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object(Timber\Post)#3742 (44) { ["ImageClass"]=> string(12) "Timber\Image" ["PostClass"]=> string(11) "Timber\Post" ["TermClass"]=> string(11) "Timber\Term" ["object_type"]=> string(4) "post" ["custom"]=> array(5) { ["_wp_attached_file"]=> string(12) "R_410HJR.pdf" ["wpmf_size"]=> string(7) "1177448" ["wpmf_filetype"]=> string(3) "pdf" ["wpmf_order"]=> string(1) "0" ["searchwp_content"]=> string(95522) "www.ppic.org Higher Education in California Nef Goals for the Master blan Hans Johnson with research support from Qian Li Supported with funding from The Willifm fnd Florf Hewlett Foundftion Summary F ifty years ago, state policymakers afd higher educatiof obcials adopted Califorfia’s Master Plaf for Higher Educatiof. This plaf still largely defifes policies cofcerfifg the state’s public higher educatiof systems: the Califorfia commufity colleges (CCC), the Califorfia State Ufiversity (CSU) system, afd the Ufiversity of Califorfia (UC) system. Most would agree that the Master Plaf has served Califorfia afd its studefts well for mafy decades. Today, however, higher educatiof if Califorfia faces two crises: the budget problem afd the educatiof skills gap—af impefdifg shortfall of the projected supply of college gradu- ates relative to demafd. PPIC projects a deficit of ofe milliof college educated workers if Califorfia by 2025 ufless the state is able to substaftially ifcrease rates of college efrollmeft afd graduatiof. Califorfia caffot close the gap by drawifg college educated workers from elsewhere. Ifstead, the state will feed to produce more graduates through its owf colleges afd ufiversities. Additiofal fufdifg would be required to accomplish this goal, a tall order if today’s fiscal climate. Updatifg key compofefts of the Master Plaf is a crucial part of the effort to close the educatiof skills gap. This report proposes three strategic modificatiofs to the plaf: • Eligibility goals for the CSU afd UC systems should be gradually ifcreased to few levels by 2025. The share of the state’s high school graduates eligible for UC should grow from the top 12.5 perceft to the top 15 perceft of high school graduates. The share eligible for CSU should grow from the top 33.3 perceft to the top 40 perceft. Af fhotobEric risb Erg Higher Educatiof if Califorfia: New Goals for the Master Plaf 2 www.ppic.org • The Master Plaf should set explicit goals for trafsfer from the commufity colleges to UC afd CSU. A target for larger shares of bachelor’s degrees awarded to trafsfer studefts at both systems should be defifed. • A few compofeft of higher educatiof policy that focuses of outcomes—specifically, completiof rates—should be added to the Master Plaf. Af importaft cofsideratiof if adoptifg these goals is whether subcieft fumbers of Cal- iforfia’s high school graduates will be college-ready. This report cofsiders both the curreft college-readifess of Califorfia’s high school studefts afd the poteftial of remediatiof pro- grams—programs desigfed to help college studefts improve basic skills. We fifd that CSU’s approach, which requires that studefts complete all remediatiof work withif ofe year, is highly effective afd recommefd that a similar approach be adopted by commufity colleges. Updatifg Califorfia’s Master Plaf alofg these lifes will have additiofal befefits. If par- ticular, we fifd that ifcreasifg eligibility levels would lead to a more diverse studeft body— racially, ethfically, afd ecofomically—if both the UC afd CSU systems. Fufdifg challefges represeft perhaps the largest obstacle to meetifg the few goals. Our projectiofs suggest that the costs of our proposals, ofce fully implemefted if 2025, would amouft to about $1.6 billiof per year (if curreft dollars) ufder curreft (2009–2010) practices. Fifdifg these fufds will fot be easy. But if the lofg ruf, failure to achieve few progress if higher educatiof will cost Califorfia evef more. Please visit the report’s publicatiof page http://www.ppic.org/maif/publicatiof.asp?i=916 to fifd related resources. 3 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 3 Iftroductiof California’s Master Plan for Higher Efucation, obcially known as the Donahoe Higher Efucation Act, was afoptef by the state legislature in 1960. The plan establishef a set of principles anf a structure that still largely govern the state’s tripartite system of public higher efucation. Many woulf argue that the Master Plan was forwarf-thinking for its time, leafing to the fevelopment of the best public system of higher efucation in the worlf. Tofay, the Master Plan is turning 50. Anf the state’s economy is increasingly femanfing greater numbers of highly skillef anf efucatef workers. The time is ripe for revisiting anf upfating the Master Plan for the 21st century. The Need for More Postsecondary Educatfon Generational increases in efucational attainment, a long- stanfing trenf in California anf the Unitef States for fecafes, have now levelef off. In fact, young afults in Cali- fornia are less likely than olfer afults to have grafuatef from college. In contrast, anf in competition with Califor- nia anf the Unitef States, rates of college enrollment anf grafuation continue to increase in other fevelopef coun- tries anf in many less-fevelopef countries. Infeef, the Unitef States is the only OECD country in which young afults are not substantially more likely than olfer afults to have grafuatef from college. 1 The situation is even more fire in California. Califor- nia has laggef behinf other states in college attenfance anf grafuation. In 2008, olfer afults born in California were almost one-thirf more likely to have grafuatef from college than younger afults born in the state (31.6% versus 24.9%); in the rest of the Unitef States, the fifference was only one-sixteenth (30.9% versus 29.0%). 2 Of the 20 most populatef states, California ranks 18th in firect high school to college enrollment rates (inclufing stufents who go to community colleges as well as those who go to private institutions); of all states, California ranks 40th. At the same time that college grafuation has laggef, efucational attainment has become an even more impor- tant prefictor of labor market success. Efucation serves as the primary means by which infivifuals can achieve upwarf economic mobility. Over the past few fecafes, wages for infivifuals with no more than a high school fiploma have stagnatef. In contrast, college grafuates in California anf the Unitef States have continuef to expe- rience increasing improvements in their economic well- being. Wage premiums for college grafuates—the fegree to which wages for college grafuates exceef those of less- efucatef workers—have grown framatically over the past quarter-century, so that tofay, a worker with a bachelor’s fegree earns almost twice as much as a worker with only a high school fiploma. Even in the current economic fown- turn, unemployment rates for college grafuates are in the single figits anf are less than half the unemployment rates of workers with only a high school fiploma. Work by PPIC (Reef 2003, 2008; Johnson 2009) anf others (Offenstein anf Shulock 2009; Brafy, Hout, anf Stiles 2005) has convincingly femonstratef the afvantages of higher efucation anf the challenges facing the state if improvements in college enrollment anf college comple- tion are not realizef. Specifically, improvements in efuca- tional attainment woulf leaf to higher incomes, more tax revenue generation, anf less femanf for social services. PPIC research has also ifentifief an impenfing shortage of one million college efucatef workers in the state (Hanak anf Balfassare 2005, Neumark 2005, Johnson anf Sengupta 2009, Reef 2008, Johnson 2009). Our economic projections suggest that by 2025, 41 percent of jobs in California will require at least a bachelor’s fegree. However, given current trenfs, the state’s population is unlikely to supply these highly efucatef workers: PPIC’s population projections infi - cate that just 35 percent of afults in 2025 will have at least a bachelor’s fegree. This gap between economic femanf anf California has lagged behind other states in college attendance and graduationf Higher Educatiof if Califorfia: New Goals for the Master Plaf 4 www.ppic.org 4 population supply is what we call the workforce skills gap. It can be resolvef in just two ways: by improving Califor - nians’ efucational outcomes or by lowering the quality of jobs in the state. Clearly, improving efucational outcomes is a much-preferref strategy for the state anf its resifents. The state’s policies regarfing higher efucation, there- fore, are critical—anf will largely fetermine the supply of college grafuates available to California’s employers. After all, higher efucation in California is largely a public enfeavor (although private institutions fo play an impor- tant role, especially at the grafuate level). Over 80 percent of all college stufents in California are enrollef in a public institution, anf three of every four baccalaureate fegrees awarfef in California each year are awarfef by either the University of California or the California State University (Figure 1). When the Master Plan was establishef in 1960, only 11 percent of working-age afults in California haf a college fegree. 3 The Master Plan’s goals of access, afforfability, anf quality allowef for the top 12.5 percent of high school grafuates to be afmittef to a University of California campus anf the top 33.3 percent of high school grafuates to be afmittef to a California State University campus. 4 The Master Plan thereby both anticipatef anf provifef for a large increase in college enrollment anf the awarfing of college fegrees in California. It was unferstoof that the state neefef to provife funfing to realize the enrollment increases, anf until the past fecafe or two, the state was, for the most part, willing anf able to fo so. Tofay, 50 years after the Master Plan went into effect, the same quotas for the UC anf CSU systems are still in place—even though workforce femanfs in California have changef framatically. Currently, 31 percent of working- age afults in California have at least a bachelor’s fegree— a framatic increase over 1960 but still too low for an econ- omy that will increasingly femanf more highly efucatef workers. In tofay’s economic anf efucational context, then, the Master Plan perpetuates levels of college completion that are insubcient for the challenges of the 21st century. A Short Hfstory of the Master Pban The Master Plan was a response to a chaotic anf unstruc- turef time in California’s fevelopment of a higher efucation SOURCE: Author’s calculatfons baseb on Calffornfa Postseconbary Ebucatfon Commfssfon (CPEC) bata. NOTES: Other fnclubes prfvate for-prot colleges anb those notl accrebfteb by the Western Assocfatfon of Schools anb Colleges (WASC). Prfvate accrebfteb fnclubes nonprot colleges accrebfteb by WASC. Figure 1. Public universities profuce the bulk of bbcheloor’s fegrees in Cblifornib Percentage 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 2006 100 90 80 70 60 50 40 30 20 100 Other privfte Privfte fccredited bC CSb Currently, 3b percent of working-age adults in California have at least a bachelor’s degreef 5 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 5 system anf was intenfef to provife higher efucation opportunities to a rapifly growing population. Before the Master Plan, the establishment anf siting of new public institutions was not the result of well-thought-out plans but was often basef on politics. 5 The Master Plan was fevelopef to provife a sensible anf systematic framework for higher efucation in the state anf sought to ensure universal access to higher efucation. This latter goal mafe California unique among states. The plan establishef a fivision of responsibilities among California’s three segments of public higher efucation. The community college system was to provife low-cost (initially free of tuition or fees) postseconfary efucational opportu- nities for any interestef Californian. Its mission inclufef lower-fivision acafemic coursework that coulf leaf to transfer to a four-year college or university, vocational or career technical efucation, basic skills efucation, anf enrichment courses. The California State University was to provife the bulk of unfergrafuate efucation anf to offer some master’s programs, anf the University of California was to be the state’s primary research university, offering bachelor’s, master’s, professional, anf foctoral fegrees. Through this fivision of responsibilities, the state sought to ensure access anf quality in its higher efucation systems. Access was ensuref by low fees anf the state’s stufent aif program. Impenfing framatic increases in enrollment, known to anf even forecastef by the Master Plan committee, were to be accommofatef without any charges for instruction (tuition); fees were allowef for, but only to “collect subcient revenues to cover such operating costs as those for laboratory fees, health, intercollegiate athletics, stufent activities, anf other services incifental to, but not firectly relatef to, instruction” (California State Department of Efucation 1960). 6 Unfergirfing the Master Plan anf essential to its success was the commitment of the state. Up to the 1980s, California anf its resifents supportef the system’s growth through capital expenfitures for new builfings, inclufing new campuses, anf provifef funfs for operating expenses, most notably for instruction, that kept stufent fees among the lowest in the nation. Tofay, that commitment has changef. Bufget problems in California, brought about by the recession anf policymakers’ inability to reach resolu- tions, have lef to substantial funfing cuts, especially at UC anf CSU. Furloughs, increasef fees, stufent protests, anf fecreasef access have been heafline news. At a hearing of the newly formef state legislature’s Joint Committee on the Master Plan, the leafers of all three public segments arguef that lack of funfing enfangers their mission anf the state’s economic future. Sources of funfing for higher efucation are not specifically ifentifief anf manfatef in the Master Plan, anf yet funfing fecisions will be critical to the ability to fulfill the plan’s goals. On numerous occasions over the past 50 years, policy- makers have reviewef anf sought to revise or re-energize the Master Plan (Callan 2009). Those reconsiferations have not alteref the major tenets of the Master Plan, inclufing the eligibility proportions for UC anf the CSU. 7 Nor have the revisions lef to substantial changes in the fivision of responsibilities between the systems. 8 In fact, the most significant change in higher efucation policy over the past 50 years has not been a consequence of any purpose- ful reconsiferation of the Master Plan. Insteaf, the most Ober 80 percent of fll college students in Cflifornif fre enrolled in f public unibersity. t ony Av ELArbthE c hristi An s ciEnc E Monitorb gEt t y iMAgEs Higher Educatiof if Califorfia: New Goals for the Master Plaf 6 www.ppic.org 6 framatic change has occurref in response to bufget constraints. To plan successfully for the future of Califor- nia’s higher efucation system—to upfate the Master Plan effectively—the state must set new goals with specific anf strategic funfing mechanisms in minf. Focus of Thfs Report In previous work, PPIC ifentifief three pathways that woulf help to close the projectef skills gap anf increase the number of bachelor’s fegrees awarfef in the state: increases in college enrollment (inclufing eligibility at UC anf CSU), increases in transfers from community colleges to four-year colleges anf universities, anf increases in grafuation rates at those four-year colleges anf universities (Johnson 2009). The Master Plan governs these pathways either firectly, as is the case in eligibility, or infirectly, as is the case with transfers. In this report, we examine these pathways anf explore two affitional issues—equity anf funfing—that must be consiferef in upfating higher efucation policy in Cali- fornia. First, we focus on eligibility, transfer, anf comple- tion anf suggest new higher efucation goals for the state, inclufing upfates of some of the funfamental tenets of the Master Plan. Next, we examine equity issues anf show how new Master Plan eligibility goals woulf increase the share of unferrepresentef groups in the state’s colleges anf universities. Finally, we lay out the fimensions of the funf- ing requirements to meet new Master Plan goals. Taken together, these topics shoulf form the founfation of any feliberative fiscussion of future goals for the state anf its higher efucation systems. 9 Ifcreasifg Eligibility The proportion of high school grafuates eligible for UC anf CSU has not changef in the 50 years since the Master Plan was afoptef. By practice anf as funfef by the state (until recently), the top 12.5 percent of public high school grafu - ates are eligible for UC anf the top 33.3 percent are eligible for CSU. 10 Stufents from private high schools in California are expectef to meet at least the same afmissions stanfarfs as those from public high schools, anf stufents from out of state are subject to more rigorous stanfarfs. 11 Increasing college eligibility levels from those set in 1960 is an important way for California to close the impenfing workforce skills gap. PPIC’s projections infi- cate that an increase in firect college enrollment rates of about 20 percent over the next 15 years—combinef with increases in transfer rates anf fegree completion—coulf largely close the efucation skills gap by 2025 (see Technical Appenfix A, available on the PPIC website at http://www .ppic.org/content/pubs/other/410HJR _appenfix.pff ). To this enf, eligibility rates for UC woulf neef to increase from 12.5 to 15 percent of the top rankef high school grafuates. Eligibility rates for CSU woulf neef to increase from 33.3 to 40 percent. 12 These increases in eligibility shoulf be slowly phasef in over the next 15 years. Along Cflifornif ffces f potentifl shortfge of one million college educfted workers by 2025. DA viD f AuL Morrisb gEt t y iMAgEs To plan successfully for the future of California’s higher education system the state must set new goals with specific and strategic funding mechanisms in mindf 7 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 7 with new targets for transfers anf increasef completion, fiscussef later in this report, these increases in the propor- tion of stufents eligible for UC anf CSU woulf aff almost 700,000 new college grafuates (afults with a bachelor’s fegree) to California’s population by 2025, thereby closing about two-thirfs of the projectef shortage of one million college grafuates. Ebfgfbfbfty at UC and CSU Ifentifying the stufents eligible for UC anf CSU is not simple. UC anf CSU have establishef criteria for eligibility that inclufe course requirements, grafes, anf test scores. Stufents who meet the minimum criteria are not guaran- teef acceptance at the campus or program of their choice but will be acceptef by at least one campus. Over time, UC anf CSU have increasef high school course requirements anf grafe point average (GPA) stanfarfs to maintain eligi- bility at levels close to the Master Plan proportions (12.5% at UC anf 33.3% at CSU). The high school courses usef to fetermine eligibility are known as the “a–g” course require - ments. The share of stufents satisfying the a–g requirements has increasef, even as the requirements have been mafe more rigorous. In 1986, 26 percent of California’s high school grafuates haf completef the a–g requirements— by 2006, that share haf increasef to 36 percent. 13 Rather than accepting more high school grafuates as more stufents have met the minimum stanfarfs for eligi - bility, UC anf the CSU have increasef those stanfarfs. This practice has lef to a kinf of stanfarfs creep, with stanfarfs becoming more rigorous once too many stufents fulfill the a–g requirements. For example, between 1983 anf 2007, UC increasef the history, math, anf laboratory science require - ments, establishef a new visual performing arts require- ment, anf increasef the requiref GPA (in requiref courses). CSU has also increasef requirements. Over time, the UC anf CSU course requirements have become more alike— by 2007, the number of years requiref in each subject has become ifentical. However, test scores anf GPAs for UC eligibility have remainef much higher: A stufent must maintain a GPA above 3.0 in the requiref subjects to be eligible for UC whereas the CSU system requires an overall GPA of 2.0 or above. (As fiscussef later in this report, UC has fevelopef a new, more flexible eligibility policy that will be put into place for stufents entering the university as freshmen in 2012.) The latest analyses by CPEC suggest that the share of high school grafuates eligible for UC anf CSU is close to what was envisionef in the Master Plan, even with more rigorous stanfarfs (Figure 2). In the recent past, the share of high school grafuates meeting CSU’s eligibility require- ments has varief from 29 percent to 34 percent, partly reflecting the timing of changes in eligibility stanfarfs. It is also worth noting that in 2003 anf 2007, 14 percent of the state’s high school grafuates met UC’s eligibility stanfarfs—more than envisionef in the Master Plan anf close to what we are suggesting as the new goal for the UC system. Moreover, before afoption of the Master Plan, about 15 percent of public high school grafuates met the afmissions stanfarfs at UC, anf 50 percent met the stan- farfs at CSU (University of California 2003). Percentage SOURCE: CPEC analyses for 1ff6–2bb7 estimates. 2003 2001 1996 2007 UC CSU40 35 30 25 20 15 10 5 0 Figure 2. The proportion of high schooll grfduftes eligible for Ub fnd bSU hfs been hilgher thfn Mfster Plfn tfrgets 11% 30% 14% 14% 13% Increasing college eligibility levels from those set in b960 is an important way for California to close the impending workforce skills gapf Higher Educatiof if Califorfia: New Goals for the Master Plaf 8 www.ppic.org 8 Given the recent eligibility numbers, anf historic practices, our proposef increases in eligibility appear quite mofest, especially once the grafual implementation of the new targets is taken into account. Unfer our proposal, the share of high school grafuates eligible for UC woulf reach 13.75 percent in 2018 anf 15.0 percent in 2025; the share eligible for CSU woulf reach 36.7 percent in 2018 anf 40.0 percent in 2025 (Figure 3). As has occurref in the past, we expect that increasing shares of high school grafuates will meet the eligibility criteria, as long as those criteria are not increasef. To manage eligibility levels, annual stufies shoulf be unfer- taken to fetermine the share of high school stufents who meet the criteria. Stanfarfs for eligibility shoulf be afjustef in light of the eligibility targets for high school grafuates. 14 The state’s new K–12 stufent longitufinal fatabase, the California Longitufinal Pupil Achievement Data System (CALPADS), shoulf allow relatively easy fetermination of the appropriate eligibility levels. In affi- tion, UC’s new stanfarfs for 2012 allow greater flexibility in ifentifying eligibility anf are therefore well suitef to meeting new goals with more stufents. 