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Prepared Remarks for Guest Lecture to "Public Policy Challenges of the 21st Century"

March 30, 2016

I’m aware that this class has been using the Global Trends 2030 report as a framework for thinking about U.S. policymaking over the next 15 years. So today, we’re going to talk about U.S. higher education and how it might evolve over the next decade or so, by posing several questions:

  • What will be the most pressing public-policy issues for colleges and universities over the next several years?

  • What demographic changes will shape higher education during that period, and how should public policies address those changes?

  • What strategies and investments should great public universities, such as UVA, embrace now to remain great over the next decade or so?

Before we talk about priorities for the future, it’s important to know what has worked — and what has not worked — in the past. So let’s look at some historical context, including some major milestones in public policy affecting higher education in the United States.

Lessons Learned – Morrill, GI Bill, HEA

July 2, 1862 marked one of the first milestones in U.S. higher education policy. That was the day that President Lincoln signed into law the Morrill Act, which provided grants of 30,000 acres of Federal lands to help states establish public colleges — they became known as the land-grant colleges and universities.

The Morrill Act was meant to equip large numbers of citizens with skills for the Industrial Revolution that was transforming the economy. It gave farmers and working-class people access to higher education that previously had been available only to the upper class.

This moment of new opportunity was really an extension of the public-policy vision that Thomas Jefferson had laid out four decades earlier — specifically, his desire to create a system of education that would, in his words, “reach every description of our citizens.”

Today we have more than 100 land-grant universities in the U.S., with at least one in every state, and they include some of our finest universities. These institutions have educated millions of Americans and improved countless lives through research and discovery of new products and therapies. The Morrill Act was a milestone in U.S. higher education, and it’s one of our great public-policy success stories.

Another milestone came in 1944, with passage of the G.I. Bill, which granted stipends to cover tuition and expenses for war veterans attending college or trade schools.

This one is personal for me, because my own family benefitted from the G.I. Bill. My mother was 25 years-old when the Japanese bombed Pearl Harbor in 1941. She enlisted in the Army Nurse Corps shortly afterward, and served under live fire in the European Theater during World War II. After the war and discharge, she earned her BSN from Washington University on the G.I. Bill.

I’m the beneficiary of the program myself. I attended college on the G.I. Bill as a war orphan, because my father died from a service-connected disability he acquired during World War II.

Over the years, the G.I. Bill has allowed millions of young veterans to enter America’s colleges and universities. Like the Morrill Act, it opened the door to higher education for many Americans who otherwise never would’ve been able to go to college. It’s another success story in public policy.

Another milestone came in 1965, with passage of the U.S. Higher Education Act. This legislation strengthened America’s colleges and universities with financial support for institutions and scholarships and low-interest loans for students. It was another success story in public policy, and through its repeated re-authorizations, the Act has continued to provide support for higher education.

But not all of the milestones in America’s higher education policy have been good milestones. In the early 1990s we began to see cuts in state support that led to a progressive collapse of financial support for public colleges and universities. State support on a per-student basis hit a 25-year low in 2011.

The Great Recession made a bad problem worse. The crisis led to drastic cuts for public higher education in many states, and even since the recession ended, state support has continued to decline across the country. Appropriations for institutions fell by $14.1 billion (or 21%) between 2008 and 2013.

While state funding continued to drop, federal support, which was in decline or flat for many years, has rebounded in some areas since the recession. For example, federal support for the Pell Grant program and veterans’ educational benefits grew by $13.2 billion (72%) and $8.4 billion (225%), respectively, from 2008 to 2013.

Here in Virginia, we are seeing the state government begin to reinvest in higher education in recent years ... I’ll talk more about that in a few minutes.

Reinvestment is good news, but two decades of disinvestment in many states has done damage to public higher education that will be hard to un-do. For one thing, it triggered tuition increases for colleges and universities in many states, because schools had to make up for lost revenues. Rising tuition has led to mounting debt burdens for many college graduates, with national student-loan debt now topping $1 trillion. Some commentators believe this student debt bubble could lead to the next recession. Dealing with this issue will be a public-policy challenge in the years ahead.

