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2006Research Conference | June 15–16

This conference highlighted the work of invited speakers, independent researchers who have received grant funds from the Institute of Education Sciences, and trainees supported through predoctoral training grants and postdoctoral fellowships. The presentations are those of the authors and do not necessarily represent the views of the U.S. Department of Education or the Institute of Education Sciences.
Hyatt Regency Washington on Capitol Hill
400 New Jersey Avenue, N.W.
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A National Dialogue: The Secretary of Education's Commission on the Future of Higher Education

Remarks by Charles Miller, Chairman of the Commission to the Institute of Education Sciences' 2006 Research Conference

Future of Higher Education

The future of higher education in the U.S. will depend on our strategic responses to major forces in place today that hold the potential to unleash far-reaching and not necessarily positive changes. Those forces are fiscal; demographic; technological; geographical. And they are all related to one another.

Today, I'm going to focus most on the fiscal situation: Money.

More than 75% of our higher education system (all post-secondary institutions, public; private; for-profit, but not employers or military training) is provided by public institutions, local and state-operated, with significant federal support. "Private" institutions provide the balance, with about 5% provided by the for-profit sector. However, approximately 25% of the revenues of the so-called "private" non-profits are supplied by the federal government and, in addition, these institutions receive significant state and local revenue support, receive tax benefits through endowment earnings and deductibility of contributions, and receive indirect benefits from public infrastructure. For-profit institutions are heavily dependent on federal financial aid available for its students for their very existence. In other words, private institutions are not really "private."

So, it is no surprise that the overall fiscal situation of local, state and federal governments is highly relevant to the status of all of higher education. Speaking bluntly, that fiscal situation is terrible. It is estimated that state governments are facing structural deficits for the next decade or more. Combined with the federal government's Medicare and Social Security liabilities of one estimate of the government's total current unfunded liabilities is an unprecedented $57.8 trillion---a figure that has grown $10 trillion in the past two years alone. That's an estimated liability of $500,000 for every American household.

Considering the substantial and critical funding for higher education from the public sector, this is not a pretty picture; not a promising background.

Over the last 25 years or so, the proportion of revenues for higher education institutions provided by state governments has persistently declined, with cyclical swings but with a pronounced secular trend.

At the same time, the inflation factor for higher education has expanded faster than for most other goods and services and even with increases in total state spending, real per capita funding from states has been flat or declined.

That is not a pretty fiscal picture, either. As a result of these trends, there has been a substantial shifting of the cost of higher education in recent years directly to students and families. These families are also taxpayers, paying record levels of local and state taxes. This cost-shifting directly to students is often rationalized by educators by referring to cuts in state funding. While this is a partial explanation, they somehow fail to acknowledge a key contributing factor over which they have substantial control; higher education cost increases that far outpace the rate of inflation and a lack of substantial improvement in productivity at our nation's colleges and universities.

For the public, however, as the average cost for higher education rises to larger and larger percentages of average family incomes, excuses are not likely to be easily tolerated. Institutions trying to regain larger portions of funding from their governments are not likely to be successful because of other more urgent public priorities. These calls for more money could backfire and trigger very unpleasant responses, such as more regulation and pressures to do better with fewer resources. Simply stated, we're between a rock and a hard place in the funding of higher education.

At the same time, demographically the college age population is growing. And the need for continuing, life-long learning by the adult population is also rising because of economic necessity.

So, the total demand for higher education in the U.S. is clearly on the increase. Furthermore, the population growth of the under-educated will be rapid in many states. If there is no change in the level of education of these populations, economists estimate that we could experience a decline in per capital personal income in one-third of the states, including many of the most populated, in a relatively short period of time.

In the other developed regions of the world, namely Europe and Japan, the population is aging and even in decline in many countries. Yet the fiscal situation is worse there than in the U.S. due to overburdened social welfare systems on top of this demographic shift. Nor is the status of higher education system in Europe and Japan very strong overall.

