Jeffrey D. Baker
Interim Commissioner
Since 1983, the portion of higher education funding from the state has been reduced from 77.9 percent In 63.4 percent. This trend is not one that is unique to Montana; we see similar patterns throughout the country. The decrease is a financial reality, and the most likely scenario for the future is that this downward trend will continue.
I am troubled by the trend because public education has been one of the hallmarks of our country's economic prosperity. We are making a public policy statement that is changing the face of higher education for years to come. We will continue to argue against the public policy decision to invest less in education while simultaneously addressing the numerous challenges before us Namely: How do we become more efficient in providing educational services with available resources? How do we keep education affordable? How do we achieve quality? How do we bring excellence to the classroom and prepare students to compete in the global economy?
The current restructuring proposal is a beginning. It is aimed at the future. The premise is to build a strong, unified system by putting into place a new structure, an improved approach to access, and a pricing strategy that takes into account the predicted strong demand for education. Once the structure is in place, academic and administrative review will follow. The process is long term. We will look for cost savings, cost containment, and alternative revenue sources while simultaneously focusing on better service to students. Some say it cannot be done. It has to be done, however, if we hope to keep pace in education with the challenges of our fast-paced world.
There are no quick fixes to our challenges. The process that has been started will span the next seven to ten years, but we must begin now to prepare ourselves for the even greater challenges that lie ahead. Phase 1 is planned to culminate at the Board of Regents' meeting on Sept. 23 & 24 in Billings. The goal is to position Montana's university system for the activities to follow in Phases 2 and 3. Phase 1 is designed to move us in the direction of a single, unified system of higher education--a totally integrated approach, not merely a collection of separate units. The most important goal of this first phase is to begin the process of changed thinking that promotes unity while simultaneously supporting a shared statewide sense of ownership--a positive, mutually supportive relationship among units, faculty, and staff communicating and working for common system goals.
In moving toward unification, Phase 1
changes the approach to higher education by detailing a single system of branch campuses;
redefines access by the way instate and out-of-state students are managed;
focuses on new tuition strategies;
increases the emphasis on two-year versus four-year education;
lays the framework for improved transferability within the university system; and
ensures that Montana dollars go only to Montana students.
The adoption of Phase 1 puts into place the foundation for the activities that will follow. Phase 1 terminates September 24, 1993,
Phase 2 begins the detailed planning to bring definition to the goal of system integration. Phase 2 is comprehensive in scope, with the core of all planning objectives focused on students, In the context of a unified system, how do we position higher education to provide academic, student, and support services for the 21st century? The challenge will be to look at everything we do in the context of being better. The emphasis will focus on incentives, cost savings, cost containment, and alternative revenue sources. Every activity will be analyzed on its own merit, as well as within the context of a unified, integrative whole, By July 1, 1994, the following will be specified:
governance to support the new structure of a single, unified system of higher education;
administrative planning to detail the future direction of all student and support services;
academic program review that has as its overriding philosophy the enhancement of strength and the elimination of marginal and weak programs;
personnel management guidelines that detail a new approach toward labor relations and minimize the fallout from planned changes in academic program and student/support services.
The goals of Phase 2 are ambitious and undoubtedly will not be finalized when the implementation of Phase 3 begins July 1, 1994. On that date, the new structure will be effective, and the process of bringing form to the plans of Phase 2 commences. The process will continue for what is anticipated to be the next seven to ten years.
At the heart of this plan is a basic assumption that new relationships will be needed if success is to be achieved.
Higher education leadership will need to work closely with the executive and legislative branches of government.
Higher education will have to enhance a trust relationship with all Montanans.
Higher education will have to achieve enlightened approaches toward labor relations.
At the same time, success will depend on making investments in human and capital resources to ensure quality of the system for the future. The rewards from new incentives, cost savings, and revenue enhancements must not be lost. Educational managers must be given latitude to invest, to experiment, and even to fail.
Some may label this proposal as reinventing government or re-engineering the enterprise. Labels are not important. What is important is a changed way of thinking. We cannot afford "business as usual." Salaries are going nowhere; we cannot fall any lower than 51st in the nation. The physical facilities are in desperate need of investment. Classes are getting larger, and student complaints are increasing. At the same time, we face a growing demand for educational services within Montana and mushrooming demands from other western states. We must put aside decades of historical precedent, promote a system perspective rather than a local community agenda, and embrace a degree of cooperation that has been the exception rather than the rule.