What Does ‘Public’ and ‘Private’ Mean?

Our discussion of the relationship between public universities and their state governments leads to an important question: What does it really mean to be a public university? And what does it mean to be a private university? The answers are not as obvious as the words seem to suggest.

Are private universities actually private? Yes and no. They are private in the sense that they aren’t controlled or regulated by state governments. They are private in the sense that they aren’t required to have open meetings of their governing boards. They are private in the sense that they aren’t subject to FOIA requests from journalists and other inquiring minds.

But private universities also have some fairly obvious public characteristics. They receive public subsidies, mostly in the form of tax breaks and student loans and grants. Donors who make gifts to build the large endowments in private universities get a tax exemption for their gifts; this exemption has helped Harvard, for example, build its endowment to more than $37 billion.

Private universities also get tax exemptions on their campus buildings. The Federal government provides need-based financial aid for students in private universities. Private research universities, just like public research universities, receive government grants and contracts that allow overhead to cover a portion of the research costs. These may be private universities in name, but these are public, taxpayer-based subsidies.

If you think about it, private universities are getting a pretty sweet deal: they receive all of the financial benefits of public subsidies, but none of the regulation that public universities have to deal with.

Of course, public universities have private elements, too. Once again, money is the heart of the matter. Because of the collapse of state support for public colleges and universities in recent decades, private funds have become an increasingly essential revenue stream for the publics.

UVA completed a $3-billion fundraising campaign in 2013, immediately followed by a bridge campaign to support key priorities, and now we’re about to begin another campaign to coincide with the University’s bicentennial. Without this private support from donors, UVA would cease to be the excellent university that it is today.

Some of the individual schools within public universities operate much like private schools. For example, our professional schools — the Law School and the Darden School — are self-sufficient. They receive no part of our state funds, and they support themselves through tuition and private gifts. They pay a portion of their tuition revenue back to the University as a “tax,” but they control the rest. This has allowed these schools to set their tuition at market rates — much like private universities.

Ultimately, though, being a public university is about more than dollars and cents. It’s about mission and purpose. Public universities have a public mandate: They are expected to have a strong mission focused on serving needs in their home states.

Because of this critical mission, it’s important for us to focus on the big public-policy challenges facing higher education over the next decade. So what are those challenges? ….

Policy Issues for the Years Ahead

The American Association of State Colleges and Universities just released a policy brief outlining the top higher-education policy issues for U.S. states. I’ll highlight four of the issues ...

  1. Keeping College Affordable

Keeping college affordable is the first issue. With tuition rates and student-debt burdens rising in many states, it’s likely that legislators will continue to press public schools to freeze or cap tuition increases. One example: The 2016-18 budget just adopted by Virginia’s General Assembly directs colleges and universities to submit their tuition increases to SCHEV (State Council of Higher Education for Virginia) and the leaders of the Assembly’s money committees for review. This is part of a national push to keep tuition under control.

While focusing on affordability, we need to make sure we don’t sacrifice academic quality. That’s why we have a program at UVA called “Affordable Excellence”; it’s designed to sustain academic quality while controlling costs and keeping a UVA education affordable for students from all backgrounds. We can never let those two words—affordable and excellent—become mutually exclusive. It’s our responsibility to keep UVA both excellent and affordable.

I mentioned earlier that Virginia is beginning to reinvest in higher education, after an extended period of disinvestment. For example, the 2016-18 budget adopted by the General Assembly this month includes more than $115 million in direct aid to colleges and universities. For UVA, it includes approximately $15.7 million in additional appropriations to fund financial aid, undergraduate enrollment growth, and other UVA priorities.

Our public-policy leaders need to sustain this trend of reinvestment in public higher education, if we want our public colleges and universities to remain both strong and affordable.

  1. Improving Outcomes and Boosting Degree Production

The focus on institutional outcomes and accountability metrics in higher education will continue to be a public-policy issue, along with the push to boost overall degree production.

