Making Opportunity Affordable-
Tennessee Initiative
Why It Matters (view PDF)
At its core, Making Opportunity Affordable is about making Tennessee’s statewide system of colleges and universities more productive, defined simply as graduating more students with postsecondary credentials – certificates as well as degrees – within the amount of State and student dollars available.
Competitiveness of Economy
Educational attainment has implications for individual Tennesseans’ ability to compete in the knowledge economy and for the economic vitality of the state and its regions. Although Tennessee has made substantial strides in progressing from an economy dependent on agriculture and mechanical industries, a more educated workforce is needed to attract new technological businesses and in turn to increase per capita income in Tennessee. A recent report ranks Tennessee 36th on the State New Economy Index, an indication of states’ economic competitiveness. This evaluation is important as a measure of a state’s capacity in workforce, technology, and infrastructure to attract new businesses. Tennessee also scores in the bottom third of states in other evaluations of economic vitality including the Developmental Report Card for the States and the Beacon Hill Institute Competitiveness Report Card. 3, 7, 9 (see chart)
Why it matters for…
The state: In order to compete with other states, and increasingly nations, for new high-tech businesses and industries, Tennessee must increase the number of college educated citizens to supply a capable workforce.
Counties: Increasingly, counties must have a postsecondary educated workforce to fill the specific demands of new high-tech businesses and industries they wish to attract or retain in their area.
Colleges: Higher education institutions are tasked with filling the needs not only of the counties and communities they serve, but also of the businesses and industries located there. The competitiveness of the state and local economy indirectly affects higher education institutions by virtue of their need for funding support from state appropriations.
Citizens: All Tennesseans benefit from an influx of new business and industry. In addition to the jobs created, research shows that the citizenry benefits from earnings increases when the educational attainment of the area increases. For instance, as the percentage of the population with a college degree increases, the wages of workers increase overall, even for those who have not attended college. 6
Meeting Current Workforce Needs
More college graduates are needed to fill current workforce needs. As the baby boomers retire, a large portion of the workforce will need to be replaced, particularly the college educated workforce. This workforce demand is compounded by the fact that on the whole, today’s workforce is more well educated than the generation that will replace it. This statistic holds true for the United States, Tennessee, and most counties. In addition, the majority of the job openings paying more than the median wage in Tennessee will require college training of some kind. (see chart)
Why it matters for…
The state: The state of Tennessee needs more college educated citizens to replace the existing baby boomer population. These needs are particularly pressing in jobs that pay more than the median earnings level.
Counties: Tennessee counties show the same trends in workforce needs in terms of replacing the baby boomer generation and the majority of jobs paying more than median wages will require a college degree.
Colleges: Higher education institutions will have to produce more graduates, particularly in high demand fields, faster than they have done so in the past in order to meet the workforce demand. This means that institutions must become more productive with students that are enrolled currently and in the future.
Citizens: In order to fill jobs vacated by retiring adults, Tennesseans will need to acquire the necessary skills, which increasingly include a higher education degree of some kind.
Tax Revenue
Tennessee’s relatively low educational attainment impacts state wealth, reflected in the income earned by its citizens. Comparatively low earnings, combined with a tax rate that lags the national average, limits Tennessee’s capacity to generate tax revenue. Only 10 states have fewer taxable resources per capita than Tennessee, as seen below. 5, 12 (see chart)
Why it matters for…
The state: State resources are derived largely from tax revenue, which is affected by the education level of the workforce. Only 10 states in the country have fewer total taxable resources per capita than Tennessee. The state is well below the national average in taxable resources and the education level of the population.
Counties: Counties are also dependent on tax revenue, which is affected by the education level of its taxpayers.
Colleges: Colleges and universities, which receive a sizeable portion of their funding from the state, are dependent on tax revenues the state collects and allocates to higher education and other expenditures.
Citizens: All citizens utilize government services of some kind, ranging from public parks to unemployment benefits, and are thus dependent on the tax revenue that funds those services.