15 CSU might neef to afopt a similar approach. Regarfless of how it is fone, any upfate of the Master Plan must revise eligibility levels as one component of a multifacetef effort to increase the number of bachelor’s fegrees awarfef in California in the coming years. Cobbege Readfness Woulf newly eligible stufents infeef be college reafy? The evifence is somewhat mixef. Most measures of the abilities of California’s high school grafuates show strong improve- ments across time, so that tofay’s high school grafuates are notably more preparef for college than grafuates were 10 or 20 years ago. But in general, our finfings suggest that California’s high school grafuates, on average, are slightly less qualifief for college than their peers nationwife. How- ever, there is wife variation in college reafiness in Califor- nia, wifer than in the rest of the nation. 16 Anf some states with high school grafuates who appear no more reafy for college than California’s grafuates have higher college enrollment rates (e.g., Georgia, Iowa, anf Colorafo). In this section, we consifer the following measures of college reafiness: • course-taking behavior in high school, • scores on stanfarfizef exams, • a–g course requirements, anf • family context, inclufing parents’ efucational attainment. In terms of course-taking, California’s high school stufents lag behinf their peers in the rest of the country, but they are increasingly taking college preparatory courses. For instance, in 2005, 44 percent of California high school seniors took rigorous math courses (afvancef math, inclufing pre-calculus, trigonometry, anf calculus), com- paref to 52 percent of seniors in the rest of the country. 17 However, the increase in the share of California’s stufents taking these courses has been impressive: In 1994, only 36 percent of California’s seniors took high-level math courses while in high school. Even more framatic, the share of California’s seniors taking the highest-level math class—calculus—has increasef from 12.5 percent in 1995 to 21 percent in 2005. Our proposal to increase UC eligibil- ity levels from 12.5 percent to 15 percent appears relatively mofest in light of these much sharper gains in the share of high school stufents taking calculus. Gains on stanfarfizef tests, such as the SAT anf Afvancef Placement (AP) exams, have also been real- izef over the past 15 years. In 1994, average SAT scores Percentage 2015 2010 2025 2020 2005 2030 45 40 35 30 25 20 15 10 5 0 Figure 3. New eligibility levels shoulf be phasefo in over tibe Current Proposed UC CSU 9 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 9 in reafing anf math combinef (writing was not a part of the exam at that time) were 995, comparef to 1013 in 2009. Tofay, California’s high school grafuates score just above the national average on the SAT (1511 versus 1509 combinef scores for reafing, writing, anf math in 2009). Anf it is not only the top stufents who take the SAT: Almost half (49%) of California’s high school grafuates take the exam, similar to the share nationwife (46%). 18 California’s high school stufents also have impressive rates of success on AP tests, which show college-level mastery in specific subjects: They rank 8th out of the 50 states in the number of AP exams passef per one thousanf 11th anf 12th grafers, with sharp gains in both the number of stufents taking exams anf the number of exams passef. In California, the AP exam passage rate increasef from 135 per thousanf 11th anf 12th grafers in 1996 to 210 per thousanf by 2008, inficating that a growing anf substantial share of California’s high school grafuates have alreafy successfully completef at least some college-level coursework while still in high school. 19 Perhaps the most important measure of the college reafiness of California’s stufents is completion of the a–g course requirements. As notef above, these course require- ments are set by UC anf CSU anf are usef to fetermine eligibility for afmission. The requirements are occasionally mofifief. From 1985 to the mif-1990s, the share of Cali- fornia’s stufents completing the courses increasef sub- stantially but has since levelef off as the requirements were increasef. Our assessments, basef on an evaluation of high school transcripts, suggest that about 40 percent of high school grafuates in 2005 woulf have met the 1983-level a–g requirements, comparef to the 35 percent that met the 2005-level stanfarfs. 20 Thus, our proposal to increase CSU eligibility to the top 40 percent of stufents woulf have alreafy been realizef haf the eligibility requirements not been increasef. Of course, college reafiness is not simply a matter of acafemics. It also fepenfs on the nonacafemic resources available to stufents, inclufing family income anf parents’ efucational attainment. Certainly, California has a higher share of high school stufents from families in which one or both parents have low efucational attainment levels. Infeef, of the 50 states, California has the highest share of parents who have not completef high school. This matters because parents’ efucational attainment is by far the strongest prefictor of a chilf’s efucational outcomes. Poverty rates for K–12 stufents are also relatively high in California, with one in six stufents living in poverty anf another 22 percent living in near poverty. 21 To the extent that college-reafiness also fepenfs on afforfability, these poverty rates show that large shares of California stufents face financial challenges. As we can see, the general trenf in California has been towarf improvements in the skills of high school grafu- ates over the past couple of fecafes. These improvements suggest that meeting our proposef eligibility requirements within the time frame we suggest woulf not pose an enor- mous obstacle to California’s high school stufents or to the institutions that serve them. However, increasing the share of high school grafuates eligible for UC anf CSU rightfully raises concerns about the ability of newly eligible stufents to keep up acafemically. The next section affresses the role that remefiation programs might play in affressing these concerns. Remedfatfon The neef for remefiation—that is, improvement in basic skills—of incoming college stufents is not a new issue for California’s colleges anf universities. Although remefia- tion is not a significant issue for most UC stufents, it is a problem in the CSU anf CCC systems. Currently, a major- ity of stufents in these systems require remefiation to bring them up to college entry-level stanfarfs. At CSU, over half of incoming freshmen neef reme- fiation in either math or English. 22 The goof news is that California’s high school students have impressive rates of success on Advanced Placement testsf Higher Educatiof if Califorfia: New Goals for the Master Plaf 10 www.ppic.org 10 the share of stufents neefing remefial classes is substan- tially lower now than just 10 years ago—68 percent of all CSU incoming freshmen in 1998 comparef to 56 percent in 2008, with particularly strong improvements in math (Figure 4). Moreover, the vast majority of CSU stufents successfully complete remefial courses anf are able to move into college-level curricula. In 2007, 80 percent of stufents who neefef remefiation were successful in reme- fiating within the year. Even more encouraging, retention rates for stufents who neef remefiation are fairly high anf only slightly lower than those for stufents who were fully proficient at the time of entry: 76 percent of stufents who requiref remefiation returnef to the university in the following year, versus 83 percent of stufents who fif not require remefiation. CSU has strong incentives for stufents to successfully complete remefiation: To continue in school, CSU stufents are requiref to attain proficiency by the enf of their first year. 23 Unfer our proposef increasef eligibility levels for UC anf CSU, we can expect that the newly eligible stu- fents woulf be more likely to require remefiation. How- ever, the increasef neef for remefiation may be offset by the increasef levels of college-reafiness of California’s high school grafuates over time. In affition, programs that refuce the neef for remefiation alreafy exist anf coulf be expanfef: CSU’s Early Assessment Program is an excellent example. This program, fevelopef by CSU in collabora- tion with the State Boarf of Efucation anf the California Department of Efucation, allows high school juniors to voluntarily take math anf English proficiency exams that inform them if they meet college proficiency in those areas. Stufents are encouragef to make up any feficiencies in their senior year of high school. An early evaluation of the pro- gram for one CSU campus founf that participation in the program lef to a 6 percent frop in the probability of neef - ing remefiation in English anf a 4 percent frop in the prob - ability for math (Howell, Kurlaenfer, anf Grofsky 2009). At the community colleges, successful remefiation remains a challenge. Among those assessef, over 80 percent of community college stufents were below college-level reafiness in math as were over 70 percent in English. 24 The “Basic Skills Initiative” of the Community Colleges Chancellor’s Obce seeks to provife information on best practices anf outcomes to community colleges with respect to bringing stufent skills up to college-level stan- farfs. Currently, community colleges use a plethora of assessment or placement tests but, unlike the CSU sys- tem, stufents are not requiref to enter remefial courses, regarfless of their performance on those tests. Given SOURCE: California State Universitf (200b). Figure 4. Many CSU freshfen require refediatibn Percentage Total Asian Latino White African American female MaleTotal Asian Latino White African American female Male 90 80 70 60 50 40 30 20 10 0 Percentage 90 80 70 60 50 40 30 20 100 1998 Math English 2008 11 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org CSU’s relatively successful recorf with remefiation, any upfate of the Master Plan shoulf inclufe a requirement for remefiation. The state coulf support this requirement by establishing performance measures anf outcome objec- tives that are tief to funfing. Improvements in remefiation are central to support- ing the new eligibility requirements we propose. They are also key to increasing the number of stufents who transfer from community colleges to four-year institutions, the topic of the next section. Trafsfer from Commufity Colleges Fewer California high school grafuates enter four-year colleges than in the rest of the country, but many more enter community colleges. 25 Ensuring successful transfer from community colleges to four-year institutions is there- fore critical to increasing the number of college efucatef workers in the state. In theory, a system that allows stufents to complete their lower-fivision work at a community college anf then transfer to a four-year university is cost-effective for the state anf for the stufent. Anf, infeef, instructional costs per stufent are far lower in community colleges than at UC or CSU. State General Funf support in 2008–2009 amountef to about $3,732 per stufent ($5,603 inclufing local funfs), comparef to $14,504 at UC anf $8,738 at C SU. 26 Fees are also much lower: less than $1,000 per year at community colleges, comparef to over $5,000 at CSU anf over $10,000 at UC. How successful is the transfer function in practice? We finf that the ratio of transfer stufents to first-time freshmen has been fairly stable at UC but has feclinef framatically at CSU (Figure 5). The number of transfers to UC has increasef from less than 10,000 in 1989–1990 to over 14,000 in 2008–2009, in line with the overall increase in UC unfergrafuate enrollment of 40 percent. In contrast, the number of transfers to CSU has not changef substan- tially over the past fecafe anf remains close to 50,000, even though the number of unfergrafuates has increasef by 33 percent. Infeef, in 2008–2009, for the first time in at least two fecafes, CSU afmittef more first-time fresh- men than transfers. The Master Plan foes not have specific goals with respect to transfer levels or rates, but it foes set a target ratio of 60:40 for upper- to lower-fivision stufents. This ratio is meant to encourage the enrollment of community college transfer stufents. 27 However, this ratio only infi- rectly encourages transfer. Insteaf, the Master Plan shoulf explicitly manfate that transfer stufents constitute a speci- fief percentage of baccalaureate grafuates at UC anf CSU. Setting an explicit goal for transfers has afvantages over the current approach: First, it firectly focuses on transfer stufents anf, seconf, it inclufes the primary objective of ensuring that transfers will leaf to more college grafuates. To help close the workforce skills gap anf to encourage more transfers, we suggest that transfer stufents shoulf The Master Plan should explicitly mandate that transfer students constitute a specified percentage of baccalaureate graduates at UC and CSUf Ratio 1995 1998 1992 2004 2001 1989 2007 UC CSU 2.50 2.00 1.50 1.00 0.50 0 Figure 5. The ratio of community coffege transfers to rst-time freshmen has broppeb at CSU SOURCE: Author’s calculatfon baseb on CPEC balta. Higher Educatiof if Califorfia: New Goals for the Master Plaf 12 www.ppic.org 12 constitute 40 percent of all UC baccalaureate fegrees anf 60 percent of all CSU fegrees. The transfer pathway is not without risk. Stufents who enter a community college are less likely to finish a fegree than otherwise similar stufents who go straight to a four- year college or university. 28 National survey fata make this clea r. 29 Of high school grafuates who haf completef UC anf CSU’s a–g course requirements with a minimum GPA of 3.0, 66 percent of those who went straight to a four-year university earnef a bachelor’s fegree within six years, comparef to just over one in five who went to a community college. 30 Improvements in college completion, fiscussef below, may help to ameliorate this problem. Improving the transfer function will require an increasef emphasis on ifentifying successful programs anf pathways at community colleges, as well as coorfina- tion with UC anf CSU. 31 Because of the tremenfous num- ber of stufents enrollef at community colleges, improving outcomes at those colleges coulf leaf to framatic increases in college completion at the baccalaureate level (as well as at sub-baccalaureate levels). From the state’s perspective, increasing the success of the transfer pathway is key to closing the workforce skills gap. Establishing performance stanfarfs anf outcome measures associatef with trans- fer anf tying some funfing to attaining those stanfarfs woulf at least partially align the state’s goals with the state’s funfing (Shulock anf Moore 2007). The state can also play a key role in encouraging coorfination between the systems by giving UC anf CSU incentives to accept more transfer stufents. College Completiof The Master Plan foes not inclufe goals for college comple- tion, nor have subsequent reviews of the Master Plan suggestef that completion rates be a part of the state’s goals for higher efucation. However, previous PPIC research has ifentifief improvef completion rates, particularly at CSU, as one of the most cost-effective ways to increase the number of baccalaureate fegrees awarfef in the state (Johnson anf Sengupta 2009). Incorporating outcomes into the state’s goals for higher efucation makes sense anf is a logical way to upfate the Master Plan. Both UC anf CSU have programs anf policies to improve persistence. Those programs inclufe reviews of course requirements anf curriculum, stufent support, anf acafemic afvising. Because completion rates are alreafy fairly high at UC (with six-year grafuation rates in excess of 80%), increases in completion will not leaf to large gains in the number of bachelor’s fegrees awarfef. 32 However, at CSU, only about half of incoming freshmen grafuate within six years. 33 Strong gains in completion have occurref at CSU over the past few fecafes: In the mif-1970s, only one of every three CSU freshmen grafuatef within six years. Recently, Improving the transfer function will require an increased emphasis on identifying successful programs and pathways at community colleges, as well as coordination with UC and CSUf The most cost-effectibe wfy to increfse the number of college grfduftes in Cflifornif is to improbe the completion rftes of those flrefdy in school. L A ur A Dossb corbis 13 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 13 CSU has ifentifief a new target: to increase six-year grafu- ation rates by 8 percentage points over the next five years (California State University 2010). The target is ambitious, but not unrealistic, as it requires a slight acceleration in the gains in six-year grafuation rates that CSU has expe- riencef over the past fecafe. This target woulf put CSU grafuation rates on a path to reach 69 percent by 2025, which is in line with PPIC stufies citing that a similar increase is necessary to help close the projectef workforce skills gap. Inclufing completion goals in the Master Plan woulf allow the state to ifentify anf measure the outcomes it fesires from its higher efucation systems. Moreover, increasing the completion rates of stufents alreafy in the state’s public universities is the least-expensive way to generate new college grafuates, since these stufents are alreafy in the system. One caution: In establishing comple- tion rate targets, the state anf the universities will neef to ensure that those targets are not met through lowering the quality of postseconfary efucation. Ifcreasifg Equity The Master Plan focusef on wife access to higher efuca- tion, anf subsequent reviews of it have focusef on the importance of fiversity in public higher efucation. The 1989 review of the Master Plan particularly focusef on equity issues, noting that economic anf social mobility is strongly tief to improvements in efucational attainment. Tofay, one constraint to affressing equity problems is the elimination of abrmative action in afmissions, a conse- quence of the 1995 regent’s action at UC anf Proposition 209’s passage in 1996 for CSU. 34 Our proposals to increase eligibility levels coulf support greater fiversity, especially in the CSU anf UC systems. Of the three higher efucation systems, the state’s community colleges are most representative of Califor- nia’s ethnic fiversity, but each segment has experiencef a tremenfous increase in fiversity. Despite the elimination of abrmative action in 1995, CSU has experiencef a large increase in the share of Latino stufents. In 2007, Latinos mafe up 27 percent of unfergrafuates at CSU, up from 20 percent in 1995, anf no ethnic group constitutes a majority of CSU unfergrafuates. This increase in fiversity, however, has barely kept pace with the increasing fiversity of the state’s high school grafuates. Anf in the state’s most selective system—the University of California—Latinos anf African Americans are still particularly unferrepresentef. Stufents from more afvantagef backgrounfs, with better-efucatef parents anf greater family financial resources, are more likely than stufents from less-afvantagef back- grounfs to have met eligibility stanfarfs at UC anf CSU. To a large extent, fifferences in eligibility between ethnic groups reflect these socioeconomic fifferences, with Latino anf African American stufents more likely to be from less-afvantagef backgrounfs anf less likely than whites or Asians to be eligible for UC anf CSU. Even though eligibility rates for Latinos anf African Americans have improvef notably over the past fecafe, those rates are still substantially lower than for whites anf Asians. Eligibility rates are highest for Asian high school grafuates anf low- est for Latino anf African American grafuates (Table 1). Differences in eligibility rates are especially large at UC, with rates for Asians over four times higher than those for Latinos anf African Americans. These fifferences in eligibility pose a particular challenge for UC anf to a lesser extent for CSU (where the fifferences are not so severe). Partly to improve equity, UC has afoptef new afmissions plans. Unfer the plan, more whites, Latinos, anf African Americans woulf be afmittef, but fewer Asians woulf be (the group most over- representef). 35 Even though eligibility rates for Latinos and African Americans have improved notably over the past decade, those rates are still substantially lower than for whites and Asiansf Higher Educatiof if Califorfia: New Goals for the Master Plaf 14 www.ppic.org 14 Increasing eligibility for UC anf CSU to the top 40 percent of high school grafuates, as we recommenf in this report, woulf leaf to a more fiverse set of stufents. The share of Latinos in the 30th–40th percentiles of grafu- ating seniors in California is twice as high as in the top 10 percent (Table 2). There are over three times as many African Americans in the 30th–40th percentiles as in the top 10 percent. Not only woulf racial fiversity increase, but so woulf economic anf social fiversity. Stufents in the 30th–40th percentiles are more likely to come from homes with lower incomes anf homes in which neither parent has grafuatef from college. Increasing the number of transfers also has the poten - tial to fiversify the pool of stufents at UC anf CSU. The most recent fata show that Latinos anf African Americans make up a smaller share of transfers than incoming fresh - men at either UC or CSU. 36 But the potential for much more fiversity among transfers is very high because the commu - nity colleges enroll such a fiverse group of stufents. Improving equity is important for California. Efu- cation is the key means for economically fisafvantagef groups to experience occupational anf income mobility. Tofay, wage premiums between college grafuates anf less-efucatef workers are at or near all time highs (Reef 2008). California’s public higher efucation systems neef to reflect the fiversity of the state’s population both to close the workforce skills gap anf to help alleviate many of the economic inequalities between ethnic groups in California. Equity gains have been mafe by the state’s public efucation systems, anf those gains coulf be furtheref by increasing eligibility levels anf transfer rates. Education is the key means for economically disadvantaged groups to experience occupational and income mobilityf 20072003 2001 19 9 6 u C efigibifiby rabes (%) All 13 . 414 . 414 . 2 11 .1 Male 11 . 212.6 12 . 5 9.7 Female 15 . 316 . 2 15 . 812.6 White 14 . 616 . 2 16 .912 . 7 Asiaf 29.431. 432.7 30.0 Latifo 6.96.5 5.53.8 Africaf Americaf 6.36.2 4.32.8 CS u efigibifiby rabes (%) All 32.728.8 3 4 .129.6 Male 2 7. 324.0 28.4 26.3 Female 3 7. 633.3 39.432.9 White 3 7.134.3 40.036.3 Asiaf 50.94 7. 552.4 54.4 Latifo 22.516 . 021. 613 . 4 Africaf Americaf 24.018 . 620.2 13 . 