While running for Governor in 2009, Robert McDonnell proposed a plan that would push Virginia’s colleges and universities to award 100,000 additional degrees by 2025. This plan was fleshed out in legislation known as the “Top Jobs Act” of 2011, which boosted state financial support while asking colleges and universities to produce more degrees.

32 states, including Virginia, now have some type of performance-based funding (PBF) aimed at increasing degree production, and five other states are currently in transition to such models. This will continue to be a top issue.

  1. Combating Campus Sexual Violence

Sexual violence on America’s college campuses has become one of the top public-policy issues for higher education, with both state and federal legislators—as well as leaders at individual schools—focused on finding solutions.

In 2015, 26 state legislatures considered legislation related to campus sexual assault, up from only six states in the prior year. In Virginia’s General Assembly, 33 bills and resolutions were introduced in 2015 related to sexual assault issues, and four bills passed. The four bills focused on three themes: (1) requiring mandatory reporting of sexual assaults to “responsible” employees; (2) making transcript notations for any student who is expelled, suspended, or withdraws while under investigation for sexual misconduct; and (3) requiring mutual-aid agreements between campus police and local law enforcement.

UVA was in the spotlight of this national dialogue in November 2014, following publication of the Rolling Stone article, which was later retracted. Since then, UVA and many other schools have made significant progress related to education and training; prevention; response; reporting; and adjudication.

Still, sexual violence remains a problem on college campuses, just as it remains a problem in the military, in corporations, and everywhere in society. And it will remain a public-policy issue in the years ahead, as we continue to work on solutions to bring about meaningful change.

  1. Meeting Economic/Workforce Needs

Policy-makers will continue to rely on higher education to help meet workforce needs and spur economic development in states across the nation. Many public research universities operate as hot-beds of innovation that serve their local communities and stimulate their economies.

Last month, the National Venture Capital Association ranked Charlottesville as the fastest-growing venture-capital ecosystem in the U.S. Nine companies in Charlottesville were the recipients of $278 million in investments last year; and of those nine, six worked directly with the UVA Licensing & Ventures Group to bring UVA research to the commercial market.

In an example from another state, Wayne State University in Detroit has an incubator named TechTown that served 1,026 companies from 2007 to 2014, raising more than $107 million in start-up capital and adding 1,200 jobs to the local economy.

States will continue to rely on their public universities as sources of innovation and economic development, and public policies should support and strengthen these relationships.

So, those will be four public-policy challenges for higher education in the years ahead: keeping college affordable; boosting degree production; curbing sexual violence; and meeting workforce needs. Other issues will continue to draw the attention of policy-makers, including, for example, proposals to make community college free and controversial issues such as allowing guns on campus.

Policy-makers must continue to support our public research universities, because they are too valuable to the nation to allow them to wither. They educate nearly 4 million Americans each year, including about 900,000 graduate students. And they have led so many research breakthroughs that benefit society, such as the lithium-ion battery in smartphones and tablets; retractable locking seatbelts; and antibiotics like Streptomycin.

Demographic Forces and the Issue of ‘Quality’

As we consider priorities for higher education, we have to understand some of the demographic forces that are shaping higher education in the 21 st century. For example, the Census Bureau projects that, this year, the Millennial population (ages 18 to 34) will grow to more than 75 million, finally surpassing the Baby Boomer population (ages 51 to 69), which numbers just under 75 million people.

With immigration adding more Millennials to the U.S. than any other group, the Millennial population is projected to peak at 81.1 million in 2036. Meanwhile, the Boomer population is expected to dwindle to 16.6 million by mid-century.

Partially as a result of this youth trend, more young people than ever are going to college. In fall 2013, total undergraduate enrollment in degree-granting post-secondary institutions in the U.S. was 17.5 million students, up from 12 million in 1990. Between 2013 and 2024, enrollment numbers are projected to continue increasing, from 17.5 million to 19.6 million.

With growing student enrollment, the number of U.S. colleges and universities has also grown. Question for the class: How many colleges and universities do you think there are in America now? Any guesses?

