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Adam Smeltz

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A battle is looming over the funding of higher education as Gov. Tom Corbett angles to limit direct appropriations for state and state-related institutions and move to student grants and vouchers, according to state legislators and higher-education officials.

As early as last spring, Corbett said he would favor severing direct appropriations for state-related universities such as the University of Pittsburgh, Temple University and Penn State University, according to a higher-education official who was briefed on Corbett’s thinking and asked not to be named.

Corbett and his appointees suggested a voucher system where state money would follow undergraduate students, the source said.

Timothy Eller, a spokesman for the state Department of Education, said the Corbett administration has no goal to end institution-based funding for higher education. At the same time, Corbett and Ronald Tomalis, his education secretary, believe “funding for students should be a focus for education funding,” Eller said.

“I think, as of right now, they’re looking at balance: funding the institutions to make sure they’re accessible to the public at large, but also providing assistance directly to students so they can take their funding to institutions that may not receive direct state funding,” Eller said.

A snapshot of Tom Corbett's Advisory Commission on Postsecondary Education members.

See Corbett's advisory commission members

Corbett appointed a state advisory commission heavily weighted with people who are unlikely to provide an independent recommendation, said state Sen. Andrew Dinniman, D-West Chester, minority chairman for the Senate Education Committee.

“In my view, it’s going to be a very skewed report,” he said.

Formally called the Advisory Commission on Postsecondary Education, its 31 members include officials of private schools or for-profit education enterprises, business executives, and leaders of state-supported colleges and universities. (See sidebar for list of members.)

The state schools, already coping with diminished public resources, could face their “death knell” if direct appropriations evaporate, said state Sen. Jim Ferlo, D-Pittsburgh. He called the prospect “devastating,” particularly for communities around the institutions.

But Corbett, who announced the commission in February, has not pushed “any pre-baked ideas,” said Rob Wonderling, its chairman. The commission is to write recommendations by Nov. 15.

According to education experts, no state has yet used a solely voucher-based system for higher education, though several states, including Colorado and Texas, have flirted with the concept.

Edward St. John, a professor of higher education at the University of Michigan, said it’s tough to know what the impact would be without details.

“The constraints on the flow of funding and where the student can take the (voucher) money makes all the difference,” St. John said.

'Find a new model'

About 76 percent of state funding for higher education in Pennsylvania is currently allocated as direct-to-institution appropriations, primarily for state-owned and -related schools. The other 24 percent goes toward student grants distributed through the Pennsylvania Higher Education Assistance Agency, or PHEAA.

In his 2012-13 budget proposal, Corbett proposed spending $977 million, or 73 percent of the state's higher education money, on direct institutional support for higher education. About $362 million would be tagged for student grants, used at both private and public institutions.

Corbett’s approach will hinge heavily on recommendations from the advisory commission, Eller said.

He also defended the commission’s composition, saying it is “very well balanced.”

Corbett wanted voices from “large employers across the commonwealth,” both to diversify geographic representation and to gauge their vision of what’s needed for the future workforce, Eller said.

Corbett, who has pushed a grade-school voucher campaign, made clear his preference for higher-education funding in his inaugural budget address, in March 2011.

“We need to find a new model,” Corbett said. “When it comes to higher education, we should do the same thing that we do in basic education: The dollar should follow the student. It’s their money.”

But critics said redirecting money into state grants for individual students would amount to a higher-education voucher program that could threaten access for lower-income families.

“I don’t see how you’re going to create reasonableness of cost just by giving a student a voucher,” said Dinniman, a former faculty member at the state-owned West Chester University. “ … How can we possibly provide enough tuition money to make those (private) institutions affordable?”

Pennsylvanians would find little relief at state-related universities, some lawmakers have warned. Those schools could eliminate in-state tuition discounts if direct state funding dries up, school representatives have said. For in-state students, that would mean an effective doubling of tuition rates at schools like Penn State.