2 SOURCE: CPEC eligibility studiesf Tabbe 1. Ebfgfbfbfty rates among hfgh schoob graduates vary dramatfcabby by race and ethnfcfty 15 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 15 Fifdifg the Mofey Perhaps the greatest challenge going forwarf is ifentifying how to funf the current system anf, if we are to close the efucation skills gap, how to funf increases in enrollment anf improvements in outcomes such as transfer anf com- pletion. 37 Jufging by 2008–2009 levels of state expenfitures per full-time-equivalent (FTE) stufent, we estimate that our eligibility anf transfer proposals—once fully imple- mentef in 2024–2025—woulf cost the state an affitional $1.6 billion in General Funf expenfitures, an increase in higher efucation expenfitures of 17 percent. These costs woulf support increasef enrollments at UC anf CSU ($940 million for enrollment of newly eligible high school grafuates anf $440 million for new transfer stufents) anf increases in CalGrants ($220 million). 38 Affitional costs associatef with increasef retention anf transfer programs are fibcult to estimate but woulf certainly be of far lower magnitufe. Although these affitional costs appear imposing, they woulf be phasef in grafually over the next 15 years as eligibility proportions anf transfer targets slowly increasef. Moreover, these affitional costs woulf be amelioratef by the state’s femography. Projections by the California Department of Finance inficate that the number of high school grafuates will fall 4 percent between 2010 anf 2017 as the chilfren of baby boomers are replacef by the smaller cohorts of chilfren born to members of the baby bust. Comparef to the rapif growth in the number of high school grafuates over the past 10 years, the next 10 years will offer some respite in accommofating new high school grafuates in the state’s higher efucation systems. (Of course, some postseconfary stufents are of olfer ages.) 39 Our projections inficate that the affitional enrollment anf aif costs to the state of our proposef upfates to the Master Plan woulf amount to less than $100 million in the first year of imple- mentation (2011–2012) anf woulf grafually increase to the $1.6 billion figure citef above for 2024–2025. Over the past 50 years, the most significant change to higher efucation in California has been the state’s refucef role in provifing funfing. 40 Even before the current bufget Sbudenb rank % Whibe % african american % Labino % a sian% american Indian % Obher Top 10% 58.72.213 .922.5 0.02.7 10th–20th perceftile 55. 34.215 . 821. 3 0.72.7 20th–30th perceftile 48.65.625.517. 6 0.52.3 30bh–40bh percenbife 4 7. 57. 02 7. 016 .1 0.32.2 40th–50th perceftile 41. 711 . 8 34.210.7 0.70.9 50th–60th perceftile 40.212 . 9 34.011 . 5 0.51.0 60th–70th perceftile 39.810. 8 33.313 .9 1.40.7 70th–80th perceftile 3 7.19.842. 59. 5 0.4 0.7 80th–90th perceftile 32.612 . 5 46.37. 8 0.4 0.5 Bottom 10% 24.015 . 2 54.84.3 0.9 0.8 SOURCE: Authob’s analyses of the HSTS, Califobnia data, 2005f Tabbe 2. Increasfng ebfgfbfbfty bevebs of hfgh schoob graduates woubd fncrease dfversfty Perhaps the greatest challenge going forward is identifying how to fund the current system and how to fund increases in enrollment and improvements in outcomesf Higher Educatiof if Califorfia: New Goals for the Master Plaf 16 www.ppic.org 16 crisis, the state’s funfing haf been erofing. For example, from 1970 to 2008, the share of the state’s General Funf bufget fevotef to UC fell from 7 percent to less than 4 per- cent. 41 In 2005–2006, for the first time ever, state General Funf support for prisons anf criminal justice surpassef the bufget for higher efucation. Currently, the largest share of General Funf expen- fitures for higher efucation is firectef to the state’s community colleges (Table 3). Refuctions in funfing were especially large for UC anf CSU from 2007–2008 to 2008–2009. Community colleges have been less vulnerable to cuts, partly because they are incorporatef into Proposi- tion 98 funfing guarantees for K–14 schools. General Funf expenfitures for the CalGrant program amount to almost $1 billion, anf febt service affs another $750 million, so that total General Funf expenfitures on higher efucation in 2009–2010 are expectef to be about $10.5 billion. As state support has feclinef, the systems have responfef by raising fees anf making cuts. UC anf CSU have mafe up for the erosion in state support partly through increasef stufent fees (Figure 6). 42 At UC, where the fecline in state support has been especially sharp, fee increases fif not fully offset state funfing feclines, leafing to a substantial fecrease in instruction-relatef expenfitures. Bufget cuts have lef to increasef class sizes, refuctions in course offerings, faculty furloughs, refucef services (inclufing library services), anf feclines in the hiring of lecturers anf new faculty. UC has plannef to refuce the number of new freshmen afmittef anf enrollef by almost 5,000 over the next two years (about 7% of fresh- men enrollment each year), anf CSU is planning to refuce enrollment by 40,000 (about 10% of total enrollment) over the same time frame (Newell 2009). Refuctions in funfing have been less severe at the community colleges, but enroll- ment femanf has increasef with the recession. Because of the open access policy of community colleges, cuts have occurref not firectly through refucef enrollments but infirectly through refucef course offerings anf services (such as counseling, assessment, anf placement). Fees paif by stufents in California have increasef framatically over time, but even up to the late 1980s, those fees were relatively low. Total annual fees in 1990–1991 at UC were only $1,820 (or about $3,000 in inflation-afjustef 2008 follars). The latest proposal at UC woulf leaf to fees in excess of $10,000 per year for 2010–2011, placing that system among the nation’s most expensive public universi- ties in the nation. 43 CSU fees are to exceef $5,000 per year, up from less than $1,000 in 1990–1991. Living expenses, inclufing room anf boarf on campus, aff about another $20,000 per year to annual costs. 44 In contrast, stufent 2007–20082008–2009 2009–2010 Ufiversity of Califorfia 3,257 2,420 2,636 Califorfia State Ufiversity 2,9712 ,15 62,338 Califorfia commufity colleges 4 ,17 03,948 3,736 Total for the three segmefts 10, 3988,5248 ,710 Studeft Aid Commissiof 867897 967 SOURCE: Legislative Analyst’s Office (2009b)f NOTES: These figubes include expenditubes fob both gbaduates and undebgbaduates, excluding health sciencesf In 2007–2008, 84 pebcent of UC students and 90 pebcent of CSU students webe undebgbaduatesf Tabbe 3. Generab Fund expendftures are hfghest for communfty cobbeges ($ mfbbfons) Budget cuts have led to increased class sizes, reductions in course offerings, faculty furloughs, reduced services, and declines in the hiring of lecturers and new facultyf 17 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 17 Funding ($1000s, 2008) Statf and local bunding pfr studfant CSU UC CCC 30 25 20 15 105 0 Figure 6. Government funding for Cafifornia pubfic bigber education bas dropped as student fees bave grown SOURCE: California Postsefondary Edufation Cobbission (2008). NOTES: Calfulations based on FTE setudents. The fobbunity folleges started refording revenues frob the systeb’s bandatory student enrollbent fee only in 1984. Data for years 2007–2008 and e2008–2009 are estibates. Dollars are adjusted for California Consuber Prife Index (CPI) ination rates (frob the Departbent of Finanfe). Funding ($1000s, 2008) 2003–04 1999–00 1995–96 1991–92 1987–88 1983–84 1979–80 1975–76 1971–72 1967–68 2007–082003–04 1999–00 1995–96 1991–92 1987–88 1983–84 1979–80 1975–76 1971–72 1967–68 2007–08 Studfnt bff rfvfnufs pfr studfntCSU UC CCC 108 6 4 2 0 fees at community colleges are very low comparef to fees in other states. Fees at California community colleges amountef to $817 for full-time stufents in 2009–2010; the state with the seconf-lowest fees is New Mexico at $1,204; anf the national average for two-year institutions is $3,012. Some portion of the UC anf CSU fee increases has been offset by increasef aif for low-income stufents. Presifent Obama proposef a provision in the 2010 bufget to increase the Pell Grant maximum from $5,350 currently (2009–2010) to $5,500 for 2010–2011. Beyonf 2010–2011, the Pell Grant maximum will increase in step with the CPI plus an affitional 1 percent. (In the past few years, though, tuition anf fees have been going up at a much faster pace than the CPI plus 1 percent.) CalGrant, the state’s higher efucation grant program for low-income stufents, announcef in August 2009 that awarfs woulf be afjustef to cover the 2009–2010 stufent fee increases. UC has reservef one-thirf of the recent tuition increases to provife grants for low- anf miffle-income stufents. The extent to which ebciency gains coulf help refuce costs in higher efucation is uncertain. UC’s costs per stu- fent appear to have feclinef in the face of refucef state sup - port, anf CSU’s instructional costs remain lower than those at UC. Nationally, there has been a fecrease in spenfing per fegree, but it is uncertain whether this reflects profuctivity gains or quality refuctions (Wellman, Desrochers, anf Lenthan 2009). The primary instructional expenses are fac- ulty salaries. Even before the recent cuts, faculty salaries at public institutions haf not kept pace with their private coun - terparts. 45 UC insists that, in the long run, the quality of the faculty anf research will suffer as a consequence. Regarf- less, ebciency gains woulf almost certainly be realizef by improving the completion anf transfer rates of stufents who are alreafy in the state’s higher efucation system. The path forwarf is not clear. Suggestef funfing solu- tions for higher efucation range from partial privatization to renewef public support (see “Funfing options,” next page). Californians are strongly in favor of efforts to provife more funfing for stufents through work-stufy opportu- nities (85% favor increasef funfing) anf more funfing for scholarships anf grants (80% favor). But many are opposef to paying higher taxes anf most fo not support increasing stufent fees (68% oppose, 29% favor). To keep fees from increasing, half of Californians favor shifting spenfing from other government programs (49% favor, Suggested funding solutions for higher education range from partial privatization to renewed public supportf Higher Educatiof if Califorfia: New Goals for the Master Plaf 18 www.ppic.org 18 Fundfng optfons for Cabffornfa’s hfgher educatfon system Below, we lay out a few optiofs, fot fecessarily mutually exclusive, for fufdifg the state’s higher educatiof system, focusifg of likely outcomes with respect to college efrollmeft afd graduatiof. Optfon 1. Partfab prfvatfzatfon Ufder this approach, the state would substaftially reduce public support for higher educatiof. Colleges would feed to raise most of their owf fufds for operatifg afd capital budgets. The costs of college would fall ifcreasifgly of the users—studefts afd their families. The size of some CSU afd UC campuses would likely be reduced, perhaps dramatically, as some studefts could fot afford to attefd afd as smaller cost differefces betweef public afd private ifstitutiofs led others to choose private ufiversities. Eligibility would depefd partly of a studeft’s ability to pay, as is the case with most private colleges if the Ufited States. College efrollmeft afd graduatiof rates would almost certaifly declife. Fewer Califorfia high school graduates would be served by such a sys- tem, with low- afd middle-ifcome studefts most affected. Commufity colleges, curreftly fufded for operatifg expefses partly through Propositiof 98, would perhaps turf to local district voters to secure some fufdifg. Savifgs to the state would depefd of the exteft of privatizatiof. Some campuses would replace Califorfia studefts with out-of-state studefts who pay much higher fees. Almost certaifly fewer slots would be available to Califorfia’s high school graduates at the state’s most prestigious public ufiversities. Clearly, this optiof rufs coftrary to the state’s feed to close the workforce skills gap. Optfon 2. Status quo Ufder this optiof, higher educatiof fufdifg would coftifue to declife as a share of overall state fufdifg durifg leaf years. Fees would coftifue to ifcrease to make up the differefce. (At UC afd CSU, the share of total fufds from studeft fees doubled from 2000–2001 to 2008–2009.) A varia- tiof of this approach, ofe that UC is pursuifg today, is a high-fee high-aid model: Some of the fee ifcreases are used to provide grafts for lower-ifcome studefts, with ifcreases if fees fully offset by ifcreases if aid for studefts from low-ifcome families. At commufity colleges, federal assistafce could offset some of the fee ifcreases. 47 To the exteft that high fees discourage some studefts, efrollmefts would probably declife, particularly at the less-popular UC afd CSU campuses. Thus, the status quo optiof is also fot cofducive to closifg the workforce skills gap. Optfon 3. Renewed pubbfc support This optiof would ifcrease state fufdifg for higher educatiof to accommodate ifcreases if college efrollmeft afd college graduatiof. Fees would be lower thaf if most comparable public systems if other states, or a combifatiof of fees afd aid would be used to efcourage greater efrollmeft. Additiofal or redirected state fufds would have to be located. Ideftifyifg few revefue streams— af oil severafce fee (that is, a charge for oil extractiof) has beef proposed—could help if those few revefues do fot simply replace state Geferal Fufd expefditures. If 2008, Califorfia rafked 22fd of the 50 states if state afd local support per studeft for public higher educatiof. Of the states with greater per studeft expefditures, 19 had higher direct college efrollmeft rates thaf Califorfia. 48 Fufdifg challefges aside, this optiof is most likely to help close the state’s impefdifg workforce skills gap. 19 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 19 43% oppose).46 Of course, higher efucation funfing is enmeshef in the state’s larger bufget anf governance morass. Whatever path is chosen, policymakers, higher efucation obcials, anf Californians shoulf have a felibera - tive fiscussion of what role we woulf like higher efucation to play in our state’s future anf how we will funf that role. Policy Recommefdatiofs Fifty years ago, California’s Master Plan for Higher Efuca- tion provifef a forwarf-looking strategy for hanfling the challenges then facing the state. California’s population was increasing framatically anf policymakers realizef that long-term planning for the state’s prosperity requiref a higher efucation plan that woulf accommofate large numbers of Californians. Tofay, California is at another critical juncture with respect to higher efucation, particularly in terms of the workforce skills gap anf the state’s troublef bufget. An immefiate fanger is that short-term fecisions will have long-term consequences that run counter to the best inter- ests of the state anf its resifents. A feliberative fiscussion of the future of higher efucation in California—the goals we woulf like to achieve anf the policies necessary to get us there—is essential in such a context. Ultimately, those goals anf policies will be set by the people of the state through their electef representatives or firectly through the initiative process, by policymakers, anf by higher efu- cation obcials. To upfate the Master Plan for effective management of tofay’s challenges, California neefs new higher efuca- tion policies. We offer the following recommenfations anf guifelines for policymakers anf higher efucation obcials: • The state should set clear goals for what it wants to achiefe with respect to higher education. The goals coulf be broaf, such as reabrming the Master Plan’s goals of open access, but must be specific. For example, if the state reabrms the goal of open access, it shoulf fefine what this means in practice with respect to stu- fent fees anf financial support. • Our probections of economic demand lead us to beliefe that the state should set new Master Plan goals with respect to eligibility: The top 15 percent of high school grafuates shoulf be feemef eligible for UC, rather than the 12.5 percent currently eligible, anf the top 40 per- cent of high school grafuates shoulf be feemef eligible for CSU, rather than the 33.3 percent currently. These goals shoulf be met by 2025, with incremental annual increases from current levels to the ultimate target. • Transfer students should make up an increased share of all graduates from UC and CSU. For UC, the propor- tion shoulf be 40 percent anf for CSU 60 percent. These goals shoulf also be met by 2025. • The state should add efficiency goals to the Master Plan, inclufing transfers, completions, anf time to fegree. It shoulf consifer affing goals for the CalGrant program. • The state should measure progress toward meeting its goals for higher education. Performance measures, such as college enrollment rates, transfer rates, anf comple- tion rates, shoulf be ifentifief anf measuref annually. • The state should continue to defelop a robust longitudi- nal student database, linking K–12, higher efucation, anf employment fata for infivifuals across time. This fata - base shoulf inclufe information about participation in programs, such as early college commitment programs, so that policymakers can evaluate their ebcacy. New pilot programs shoulf be implementef with an experimental fesign that allows accurate evaluations of results. • Finally, the state must identify how it will fund its goals. Infeef, goals must be set with funfing mechanisms in minf. Funfing shoulf be alignef with the state’s goals, so that higher efucation institutions are rewarfef for meeting benchmarks. Implementing these recommenfations woulf put the state on a path towarf closing the impenfing workforce skills gap anf woulf allow resifents the increasef eco- nomic mobility that ferives from higher efucation. An affitional benefit of the higher eligibility anf transfer rates woulf be greater fiversity in the pool of stufents anf grafuates from the state’s universities. Higher Educatiof if Califorfia: New Goals for the Master Plaf 20 www.ppic.org Funfing the state’s higher efucation system will be the greatest challenge. Strategic investments coulf help leaf to greater ebcacy in higher efucation spenfing. Private institutions coulf play an important role (see the text box). But it is certain that affitional public funfs will also be necessary to realize the substantial increases in enrollment anf grafuation that are necessary to meet future economic femanfs. As fire as the current bufget situation is in California, it has createf some momentum for change anf there are targets of opportunity. First is public opinion. Californians holf the state’s public colleges anf universities in high esteem, anf there is perhaps more confifence in higher efucation than in any other function of state government. Moreover, Californians are very concernef with the costs of higher efucation anf are upset about bufget cuts. Half of Californians believe that a major change is neefef in the state’s public higher efucation system, a 10 percent jump from last year (Balfassare et al. 2009). Seconf, the higher efucation segments are reevaluat- ing their roles. In particular, the University of California has establishef a commission on its long-term future, anf its new afmission policy will expanf the pool of stufents who will be consiferef for afmission (“entitlef to review” in UC jargon) to 22 percent of California’s public high school grafuates (University of California Obce of the Presifent 2009a). In affition, CSU has fevelopef new goals to increase completion. Anf the Community College League of California has establishef a commission to stufy the future of community colleges. Finally, the legislature has createf a joint committee to review the Master Plan anf the state’s higher efucation policies. That committee has focusef on the state’s long-term neefs, with an eye towarf closing the workforce skills gap anf establishing funfing priorities when the economy recovers. The outcome of these anf other efforts to reconsifer higher efucation in California is malleable. In fact, all of the problems that have lef to the current crises can be solvef, but foing so will require new vision anf strong leafership both by policymakers in Sacramento anf by higher efucation obcials. ● Techfical appefdices to this report are available of the PPIC website: http://www.ppic.org/cofteft/pubs/other/410HJR_appefdix.pdf Prfvate fnstftutfons The Master Plaf ideftifies the importafce of the state’s pri- vate ifstitutiofs. Curreftly, private colleges afd ufiversities play a relatively mifor but importaft role if ufdergraduate educatiof if Califorfia, awardifg about ofe of every four of the state’s bachelor’s degrees each year. The fastest growth rates have beef amofg private ifstitutiofs fot accredited by WASC. These ifstitutiofs are mostly made up of private for- profit ufiversities. Over the past 10 years, the fumber of bach- elor’s degrees awarded by these ifstitutiofs almost tripled. Evef so, they still award ofly about 5 perceft of all bachelor’s degrees if the state. The state has limited authority over private ifstitutiofs. Lofg-term eligibility afd efrollmeft policies are fot subject to state approval or coftrol. However, the state could efcourage private school attefdafce by providifg more fifafcial support for studefts. Private ifstitutiofs have argued that CalGrafts would be the appropriate vehicle for such support. Curreftly, the state restricts CalGrafts to $9,708 per year for Califorfia’s high school graduates. Private ifstitutiofs would like to see this amouft ifcreased, fotifg that state support for CalGraft recipiefts at CSU afd UC are substaftially higher ofce state subsidies for ifstructiofal expefses are takef ifto accouft. A policy cofcerf is that the much-higher tuitiofs afd fees at private ufiversities could lead to much-higher debt loads for studefts at these schools. Ofe optiof would be to ifcrease CalGrafts but tie the ifcreases to ifstitutiofs’ ability to at least partially match those grafts with ifstitutiofal support, keepifg studeft debt loads mafageable. If additiof, the state could tie ifstitutiofal CalGraft eligibility to certaif accouft - ability befchmarks, such as graduatiof rates afd debt loads. 21 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org Notes 1 The OECD (Organisation for Economic Co-operation anf Devel - opment) is composef of 30 countries that, with a couple of excep - tions, have highly fevelopef economies. They inclufe most of Western Europe, Australia, Japan, Canafa, anf the Unitef States. 2 Author’s calculations basef on 2008 American Community Survey fata analyzef by state of birth. Young afults are ages 25 to 29 anf olfer afults are ages 55 to 59. 3 Author’s calculations basef on 1960 census fata. 4 These proportions are not cofifief in statute (Legislative Analyst’s Obce 2004). 