There are 4,706 degree-granting institutions in the country, up from 3,231 in the 1980. This number includes 1,738 two-year colleges and 2,968 four-year colleges.

When you have almost 5,000 institutions of higher education, one thing becomes the key distinguishing factor, and that’s quality. A handful of these colleges and universities are excellent; many are good; some are mediocre.

Some do an excellent job of educating their students; others less so. Some are in excellent financial health; others are struggling.

With quality as the differentiating factor among 5,000 colleges and universities, university leaders need to ask ourselves: What are the contributing factors to quality? Once we determine those factors, we can identify our priorities and make the necessary investments. That’s what we’ve done at UVA through our strategic plan, the Cornerstone Plan.

The best measure of a university’s quality is the quality of its faculty. So Faculty Excellence is a priority for UVA, and a critical area of investment. This is especially important now, because we are in the midst a generational turnover of our faculty. Many of our faculty members are part of the Baby Boomer generation that I mentioned earlier, and they will be retiring in great numbers over the next 5 to 10 years.

As we seek to build a great faculty for the University’s third century, we will be competing with our peers to hire and retain the very best in a fiercely competitive market. This issue is so important that we made Faculty Excellence one of the five pillars in the Cornerstone Plan.

Strengthening research is another priority for us, and it’s another pillar in our Cornerstone Plan. One way we are building our research activity is by establishing pan-University research institutes that bring together faculty and students from various schools and disciplines to collaborate on big, 21 st-century challenges.

The Data Science Institute is a perfect example of our pan-University focus: it brings together faculty and students working in computation, science, engineering, mathematics, statistics, commerce, social science, humanities, law, and other disciplines as they focus together on data analytics, storage, security, ethics, and other issues. Last spring, we graduated the inaugural class of 48 students in the Institute’s Master of Science in Data Science (MSDS) program, and the second class is now enrolled.

Our Provost Tom Katsouleas is now in the process of determining what our next research institute will be.

State leaders are recognizing the importance of research. The General Assembly’s Budget for 2016-18 provides $22 million for a new Virginia Research Investment Fund. The purpose of this fund is to support commercialization efforts that have potential for economic development, and to encourage research collaboration among institutions and the private sector.

Another priority in our Cornerstone Plan is expanding our global activities. Last week, I was in Munich to sign an agreement for UVA’s new partnership with the Max Planck Society, one of the foremost research institutions in the world. UVA was selected as the only U.S. member of the MAXNET Energy initiative, which will develop solutions for clean, renewable energy sources.

This partnership will enable UVA to attract top faculty and students who work in highly innovative energy-science fields. And it will provide great opportunities for UVA undergraduate and graduate students, allowing them to work with some of the world’s leading scientists on a major global problem.

UVA students need to be prepared for leadership on a global scale. So we created a major in Global Studies with four concentrations: Global Development; Global Public Health; Environments and Sustainability; and, Security and Justice. We’ve also increased our offerings in global- and service-learning activities, which include study-abroad, J-term, embedded semesters, internships, research, and service.

By investing in these areas — faculty excellence, research, student programs, global activities — we are putting stakes in the ground for this University. We’re saying, “These are areas that will define excellence for public higher education over the next decade, and we’re going to make them signature priorities for UVA.”

Closing

I want to save time for questions, so let me share one closing thought. Higher education leaders can do their best to identify the right priorities and make the right investments, as we’re doing at UVA through the Cornerstone Plan. But continued success for higher education over the next decade—especially for public higher education—will require cooperation, support, and investment from policy-makers.

At a few milestone moments in our nation’s history — the Morrill Act in 1862, the GI Bill in 1944, the Higher Education Act of 1965 — government leaders made commitments that advanced the missions of our public universities. Because of these commitments, millions of Americans have been able to graduate from college, get good jobs, support their families, and contribute to the economy.

Policy-makers should come together again now to ensure that public higher education continues to serve its great purpose.

Policy decisions made over the next 10 to 15 years will partly determine our success. I hope all of you will stay informed and remain involved in the process, because we need your wisdom and leadership.