Dispersion of Education and Its Benefits
States and counties vary widely in the educational attainment levels of their citizens. These educational differences, while significant in and of themselves, are also linked to disparities in areas like income, health, and civic engagement.2, 5 (see chart)
Why it matters for…
The state: Populations and counties on the low end of educational dispersion tend to be more heavily dependent on state funded social services, like unemployment. Having many counties on the low end of this distribution illustrates a potential area for improvement and cost savings.
Counties: Education must play a key role in decreasing the substantial divide between counties. An educated workforce can spur job growth and the indirect benefits of education and employment will flow to the individual and the county.5
Colleges: Colleges serve the unique needs of their communities, which vary considerably. Since college degrees are not evenly distributed across the state, some higher education institutions have a sizeable untapped market and potential for service delivery to new populations.
Citizens: All Tennesseans gain from an influx of new business and industry. In addition to the jobs created, research shows that the income of all citizens increases when the educational attainment of the area increases.6 Individual citizens should also benefit from a healthier and more civically involved community.
Higher Education Funding
State funding for colleges and universities has steadily declined over the past decade after adjusting for enrollment growth and inflation. During this time, student tuition and fees have increased substantially. In fact, tuition now exceeds state appropriations as the primary source of operating revenue in Tennessee’s public universities. Unprecedented cuts were made in 2008-09, and further cuts will be asked of higher education over the next several years. Student tuition and fees should not increase to completely offset the lack of funding from the state. (see chart)
Why it matters for…
The state: While Governor Bredesen and the legislature have highlighted the importance of higher education in Tennessee and revitalizing the economy, budget limitations decreased higher education funding in recent years. As the state budget becomes more constrained, the allocation of each dollar and the effectiveness of its use becomes more important.
Counties: Counties in Tennessee have been dependent on the colleges and universities in their communities to spur economic development and produce graduates for their workforce. Counties support their home institutions indirectly in a variety of ways, though to date few have made direct appropriations to support institutional operations. This dynamic is changing, as several communities have recently contributed to higher education funding by creating local scholarships for their students attending their local colleges.
Colleges: Colleges and universities have become more dependent on tuition revenue in response to declining state appropriations. These two primary revenue sources, the state and students, are increasingly constrained in their ability to support increasing higher education costs.
Citizens: Taxpayers (through the state budget) and students (through tuition) are the two primary funding sources for most public colleges and universities. Each is finding it increasingly difficult to fund higher education, however. State revenue is tied to tax collections and there are many competing uses for limited funds. Student tuition and fees are dependent on students’ willingness and ability to pay through a combination of personal income and financial aid, both of which are constrained.
Productivity
The productivity of colleges and universities, in other words how well institutions move students through college to obtaining a degree, varies considerably. In addition, institutions have made steady but incremental progress on these important measures. There is a wide range in graduation rates among America’s colleges and universities, even after controlling for their students’ academic ability. Improving institutional graduation rates will result in improved outcomes for students, taxpayers, and meeting the state’s goals.1 (see chart)
Why it matters for…
The state: The state needs more educated citizens to fill workforce needs and fuel economic development, but the traditional age college population is insufficient to meet these needs (see chart below).
Counties: Counties are also in need of more educated citizens. Their needs are often to meet immediate or near term workforce requirements for specific businesses or industries. Counties cannot rapidly increase the available population of college graduates or college students, but must educate the existing population in an efficient manner.Colleges: Colleges and universities depend largely on the students available in their geographic area. Since the traditional age college population is expected to decline over the next several years, colleges will have to reach out to new populations, decrease enrollment, and/ or become more productive with the students they enroll.
Citizens: Making higher education institutions more productive provides cost savings for all Tennesseans. Taxpayers will provide less funding per college degree produced and students will graduate in a more efficient and more cost-effective manner.
Student Population
The traditional college student, one that graduates from high school and immediately enrolls in college, will not meet the state’s workforce needs. Tennessee will see a 4.2 percent decrease in the number of high school graduates between 2009-10 and 2014-15. More students who enroll in college will have to graduate and/ or populations previously not attending college will have to enroll.14 (see chart)
Why it matters for…
The state: State policies have focused on the traditional age college student, yet Tennessee will be increasingly dependent on the nontraditional student to fuel the growth in higher education graduates. If the state experiences workforce interruptions, businesses may relocate elsewhere to meet their staffing needs.