5 Callan (2009) provifes an excellent anf concise fiscussion of the Master Plan anf its fevelopment. Burfman (2009) provifes a thoughtful analysis of more recent fevelopments regarfing the Master Plan anf higher efucation policy in California. 6 UC anf CSU technically still fo not charge tuition. The fis- tinction between fees anf tuition has been lost, however. Fees paif by stufents at UC anf CSU fo cover some of the instruc- tional costs incurref by the universities. 7 Perhaps the most significant change has been that CSU is now authorizef to awarf a foctorate in efucation fegree. Before legislation in 2005, CSU coulf not infepenfently awarf any foctorate fegrees. 8 A legislative review of the Master Plan in the late 1980s reiter- atef the centrality of wife access—the importance of serving the full fiversity of the state’s population. That review empha- sizef the role of community colleges anf the important role that transfers shoulf play in accomplishing the state’s higher efuca- tion goals (California Joint Committee for Review of the Master Plan for Higher Efucation 1989). 9 We fo not fiscuss other components of the Master Plan. Specifi - cally, we fo not consifer the fivision of responsibilities between the systems or the role of the state in establishing new programs anf new campuses. The Legislative Analyst’s Obce has fevelopef a series of publications on the Master Plan that affress some of those issues (Legislative Analyst’s Obce 2009c, 2009f, 2010). 10 In some recent years, the state has not provifef full funfing to meet enrollment at these eligibility levels. UC anf CSU have acceptef anf enrollef stufents who met the eligibility require- ments even though the universities fif not receive subcient funf - ing to accommofate all of them. UC anf CSU call these stufents “unfunfef stufents” or “unfunfef enrollment.” In 2009, UC estimatef that it haf 14,000 unfunfef stufents; CSU estimatef that it haf enrollef over 10,000 unfunfef stufents in 2007–2008. 11 The Master Plan prohibits lower stanfarfs for private high school grafuates anf allows for higher stanfarfs. In practice, stufents from accrefitef private schools in California must meet the same stanfarfs as those from public high schools. 12 See Technical Appenfix A for fetails (available on the PPIC website at http://w w w.ppic.org/content/pubs/other/410HJR _ appenfix.pff ). 13 Completing the course requirements foes not make a stufent eligible for UC anf CSU, as stufents must also complete other requirements to become eligible, for example, by taking the Scholastic Aptitufe Test (SAT). 14 It is the case that limitef but notable numbers of stufents who are eligible for UC anf CSU fo not enroll, either choosing to attenf a fifferent college (inclufing community colleges, private institu - tions, anf public institutions in other states) or, less commonly, choosing not to attenf college at all. Currently, slightly over half of all California public high school grafuates enroll in college firectly after grafuating from high school. Together, UC anf CSU firectly enroll about one in five high school grafuates (whereas one in three is eligible). Our projections assume that the enrollment rate of eli - gible stufents woulf not change as more stufents were acceptef. 15 UC’s new afmissions policies will lower the share of high school grafuates who are guaranteed afmission to about 10 percent of high school grafuates but will expanf the pool of stufents who are eligible for consideration for afmission to make up the remaining 2.5 percent of high school grafuates, so that the total share of eligible high school grafuates woulf remain at 12.5 per- cent. The new afmission policy will allow about 22 percent of California’s high school grafuates to be consiferef for afmission. 16 The fifference between 75th percentile anf 25th percentile scores in the National Assessment of Efucational Progress (NAEP) is wifer in California than in any other state (author’s calculations basef on 8th grafe NAEP fata). 17 Author’s estimates basef on 2005 fata from the High School Transcript Stufy (HSTS). 18 Only 17 percent of California’s high school grafuates took the American College Test (ACT). They scoref slightly higher than the national average on the ACT (22.2 versus 21.1 [out of 36] in 2008). However, the share of California stufents who fo not take either the ACT or SAT is higher than in most other states. SAT fata are from the College Boarf; ACT fata are from the ACT website. Higher Educatiof if Califorfia: New Goals for the Master Plaf 22 www.ppic.org 22 19 The AP exam passage rate for the entire country in 2008 was 166 per thousanf 11th anf 12th grafers, substantially lower than in California. Data are from The College Boarf (2008). 20 Author’s calculations basef on the National Center for Efuca- tion Statistics HSTS fata (1983, 2005). See Technical Appenfix B (available on the PPIC website at http://www.ppic.org/content/ pubs/other/410HJR _appenfix.pff ) for a fescription of the fata anf methofs. From 2004–2008, between 33 percent anf 36 per- cent of high school grafuates met the a–g requirements (Hall et al. 2009). 21 Author’s calculations basef on 2008 American Community Survey fata. For a family of four, the poverty level in 2008 was set at $21,834; the near-poverty level is up to two times the pov- erty level. Nationally, 34 percent of stufents live in poverty or near poverty, comparef to 38 percent in California. 22 At CSU, the proficiency of new stufents is basef on their per- formance on stanfarfizef tests, such as the SAT, or on their per- formance in entry-level university exams in math anf English. Most stufents who fail the exams must pass a remefial course to be feemef proficient. 23 Some exceptions are mafe. 24 Basef on fata provifef by the California Community Colleges Chancellor’s Obce (2009). 25 We control for high school performance anf femographic characteristics. See Technical Appenfix B for a full fiscussion. 26 Dollar figures are for fiscal year 2008–2009. This amount fenotes the state’s firect General Funf support anf foes not inclufe any financial aif packages. 27 At UC’s most selective campuses—Berkeley, UCLA, anf UC San Diego—the share of upper-fivision stufents is about two-thirfs, whereas less than half of stufents at the least selective campuses— UC Mercef, UC Riversife, anf UC Santa Cruz—are upper fivi- sion. At CSU, the share of upper-fivision stufents peakef at 72 percent in 1993 anf haf feclinef to 63 percent by 2007. Much of this fecline is relatef to a refuction in the share of unfergraf- uates who are seniors anf at least partly reflects CSU’s attempts to prevent stufents from continuing in school once they have reachef the requiref number of units to grafuate. This fecline highlights why the use of an upper-to-lower-fivision ratio of stufents as a way to encourage transfer is problematic. The ratio coulf reflect a large number of fifth- (or later) year seniors rather than the entrance of large numbers of transfer stufents. 28 A relatef concern is whether transfer stufents succeef once they transfer. Persistence anf completion rates of transfer stu- fents at UC anf CSU are similar to those of other upper-fivision stufents who enteref as freshmen. In other worfs, completion rates of juniors anf seniors fo not fepenf on whether those stufents transferref from a community college or enteref the university firectly from high school. Yet another concern is whether transfer stufents pursue fegrees in rigorous majors that offer greater economic returns. 29 See Technical Appenfix B for a fescription of the fata anf methofs usef in this analysis. 30 Because we cannot control for a host of other factors that might fetermine such fisparate outcomes, inclufing a stufent’s own motivation, we cannot attribute all of this fifference to the institutional fifferences anf effectiveness of four-year colleges anf community colleges. Nonetheless, this analysis highlights the fibculty that many stufents have in successfully transition- ing from community colleges to four-year universities. 31 Moore, Shulock, anf Jensen (2009) provife an excellent review of effective transfer policies usef in other states. 32 Six-year completion rates at UC have reachef 82.3 percent for freshmen who enteref in 2002, an increase from 74.9 percent for the 1993 freshmen cohort. Increases in four-year grafuation rates have been even more impressive, growing from 34.6 per- cent for the 1993 cohort to 58.8 percent for the 2004 cohort (University of California 2010). 33 Very few grafuate after six years. The vast majority of incoming freshmen who fo not grafuate within six years never grafuate. 34 The UC regents have subsequently reversef their 1995 vote, but the university is still bounf by Proposition 209. Proposition 209 prevents the state’s public universities from using race or ethnicity as a factor in afmission fecisions 35 The share of low-income stufents woulf increase slightly, as woulf the proportion of Latino anf African American stufents. But the largest change woulf be an increase in the share of white stufents eligible anf a fecline in the share of Asian stufents. These plans coulf be sifetrackef by the funfing crisis, which might leaf UC to accept more out-of-state stufents in lieu of California high school grafuates (University of California Obce of the Presifent 2009a). 36 Basef on the author’s calculations of CPEC transfer fata for 2009. Previous PPIC research shows that even among 23 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 23 community college stufents most likely to transfer—stufents ages 17 to 20 with a high school fiploma—only 17 percent of Latinos anf 19 percent of African Americans succeefef in transferring, comparef to 41 percent of Asians anf 30 percent of whites. Further restricting the sample to recent high school grafuates who took mostly transfer courses in their first year of community college, only 30 percent of African Americans anf 30 percent of Latinos eventually transferref, comparef to 42 percent of whites anf 59 percent of Asians (Sengupta anf Jepsen 2006). 37 Capital expenfitures have been less of an impefiment. Voters in California reafily passef bonfs for efucation facilities. In 2002 anf again in 2006, bonf acts were passef for facilities from kinfergarten to universities. PPIC’s November 2009 statewife survey shows that a majority of voters woulf support a higher efucation bonf measure. Also, UC has been fairly successful in raising private funfs for capital (Hanak anf Balfassare 2005). 38 See Technical Appenfix B for a fiscussion of our stufent flow mofel anf cost estimates. 39 At CSU in 2008–2009, 21 percent of unfergrafuates were age 25 anf olfer; at UC, only 9 percent were age 25 anf over (estimatef from CPEC enrollment fata). 40 California is not alone in these refuctions. Across the nation, with few exceptions, state support for higher efucation has feclinef, leafing the chancellor anf vice chancellor of the Berkeley campus of UC to suggest a feferal state university in which leafing public research universities woulf serve as national universities with substantial support for instructional expenses from the feferal government (Birgeneau anf Yeary 2009). 41 General Funf expenfitures to UC anf CSU have also fallen as a share of state gross fomestic profuct), from 0.46 percent in 2000–2001 to 0.34 percent in 2007–2008. 42 We focus on instructional revenues anf expenses, to the extent possible given the bufget fata. This focus ferives from the state’s funfing approach, which is basef on stufents anf enrollment. 43 Total fees inclufe a registration fee, efucation fee, anf miscel- laneous campus fees. Campus fees vary by campus anf aver- age about $1,000. Total fees in 2010–2011 will be about $10,300 accorfing to the University of California Obce of the Presifent. College Boarf fata for 2009–2010 show only a few public univer- sities nationally with tuitions in excess of $10,000. 44 These costs vary with campus anf are generally higher at UC campuses than at CSU campuses. The state provifes no firect subsify to universities for room anf boarf. 45 For example, the salaries of full professors at Berkeley were 21 percent lower than those of Stanforf full professors in 2008– 2009, comparef to 10 percent lower in 1999–2000. Between 1999 anf 2008, faculty salaries for full professors increasef 40 percent at Pepperfine, 45 percent at USC, anf 50 percent at Stanforf, comparef to only about 30 percent at UC Santa Cruz, Long Beach State, anf UC Berkeley (author’s tabulations of the Chronicle of Higher Efucation 2009). Moreover, a recent UC analysis inficates that faculty anf afministrators at UC are paif less than at peer institutions, taking into account both salaries anf benefits. See University of California (n.f.). 46 See Balfassare et al. (2009) for a fetailef report on public opinion in California regarfing higher efucation. 47 Murphy (2004) convincingly shows that increases in commu- nity college fees coulf provife more resources for the colleges, anf access coulf be protectef through increasef aif. More recently, the Legislative Analyst’s Obce (2009a) has arguef that raising fees at community colleges woulf increase revenue at little expense to stufents because a large share of community college stufents woulf qualify for feferal assistance. In the most framatic scenario, increasing fees to $50 per unit (up from $20 in 2008–2009) woulf raise about $500 million in feferal aif. 48 Wyoming ranks first anf spenfs more than twice as much per FTE as California. Populous states with large public systems anf substantially higher college enrollment rates than California inclufe North Carolina, Georgia, anf Marylanf. Expenfiture fata are basef on State Higher Efucation Executive Obcers information as reportef in National Center for Higher Efuca- tion Management System (NCHEMS) (n.f.) anf are controllef for cost of living anf college system mix (community colleges versus four-year colleges). Higher Educatiof if Califorfia: New Goals for the Master Plaf 24 www.ppic.org Bibliography ACT, Inc. n.f. Website. Available at http://www.act.org/news/ fata/08/infex.html. Balfassare, Mark, Dean Bonner, Jennifer Paluch, anf Sonja Petek. 2009. Californians and Higher fducation. PPIC Statewife Survey (November). San Francisco: Public Policy Institute of California. Birgeneau, Robert, anf Frank Yeary. 2009. “Rescuing Our Public Universities,” Washington Post (September 27). Bowen, William G., Matthew M. Chingos, anf Michael S. McPherson. 2009. 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The Master Plan at 50: Assessing California’s Vision for Higher fducation . Report. Available at www.lao.ca.gov/laoapp/main.aspx?type=6&CatID =4&Title=MasterPlanat50. Legislative Analyst’s Obce. 2009f. The Master Plan at 50: Improving State Oversight of Academic fxpansions . Report. Available at www.lao.ca.gov/laoapp/main.aspx?type=6&CatID =4&Title=MasterPlanat50. Legislative Analyst’s Obce. 2010. The Master Plan at 50: Greater Than the Sum of Its Parts—Coordinating Higher fducation in California . Report. Available at www.lao.ca.gov/laoapp/main .aspx?type=6&CatID=4&Title=MasterPlanat50. Moore, C., N. Shulock, anf C. Jensen. 2009. Crafting a Student- Centered Transfer Process in California: bessons from Other States . Sacramento: Institute for Higher Efucation Leafership & Policy. Murphy, Patrick. 2004. Financing California’s Community Colleges . San Francisco: Public Policy Institute of California. National Center for Higher Efucation Management System (NCHEMS). n.f. Available at www.higherefinfo.org/. Neumark, Davif. 2005. California’s fconomic Future and Infra- structure Challenges. San Francisco: Public Policy Institute of California (June 2). Newell, Mallory. 2009. Higher fducation Budget Cuts: How Are They Affecting Students? Sacramento: California Postseconfary Efucation Commission, December. Offenstein, Jeremy, anf Nancy Shulock. 2009. Technical Difficul- ties: Meeting California’s Workforce Needs in Science, Technology, fngineering, and Math (STfM) Fields . Sacramento: Institute for Higher Efucation Leafership & Policy. Reef, Deborah. 2003. The Growing Importance of fducation in California . San Francisco: Public Policy Institute of California. Reef, Deborah. 2008. California’s Future Workforce: Will There Be fnough College Graduates? San Francisco: Public Policy Insti- tute of California. Sengupta, Ria, anf Christopher Jepsen. 2006. “California’s Community College Stufents.” California Counts 8 (2). Shulock, Nancy, anf Colleen Moore. 2007. Invest in Success: How Finance Policy Can Increase Student Success in California’s Community Colleges . Sacramento: Institute for Higher Efuca- tion Leafership & Policy (October). University of California. n.f. “Compensation at the University of California.” Available at www.universityofcalifornia.efu/news /compensation/comparisons.html. University of California, Eligibility anf Afmissions Stufy Group. 2003. “History of UC Eligibility.” Backgrounf material for November 20 meeting. Available at www.universityofcalifornia .efu/news/compreview/backgrounfmaterials.html. University of California. 2010. StatFinfer Version 2.04 (January). Available at http://statfinfer.ucop.efu/. University of California Obce of the Presifent. 2009a. “Proposal on Eligibility Reform.” Available at www.universityofcalifornia .efu/regents/regmeet/feb09/e2.pff (February). University of California Obce of the Presifent. 2009b. Annual Accountability Report . Available at www.universityofcalifornia .efu/accountability/ (May). Wellman, Jane, Donna Desrochers, anf Colleen Lenthan. 2009. Trends in College Spending: Where Does the Money Come from and Where Does It Go? Washington DC: Delta Cost Project. Higher Educatiof if Califorfia: New Goals for the Master Plaf 26 www.ppic.org About the Author Hans Johnson is a senior fellow anf an associate firector of research at the Public Policy Institute of California, responsible for the institute’s population anf efucation research. His research focuses on the fynamics of population change in California anf policy implications of the state’s changing femography. At PPIC, he has confuctef research on international anf fomestic migra- tion, population projections, housing, anf higher efucation. Before joining PPIC as a research fellow, he was senior femographer at the California Research Bureau, where he confuctef research on population issues for the state legis- lature anf the governor’s obce. He has also workef as a femographer at the California Department of Finance, specializing in population projections. He holfs a Ph.D. in femography from the University of California, Berkeley. Ackfowledgmefts The Hewlett Founfation provifef generous support for this project. I have benefitef from the input of numerous obcials anf experts on higher efucation in California, inclufing legislative staff anf higher efucation experts at the Legislative Analyst’s Obce anf obcials at the state’s three public systems of higher efucation. Helpful reviews of an earlier fraft of this report were provifef by Patrick Callan, Ellen Hanak, Dave Lesher, Patrick Murphy, Max Neiman, Heather Rose, anf Lynette Ubois. Qian Li provifef essential research support anf expertise. www.ppic.org Board of Directors WA LT E R B. HEWLETT , CHAIRDirector Cefter for Computer Assisted Research if the Humafities MAR k B ALDASSAREPresideft afd CEO Public Policy Ifstitute of Califorfia RUBEN BARRALESPresideft afd CEO Saf Diego Chamber of Commerce JOHN E. BR ySONRetired Chairmaf afd CEO Edisof Ifterfatiofal GAR y k . HARTFormer State Sefator afd Secretary of Educatiof State of Califorfia ROBERT M. HERTzBERGPartfer Mayer Browf LLP D ONNA LUCASChief Executive Obcer Lucas Public Affairs D A v ID M AS MASUMOTOAuthor afd farmer STE vEN A. M ERkSAMERSefior Partfer Nielsef, Merksamer, Parrifello, Mueller & Naylor, LLP CONSTANCE L. RICECo-Director The Advafcemeft Project THOMAS C. SUT TONRetired Chairmaf afd CEO Pacific Life Ifsurafce Compafy CAROL WHITESIDEPresideft Emeritus Great valley Cefter PPIC is a private operatifg foufdatiof. It does fot take or support positiofs of afy ballot measures or of afy local, state, or federal legislatiof, for does it efdorse, support, or oppose afy political parties or cafdidates for public obce. © 2010 Public Policy Ifstitute of Califorfia. All rights reserved. Saf Frafcisco, CA Short sectiofs of text, fot to exceed three paragraphs, may be quoted without writtef permissiof provided that full attributiof is givef to the source afd the above copyright fotice is ifcluded. Research publicatiofs reflect the views of the authors afd fot fecessarily those of the staff, obcers, or the Board of Directors of the Public Policy Ifstitute of Califorfia. Library of Cofgress Catalogifg-if-Publicatiof Data are available for this publicatiof. ISBN 978-1-58213-138-2 PUBLIC POLIC y INSTITUTE OF CALIFORNIA 500 Washifgtof Street, Suite 600 ● Saf Frafcisco, Califorfia 94111 Telephofe 415.291.4400 ● Fax 415.291.4401 PPIC S ACRAMENTO CENTER Sefator Obce Buildifg ● 1121 L Street, Suite 801 ● Sacramefto, Califorfia 95814 Telephofe 916.440.1120 ● Fax 916.440.1121 Additional resources related to education policy are available at www.ppic.org. The Pubbfc Pobfcy Instftute of Cabffornfa fs dedfcated to fnformfng and fmprovfng pubbfc pobfcy fn Cabffornfa through fndependent, objectfve, nonpartfsan research." } ["___content":protected]=> string(102) "

R 410HJR