Penn State already has some of the highest tuition and fees among U.S. public universities, with in-state annual pricing in the $16,000 range. Prices nearly double for out-of-state students.

With flagging state support, university executives have said they have little choice but to raise tuition. The state-related universities and the 14-member State System of Higher Education absorbed funding reductions of about 20 percent in 2011-12 alone. Corbett has proposed additional state cuts between 20 percent and 30 percent for 2012-13.

His original budget proposal in 2011 would have roughly halved state money for state-related universities. That “clearly indicates (Corbett) doesn’t believe tax dollars should be used to reduce tuition for in-state residents” at those schools, said state Rep. Mike Hanna, D-Lock Haven.

Meanwhile, ongoing budget negotiations for 2012-13 should be complete by late June. Hanna said the talks will mark a critical moment as lawmakers decide whether to continue slicing direct appropriations or reverse the trend.

Republicans breaking ranks

State Sen. Jake Corman, R-Bellefonte, who sits on the Senate Education Committee, and a number of other Republicans have already broken ranks with Corbett, advocating a return to more-generous direct appropriations.

“Making sure we have the dollars to provide adequate funding is a challenge,” said state Rep. Paul Clymer, R-Perkasie. But “my opinion is that we need to restore some of these cuts” proposed by the governor.

Corman said the state puts about $500 million annually into Penn State, Pitt and Temple. In exchange, he said, the universities collectively discount tuition for in-state students by about $1.2 billion a year.

Pulling direct appropriations from those institutions would undermine that economic benefit, Corman said.

“The most competitive state institutions would benefit,” St. John, the education professor, said of a pure market-driven approach. “But the problem is, your average four-year institution will probably suffer under the model while Penn State would probably be in a position to capitalize....You could sustain Penn State because it’s viewed as an elite institution in the state. Some of its branch campuses may not fare as well.”

In Pennsylvania, talks at Corbett’s advisory commission have already pivoted toward slashing direct appropriations. At an April 16 meeting, commission member Michael MacDowell suggested the state better support the Pennsylvania Higher Education Assistance Agency, or PHEAA, and decrease direct funding for institutions. PHEAA supplies higher-education grants to college-bound Pennsylvanians.

“That way, students can decide what they want to do,” said MacDowell, president of the private Misericordia University, near Scranton.

But the leaders of both Penn State and Pitt said at the April 16 meeting that the shift to grants would probably mean cutting back outreach and extension programs, which aren’t paid for by tuition.

Pitt’s branch campuses would be most vulnerable, said Pitt Chancellor Mark Nordenberg.

More money for low-income students

Private education advocates said those arguments fail to acknowledge benefits from a change in funding strategies.

For years, the Association of Independent Colleges and Universities of Pennsylvania, or AICUP, has said the state should funnel more money through student grants -- and less directly to institutions. PHEAA, which processes state-funded student grants, considers a student’s ability to pay when determining grant amounts.

State money given directly to institutions, however, enables across-the-board tuition discounts granted without considering a student’s ability to pay, AICUP President Don Francis said.

His association would like to see state money shift more heavily to low- and middle-income students via PHEAA, he said. (Francis serves on the Advisory Commission for Postsecondary Education, though he said he was not speaking as a commission representative.)

AICUP has emphasized that private institutions produce about half of college degrees conferred in Pennsylvania, well above national averages. Making private institutions more accessible could ease crowding and cost burdens at the more public schools, plus enable a wider range of viable choices for students, Francis said.

“In a state like ours, we believe it makes a whole lot of sense to direct more dollars to students,” he said.
No one should be restricted to go only to a state-owned institution because of state block grants that lower its tuition rates, said MacDowell, the Misericordia president, in an interview. And it doesn’t make sense for wealthy students to benefit from those state-financed tuition discounts, he said.

“Why should we, as a state, continue to subsidize those who would be able to afford higher education on their own?” MacDowell said.


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