education budget proposal will be adopted by this Congress. But the initiatives included are important, because (a) some of them may be adopted, and (b) they offer a marker of future administration positions that may be more favorably received at a later date.

Here’s a thumbnail on the three key initiatives:

• The State Higher Education Performance (SHEP) Fund would provide grants to states to implement strategies and reforms that improve performance at public colleges and universities. The $4 billion federal investment over four years would be matched dollar-for-dollar by state funds. The states develop their own formulas and implement performance-based funding for institutions. Colleges would use associated funds to improve access, lower tuition costs, and increase graduation rates — particularly for low-income students. Suggested strategies include awarding more need-based grant aid, implementing dual enrollment programs for high school students, reforming remedial education, and strengthening academic and student support services. States are huge players in higher education finance and have untapped potential to drive improvements in access, affordability, and success. State funding is the No. 1 driver of tuition and fee increases. And states have control over K-12 academic preparation that is extraordinarily influential on postsecondary education completion. The administration is right to target that policy leverage point.
• Complementing the (SHEP) institutional support program is the administration’s proposed College Opportunity and Graduation Bonus (COG-B) program, which would provide funds directly to colleges and universities that enroll and graduate significant numbers of low- and moderate-income students. The budget calls for $647 million in fiscal year 2015 and a total of $7 billion over the 10-year life of the program. COG-B is unique in focusing on access and success for low-income students. Eligibility is based on the percent of Pell Grant recipients among graduates, as well as the overall graduation rate and student loan default rates. Enrolling low-income students and posting high graduation rates are not mutually exclusive and this program would reward the colleges and universities that expand opportunity and provide a high-quality education. And we know that colleges are very much capable of boosting Pell enrollment rates as well as graduation rates.
• Lastly, the budget proposes creating College Success Grants, a $75 million competitive grant program for Minority-Serving Institutions (MSIs). Funds would help MSIs implement strategies to improve completion, especially for Pell Grant recipients. Grants would be awarded for a four-year period and would be subject to performance goals established in the application. Recommended strategies include partnering with K-12 school districts to improve preparation and establish dual enrollment programs, increase institutional need-based aid for low-income students, reform remedial education, redesign high enrollment courses, and provide wraparound academic and student support services. Colleges have successfully employed these and other initiatives to increase retention and completion. A new program for MSIs has been advanced before by the administration. The signed omnibus budget for fiscal year 2014 includes $75 million for a First in the World competitive grant program for colleges and universities. Of this amount, $20 million — a full 27 percent — was specifically designated for MSIs. The current budget doubles down on the administration’s commitment and raises the stakes on implementing these strategies for improvement.

Budgets are a reflection of priorities first and strategies second. This latest federal budget proposal, at least with respect to these three higher education initiatives, is right on both.