" ["_permalink":protected]=> string(103) "https://www.ppic.org/publication/higher-education-in-california-new-goals-for-the-master-plan/r_410hjr/" ["_next":protected]=> array(0) { } ["_prev":protected]=> array(0) { } ["_css_class":protected]=> NULL ["id"]=> int(8740) ["ID"]=> int(8740) ["post_author"]=> string(1) "1" ["post_content"]=> string(0) "" ["post_date"]=> string(19) "2017-05-20 02:40:22" ["post_excerpt"]=> string(0) "" ["post_parent"]=> int(4052) ["post_status"]=> string(7) "inherit" ["post_title"]=> string(8) "R 410HJR" ["post_type"]=> string(10) "attachment" ["slug"]=> string(8) "r_410hjr" ["__type":protected]=> NULL ["_wp_attached_file"]=> string(12) "R_410HJR.pdf" ["wpmf_size"]=> string(7) "1177448" ["wpmf_filetype"]=> string(3) "pdf" ["wpmf_order"]=> string(1) "0" ["searchwp_content"]=> string(95522) "www.ppic.org Higher Education in California Nef Goals for the Master blan Hans Johnson with research support from Qian Li Supported with funding from The Willifm fnd Florf Hewlett Foundftion Summary F ifty years ago, state policymakers afd higher educatiof obcials adopted Califorfia’s Master Plaf for Higher Educatiof. This plaf still largely defifes policies cofcerfifg the state’s public higher educatiof systems: the Califorfia commufity colleges (CCC), the Califorfia State Ufiversity (CSU) system, afd the Ufiversity of Califorfia (UC) system. Most would agree that the Master Plaf has served Califorfia afd its studefts well for mafy decades. Today, however, higher educatiof if Califorfia faces two crises: the budget problem afd the educatiof skills gap—af impefdifg shortfall of the projected supply of college gradu- ates relative to demafd. PPIC projects a deficit of ofe milliof college educated workers if Califorfia by 2025 ufless the state is able to substaftially ifcrease rates of college efrollmeft afd graduatiof. Califorfia caffot close the gap by drawifg college educated workers from elsewhere. Ifstead, the state will feed to produce more graduates through its owf colleges afd ufiversities. Additiofal fufdifg would be required to accomplish this goal, a tall order if today’s fiscal climate. Updatifg key compofefts of the Master Plaf is a crucial part of the effort to close the educatiof skills gap. This report proposes three strategic modificatiofs to the plaf: • Eligibility goals for the CSU afd UC systems should be gradually ifcreased to few levels by 2025. The share of the state’s high school graduates eligible for UC should grow from the top 12.5 perceft to the top 15 perceft of high school graduates. The share eligible for CSU should grow from the top 33.3 perceft to the top 40 perceft. Af fhotobEric risb Erg Higher Educatiof if Califorfia: New Goals for the Master Plaf 2 www.ppic.org • The Master Plaf should set explicit goals for trafsfer from the commufity colleges to UC afd CSU. A target for larger shares of bachelor’s degrees awarded to trafsfer studefts at both systems should be defifed. • A few compofeft of higher educatiof policy that focuses of outcomes—specifically, completiof rates—should be added to the Master Plaf. Af importaft cofsideratiof if adoptifg these goals is whether subcieft fumbers of Cal- iforfia’s high school graduates will be college-ready. This report cofsiders both the curreft college-readifess of Califorfia’s high school studefts afd the poteftial of remediatiof pro- grams—programs desigfed to help college studefts improve basic skills. We fifd that CSU’s approach, which requires that studefts complete all remediatiof work withif ofe year, is highly effective afd recommefd that a similar approach be adopted by commufity colleges. Updatifg Califorfia’s Master Plaf alofg these lifes will have additiofal befefits. If par- ticular, we fifd that ifcreasifg eligibility levels would lead to a more diverse studeft body— racially, ethfically, afd ecofomically—if both the UC afd CSU systems. Fufdifg challefges represeft perhaps the largest obstacle to meetifg the few goals. Our projectiofs suggest that the costs of our proposals, ofce fully implemefted if 2025, would amouft to about $1.6 billiof per year (if curreft dollars) ufder curreft (2009–2010) practices. Fifdifg these fufds will fot be easy. But if the lofg ruf, failure to achieve few progress if higher educatiof will cost Califorfia evef more. Please visit the report’s publicatiof page http://www.ppic.org/maif/publicatiof.asp?i=916 to fifd related resources. 3 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 3 Iftroductiof California’s Master Plan for Higher Efucation, obcially known as the Donahoe Higher Efucation Act, was afoptef by the state legislature in 1960. The plan establishef a set of principles anf a structure that still largely govern the state’s tripartite system of public higher efucation. Many woulf argue that the Master Plan was forwarf-thinking for its time, leafing to the fevelopment of the best public system of higher efucation in the worlf. Tofay, the Master Plan is turning 50. Anf the state’s economy is increasingly femanfing greater numbers of highly skillef anf efucatef workers. The time is ripe for revisiting anf upfating the Master Plan for the 21st century. The Need for More Postsecondary Educatfon Generational increases in efucational attainment, a long- stanfing trenf in California anf the Unitef States for fecafes, have now levelef off. In fact, young afults in Cali- fornia are less likely than olfer afults to have grafuatef from college. In contrast, anf in competition with Califor- nia anf the Unitef States, rates of college enrollment anf grafuation continue to increase in other fevelopef coun- tries anf in many less-fevelopef countries. Infeef, the Unitef States is the only OECD country in which young afults are not substantially more likely than olfer afults to have grafuatef from college. 1 The situation is even more fire in California. Califor- nia has laggef behinf other states in college attenfance anf grafuation. In 2008, olfer afults born in California were almost one-thirf more likely to have grafuatef from college than younger afults born in the state (31.6% versus 24.9%); in the rest of the Unitef States, the fifference was only one-sixteenth (30.9% versus 29.0%). 2 Of the 20 most populatef states, California ranks 18th in firect high school to college enrollment rates (inclufing stufents who go to community colleges as well as those who go to private institutions); of all states, California ranks 40th. At the same time that college grafuation has laggef, efucational attainment has become an even more impor- tant prefictor of labor market success. Efucation serves as the primary means by which infivifuals can achieve upwarf economic mobility. Over the past few fecafes, wages for infivifuals with no more than a high school fiploma have stagnatef. In contrast, college grafuates in California anf the Unitef States have continuef to expe- rience increasing improvements in their economic well- being. Wage premiums for college grafuates—the fegree to which wages for college grafuates exceef those of less- efucatef workers—have grown framatically over the past quarter-century, so that tofay, a worker with a bachelor’s fegree earns almost twice as much as a worker with only a high school fiploma. Even in the current economic fown- turn, unemployment rates for college grafuates are in the single figits anf are less than half the unemployment rates of workers with only a high school fiploma. Work by PPIC (Reef 2003, 2008; Johnson 2009) anf others (Offenstein anf Shulock 2009; Brafy, Hout, anf Stiles 2005) has convincingly femonstratef the afvantages of higher efucation anf the challenges facing the state if improvements in college enrollment anf college comple- tion are not realizef. Specifically, improvements in efuca- tional attainment woulf leaf to higher incomes, more tax revenue generation, anf less femanf for social services. PPIC research has also ifentifief an impenfing shortage of one million college efucatef workers in the state (Hanak anf Balfassare 2005, Neumark 2005, Johnson anf Sengupta 2009, Reef 2008, Johnson 2009). Our economic projections suggest that by 2025, 41 percent of jobs in California will require at least a bachelor’s fegree. However, given current trenfs, the state’s population is unlikely to supply these highly efucatef workers: PPIC’s population projections infi - cate that just 35 percent of afults in 2025 will have at least a bachelor’s fegree. This gap between economic femanf anf California has lagged behind other states in college attendance and graduationf Higher Educatiof if Califorfia: New Goals for the Master Plaf 4 www.ppic.org 4 population supply is what we call the workforce skills gap. It can be resolvef in just two ways: by improving Califor - nians’ efucational outcomes or by lowering the quality of jobs in the state. Clearly, improving efucational outcomes is a much-preferref strategy for the state anf its resifents. The state’s policies regarfing higher efucation, there- fore, are critical—anf will largely fetermine the supply of college grafuates available to California’s employers. After all, higher efucation in California is largely a public enfeavor (although private institutions fo play an impor- tant role, especially at the grafuate level). Over 80 percent of all college stufents in California are enrollef in a public institution, anf three of every four baccalaureate fegrees awarfef in California each year are awarfef by either the University of California or the California State University (Figure 1). When the Master Plan was establishef in 1960, only 11 percent of working-age afults in California haf a college fegree. 3 The Master Plan’s goals of access, afforfability, anf quality allowef for the top 12.5 percent of high school grafuates to be afmittef to a University of California campus anf the top 33.3 percent of high school grafuates to be afmittef to a California State University campus. 4 The Master Plan thereby both anticipatef anf provifef for a large increase in college enrollment anf the awarfing of college fegrees in California. It was unferstoof that the state neefef to provife funfing to realize the enrollment increases, anf until the past fecafe or two, the state was, for the most part, willing anf able to fo so. Tofay, 50 years after the Master Plan went into effect, the same quotas for the UC anf CSU systems are still in place—even though workforce femanfs in California have changef framatically. Currently, 31 percent of working- age afults in California have at least a bachelor’s fegree— a framatic increase over 1960 but still too low for an econ- omy that will increasingly femanf more highly efucatef workers. In tofay’s economic anf efucational context, then, the Master Plan perpetuates levels of college completion that are insubcient for the challenges of the 21st century. A Short Hfstory of the Master Pban The Master Plan was a response to a chaotic anf unstruc- turef time in California’s fevelopment of a higher efucation SOURCE: Author’s calculatfons baseb on Calffornfa Postseconbary Ebucatfon Commfssfon (CPEC) bata. NOTES: Other fnclubes prfvate for-prot colleges anb those notl accrebfteb by the Western Assocfatfon of Schools anb Colleges (WASC). Prfvate accrebfteb fnclubes nonprot colleges accrebfteb by WASC. Figure 1. Public universities profuce the bulk of bbcheloor’s fegrees in Cblifornib Percentage 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 2006 100 90 80 70 60 50 40 30 20 100 Other privfte Privfte fccredited bC CSb Currently, 3b percent of working-age adults in California have at least a bachelor’s degreef 5 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 5 system anf was intenfef to provife higher efucation opportunities to a rapifly growing population. Before the Master Plan, the establishment anf siting of new public institutions was not the result of well-thought-out plans but was often basef on politics. 5 The Master Plan was fevelopef to provife a sensible anf systematic framework for higher efucation in the state anf sought to ensure universal access to higher efucation. This latter goal mafe California unique among states. The plan establishef a fivision of responsibilities among California’s three segments of public higher efucation. The community college system was to provife low-cost (initially free of tuition or fees) postseconfary efucational opportu- nities for any interestef Californian. Its mission inclufef lower-fivision acafemic coursework that coulf leaf to transfer to a four-year college or university, vocational or career technical efucation, basic skills efucation, anf enrichment courses. The California State University was to provife the bulk of unfergrafuate efucation anf to offer some master’s programs, anf the University of California was to be the state’s primary research university, offering bachelor’s, master’s, professional, anf foctoral fegrees. Through this fivision of responsibilities, the state sought to ensure access anf quality in its higher efucation systems. Access was ensuref by low fees anf the state’s stufent aif program. Impenfing framatic increases in enrollment, known to anf even forecastef by the Master Plan committee, were to be accommofatef without any charges for instruction (tuition); fees were allowef for, but only to “collect subcient revenues to cover such operating costs as those for laboratory fees, health, intercollegiate athletics, stufent activities, anf other services incifental to, but not firectly relatef to, instruction” (California State Department of Efucation 1960). 6 Unfergirfing the Master Plan anf essential to its success was the commitment of the state. Up to the 1980s, California anf its resifents supportef the system’s growth through capital expenfitures for new builfings, inclufing new campuses, anf provifef funfs for operating expenses, most notably for instruction, that kept stufent fees among the lowest in the nation. Tofay, that commitment has changef. Bufget problems in California, brought about by the recession anf policymakers’ inability to reach resolu- tions, have lef to substantial funfing cuts, especially at UC anf CSU. Furloughs, increasef fees, stufent protests, anf fecreasef access have been heafline news. At a hearing of the newly formef state legislature’s Joint Committee on the Master Plan, the leafers of all three public segments arguef that lack of funfing enfangers their mission anf the state’s economic future. Sources of funfing for higher efucation are not specifically ifentifief anf manfatef in the Master Plan, anf yet funfing fecisions will be critical to the ability to fulfill the plan’s goals. On numerous occasions over the past 50 years, policy- makers have reviewef anf sought to revise or re-energize the Master Plan (Callan 2009). Those reconsiferations have not alteref the major tenets of the Master Plan, inclufing the eligibility proportions for UC anf the CSU. 7 Nor have the revisions lef to substantial changes in the fivision of responsibilities between the systems. 8 In fact, the most significant change in higher efucation policy over the past 50 years has not been a consequence of any purpose- ful reconsiferation of the Master Plan. Insteaf, the most Ober 80 percent of fll college students in Cflifornif fre enrolled in f public unibersity. t ony Av ELArbthE c hristi An s ciEnc E Monitorb gEt t y iMAgEs Higher Educatiof if Califorfia: New Goals for the Master Plaf 6 www.ppic.org 6 framatic change has occurref in response to bufget constraints. To plan successfully for the future of Califor- nia’s higher efucation system—to upfate the Master Plan effectively—the state must set new goals with specific anf strategic funfing mechanisms in minf. Focus of Thfs Report In previous work, PPIC ifentifief three pathways that woulf help to close the projectef skills gap anf increase the number of bachelor’s fegrees awarfef in the state: increases in college enrollment (inclufing eligibility at UC anf CSU), increases in transfers from community colleges to four-year colleges anf universities, anf increases in grafuation rates at those four-year colleges anf universities (Johnson 2009). The Master Plan governs these pathways either firectly, as is the case in eligibility, or infirectly, as is the case with transfers. In this report, we examine these pathways anf explore two affitional issues—equity anf funfing—that must be consiferef in upfating higher efucation policy in Cali- fornia. First, we focus on eligibility, transfer, anf comple- tion anf suggest new higher efucation goals for the state, inclufing upfates of some of the funfamental tenets of the Master Plan. Next, we examine equity issues anf show how new Master Plan eligibility goals woulf increase the share of unferrepresentef groups in the state’s colleges anf universities. Finally, we lay out the fimensions of the funf- ing requirements to meet new Master Plan goals. Taken together, these topics shoulf form the founfation of any feliberative fiscussion of future goals for the state anf its higher efucation systems. 9 Ifcreasifg Eligibility The proportion of high school grafuates eligible for UC anf CSU has not changef in the 50 years since the Master Plan was afoptef. By practice anf as funfef by the state (until recently), the top 12.5 percent of public high school grafu - ates are eligible for UC anf the top 33.3 percent are eligible for CSU. 10 Stufents from private high schools in California are expectef to meet at least the same afmissions stanfarfs as those from public high schools, anf stufents from out of state are subject to more rigorous stanfarfs. 11 Increasing college eligibility levels from those set in 1960 is an important way for California to close the impenfing workforce skills gap. PPIC’s projections infi- cate that an increase in firect college enrollment rates of about 20 percent over the next 15 years—combinef with increases in transfer rates anf fegree completion—coulf largely close the efucation skills gap by 2025 (see Technical Appenfix A, available on the PPIC website at http://www .ppic.org/content/pubs/other/410HJR _appenfix.pff ). To this enf, eligibility rates for UC woulf neef to increase from 12.5 to 15 percent of the top rankef high school grafuates. Eligibility rates for CSU woulf neef to increase from 33.3 to 40 percent. 12 These increases in eligibility shoulf be slowly phasef in over the next 15 years. Along Cflifornif ffces f potentifl shortfge of one million college educfted workers by 2025. DA viD f AuL Morrisb gEt t y iMAgEs To plan successfully for the future of California’s higher education system the state must set new goals with specific and strategic funding mechanisms in mindf 7 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 7 with new targets for transfers anf increasef completion, fiscussef later in this report, these increases in the propor- tion of stufents eligible for UC anf CSU woulf aff almost 700,000 new college grafuates (afults with a bachelor’s fegree) to California’s population by 2025, thereby closing about two-thirfs of the projectef shortage of one million college grafuates. Ebfgfbfbfty at UC and CSU Ifentifying the stufents eligible for UC anf CSU is not simple. UC anf CSU have establishef criteria for eligibility that inclufe course requirements, grafes, anf test scores. Stufents who meet the minimum criteria are not guaran- teef acceptance at the campus or program of their choice but will be acceptef by at least one campus. Over time, UC anf CSU have increasef high school course requirements anf grafe point average (GPA) stanfarfs to maintain eligi- bility at levels close to the Master Plan proportions (12.5% at UC anf 33.3% at CSU). The high school courses usef to fetermine eligibility are known as the “a–g” course require - ments. The share of stufents satisfying the a–g requirements has increasef, even as the requirements have been mafe more rigorous. In 1986, 26 percent of California’s high school grafuates haf completef the a–g requirements— by 2006, that share haf increasef to 36 percent. 13 Rather than accepting more high school grafuates as more stufents have met the minimum stanfarfs for eligi - bility, UC anf the CSU have increasef those stanfarfs. This practice has lef to a kinf of stanfarfs creep, with stanfarfs becoming more rigorous once too many stufents fulfill the a–g requirements. For example, between 1983 anf 2007, UC increasef the history, math, anf laboratory science require - ments, establishef a new visual performing arts require- ment, anf increasef the requiref GPA (in requiref courses). CSU has also increasef requirements. Over time, the UC anf CSU course requirements have become more alike— by 2007, the number of years requiref in each subject has become ifentical. However, test scores anf GPAs for UC eligibility have remainef much higher: A stufent must maintain a GPA above 3.0 in the requiref subjects to be eligible for UC whereas the CSU system requires an overall GPA of 2.0 or above. (As fiscussef later in this report, UC has fevelopef a new, more flexible eligibility policy that will be put into place for stufents entering the university as freshmen in 2012.) The latest analyses by CPEC suggest that the share of high school grafuates eligible for UC anf CSU is close to what was envisionef in the Master Plan, even with more rigorous stanfarfs (Figure 2). In the recent past, the share of high school grafuates meeting CSU’s eligibility require- ments has varief from 29 percent to 34 percent, partly reflecting the timing of changes in eligibility stanfarfs. It is also worth noting that in 2003 anf 2007, 14 percent of the state’s high school grafuates met UC’s eligibility stanfarfs—more than envisionef in the Master Plan anf close to what we are suggesting as the new goal for the UC system. Moreover, before afoption of the Master Plan, about 15 percent of public high school grafuates met the afmissions stanfarfs at UC, anf 50 percent met the stan- farfs at CSU (University of California 2003). Percentage SOURCE: CPEC analyses for 1ff6–2bb7 estimates. 2003 2001 1996 2007 UC CSU40 35 30 25 20 15 10 5 0 Figure 2. The proportion of high schooll grfduftes eligible for Ub fnd bSU hfs been hilgher thfn Mfster Plfn tfrgets 11% 30% 14% 14% 13% Increasing college eligibility levels from those set in b960 is an important way for California to close the impending workforce skills gapf Higher Educatiof if Califorfia: New Goals for the Master Plaf 8 www.ppic.org 8 Given the recent eligibility numbers, anf historic practices, our proposef increases in eligibility appear quite mofest, especially once the grafual implementation of the new targets is taken into account. Unfer our proposal, the share of high school grafuates eligible for UC woulf reach 13.75 percent in 2018 anf 15.0 percent in 2025; the share eligible for CSU woulf reach 36.7 percent in 2018 anf 40.0 percent in 2025 (Figure 3). As has occurref in the past, we expect that increasing shares of high school grafuates will meet the eligibility criteria, as long as those criteria are not increasef. To manage eligibility levels, annual stufies shoulf be unfer- taken to fetermine the share of high school stufents who meet the criteria. Stanfarfs for eligibility shoulf be afjustef in light of the eligibility targets for high school grafuates. 14 The state’s new K–12 stufent longitufinal fatabase, the California Longitufinal Pupil Achievement Data System (CALPADS), shoulf allow relatively easy fetermination of the appropriate eligibility levels. In affi- tion, UC’s new stanfarfs for 2012 allow greater flexibility in ifentifying eligibility anf are therefore well suitef to meeting new goals with more stufents. 15 CSU might neef to afopt a similar approach. Regarfless of how it is fone, any upfate of the Master Plan must revise eligibility levels as one component of a multifacetef effort to increase the number of bachelor’s fegrees awarfef in California in the coming years. Cobbege Readfness Woulf newly eligible stufents infeef be college reafy? The evifence is somewhat mixef. Most measures of the abilities of California’s high school grafuates show strong improve- ments across time, so that tofay’s high school grafuates are notably more preparef for college than grafuates were 10 or 20 years ago. But in general, our finfings suggest that California’s high school grafuates, on average, are slightly less qualifief for college than their peers nationwife. How- ever, there is wife variation in college reafiness in Califor- nia, wifer than in the rest of the nation. 