Counties: Businesses in counties across Tennessee may have become accustomed to a reliable level of college graduates, but these businesses will have gaps if they are dependent on the traditional college population alone.
Colleges: Traditionally, colleges and universities have created policies and procedures largely for the traditional age college student. To maintain enrollment and funding, let alone to increase graduates, colleges will have to reach out to previously underserved populations, including adults.
Citizens: Due to the changing economy and population dynamics in the state, Tennesseans of all ages and education levels will be called upon to consider furthering their education. Increased job opportunities and income potential may motivate individuals to enroll in their local college or university.
Student Affordability
Tennessee received an “F” for Affordability in Measuring Up 2008, the national report card for higher education. The percentage of family income needed to pay for college expenses after financial aid exceeds that of best-performing states, and Tennessee exceeds the national average in undergraduate student borrowing. Thus, institutions should not entirely rely on students for increased funding. 11 (see chart)
Why it matters for…
The state: The state is concerned not only with the barrier that higher education prices create for its citizens, but also how education debt affects students. Students with education debt may find it difficult to repay or may be influenced by it in their career choices.
Counties: Counties are concerned with student costs and the barrier that financial concerns creates for college attendance. Some counties in Tennessee have addressed this concern by raising funds from individuals, county groups, or organizations in their community to allocate for college scholarships.
Colleges: As colleges and universities have become more dependent upon student tuition and fees, students are finding it more difficult to pay for their college education. Colleges will, and in many cases have, increased costs to the point of discouraging some potential students from enrolling.
Citizens: College students are finding it difficult to pay for their college education and some students say that financial concerns are their primary barrier to higher education.
Resources
1 American Enterprise Institute- Diplomas and Dropouts: Which Colleges Actually Graduate Their Students (and Which Don’t)- 2009
http://www.aei.org/docLib/Diplomas%20and%20Dropouts%20final.pdf
2 American Human Development Project and the United Way- Goals for the Common Good: Exploring the Impact of Education- 2008
http://liveunited.org/file/common_good_forecaster_full_report.pdf
3 Beacon Hill Institute- State Competitiveness Report- 2007
http://www.beaconhill.org/Compete07/Compete2007State.pdf
4 Center for Business and Economic Research- Do Tennessee Higher Education Graduates Work in Tennessee?- 2007-2008
http://cber.bus.utk.edu/tnhe.htm
5 Center for Business and Economic Research- Education Crossroads- 2007
http://www.educationcrossroads.com/
6 College Board- College Pays- 2007
http://www.collegeboard.com/prod_downloads/about/news_info/trends/ed_pays_2007.pdf
7 Corporation for Enterprise Development- Developmental Report Card of the States- 2007
http://www.cfed.org/focus.m?parentid=34&siteid=2346&id=1600&year=2007&stateid=42
8 Institute for Higher Education Policy- Investment Payoff- 2005
http://www.ihep.org/assets/files//publications/G-L/InvestmentPayoff.pdf
9 Kauffman Foundation- State New Economy Index- 2008
http://www.kauffman.org/Details.aspx?id=5846
10 National Center for Higher Education Management Systems- Information Center- 2009
http://www.higheredinfo.org/
11 National Center for Public Policy and Higher Education- Measuring Up- 2008
http://measuringup2008.highereducation.org/
12 State Higher Education Executive Officers- State Higher Education Finance survey- 2008
http://www.sheeo.org/finance/shef/SHEF%20FY08%20Early%20Release%202.pdf
13 Tennessee Higher Education Commission- County Profiles- 2009
http://www.tn.gov/moa/documents/2009CountyProfile.pdf
14 Western Interstate Commission on Higher Education- Knocking at the College Door- 2008
http://www.wiche.edu/policy/knocking/1992-2022/index.asp