The challenges are immense, and the cost of failing to meet those challenges is a price we do not want to pay. We seek the help of everyone in this enterprise as we move forward to a better system of higher education in Montana.
A single, unified system of higher education, a totally integrated approach, not merely a collection of separate units.
A distinguished system that not only promotes unity, but also a shared statewide sense of ownership, a positive, mutually supportive relationship among units, faculty and staff communicating and working for common system goals.
Continued recognition of the unique qualities that each institution shares with its community' while building toward greater unification of higher education in Montana.
A shared commitment to the public funding of higher education while simultaneously seeking to enhance and stabilize the revenue base through alternative funding options.
A focused effort on system-wide choices that will result in cost savings, cost containment and improved services.
This document is intended to be a blueprint that addresses changes in the Montana University System. The following timetable outlines a process. Where possible in this document, detail is provided; at this time the consistency of detail is necessarily dependent on the complexities of the particular issues.
Board of Regents vote:
Timeline (implementation 10/1/93)
Grievance (implementation 7/1/94)
Access (implementation 7/1/94)
Price/Revenue Strategy (implementation 7/1/94)
Academic Programs
Two-year Program Management (implementation 7/1/94)
Undergraduate Education (implementation 7/1/94)
Graduate Education (implementation 7/1/94)
Student Services
Athletics (implementation 7/1/94)
Preliminary administrative staffing; review update and report to Regents
Academic program review update and report to Regents
Begin discussions on faculty workload management, setting the agenda and timetable
Appointment of Joint Athletic Committees by Board of Regents
Preliminary administrative staffing review update and report to Regents
Academic program review update and report to Regents
New governance structure implemented
Comprehensive administrative plan completed, includes but not limited to system-wide planning of:
Over the next two years, discussions will include the relationships of the three community colleges to the Montana University System.
The Montana University System will maximize resident student access to post secondary education by ensuring that students are matched to an educational environment that best fits the academic abilities, interests, and financial circumstances. These steps will include but are not limited to:
Establishment of institutional target enrollment objectives for each four-year campus based on respective campus physical plant and program capacity to educate students effectively and efficiently;
Establishment of campus-specific and program-specific admission standards and enrollment goals designed to maximize the potential for students to successfully complete the academic programs;
Development throughout the state of community-based points of "delivery at distance" for both continuing education and regular courses of the two universities and the branch campuses;
Continued development and refinement of the MUS-wide transfer and articulation system that assures students in advance of the status of individual courses within the system.
FTE institutional target enrollments established at each four-year campus for academic years 1994-95 through 1999-2000; targets based on campus capacity to educate students effectively and efficiently.
At each institution, resident guaranteed enrollments established for in-state students;
Non-resident residual limited to difference between institutional target enrollment and resident guaranteed enrollment.
Institutional Target = Resident Guarantee + Non-Resident Residual
Example: If an institutional targets 10,500 for 1994-95 and the resident guarantee is 7,500, the non-resident residual is 3,000. These are out-of-state students who will be charged according to the policy outlined below. If a campus exceeds the resident guarantee, the non-resident residual is reduced by the overage. However, recognizing the many variables that enter into enrollment management, the non-resident residual may be exceeded by up to one percent. Thus, in the example, if the resident guarantee is 7,500, the non-resident residual could be 3,030 for a total of 10,530 before adjustments are triggered as outlined below. However, if the one percent is exceeded, the penalty is calculated based on the original institutional target. In other words, a window is provided but the penalty for going out of the window is a reduction to the original non-resident residual figure.
Fundamental to the pricing strategy is that Montana general fund dollars will be used for Montana students only.
For resident students, price will be a combination of state-appropriated money and tuition/fees. Based on the cost of education per student, the state will pay a percentage and the student will pay the remainder. Only two variables exist in this approach-the cost of education and the percentage to be paid by the state. For instance, if the cost of education is $5,200 and the state pays 75 percent of the cost, the state will pay $3,900 and the individual will pay tuition of $1,300.
The cost of education is expected to vary among campuses; thus, instate tuition may vary within the system.