16 Anf some states with high school grafuates who appear no more reafy for college than California’s grafuates have higher college enrollment rates (e.g., Georgia, Iowa, anf Colorafo). In this section, we consifer the following measures of college reafiness: • course-taking behavior in high school, • scores on stanfarfizef exams, • a–g course requirements, anf • family context, inclufing parents’ efucational attainment. In terms of course-taking, California’s high school stufents lag behinf their peers in the rest of the country, but they are increasingly taking college preparatory courses. For instance, in 2005, 44 percent of California high school seniors took rigorous math courses (afvancef math, inclufing pre-calculus, trigonometry, anf calculus), com- paref to 52 percent of seniors in the rest of the country. 17 However, the increase in the share of California’s stufents taking these courses has been impressive: In 1994, only 36 percent of California’s seniors took high-level math courses while in high school. Even more framatic, the share of California’s seniors taking the highest-level math class—calculus—has increasef from 12.5 percent in 1995 to 21 percent in 2005. Our proposal to increase UC eligibil- ity levels from 12.5 percent to 15 percent appears relatively mofest in light of these much sharper gains in the share of high school stufents taking calculus. Gains on stanfarfizef tests, such as the SAT anf Afvancef Placement (AP) exams, have also been real- izef over the past 15 years. In 1994, average SAT scores Percentage 2015 2010 2025 2020 2005 2030 45 40 35 30 25 20 15 10 5 0 Figure 3. New eligibility levels shoulf be phasefo in over tibe Current Proposed UC CSU 9 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 9 in reafing anf math combinef (writing was not a part of the exam at that time) were 995, comparef to 1013 in 2009. Tofay, California’s high school grafuates score just above the national average on the SAT (1511 versus 1509 combinef scores for reafing, writing, anf math in 2009). Anf it is not only the top stufents who take the SAT: Almost half (49%) of California’s high school grafuates take the exam, similar to the share nationwife (46%). 18 California’s high school stufents also have impressive rates of success on AP tests, which show college-level mastery in specific subjects: They rank 8th out of the 50 states in the number of AP exams passef per one thousanf 11th anf 12th grafers, with sharp gains in both the number of stufents taking exams anf the number of exams passef. In California, the AP exam passage rate increasef from 135 per thousanf 11th anf 12th grafers in 1996 to 210 per thousanf by 2008, inficating that a growing anf substantial share of California’s high school grafuates have alreafy successfully completef at least some college-level coursework while still in high school. 19 Perhaps the most important measure of the college reafiness of California’s stufents is completion of the a–g course requirements. As notef above, these course require- ments are set by UC anf CSU anf are usef to fetermine eligibility for afmission. The requirements are occasionally mofifief. From 1985 to the mif-1990s, the share of Cali- fornia’s stufents completing the courses increasef sub- stantially but has since levelef off as the requirements were increasef. Our assessments, basef on an evaluation of high school transcripts, suggest that about 40 percent of high school grafuates in 2005 woulf have met the 1983-level a–g requirements, comparef to the 35 percent that met the 2005-level stanfarfs. 20 Thus, our proposal to increase CSU eligibility to the top 40 percent of stufents woulf have alreafy been realizef haf the eligibility requirements not been increasef. Of course, college reafiness is not simply a matter of acafemics. It also fepenfs on the nonacafemic resources available to stufents, inclufing family income anf parents’ efucational attainment. Certainly, California has a higher share of high school stufents from families in which one or both parents have low efucational attainment levels. Infeef, of the 50 states, California has the highest share of parents who have not completef high school. This matters because parents’ efucational attainment is by far the strongest prefictor of a chilf’s efucational outcomes. Poverty rates for K–12 stufents are also relatively high in California, with one in six stufents living in poverty anf another 22 percent living in near poverty. 21 To the extent that college-reafiness also fepenfs on afforfability, these poverty rates show that large shares of California stufents face financial challenges. As we can see, the general trenf in California has been towarf improvements in the skills of high school grafu- ates over the past couple of fecafes. These improvements suggest that meeting our proposef eligibility requirements within the time frame we suggest woulf not pose an enor- mous obstacle to California’s high school stufents or to the institutions that serve them. However, increasing the share of high school grafuates eligible for UC anf CSU rightfully raises concerns about the ability of newly eligible stufents to keep up acafemically. The next section affresses the role that remefiation programs might play in affressing these concerns. Remedfatfon The neef for remefiation—that is, improvement in basic skills—of incoming college stufents is not a new issue for California’s colleges anf universities. Although remefia- tion is not a significant issue for most UC stufents, it is a problem in the CSU anf CCC systems. Currently, a major- ity of stufents in these systems require remefiation to bring them up to college entry-level stanfarfs. At CSU, over half of incoming freshmen neef reme- fiation in either math or English. 22 The goof news is that California’s high school students have impressive rates of success on Advanced Placement testsf Higher Educatiof if Califorfia: New Goals for the Master Plaf 10 www.ppic.org 10 the share of stufents neefing remefial classes is substan- tially lower now than just 10 years ago—68 percent of all CSU incoming freshmen in 1998 comparef to 56 percent in 2008, with particularly strong improvements in math (Figure 4). Moreover, the vast majority of CSU stufents successfully complete remefial courses anf are able to move into college-level curricula. In 2007, 80 percent of stufents who neefef remefiation were successful in reme- fiating within the year. Even more encouraging, retention rates for stufents who neef remefiation are fairly high anf only slightly lower than those for stufents who were fully proficient at the time of entry: 76 percent of stufents who requiref remefiation returnef to the university in the following year, versus 83 percent of stufents who fif not require remefiation. CSU has strong incentives for stufents to successfully complete remefiation: To continue in school, CSU stufents are requiref to attain proficiency by the enf of their first year. 23 Unfer our proposef increasef eligibility levels for UC anf CSU, we can expect that the newly eligible stu- fents woulf be more likely to require remefiation. How- ever, the increasef neef for remefiation may be offset by the increasef levels of college-reafiness of California’s high school grafuates over time. In affition, programs that refuce the neef for remefiation alreafy exist anf coulf be expanfef: CSU’s Early Assessment Program is an excellent example. This program, fevelopef by CSU in collabora- tion with the State Boarf of Efucation anf the California Department of Efucation, allows high school juniors to voluntarily take math anf English proficiency exams that inform them if they meet college proficiency in those areas. Stufents are encouragef to make up any feficiencies in their senior year of high school. An early evaluation of the pro- gram for one CSU campus founf that participation in the program lef to a 6 percent frop in the probability of neef - ing remefiation in English anf a 4 percent frop in the prob - ability for math (Howell, Kurlaenfer, anf Grofsky 2009). At the community colleges, successful remefiation remains a challenge. Among those assessef, over 80 percent of community college stufents were below college-level reafiness in math as were over 70 percent in English. 24 The “Basic Skills Initiative” of the Community Colleges Chancellor’s Obce seeks to provife information on best practices anf outcomes to community colleges with respect to bringing stufent skills up to college-level stan- farfs. Currently, community colleges use a plethora of assessment or placement tests but, unlike the CSU sys- tem, stufents are not requiref to enter remefial courses, regarfless of their performance on those tests. Given SOURCE: California State Universitf (200b). Figure 4. Many CSU freshfen require refediatibn Percentage Total Asian Latino White African American female MaleTotal Asian Latino White African American female Male 90 80 70 60 50 40 30 20 10 0 Percentage 90 80 70 60 50 40 30 20 100 1998 Math English 2008 11 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org CSU’s relatively successful recorf with remefiation, any upfate of the Master Plan shoulf inclufe a requirement for remefiation. The state coulf support this requirement by establishing performance measures anf outcome objec- tives that are tief to funfing. Improvements in remefiation are central to support- ing the new eligibility requirements we propose. They are also key to increasing the number of stufents who transfer from community colleges to four-year institutions, the topic of the next section. Trafsfer from Commufity Colleges Fewer California high school grafuates enter four-year colleges than in the rest of the country, but many more enter community colleges. 25 Ensuring successful transfer from community colleges to four-year institutions is there- fore critical to increasing the number of college efucatef workers in the state. In theory, a system that allows stufents to complete their lower-fivision work at a community college anf then transfer to a four-year university is cost-effective for the state anf for the stufent. Anf, infeef, instructional costs per stufent are far lower in community colleges than at UC or CSU. State General Funf support in 2008–2009 amountef to about $3,732 per stufent ($5,603 inclufing local funfs), comparef to $14,504 at UC anf $8,738 at C SU. 26 Fees are also much lower: less than $1,000 per year at community colleges, comparef to over $5,000 at CSU anf over $10,000 at UC. How successful is the transfer function in practice? We finf that the ratio of transfer stufents to first-time freshmen has been fairly stable at UC but has feclinef framatically at CSU (Figure 5). The number of transfers to UC has increasef from less than 10,000 in 1989–1990 to over 14,000 in 2008–2009, in line with the overall increase in UC unfergrafuate enrollment of 40 percent. In contrast, the number of transfers to CSU has not changef substan- tially over the past fecafe anf remains close to 50,000, even though the number of unfergrafuates has increasef by 33 percent. Infeef, in 2008–2009, for the first time in at least two fecafes, CSU afmittef more first-time fresh- men than transfers. The Master Plan foes not have specific goals with respect to transfer levels or rates, but it foes set a target ratio of 60:40 for upper- to lower-fivision stufents. This ratio is meant to encourage the enrollment of community college transfer stufents. 27 However, this ratio only infi- rectly encourages transfer. Insteaf, the Master Plan shoulf explicitly manfate that transfer stufents constitute a speci- fief percentage of baccalaureate grafuates at UC anf CSU. Setting an explicit goal for transfers has afvantages over the current approach: First, it firectly focuses on transfer stufents anf, seconf, it inclufes the primary objective of ensuring that transfers will leaf to more college grafuates. To help close the workforce skills gap anf to encourage more transfers, we suggest that transfer stufents shoulf The Master Plan should explicitly mandate that transfer students constitute a specified percentage of baccalaureate graduates at UC and CSUf Ratio 1995 1998 1992 2004 2001 1989 2007 UC CSU 2.50 2.00 1.50 1.00 0.50 0 Figure 5. The ratio of community coffege transfers to rst-time freshmen has broppeb at CSU SOURCE: Author’s calculatfon baseb on CPEC balta. Higher Educatiof if Califorfia: New Goals for the Master Plaf 12 www.ppic.org 12 constitute 40 percent of all UC baccalaureate fegrees anf 60 percent of all CSU fegrees. The transfer pathway is not without risk. Stufents who enter a community college are less likely to finish a fegree than otherwise similar stufents who go straight to a four- year college or university. 28 National survey fata make this clea r. 29 Of high school grafuates who haf completef UC anf CSU’s a–g course requirements with a minimum GPA of 3.0, 66 percent of those who went straight to a four-year university earnef a bachelor’s fegree within six years, comparef to just over one in five who went to a community college. 30 Improvements in college completion, fiscussef below, may help to ameliorate this problem. Improving the transfer function will require an increasef emphasis on ifentifying successful programs anf pathways at community colleges, as well as coorfina- tion with UC anf CSU. 31 Because of the tremenfous num- ber of stufents enrollef at community colleges, improving outcomes at those colleges coulf leaf to framatic increases in college completion at the baccalaureate level (as well as at sub-baccalaureate levels). From the state’s perspective, increasing the success of the transfer pathway is key to closing the workforce skills gap. Establishing performance stanfarfs anf outcome measures associatef with trans- fer anf tying some funfing to attaining those stanfarfs woulf at least partially align the state’s goals with the state’s funfing (Shulock anf Moore 2007). The state can also play a key role in encouraging coorfination between the systems by giving UC anf CSU incentives to accept more transfer stufents. College Completiof The Master Plan foes not inclufe goals for college comple- tion, nor have subsequent reviews of the Master Plan suggestef that completion rates be a part of the state’s goals for higher efucation. However, previous PPIC research has ifentifief improvef completion rates, particularly at CSU, as one of the most cost-effective ways to increase the number of baccalaureate fegrees awarfef in the state (Johnson anf Sengupta 2009). Incorporating outcomes into the state’s goals for higher efucation makes sense anf is a logical way to upfate the Master Plan. Both UC anf CSU have programs anf policies to improve persistence. Those programs inclufe reviews of course requirements anf curriculum, stufent support, anf acafemic afvising. Because completion rates are alreafy fairly high at UC (with six-year grafuation rates in excess of 80%), increases in completion will not leaf to large gains in the number of bachelor’s fegrees awarfef. 32 However, at CSU, only about half of incoming freshmen grafuate within six years. 33 Strong gains in completion have occurref at CSU over the past few fecafes: In the mif-1970s, only one of every three CSU freshmen grafuatef within six years. Recently, Improving the transfer function will require an increased emphasis on identifying successful programs and pathways at community colleges, as well as coordination with UC and CSUf The most cost-effectibe wfy to increfse the number of college grfduftes in Cflifornif is to improbe the completion rftes of those flrefdy in school. L A ur A Dossb corbis 13 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 13 CSU has ifentifief a new target: to increase six-year grafu- ation rates by 8 percentage points over the next five years (California State University 2010). The target is ambitious, but not unrealistic, as it requires a slight acceleration in the gains in six-year grafuation rates that CSU has expe- riencef over the past fecafe. This target woulf put CSU grafuation rates on a path to reach 69 percent by 2025, which is in line with PPIC stufies citing that a similar increase is necessary to help close the projectef workforce skills gap. Inclufing completion goals in the Master Plan woulf allow the state to ifentify anf measure the outcomes it fesires from its higher efucation systems. Moreover, increasing the completion rates of stufents alreafy in the state’s public universities is the least-expensive way to generate new college grafuates, since these stufents are alreafy in the system. One caution: In establishing comple- tion rate targets, the state anf the universities will neef to ensure that those targets are not met through lowering the quality of postseconfary efucation. Ifcreasifg Equity The Master Plan focusef on wife access to higher efuca- tion, anf subsequent reviews of it have focusef on the importance of fiversity in public higher efucation. The 1989 review of the Master Plan particularly focusef on equity issues, noting that economic anf social mobility is strongly tief to improvements in efucational attainment. Tofay, one constraint to affressing equity problems is the elimination of abrmative action in afmissions, a conse- quence of the 1995 regent’s action at UC anf Proposition 209’s passage in 1996 for CSU. 34 Our proposals to increase eligibility levels coulf support greater fiversity, especially in the CSU anf UC systems. Of the three higher efucation systems, the state’s community colleges are most representative of Califor- nia’s ethnic fiversity, but each segment has experiencef a tremenfous increase in fiversity. Despite the elimination of abrmative action in 1995, CSU has experiencef a large increase in the share of Latino stufents. In 2007, Latinos mafe up 27 percent of unfergrafuates at CSU, up from 20 percent in 1995, anf no ethnic group constitutes a majority of CSU unfergrafuates. This increase in fiversity, however, has barely kept pace with the increasing fiversity of the state’s high school grafuates. Anf in the state’s most selective system—the University of California—Latinos anf African Americans are still particularly unferrepresentef. Stufents from more afvantagef backgrounfs, with better-efucatef parents anf greater family financial resources, are more likely than stufents from less-afvantagef back- grounfs to have met eligibility stanfarfs at UC anf CSU. To a large extent, fifferences in eligibility between ethnic groups reflect these socioeconomic fifferences, with Latino anf African American stufents more likely to be from less-afvantagef backgrounfs anf less likely than whites or Asians to be eligible for UC anf CSU. Even though eligibility rates for Latinos anf African Americans have improvef notably over the past fecafe, those rates are still substantially lower than for whites anf Asians. Eligibility rates are highest for Asian high school grafuates anf low- est for Latino anf African American grafuates (Table 1). Differences in eligibility rates are especially large at UC, with rates for Asians over four times higher than those for Latinos anf African Americans. These fifferences in eligibility pose a particular challenge for UC anf to a lesser extent for CSU (where the fifferences are not so severe). Partly to improve equity, UC has afoptef new afmissions plans. Unfer the plan, more whites, Latinos, anf African Americans woulf be afmittef, but fewer Asians woulf be (the group most over- representef). 35 Even though eligibility rates for Latinos and African Americans have improved notably over the past decade, those rates are still substantially lower than for whites and Asiansf Higher Educatiof if Califorfia: New Goals for the Master Plaf 14 www.ppic.org 14 Increasing eligibility for UC anf CSU to the top 40 percent of high school grafuates, as we recommenf in this report, woulf leaf to a more fiverse set of stufents. The share of Latinos in the 30th–40th percentiles of grafu- ating seniors in California is twice as high as in the top 10 percent (Table 2). There are over three times as many African Americans in the 30th–40th percentiles as in the top 10 percent. Not only woulf racial fiversity increase, but so woulf economic anf social fiversity. Stufents in the 30th–40th percentiles are more likely to come from homes with lower incomes anf homes in which neither parent has grafuatef from college. Increasing the number of transfers also has the poten - tial to fiversify the pool of stufents at UC anf CSU. The most recent fata show that Latinos anf African Americans make up a smaller share of transfers than incoming fresh - men at either UC or CSU. 36 But the potential for much more fiversity among transfers is very high because the commu - nity colleges enroll such a fiverse group of stufents. Improving equity is important for California. Efu- cation is the key means for economically fisafvantagef groups to experience occupational anf income mobility. Tofay, wage premiums between college grafuates anf less-efucatef workers are at or near all time highs (Reef 2008). California’s public higher efucation systems neef to reflect the fiversity of the state’s population both to close the workforce skills gap anf to help alleviate many of the economic inequalities between ethnic groups in California. Equity gains have been mafe by the state’s public efucation systems, anf those gains coulf be furtheref by increasing eligibility levels anf transfer rates. Education is the key means for economically disadvantaged groups to experience occupational and income mobilityf 20072003 2001 19 9 6 u C efigibifiby rabes (%) All 13 . 414 . 414 . 2 11 .1 Male 11 . 212.6 12 . 5 9.7 Female 15 . 316 . 2 15 . 812.6 White 14 . 616 . 2 16 .912 . 7 Asiaf 29.431. 432.7 30.0 Latifo 6.96.5 5.53.8 Africaf Americaf 6.36.2 4.32.8 CS u efigibifiby rabes (%) All 32.728.8 3 4 .129.6 Male 2 7. 324.0 28.4 26.3 Female 3 7. 633.3 39.432.9 White 3 7.134.3 40.036.3 Asiaf 50.94 7. 552.4 54.4 Latifo 22.516 . 021. 613 . 4 Africaf Americaf 24.018 . 620.2 13 . 2 SOURCE: CPEC eligibility studiesf Tabbe 1. Ebfgfbfbfty rates among hfgh schoob graduates vary dramatfcabby by race and ethnfcfty 15 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 15 Fifdifg the Mofey Perhaps the greatest challenge going forwarf is ifentifying how to funf the current system anf, if we are to close the efucation skills gap, how to funf increases in enrollment anf improvements in outcomes such as transfer anf com- pletion. 37 Jufging by 2008–2009 levels of state expenfitures per full-time-equivalent (FTE) stufent, we estimate that our eligibility anf transfer proposals—once fully imple- mentef in 2024–2025—woulf cost the state an affitional $1.6 billion in General Funf expenfitures, an increase in higher efucation expenfitures of 17 percent. These costs woulf support increasef enrollments at UC anf CSU ($940 million for enrollment of newly eligible high school grafuates anf $440 million for new transfer stufents) anf increases in CalGrants ($220 million). 