In developing countries, demographics are mixed. Economically rising China has an aging population, and will have an older average age than the U.S. by 2050. Some of these heavily populated countries will also have a smaller set of younger people to support a growing number of older people. However, with developing countries opening their economic systems and attempting to grow out of economic poverty, there is attendant recognition of the need to invest heavily-and innovatively-in human capital, meaning higher education. It is no accident that China and India are actively seeking to create more and more U.S.-style universities on their own soil.

Forecasts of employment growth here and globally indicate that most of the best job opportunities will require an advanced education, essentially a college degree, or more. The skills required will be beyond the traditional curriculum and will include skills such as problem solving, critical thinking, analytical reasoning and written communications skills.

A large global demand for higher education is therefore inevitable; for the developed countries, if they are to turn around their stagnant and aging economies (Europe, Japan); or for developing countries to grow out of weak economic levels (China, India, Brazil, etc.); or for the U.S. to remain highly competitive economically.

We must think in international or global terms when we consider the future of higher education. With information and communications today and continuing to grow and improve, geographic boundaries are less limiting and the possibilities for economic "leapfrogging" by innovative players---countries, cultures, companies---are open-ended.

U.S. higher education will be one of the principal players in this global environment. Yet, it is a change-resistant, complacent community, in which institutions compete among themselves for funds and students and prestige in a producer-driven setting that is not sufficiently responsive to what educational consumers want. Colleges and universities have little or no vision for how their activities fit into the strategic needs of the nation as a whole. Information systems are antiquated and opaque, transparency is limited, and the public and policymakers have grossly inadequate information on which to make decisions.

So, with these factors in mind, let's look at the future. With the existing fiscal, demographic, technological and global competitiveness factors, danger lurks for our higher education system.

In my view, there are two general scenarios or probabilities, and one special scenario:

Scenario 1: There would be no change in current policies in the higher education system--- same funding regimes; same organizational structures; same use of technology; same information systems for informing the public.

In Scenario 1, there are two possible outcomes. The first outcome is a slow deterioration, over years, in our educational system. This is a gradual decline in quality, in access and in affordability. This entails slower economic growth for the country and a furthering of regional and class divisions. This is the European model, more or less. This may be where the U.S. is today.

The second variation on Scenario 1 is that due to declining access, poorer quality and higher costs, is a sudden, explosive, hostile public response and political response made in the heat of the current moment, without a long-term strategic vision.

In higher education, this could happen when students and their families show up to enroll in colleges they have expected to be available and find out there is no more room; that the next available option is further from home; is much more costly; is poorer quality; and has a "take it or leave it" attitude. That's what is happening today. That's potentially an explosive situation.

This is very similar to the U.S. health care experience; we've been through twenty years of lurching to fix a deficient system with very poor results. The similarities here to health care are strong. The financing of both systems depends heavily on third-party payers, separating the ultimate consumer from cost and price decisions. The information system in both is antiquated, inefficient and user-unfriendly. Quality in both is defined by spending more resources, not by measures of productivity or efficacy.

As costs in health care inexorably rose and care was inexorably rationed, the public and policymakers reacted with hostility to the industry; radical changes were forced upon the producers (doctors, hospitals, drug manufacturers) and while the structure of health care has changed radically, it has not been "fixed." There could be a similar outcome where higher education providers (academics) would be squeezed and rationing would take place through access by economic class and through government regulation.

The probabilities attached to those two outcomes under Scenario 1 are about even.

Scenario 2: The wise-beyond-her-years Secretary of Education sees the powerful trends and assumes her responsibility. She calls for a National Dialogue: Commission on the Future of Higher Education. That Commission's work leads to the initiation of the development of a strategic vision for higher education in the U.S. and internationally.

This effort is in very early stages, even though the report is due in a couple of months. It will continue to be a work in progress for some time to come.

The earliest elements are promising. There is a strong leaning toward opening up the information flow about colleges and universities to provide data in a usable form at little cost and easily accessible by the public, policymakers---and researchers. This is vitally important because in the environment we're in, transparency is absolutely essential. The equation is I (Information) = T1 (Transparency) = T2 (Trust). Trust will allow us to make changes; to innovate.

The Commission's work so far has focused very significantly on measuring outcomes, on using improved technology and information to measure student learning, retention and graduation rates, and on implementing many other measures of educational outcomes and financial productivity.

