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National CrossTalk Fall 2002
News Editorial Other Voices Interview

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Vouchers in Public Higher Education
A bad idea whose time has come?

By Steven M. Jordan

In the late 1970s I had the opportunity as a member of the Colorado Governor's Office of State Planning and Budgeting to participate in a series of discussions with conservative legislative leaders about implementing a voucher system for the state's higher education institutions. As in many states at that time, the concept of a voucher system to fund elementary and secondary public schools was gathering steam.

The legislators who were proposing the voucher system knew that they would not be successful in implementing vouchers in the K-12 schools in the immediate term and were looking for an opportunity to display how a successful voucher system might work. It seemed reasonable to them that higher education, which was already funded on an enrollment formula basis, could become the "camel's nose under the tent." Implement higher education first, and then after everyone saw it could work successfully in public higher education, there would be less resistance in K-12.

The effort never got very far, and looking back, it seems clear that it failed for two fundamental reasons: There was no compelling reason for the higher education institutions to support the effort; and it was not connected to any fundamental change or improvement effort in the institutions.

As I suggested to colleagues at a recent meeting of the Society of College and University Planning, these two conditions could be met by a voucher system applied to public higher education today.

How would the voucher system work? I propose that the total of state appropriations for higher education, less any state appropriated financial aid, be divided by the total number of state appropriated full-time equivalent students. The resulting figure would be the beginning voucher value.

The voucher would be an entitlement to any citizen of the state to attend an accredited postsecondary institution in the state, whether public or private, but exclusive of for-profit proprietary institutions. The value of the voucher would be the same for each individual regardless of the role and mission of the institution.

To help preserve the historic mission of public institutions to promote access, I would limit the state financial aid appropriations not included in the voucher calculation to the public institutions. In addition, capital appropriations would still be available to public institutions as a second method to help promote access by continuing to exclude capital costs from tuition in public institutions.

There are two essential assumptions in the proposal. First, the voucher must be an entitlement. By doing this, the state no longer shows preference to any particular institution or set of institutions, but only to its citizens. In exchange, the state relinquishes its regulatory authority over its public institutions and allows them to compete equally with the private institutions. The state would retain an interest in new degree program approval, but only as a qualitative measure, not a regulatory competitive measure.

Second, private institutions should be included. The inclusion of the private institutions in the voucher system is probably the most controversial component. I include the private institutions for two reasons. In my view it maximizes the utility of the reform effort, essentially bringing all institutions into a more equal competitive environment. Additionally, it is less expensive in total costs per student for states to include the privates and allow the states to take full advantage of the private facilities than it is to build more space for students at the public institutions at public expense.

Assuming these conditions, what compelling reasons exist for public higher education to support a voucher system? Foremost is the condition of the economy. Much has been written about the effect that this, and previous recessions, have had on higher education. When state revenues decline, higher education is cut, even while enrollments are increasing. At the same time other state services, particularly those that involve entitlements to the public, are protected. Invariably higher education is treated as the budget balancer, and students are asked to pay more tuition to make up for the effects of state budget reductions.

A voucher system based upon an entitlement would make it much more difficult for state legislatures to cut higher education. In essence, instead of cutting institutions, they would now be forced to cut a specific entitlement to taxpayers, a much less likely scenario since legislatures are very attentive today to protecting individual benefits to taxpayers.

Next, with every student that arrives at the institution, the full value of the voucher is paid to the institution. Public higher education would no longer find itself having to absorb students as a marginal cost above a state appropriated full-time equivalent level. Instead, they could set their tuition, compete for students, and know that with each student that arrived, the value of the voucher would arrive with the student. Admittedly, the voucher for the research universities would be less than their current state appropriated level per full-time equivalent student. But these institutions have already demonstrated their ability to compete successfully for other sources of revenue, namely grants, contracts and private giving.