38 Affitional costs associatef with increasef retention anf transfer programs are fibcult to estimate but woulf certainly be of far lower magnitufe. Although these affitional costs appear imposing, they woulf be phasef in grafually over the next 15 years as eligibility proportions anf transfer targets slowly increasef. Moreover, these affitional costs woulf be amelioratef by the state’s femography. Projections by the California Department of Finance inficate that the number of high school grafuates will fall 4 percent between 2010 anf 2017 as the chilfren of baby boomers are replacef by the smaller cohorts of chilfren born to members of the baby bust. Comparef to the rapif growth in the number of high school grafuates over the past 10 years, the next 10 years will offer some respite in accommofating new high school grafuates in the state’s higher efucation systems. (Of course, some postseconfary stufents are of olfer ages.) 39 Our projections inficate that the affitional enrollment anf aif costs to the state of our proposef upfates to the Master Plan woulf amount to less than $100 million in the first year of imple- mentation (2011–2012) anf woulf grafually increase to the $1.6 billion figure citef above for 2024–2025. Over the past 50 years, the most significant change to higher efucation in California has been the state’s refucef role in provifing funfing. 40 Even before the current bufget Sbudenb rank % Whibe % african american % Labino % a sian% american Indian % Obher Top 10% 58.72.213 .922.5 0.02.7 10th–20th perceftile 55. 34.215 . 821. 3 0.72.7 20th–30th perceftile 48.65.625.517. 6 0.52.3 30bh–40bh percenbife 4 7. 57. 02 7. 016 .1 0.32.2 40th–50th perceftile 41. 711 . 8 34.210.7 0.70.9 50th–60th perceftile 40.212 . 9 34.011 . 5 0.51.0 60th–70th perceftile 39.810. 8 33.313 .9 1.40.7 70th–80th perceftile 3 7.19.842. 59. 5 0.4 0.7 80th–90th perceftile 32.612 . 5 46.37. 8 0.4 0.5 Bottom 10% 24.015 . 2 54.84.3 0.9 0.8 SOURCE: Authob’s analyses of the HSTS, Califobnia data, 2005f Tabbe 2. Increasfng ebfgfbfbfty bevebs of hfgh schoob graduates woubd fncrease dfversfty Perhaps the greatest challenge going forward is identifying how to fund the current system and how to fund increases in enrollment and improvements in outcomesf Higher Educatiof if Califorfia: New Goals for the Master Plaf 16 www.ppic.org 16 crisis, the state’s funfing haf been erofing. For example, from 1970 to 2008, the share of the state’s General Funf bufget fevotef to UC fell from 7 percent to less than 4 per- cent. 41 In 2005–2006, for the first time ever, state General Funf support for prisons anf criminal justice surpassef the bufget for higher efucation. Currently, the largest share of General Funf expen- fitures for higher efucation is firectef to the state’s community colleges (Table 3). Refuctions in funfing were especially large for UC anf CSU from 2007–2008 to 2008–2009. Community colleges have been less vulnerable to cuts, partly because they are incorporatef into Proposi- tion 98 funfing guarantees for K–14 schools. General Funf expenfitures for the CalGrant program amount to almost $1 billion, anf febt service affs another $750 million, so that total General Funf expenfitures on higher efucation in 2009–2010 are expectef to be about $10.5 billion. As state support has feclinef, the systems have responfef by raising fees anf making cuts. UC anf CSU have mafe up for the erosion in state support partly through increasef stufent fees (Figure 6). 42 At UC, where the fecline in state support has been especially sharp, fee increases fif not fully offset state funfing feclines, leafing to a substantial fecrease in instruction-relatef expenfitures. Bufget cuts have lef to increasef class sizes, refuctions in course offerings, faculty furloughs, refucef services (inclufing library services), anf feclines in the hiring of lecturers anf new faculty. UC has plannef to refuce the number of new freshmen afmittef anf enrollef by almost 5,000 over the next two years (about 7% of fresh- men enrollment each year), anf CSU is planning to refuce enrollment by 40,000 (about 10% of total enrollment) over the same time frame (Newell 2009). Refuctions in funfing have been less severe at the community colleges, but enroll- ment femanf has increasef with the recession. Because of the open access policy of community colleges, cuts have occurref not firectly through refucef enrollments but infirectly through refucef course offerings anf services (such as counseling, assessment, anf placement). Fees paif by stufents in California have increasef framatically over time, but even up to the late 1980s, those fees were relatively low. Total annual fees in 1990–1991 at UC were only $1,820 (or about $3,000 in inflation-afjustef 2008 follars). The latest proposal at UC woulf leaf to fees in excess of $10,000 per year for 2010–2011, placing that system among the nation’s most expensive public universi- ties in the nation. 43 CSU fees are to exceef $5,000 per year, up from less than $1,000 in 1990–1991. Living expenses, inclufing room anf boarf on campus, aff about another $20,000 per year to annual costs. 44 In contrast, stufent 2007–20082008–2009 2009–2010 Ufiversity of Califorfia 3,257 2,420 2,636 Califorfia State Ufiversity 2,9712 ,15 62,338 Califorfia commufity colleges 4 ,17 03,948 3,736 Total for the three segmefts 10, 3988,5248 ,710 Studeft Aid Commissiof 867897 967 SOURCE: Legislative Analyst’s Office (2009b)f NOTES: These figubes include expenditubes fob both gbaduates and undebgbaduates, excluding health sciencesf In 2007–2008, 84 pebcent of UC students and 90 pebcent of CSU students webe undebgbaduatesf Tabbe 3. Generab Fund expendftures are hfghest for communfty cobbeges ($ mfbbfons) Budget cuts have led to increased class sizes, reductions in course offerings, faculty furloughs, reduced services, and declines in the hiring of lecturers and new facultyf 17 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 17 Funding ($1000s, 2008) Statf and local bunding pfr studfant CSU UC CCC 30 25 20 15 105 0 Figure 6. Government funding for Cafifornia pubfic bigber education bas dropped as student fees bave grown SOURCE: California Postsefondary Edufation Cobbission (2008). NOTES: Calfulations based on FTE setudents. The fobbunity folleges started refording revenues frob the systeb’s bandatory student enrollbent fee only in 1984. Data for years 2007–2008 and e2008–2009 are estibates. Dollars are adjusted for California Consuber Prife Index (CPI) ination rates (frob the Departbent of Finanfe). Funding ($1000s, 2008) 2003–04 1999–00 1995–96 1991–92 1987–88 1983–84 1979–80 1975–76 1971–72 1967–68 2007–082003–04 1999–00 1995–96 1991–92 1987–88 1983–84 1979–80 1975–76 1971–72 1967–68 2007–08 Studfnt bff rfvfnufs pfr studfntCSU UC CCC 108 6 4 2 0 fees at community colleges are very low comparef to fees in other states. Fees at California community colleges amountef to $817 for full-time stufents in 2009–2010; the state with the seconf-lowest fees is New Mexico at $1,204; anf the national average for two-year institutions is $3,012. Some portion of the UC anf CSU fee increases has been offset by increasef aif for low-income stufents. Presifent Obama proposef a provision in the 2010 bufget to increase the Pell Grant maximum from $5,350 currently (2009–2010) to $5,500 for 2010–2011. Beyonf 2010–2011, the Pell Grant maximum will increase in step with the CPI plus an affitional 1 percent. (In the past few years, though, tuition anf fees have been going up at a much faster pace than the CPI plus 1 percent.) CalGrant, the state’s higher efucation grant program for low-income stufents, announcef in August 2009 that awarfs woulf be afjustef to cover the 2009–2010 stufent fee increases. UC has reservef one-thirf of the recent tuition increases to provife grants for low- anf miffle-income stufents. The extent to which ebciency gains coulf help refuce costs in higher efucation is uncertain. UC’s costs per stu- fent appear to have feclinef in the face of refucef state sup - port, anf CSU’s instructional costs remain lower than those at UC. Nationally, there has been a fecrease in spenfing per fegree, but it is uncertain whether this reflects profuctivity gains or quality refuctions (Wellman, Desrochers, anf Lenthan 2009). The primary instructional expenses are fac- ulty salaries. Even before the recent cuts, faculty salaries at public institutions haf not kept pace with their private coun - terparts. 45 UC insists that, in the long run, the quality of the faculty anf research will suffer as a consequence. Regarf- less, ebciency gains woulf almost certainly be realizef by improving the completion anf transfer rates of stufents who are alreafy in the state’s higher efucation system. The path forwarf is not clear. Suggestef funfing solu- tions for higher efucation range from partial privatization to renewef public support (see “Funfing options,” next page). Californians are strongly in favor of efforts to provife more funfing for stufents through work-stufy opportu- nities (85% favor increasef funfing) anf more funfing for scholarships anf grants (80% favor). But many are opposef to paying higher taxes anf most fo not support increasing stufent fees (68% oppose, 29% favor). To keep fees from increasing, half of Californians favor shifting spenfing from other government programs (49% favor, Suggested funding solutions for higher education range from partial privatization to renewed public supportf Higher Educatiof if Califorfia: New Goals for the Master Plaf 18 www.ppic.org 18 Fundfng optfons for Cabffornfa’s hfgher educatfon system Below, we lay out a few optiofs, fot fecessarily mutually exclusive, for fufdifg the state’s higher educatiof system, focusifg of likely outcomes with respect to college efrollmeft afd graduatiof. Optfon 1. Partfab prfvatfzatfon Ufder this approach, the state would substaftially reduce public support for higher educatiof. Colleges would feed to raise most of their owf fufds for operatifg afd capital budgets. The costs of college would fall ifcreasifgly of the users—studefts afd their families. The size of some CSU afd UC campuses would likely be reduced, perhaps dramatically, as some studefts could fot afford to attefd afd as smaller cost differefces betweef public afd private ifstitutiofs led others to choose private ufiversities. Eligibility would depefd partly of a studeft’s ability to pay, as is the case with most private colleges if the Ufited States. College efrollmeft afd graduatiof rates would almost certaifly declife. Fewer Califorfia high school graduates would be served by such a sys- tem, with low- afd middle-ifcome studefts most affected. Commufity colleges, curreftly fufded for operatifg expefses partly through Propositiof 98, would perhaps turf to local district voters to secure some fufdifg. Savifgs to the state would depefd of the exteft of privatizatiof. Some campuses would replace Califorfia studefts with out-of-state studefts who pay much higher fees. Almost certaifly fewer slots would be available to Califorfia’s high school graduates at the state’s most prestigious public ufiversities. Clearly, this optiof rufs coftrary to the state’s feed to close the workforce skills gap. Optfon 2. Status quo Ufder this optiof, higher educatiof fufdifg would coftifue to declife as a share of overall state fufdifg durifg leaf years. Fees would coftifue to ifcrease to make up the differefce. (At UC afd CSU, the share of total fufds from studeft fees doubled from 2000–2001 to 2008–2009.) A varia- tiof of this approach, ofe that UC is pursuifg today, is a high-fee high-aid model: Some of the fee ifcreases are used to provide grafts for lower-ifcome studefts, with ifcreases if fees fully offset by ifcreases if aid for studefts from low-ifcome families. At commufity colleges, federal assistafce could offset some of the fee ifcreases. 47 To the exteft that high fees discourage some studefts, efrollmefts would probably declife, particularly at the less-popular UC afd CSU campuses. Thus, the status quo optiof is also fot cofducive to closifg the workforce skills gap. Optfon 3. Renewed pubbfc support This optiof would ifcrease state fufdifg for higher educatiof to accommodate ifcreases if college efrollmeft afd college graduatiof. Fees would be lower thaf if most comparable public systems if other states, or a combifatiof of fees afd aid would be used to efcourage greater efrollmeft. Additiofal or redirected state fufds would have to be located. Ideftifyifg few revefue streams— af oil severafce fee (that is, a charge for oil extractiof) has beef proposed—could help if those few revefues do fot simply replace state Geferal Fufd expefditures. If 2008, Califorfia rafked 22fd of the 50 states if state afd local support per studeft for public higher educatiof. Of the states with greater per studeft expefditures, 19 had higher direct college efrollmeft rates thaf Califorfia. 48 Fufdifg challefges aside, this optiof is most likely to help close the state’s impefdifg workforce skills gap. 19 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 19 43% oppose).46 Of course, higher efucation funfing is enmeshef in the state’s larger bufget anf governance morass. Whatever path is chosen, policymakers, higher efucation obcials, anf Californians shoulf have a felibera - tive fiscussion of what role we woulf like higher efucation to play in our state’s future anf how we will funf that role. Policy Recommefdatiofs Fifty years ago, California’s Master Plan for Higher Efuca- tion provifef a forwarf-looking strategy for hanfling the challenges then facing the state. California’s population was increasing framatically anf policymakers realizef that long-term planning for the state’s prosperity requiref a higher efucation plan that woulf accommofate large numbers of Californians. Tofay, California is at another critical juncture with respect to higher efucation, particularly in terms of the workforce skills gap anf the state’s troublef bufget. An immefiate fanger is that short-term fecisions will have long-term consequences that run counter to the best inter- ests of the state anf its resifents. A feliberative fiscussion of the future of higher efucation in California—the goals we woulf like to achieve anf the policies necessary to get us there—is essential in such a context. Ultimately, those goals anf policies will be set by the people of the state through their electef representatives or firectly through the initiative process, by policymakers, anf by higher efu- cation obcials. To upfate the Master Plan for effective management of tofay’s challenges, California neefs new higher efuca- tion policies. We offer the following recommenfations anf guifelines for policymakers anf higher efucation obcials: • The state should set clear goals for what it wants to achiefe with respect to higher education. The goals coulf be broaf, such as reabrming the Master Plan’s goals of open access, but must be specific. For example, if the state reabrms the goal of open access, it shoulf fefine what this means in practice with respect to stu- fent fees anf financial support. • Our probections of economic demand lead us to beliefe that the state should set new Master Plan goals with respect to eligibility: The top 15 percent of high school grafuates shoulf be feemef eligible for UC, rather than the 12.5 percent currently eligible, anf the top 40 per- cent of high school grafuates shoulf be feemef eligible for CSU, rather than the 33.3 percent currently. These goals shoulf be met by 2025, with incremental annual increases from current levels to the ultimate target. • Transfer students should make up an increased share of all graduates from UC and CSU. For UC, the propor- tion shoulf be 40 percent anf for CSU 60 percent. These goals shoulf also be met by 2025. • The state should add efficiency goals to the Master Plan, inclufing transfers, completions, anf time to fegree. It shoulf consifer affing goals for the CalGrant program. • The state should measure progress toward meeting its goals for higher education. Performance measures, such as college enrollment rates, transfer rates, anf comple- tion rates, shoulf be ifentifief anf measuref annually. • The state should continue to defelop a robust longitudi- nal student database, linking K–12, higher efucation, anf employment fata for infivifuals across time. This fata - base shoulf inclufe information about participation in programs, such as early college commitment programs, so that policymakers can evaluate their ebcacy. New pilot programs shoulf be implementef with an experimental fesign that allows accurate evaluations of results. • Finally, the state must identify how it will fund its goals. Infeef, goals must be set with funfing mechanisms in minf. Funfing shoulf be alignef with the state’s goals, so that higher efucation institutions are rewarfef for meeting benchmarks. Implementing these recommenfations woulf put the state on a path towarf closing the impenfing workforce skills gap anf woulf allow resifents the increasef eco- nomic mobility that ferives from higher efucation. An affitional benefit of the higher eligibility anf transfer rates woulf be greater fiversity in the pool of stufents anf grafuates from the state’s universities. Higher Educatiof if Califorfia: New Goals for the Master Plaf 20 www.ppic.org Funfing the state’s higher efucation system will be the greatest challenge. Strategic investments coulf help leaf to greater ebcacy in higher efucation spenfing. Private institutions coulf play an important role (see the text box). But it is certain that affitional public funfs will also be necessary to realize the substantial increases in enrollment anf grafuation that are necessary to meet future economic femanfs. As fire as the current bufget situation is in California, it has createf some momentum for change anf there are targets of opportunity. First is public opinion. Californians holf the state’s public colleges anf universities in high esteem, anf there is perhaps more confifence in higher efucation than in any other function of state government. Moreover, Californians are very concernef with the costs of higher efucation anf are upset about bufget cuts. Half of Californians believe that a major change is neefef in the state’s public higher efucation system, a 10 percent jump from last year (Balfassare et al. 2009). Seconf, the higher efucation segments are reevaluat- ing their roles. In particular, the University of California has establishef a commission on its long-term future, anf its new afmission policy will expanf the pool of stufents who will be consiferef for afmission (“entitlef to review” in UC jargon) to 22 percent of California’s public high school grafuates (University of California Obce of the Presifent 2009a). In affition, CSU has fevelopef new goals to increase completion. Anf the Community College League of California has establishef a commission to stufy the future of community colleges. Finally, the legislature has createf a joint committee to review the Master Plan anf the state’s higher efucation policies. That committee has focusef on the state’s long-term neefs, with an eye towarf closing the workforce skills gap anf establishing funfing priorities when the economy recovers. The outcome of these anf other efforts to reconsifer higher efucation in California is malleable. In fact, all of the problems that have lef to the current crises can be solvef, but foing so will require new vision anf strong leafership both by policymakers in Sacramento anf by higher efucation obcials. ● Techfical appefdices to this report are available of the PPIC website: http://www.ppic.org/cofteft/pubs/other/410HJR_appefdix.pdf Prfvate fnstftutfons The Master Plaf ideftifies the importafce of the state’s pri- vate ifstitutiofs. Curreftly, private colleges afd ufiversities play a relatively mifor but importaft role if ufdergraduate educatiof if Califorfia, awardifg about ofe of every four of the state’s bachelor’s degrees each year. The fastest growth rates have beef amofg private ifstitutiofs fot accredited by WASC. These ifstitutiofs are mostly made up of private for- profit ufiversities. Over the past 10 years, the fumber of bach- elor’s degrees awarded by these ifstitutiofs almost tripled. Evef so, they still award ofly about 5 perceft of all bachelor’s degrees if the state. The state has limited authority over private ifstitutiofs. Lofg-term eligibility afd efrollmeft policies are fot subject to state approval or coftrol. However, the state could efcourage private school attefdafce by providifg more fifafcial support for studefts. Private ifstitutiofs have argued that CalGrafts would be the appropriate vehicle for such support. Curreftly, the state restricts CalGrafts to $9,708 per year for Califorfia’s high school graduates. Private ifstitutiofs would like to see this amouft ifcreased, fotifg that state support for CalGraft recipiefts at CSU afd UC are substaftially higher ofce state subsidies for ifstructiofal expefses are takef ifto accouft. A policy cofcerf is that the much-higher tuitiofs afd fees at private ufiversities could lead to much-higher debt loads for studefts at these schools. Ofe optiof would be to ifcrease CalGrafts but tie the ifcreases to ifstitutiofs’ ability to at least partially match those grafts with ifstitutiofal support, keepifg studeft debt loads mafageable. If additiof, the state could tie ifstitutiofal CalGraft eligibility to certaif accouft - ability befchmarks, such as graduatiof rates afd debt loads. 21 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org Notes 1 The OECD (Organisation for Economic Co-operation anf Devel - opment) is composef of 30 countries that, with a couple of excep - tions, have highly fevelopef economies. They inclufe most of Western Europe, Australia, Japan, Canafa, anf the Unitef States. 2 Author’s calculations basef on 2008 American Community Survey fata analyzef by state of birth. Young afults are ages 25 to 29 anf olfer afults are ages 55 to 59. 3 Author’s calculations basef on 1960 census fata. 4 These proportions are not cofifief in statute (Legislative Analyst’s Obce 2004). 5 Callan (2009) provifes an excellent anf concise fiscussion of the Master Plan anf its fevelopment. Burfman (2009) provifes a thoughtful analysis of more recent fevelopments regarfing the Master Plan anf higher efucation policy in California. 6 UC anf CSU technically still fo not charge tuition. The fis- tinction between fees anf tuition has been lost, however. Fees paif by stufents at UC anf CSU fo cover some of the instruc- tional costs incurref by the universities. 7 Perhaps the most significant change has been that CSU is now authorizef to awarf a foctorate in efucation fegree. Before legislation in 2005, CSU coulf not infepenfently awarf any foctorate fegrees. 8 A legislative review of the Master Plan in the late 1980s reiter- atef the centrality of wife access—the importance of serving the full fiversity of the state’s population. That review empha- sizef the role of community colleges anf the important role that transfers shoulf play in accomplishing the state’s higher efuca- tion goals (California Joint Committee for Review of the Master Plan for Higher Efucation 1989). 9 We fo not fiscuss other components of the Master Plan. Specifi - cally, we fo not consifer the fivision of responsibilities between the systems or the role of the state in establishing new programs anf new campuses. The Legislative Analyst’s Obce has fevelopef a series of publications on the Master Plan that affress some of those issues (Legislative Analyst’s Obce 2009c, 2009f, 2010). 