The current financial structure of higher education borders on being dysfunctional. Because we have had little or no ability to measure the results of specific policies or activities, there has been no feedback mechanism to provide incentives for successful behavior or evidence for changing unsuccessful behavior.

Modern information and communications technology could be used to allocate resources and assure members of the public (who, after all, are the primary funders of higher education) of the use of best practices. That last point is crucial, because better use of resources and communication with the public would help colleges and universities gain the financial and policy support they need---even during difficult times.

Scenario 2 could engage the public, the academy and policymakers in an open, informed dialogue not only about the critical value of a world-class higher education system to the economic future of the United States, but also about the current structural flaws, the shortcomings, the needs of higher education. This open, transparent dialogue would lay the groundwork of trust necessary to effect the innovation that is already prevalent in other institutions and economic sectors. If the academy faces its challenges and deals with the public transparently, the necessary support would very likely be forthcoming, and the academy would be fully engaged in determining its future. If not, the outcome will, very likely, be imposed.

Scenario 2 is not predestined. It will not be simple, or easy. It will meet with resistance from the academy. It will take informed and persistent leadership from policymakers and from the private sector. A positive outcome under Scenario 2 would be heavily enhanced by a strong education research community.

The Special Scenario is very "blue sky." We can call it the Technological Tsunami. It could occur while either of the other scenarios is playing out (especially Scenario 1).

While we dither with our higher education system, knowing it's "the best in the world" in our self-satisfied, complacent way, some small group of risk-takers and innovators may build some new, unique but highly effective system for developing skills in people---something dramatically different; something very cost-effective; something which develops skills of the kind needed most and valued highly.

If this happens, slowly, or quickly, these new educational technologies or techniques could take hold, until a critical mass and tipping point is reached. And before the incumbent institutions, the "best in the world," even realize it, they will no longer be as relevant, no longer as needed, no longer protected --- and will no longer receive the support necessary for maintaining their existence long term.

In each of these Scenarios, danger lurks.


In closing, let me make a few comments about the vital role of Research. In education today, generally the quantity and quality of research is inadequate. That's especially true given the significant economic value attached to enhancing the education level of our population, and given the level of expenditures on all levels of education and on lifelong learning and training. What accounts for this lack of a higher level of research endeavor? One reason is the general view of education research as a soft and fuzzy social science, less subject to a traditional, rigorous, scientific model and, complementing that, more subject to the subjective gaze of researchers who have at times been unduly influenced by their own social and political philosophies.

Another reason has been the lack of information, data availability, to do the type of long-term research and analysis usually attributable to biological and physical sciences. That should no longer be the case. We have finally arrived at a place with information and communications technology which will allow us to design, initiate and conduct large-scale studies of any significant education policy. We could learn anything about learning and learn how to organize that learning into optimizing the delivery of learning. How can we not do that?

The biggest missing ingredient for higher education research is the data system itself. If it is redesigned to create and collect data on outcomes; and to make that data and other data more easily available to a broad audience---including policy makers and the public who want answers to their questions, researchers who seek the those answers, and institutions who want to innovate and become more productive---we would have the structural framework for a world-class research function.

If we went the final and probably most critical step and created a unit-record system of data, following individuals throughout educational experiences and into the workforce, in order to provide the longitudinal data systems for serious, long-term research, there is no doubt that support could be generated for an infinite variety of creative research opportunities.

Our Commission could justifiably recommend the expansion of the education research community---more funds and the development of a cadre of talented and dedicated researchers who could commit to a career in a most productive endeavor. But, the fact is, we first need to develop this data information system and, specifically, the unit-record element. Until we do that, higher education policy will be determined in an uninformed environment equivalent to sitting in a dark room, blindfolded, with earplugs. We won't be able to see or hear what we need to in an area of such importance to our future as to be a matter of economic life or death. Today, we're just guessing about our future from a deep, black hole.

Unless we are willing to admit and address our shortcomings, provide the information needed to the public, and think and act strategically, higher education faces a dangerous future. But with the right kind of reforms, I'm confident that we can avoid those dangers and put higher education on a much stronger and forward-looking footing for the 21st century.

Thank you.