For the regional comprehensive universities and the state colleges, their voucher most likely will be higher than their current state appropriation per full-time equivalent student. This provides them a benefit while at the same time forcing them to compete more aggressively for other sources of funding. While the value of the voucher may not increase over time, or may only increase marginally, the fact that each student brings the voucher with her or him will in most cases increase the total dollars available to institutions compared to the current appropriation processes.

Finally, with the exception of quality control for academic programs, the institutions would be freed from the regulatory control of the state. Invariably, it seems that whenever public higher education wants to respond to a new need, or to change the way it does business, there is some state agency blocking the way. Higher education would now be permitted to be more responsive to the curriculum needs of the economy and their individual communities. At the same time, higher education would be forced to accomplish its objectives within the means provided by the paid vouchers, their tuition income, grants and contracts and private giving. There would be no more going to the state for funding for every initiative that public higher education wished to implement.

There can be no doubt that state legislatures are intently focused on change in public higher education. Not a single meeting or conference on higher education occurs without some discussion of state efforts to improve accountability. Listening to the conversations at these meetings, I find there always seems to be a consistent theme: The measures of accountability being implemented by legislatures are numerous, they are inevitably not well thought out, the results are questionable, even contradictory, and the only way higher education will ever be able to achieve these measures is if greater flexibility is given to governing boards.

Some states have experimented with various strategies to provide incentives for the achievement of accountability goals, including setting aside some small percentage of higher education state appropriations for allocation to institutions that achieve their goals. But the fundamental appropriations methods of states, base appropriations and enrollment growth have not changed. Vouchers provide the means to connect the desired change effort in the institutions with a funding methodology to encourage institutions to achieve the purposes desired in the current accountability goals.

With a voucher system, public higher education institutions would be free to decide the array of programs and services they wished to provide and to set their tuition at a level which, when combined with the voucher, will support their activities. In other words, vouchers will encourage institutions to be cognizant of their environment and to be competitive in the marketplace.

Unlike the current system, which encourages mission creep because institutions lobby state boards or the legislature for the authority to expand their missions, vouchers will encourage institutions to find niche markets. If there is mission creep, it will most likely be justified because the student market supports the change. In either case, accountability will be achieved through the marketplace, not through artificial regulatory methods. Students will judge the array and quality of services, and the price, and will vote with their feet.

Institutions which fail to respond to the marketplace will no longer continue to receive funding simply because they are a state supported institution. And yes, some state institutions may fail, just as private institutions have failed.

Because the voucher both arrives and leaves with the student, public institutions will have a great incentive to retain every student that they successfully attract. If they do not retain the student, they lose the full value of the voucher along with the tuition, not the marginal dollar loss that institutions most typically experience with the current funding mechanisms.

This one change goes right to the heart of the retention and graduation accountability goals with which most states are concerned. Public institutions would have a clear monetary incentive to improve their retention and graduation rates. To accomplish this, institutions will have to address issues like class size, course availability, the integration of the liberal arts curriculum with the professional school curriculum, and the availability of the senior faculty at all levels of the curriculum.

Vouchers for public higher education are perceived to be a bad idea because they seem contrary to the very ideals upon which public higher education was established-public good and the achievement of access to every facet of American society. But those ideals have been challenged by the very funding systems that we have built to support them. Indeed, throughout the country the concept of "private good" has replaced "public good" as the prevailing thought in our state legislatures about the benefit of higher education. And access is now challenged by the current fiscal conditions of states at the very time when our economic system demands an educated workforce, and our democracy begs for a literate and engaged citizenry.

I would argue that vouchers provide the means to bridge back to our original objectives using today's prevailing notions. Vouchers invest in our citizens as a public good to enhance their individual private good. As an entitlement, vouchers guarantee every citizen's right to higher education; and by doing so, they contribute to a more engaged citizenry.

Continuing down the current road of less state support, using higher education as a budget balancer, and shifting costs to students through higher tuition will, in my view, ultimately undermine our public higher education system. Vouchers are an idea whose time has come to public higher education.

Stephen M. Jordan is president of Eastern Washington University.

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