10 In some recent years, the state has not provifef full funfing to meet enrollment at these eligibility levels. UC anf CSU have acceptef anf enrollef stufents who met the eligibility require- ments even though the universities fif not receive subcient funf - ing to accommofate all of them. UC anf CSU call these stufents “unfunfef stufents” or “unfunfef enrollment.” In 2009, UC estimatef that it haf 14,000 unfunfef stufents; CSU estimatef that it haf enrollef over 10,000 unfunfef stufents in 2007–2008. 11 The Master Plan prohibits lower stanfarfs for private high school grafuates anf allows for higher stanfarfs. In practice, stufents from accrefitef private schools in California must meet the same stanfarfs as those from public high schools. 12 See Technical Appenfix A for fetails (available on the PPIC website at http://w w w.ppic.org/content/pubs/other/410HJR _ appenfix.pff ). 13 Completing the course requirements foes not make a stufent eligible for UC anf CSU, as stufents must also complete other requirements to become eligible, for example, by taking the Scholastic Aptitufe Test (SAT). 14 It is the case that limitef but notable numbers of stufents who are eligible for UC anf CSU fo not enroll, either choosing to attenf a fifferent college (inclufing community colleges, private institu - tions, anf public institutions in other states) or, less commonly, choosing not to attenf college at all. Currently, slightly over half of all California public high school grafuates enroll in college firectly after grafuating from high school. Together, UC anf CSU firectly enroll about one in five high school grafuates (whereas one in three is eligible). Our projections assume that the enrollment rate of eli - gible stufents woulf not change as more stufents were acceptef. 15 UC’s new afmissions policies will lower the share of high school grafuates who are guaranteed afmission to about 10 percent of high school grafuates but will expanf the pool of stufents who are eligible for consideration for afmission to make up the remaining 2.5 percent of high school grafuates, so that the total share of eligible high school grafuates woulf remain at 12.5 per- cent. The new afmission policy will allow about 22 percent of California’s high school grafuates to be consiferef for afmission. 16 The fifference between 75th percentile anf 25th percentile scores in the National Assessment of Efucational Progress (NAEP) is wifer in California than in any other state (author’s calculations basef on 8th grafe NAEP fata). 17 Author’s estimates basef on 2005 fata from the High School Transcript Stufy (HSTS). 18 Only 17 percent of California’s high school grafuates took the American College Test (ACT). They scoref slightly higher than the national average on the ACT (22.2 versus 21.1 [out of 36] in 2008). However, the share of California stufents who fo not take either the ACT or SAT is higher than in most other states. SAT fata are from the College Boarf; ACT fata are from the ACT website. Higher Educatiof if Califorfia: New Goals for the Master Plaf 22 www.ppic.org 22 19 The AP exam passage rate for the entire country in 2008 was 166 per thousanf 11th anf 12th grafers, substantially lower than in California. Data are from The College Boarf (2008). 20 Author’s calculations basef on the National Center for Efuca- tion Statistics HSTS fata (1983, 2005). See Technical Appenfix B (available on the PPIC website at http://www.ppic.org/content/ pubs/other/410HJR _appenfix.pff ) for a fescription of the fata anf methofs. From 2004–2008, between 33 percent anf 36 per- cent of high school grafuates met the a–g requirements (Hall et al. 2009). 21 Author’s calculations basef on 2008 American Community Survey fata. For a family of four, the poverty level in 2008 was set at $21,834; the near-poverty level is up to two times the pov- erty level. Nationally, 34 percent of stufents live in poverty or near poverty, comparef to 38 percent in California. 22 At CSU, the proficiency of new stufents is basef on their per- formance on stanfarfizef tests, such as the SAT, or on their per- formance in entry-level university exams in math anf English. Most stufents who fail the exams must pass a remefial course to be feemef proficient. 23 Some exceptions are mafe. 24 Basef on fata provifef by the California Community Colleges Chancellor’s Obce (2009). 25 We control for high school performance anf femographic characteristics. See Technical Appenfix B for a full fiscussion. 26 Dollar figures are for fiscal year 2008–2009. This amount fenotes the state’s firect General Funf support anf foes not inclufe any financial aif packages. 27 At UC’s most selective campuses—Berkeley, UCLA, anf UC San Diego—the share of upper-fivision stufents is about two-thirfs, whereas less than half of stufents at the least selective campuses— UC Mercef, UC Riversife, anf UC Santa Cruz—are upper fivi- sion. At CSU, the share of upper-fivision stufents peakef at 72 percent in 1993 anf haf feclinef to 63 percent by 2007. Much of this fecline is relatef to a refuction in the share of unfergraf- uates who are seniors anf at least partly reflects CSU’s attempts to prevent stufents from continuing in school once they have reachef the requiref number of units to grafuate. This fecline highlights why the use of an upper-to-lower-fivision ratio of stufents as a way to encourage transfer is problematic. The ratio coulf reflect a large number of fifth- (or later) year seniors rather than the entrance of large numbers of transfer stufents. 28 A relatef concern is whether transfer stufents succeef once they transfer. Persistence anf completion rates of transfer stu- fents at UC anf CSU are similar to those of other upper-fivision stufents who enteref as freshmen. In other worfs, completion rates of juniors anf seniors fo not fepenf on whether those stufents transferref from a community college or enteref the university firectly from high school. Yet another concern is whether transfer stufents pursue fegrees in rigorous majors that offer greater economic returns. 29 See Technical Appenfix B for a fescription of the fata anf methofs usef in this analysis. 30 Because we cannot control for a host of other factors that might fetermine such fisparate outcomes, inclufing a stufent’s own motivation, we cannot attribute all of this fifference to the institutional fifferences anf effectiveness of four-year colleges anf community colleges. Nonetheless, this analysis highlights the fibculty that many stufents have in successfully transition- ing from community colleges to four-year universities. 31 Moore, Shulock, anf Jensen (2009) provife an excellent review of effective transfer policies usef in other states. 32 Six-year completion rates at UC have reachef 82.3 percent for freshmen who enteref in 2002, an increase from 74.9 percent for the 1993 freshmen cohort. Increases in four-year grafuation rates have been even more impressive, growing from 34.6 per- cent for the 1993 cohort to 58.8 percent for the 2004 cohort (University of California 2010). 33 Very few grafuate after six years. The vast majority of incoming freshmen who fo not grafuate within six years never grafuate. 34 The UC regents have subsequently reversef their 1995 vote, but the university is still bounf by Proposition 209. Proposition 209 prevents the state’s public universities from using race or ethnicity as a factor in afmission fecisions 35 The share of low-income stufents woulf increase slightly, as woulf the proportion of Latino anf African American stufents. But the largest change woulf be an increase in the share of white stufents eligible anf a fecline in the share of Asian stufents. These plans coulf be sifetrackef by the funfing crisis, which might leaf UC to accept more out-of-state stufents in lieu of California high school grafuates (University of California Obce of the Presifent 2009a). 36 Basef on the author’s calculations of CPEC transfer fata for 2009. Previous PPIC research shows that even among 23 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org 23 community college stufents most likely to transfer—stufents ages 17 to 20 with a high school fiploma—only 17 percent of Latinos anf 19 percent of African Americans succeefef in transferring, comparef to 41 percent of Asians anf 30 percent of whites. Further restricting the sample to recent high school grafuates who took mostly transfer courses in their first year of community college, only 30 percent of African Americans anf 30 percent of Latinos eventually transferref, comparef to 42 percent of whites anf 59 percent of Asians (Sengupta anf Jepsen 2006). 37 Capital expenfitures have been less of an impefiment. Voters in California reafily passef bonfs for efucation facilities. In 2002 anf again in 2006, bonf acts were passef for facilities from kinfergarten to universities. PPIC’s November 2009 statewife survey shows that a majority of voters woulf support a higher efucation bonf measure. Also, UC has been fairly successful in raising private funfs for capital (Hanak anf Balfassare 2005). 38 See Technical Appenfix B for a fiscussion of our stufent flow mofel anf cost estimates. 39 At CSU in 2008–2009, 21 percent of unfergrafuates were age 25 anf olfer; at UC, only 9 percent were age 25 anf over (estimatef from CPEC enrollment fata). 40 California is not alone in these refuctions. Across the nation, with few exceptions, state support for higher efucation has feclinef, leafing the chancellor anf vice chancellor of the Berkeley campus of UC to suggest a feferal state university in which leafing public research universities woulf serve as national universities with substantial support for instructional expenses from the feferal government (Birgeneau anf Yeary 2009). 41 General Funf expenfitures to UC anf CSU have also fallen as a share of state gross fomestic profuct), from 0.46 percent in 2000–2001 to 0.34 percent in 2007–2008. 42 We focus on instructional revenues anf expenses, to the extent possible given the bufget fata. This focus ferives from the state’s funfing approach, which is basef on stufents anf enrollment. 43 Total fees inclufe a registration fee, efucation fee, anf miscel- laneous campus fees. Campus fees vary by campus anf aver- age about $1,000. Total fees in 2010–2011 will be about $10,300 accorfing to the University of California Obce of the Presifent. College Boarf fata for 2009–2010 show only a few public univer- sities nationally with tuitions in excess of $10,000. 44 These costs vary with campus anf are generally higher at UC campuses than at CSU campuses. The state provifes no firect subsify to universities for room anf boarf. 45 For example, the salaries of full professors at Berkeley were 21 percent lower than those of Stanforf full professors in 2008– 2009, comparef to 10 percent lower in 1999–2000. Between 1999 anf 2008, faculty salaries for full professors increasef 40 percent at Pepperfine, 45 percent at USC, anf 50 percent at Stanforf, comparef to only about 30 percent at UC Santa Cruz, Long Beach State, anf UC Berkeley (author’s tabulations of the Chronicle of Higher Efucation 2009). Moreover, a recent UC analysis inficates that faculty anf afministrators at UC are paif less than at peer institutions, taking into account both salaries anf benefits. See University of California (n.f.). 46 See Balfassare et al. (2009) for a fetailef report on public opinion in California regarfing higher efucation. 47 Murphy (2004) convincingly shows that increases in commu- nity college fees coulf provife more resources for the colleges, anf access coulf be protectef through increasef aif. More recently, the Legislative Analyst’s Obce (2009a) has arguef that raising fees at community colleges woulf increase revenue at little expense to stufents because a large share of community college stufents woulf qualify for feferal assistance. In the most framatic scenario, increasing fees to $50 per unit (up from $20 in 2008–2009) woulf raise about $500 million in feferal aif. 48 Wyoming ranks first anf spenfs more than twice as much per FTE as California. Populous states with large public systems anf substantially higher college enrollment rates than California inclufe North Carolina, Georgia, anf Marylanf. Expenfiture fata are basef on State Higher Efucation Executive Obcers information as reportef in National Center for Higher Efuca- tion Management System (NCHEMS) (n.f.) anf are controllef for cost of living anf college system mix (community colleges versus four-year colleges). Higher Educatiof if Califorfia: New Goals for the Master Plaf 24 www.ppic.org Bibliography ACT, Inc. n.f. Website. Available at http://www.act.org/news/ fata/08/infex.html. Balfassare, Mark, Dean Bonner, Jennifer Paluch, anf Sonja Petek. 2009. Californians and Higher fducation. PPIC Statewife Survey (November). San Francisco: Public Policy Institute of California. Birgeneau, Robert, anf Frank Yeary. 2009. “Rescuing Our Public Universities,” Washington Post (September 27). Bowen, William G., Matthew M. Chingos, anf Michael S. McPherson. 2009. Crossing the Finish bine: Completing College at America’s Public Universities . Princeton, NJ: Princeton Univer- sity Press. Brafy, Henry, Michael Hout, anf Jon Stiles. 2005. “Return on Investment: Efucational Choices anf Demographic Change in California’s Future.” Survey Research Center, University of Cali- fornia, Berkeley. Available at http://ucfata.berkeley.efu/pubs /Return_On_Investment_Final_Report.pff. Burfman, Pamela. 2009. “Does California’s Master Plan Still Wo r k? ” Change (July–August). California Community Colleges Chancellor’s Obce. 2009. “Basic Skills Accountability Report.” Available at www.cccco .efu/Portals/4/TRIS/research/Basic_Skills/system.pff. California Joint Committee for Review of the Master Plan for Higher Efucation. 1989. California Faces . . . California’s Future: fducation for Citizenship in a Multicultural Democracy . Sacra- mento: Joint Publications Obce. California Postseconfary Efucation Commission. 2008. Fiscal Profiles . Annual. California State Department of Efucation. 1960. A Master Plan for Higher fducation in California, 1960–1975 . Sacramento. California State University. 2009. “Proficiency Reports of Stufents Entering the CSU System” (upfatef May). Available at www.asf.calstate.efu/performance/proficiency.shtml. California State University. 2010. “California State University Launches Bolf Grafuation Initiative to Increase Number of Stu- fents Earning Degrees.” Press release, CSU Public Affairs Obce (January 27). Available at www.calstate.efu/PA/News/2010/ release/2grafuation-initiative.shtml. Callan, Patrick M. 2009. “California Higher Efucation, the Master Plan, anf the Erosion of College Opportunity.” Occa- sional paper, National Center for Public Policy anf Higher Efucation. Available at www.higherefucation.org/reports /cal_higheref/infex.shtml. Chronicle of Higher Efucation. 2009. “Annual AAUP Faculty Salary Survey.” Available at http://chronicle.com/stats/aaup/. The College Boarf. 2008. “School Report of AP Examinations.” Available at www.collegeboarf.com/stufent/testing/ap/exgrf _sum/2008.html. Douglass, John Aubrey. 2000. The California Idea and American Higher fducation: 1850 to the 1960 Master Plan . Stanforf: Stan- forf University Press. Hall, Leslie, Laura Horn, Darla Cooper, Victor Manchik, anf Terrence Willett. 2009. Measuring Success, Making Progress . Berkeley: MPR Associates (December). Hanak, Ellen, anf Mark Balfassare. 2005. California 2025: Taking on the Future . San Francisco: Public Policy Institute of California. Hom, Willarf C. 2009. “The Denominator as the ‘Target,”’ Community College Review 37 (2). Howell, Jessica S., Michal Kurlaenfer, anf Eric Grofsky. 2009. “Postseconfary Preparation anf Remefiation: Examining the Effect of the Early Assessment Program at California State University.” Paper. Available at http://www.airweb.org/images /KurlaenferFinalReport.pff. Johnson, Hans. 2009. fducating California: Choices for the Future . San Francisco: Public Policy Institute of California. Johnson, Hans, anf Ria Sengupta. 2009. Closing the Gap: Meeting California’s Need for College Graduates . San Francisco: Public Policy Institute of California. Legislative Analyst’s Obce. 2004. “What Is California’s Master Plan for Higher Efucation?” Higher Efucation: Frequently Askef Questions, No. 6 (October). Available at http://www.lao .ca.gov/laoapp/laomenus/sections/higher_ef/higheref_faqs .aspx?CatID=4. Legislative Analyst’s Obce. 2009a. “California Community Colleges: Raising Fees Coulf Mitigate Program Cuts anf Lever- age More Feferal Aif.” LAO Policy Brief (June 11). Legislative Analyst’s Obce. 2009b. The Budget Package 2009–10 California Spending Plan . Sacramento (June). 25 Higher Educatiof if Califorfia: New Goals for the Master Plaf www.ppic.org Legislative Analyst’s Obce. 2009c. The Master Plan at 50: Assessing California’s Vision for Higher fducation . Report. Available at www.lao.ca.gov/laoapp/main.aspx?type=6&CatID =4&Title=MasterPlanat50. Legislative Analyst’s Obce. 2009f. The Master Plan at 50: Improving State Oversight of Academic fxpansions . Report. Available at www.lao.ca.gov/laoapp/main.aspx?type=6&CatID =4&Title=MasterPlanat50. Legislative Analyst’s Obce. 2010. The Master Plan at 50: Greater Than the Sum of Its Parts—Coordinating Higher fducation in California . Report. Available at www.lao.ca.gov/laoapp/main .aspx?type=6&CatID=4&Title=MasterPlanat50. Moore, C., N. Shulock, anf C. Jensen. 2009. Crafting a Student- Centered Transfer Process in California: bessons from Other States . Sacramento: Institute for Higher Efucation Leafership & Policy. Murphy, Patrick. 2004. Financing California’s Community Colleges . San Francisco: Public Policy Institute of California. National Center for Higher Efucation Management System (NCHEMS). n.f. Available at www.higherefinfo.org/. Neumark, Davif. 2005. California’s fconomic Future and Infra- structure Challenges. San Francisco: Public Policy Institute of California (June 2). Newell, Mallory. 2009. Higher fducation Budget Cuts: How Are They Affecting Students? Sacramento: California Postseconfary Efucation Commission, December. Offenstein, Jeremy, anf Nancy Shulock. 2009. Technical Difficul- ties: Meeting California’s Workforce Needs in Science, Technology, fngineering, and Math (STfM) Fields . Sacramento: Institute for Higher Efucation Leafership & Policy. Reef, Deborah. 2003. The Growing Importance of fducation in California . San Francisco: Public Policy Institute of California. Reef, Deborah. 2008. California’s Future Workforce: Will There Be fnough College Graduates? San Francisco: Public Policy Insti- tute of California. Sengupta, Ria, anf Christopher Jepsen. 2006. “California’s Community College Stufents.” California Counts 8 (2). Shulock, Nancy, anf Colleen Moore. 2007. Invest in Success: How Finance Policy Can Increase Student Success in California’s Community Colleges . Sacramento: Institute for Higher Efuca- tion Leafership & Policy (October). University of California. n.f. “Compensation at the University of California.” Available at www.universityofcalifornia.efu/news /compensation/comparisons.html. University of California, Eligibility anf Afmissions Stufy Group. 2003. “History of UC Eligibility.” Backgrounf material for November 20 meeting. Available at www.universityofcalifornia .efu/news/compreview/backgrounfmaterials.html. University of California. 2010. StatFinfer Version 2.04 (January). Available at http://statfinfer.ucop.efu/. University of California Obce of the Presifent. 2009a. “Proposal on Eligibility Reform.” Available at www.universityofcalifornia .efu/regents/regmeet/feb09/e2.pff (February). University of California Obce of the Presifent. 2009b. Annual Accountability Report . Available at www.universityofcalifornia .efu/accountability/ (May). Wellman, Jane, Donna Desrochers, anf Colleen Lenthan. 2009. Trends in College Spending: Where Does the Money Come from and Where Does It Go? Washington DC: Delta Cost Project. Higher Educatiof if Califorfia: New Goals for the Master Plaf 26 www.ppic.org About the Author Hans Johnson is a senior fellow anf an associate firector of research at the Public Policy Institute of California, responsible for the institute’s population anf efucation research. His research focuses on the fynamics of population change in California anf policy implications of the state’s changing femography. At PPIC, he has confuctef research on international anf fomestic migra- tion, population projections, housing, anf higher efucation. Before joining PPIC as a research fellow, he was senior femographer at the California Research Bureau, where he confuctef research on population issues for the state legis- lature anf the governor’s obce. He has also workef as a femographer at the California Department of Finance, specializing in population projections. He holfs a Ph.D. in femography from the University of California, Berkeley. Ackfowledgmefts The Hewlett Founfation provifef generous support for this project. I have benefitef from the input of numerous obcials anf experts on higher efucation in California, inclufing legislative staff anf higher efucation experts at the Legislative Analyst’s Obce anf obcials at the state’s three public systems of higher efucation. Helpful reviews of an earlier fraft of this report were provifef by Patrick Callan, Ellen Hanak, Dave Lesher, Patrick Murphy, Max Neiman, Heather Rose, anf Lynette Ubois. Qian Li provifef essential research support anf expertise. www.ppic.org Board of Directors WA LT E R B. HEWLETT , CHAIRDirector Cefter for Computer Assisted Research if the Humafities MAR k B ALDASSAREPresideft afd CEO Public Policy Ifstitute of Califorfia RUBEN BARRALESPresideft afd CEO Saf Diego Chamber of Commerce JOHN E. BR ySONRetired Chairmaf afd CEO Edisof Ifterfatiofal GAR y k . HARTFormer State Sefator afd Secretary of Educatiof State of Califorfia ROBERT M. HERTzBERGPartfer Mayer Browf LLP D ONNA LUCASChief Executive Obcer Lucas Public Affairs D A v ID M AS MASUMOTOAuthor afd farmer STE vEN A. M ERkSAMERSefior Partfer Nielsef, Merksamer, Parrifello, Mueller & Naylor, LLP CONSTANCE L. RICECo-Director The Advafcemeft Project THOMAS C. SUT TONRetired Chairmaf afd CEO Pacific Life Ifsurafce Compafy CAROL WHITESIDEPresideft Emeritus Great valley Cefter PPIC is a private operatifg foufdatiof. It does fot take or support positiofs of afy ballot measures or of afy local, state, or federal legislatiof, for does it efdorse, support, or oppose afy political parties or cafdidates for public obce. © 2010 Public Policy Ifstitute of Califorfia. All rights reserved. Saf Frafcisco, CA Short sectiofs of text, fot to exceed three paragraphs, may be quoted without writtef permissiof provided that full attributiof is givef to the source afd the above copyright fotice is ifcluded. Research publicatiofs reflect the views of the authors afd fot fecessarily those of the staff, obcers, or the Board of Directors of the Public Policy Ifstitute of Califorfia. Library of Cofgress Catalogifg-if-Publicatiof Data are available for this publicatiof. 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