Since the cost of education is an average for each institution, individual programs that are exceptionally expensive may have extra tuition; thus, some differences may occur among programs on a given campus.
In the example, the state general fund appropriation will be $3,900 X 7,500 students, or $29.25 million for the year.
If the resident enrollment target is not met, appropriated funds for the students who did not attend will be returned to the state. Example: If the resident guarantee is 7,500 and the number of resident students is 7,450, $195,000 (50 X $3,900) will be refunded to the state of Montana. No additional state funding will be received for resident students in excess of 7,500.
Subject to approval by the Board of Regents, individual campuses will be permitted to set out-of-state tuition based on their analyses of market conditions. The goal is to build incentives into the marketing strategy while increasing the revenue base. Therefore, revenue generated from nonresident students will be used to offset the cost of education, and revenue that exceeds these costs may be reinvested into an institution at the discretion of the school's administration, subject to normal review processes by the Commissioner and Regents.
Revenue that is generated by exceeding the non-resident residual will be paid to the state of Montana, Example: If the out-of-state tuition is $6,000 and the non-resident residual is 3,000 students, the expected revenue is $18 million. If the institution enters 3,100 students, the additional $600,000 (100 X $6,000) will be paid to the state. Note that in the example the school exceeded the 1% window of 30 and thus paid the full penalty to the state. Had the nonresident residual been 30 or under, no penalty would have been assessed and all revenues would have been retained by the school.
For purposes of calculating fiscal year FTE enrollments, summer programs that are self-funded are not to be included in the FTE figures.
Two-Year Programs
All two-year programs, except those currently offered at community colleges, will be managed through the Schools of Technology in Great Falls, Helena, Missoula, Billings, and Butte. Two-year education in Dillon and Havre will continue to be managed through the respective branch campuses at these locations.
Undergraduate Education
All undergraduate education at the branch campus will be managed through the University of Montana-Missoula and Montana State University-Bozeman.
Graduate Education
All graduate programs at the branch campuses will be managed and degrees awarded through the University of Montana-Missoula and Montana State University-Bozeman.
Program Review
Criteria are being proposed to the campuses for review of all programs In consultation with the campuses, a list of programs considered for elimination will be prepared for the Regents as soon as possible.
Athletics: Montana State University and the University of Montana
Beginning FY2000, intercollegiate athletic programs will receive no more than $500,000 each in unrestricted funds/fee waivers as a part of state appropriations. In consultation with the presidents of MSU and U of M, a Joint Athletic Committee will be appointed by the Board of Regents not later than February 1, 1994, to begin planning for the year 2000. State appropriations for intercollegiate athletics will be increased only by the cost of living after the year 2000. The $500,000 target is based on an annual increase of 3% In the CPI. As the CPI varies around 3%, adjustments will be made in the targeted funding amount of $500,000.
Beginning Fall 1994, fee waivers and unrestricted funds will be reduced by 10 percent below the FY 1994 level.
Beginning Fall 1995, further reductions in unrestricted funding and fee waivers will be implemented. In making additional reductions, consideration will be given to the recommendations of the Joint Athletic Committee, but the reduction will be at least an additional 10 percent in fee waivers and 10 percent in unrestricted funds below the FY 1994 level.
Student athletic fees will continue to be reviewed and approved by the Board of Regents.
Athletics: Branch Campuses
Beginning FY2000, inter collegiate athletics will receive no more than $200,000 each in unrestricted funds/fee waivers as a part of state appropriations. In consultation with the presidents of MSU and U of M, a Joint Athletic Committee will be appointed by the Board of Regents not later than January 1, 1994, to begin planning for the year 2000. State appropriations for intercollegiate athletics will be increased only by the cost of living after the year 2000. The $200,000 target is based on an annual increase of 3% in the CPI. As the CPI varies around 3%, adjustments will be made in the targeted funding amount of $200,000.
Beginning Fall 1994, fee waivers and unrestricted funds will be reduced by 10 percent below the FY1994 level.
Beginning Fall 1995, further reductions in unrestricted funding and fee waivers will be implemented. In making reductions, consideration will be given to the recommendations of the Joint Athletic Committee, but the reductions will be at least an additional 10 percent in unrestricted funding and 10 percent in fee waivers below the FY1994 level.
Student athletic fees will continue to be reviewed and approved by the Board of Regents.