Observations of Patrick Perry on the Budget, Enrollments and Where are we headed as a System

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Patrick Perry is the Vice Chancellor of Technology, Research, and Information Systems for the California Community Colleges Chancellor’s Office. He oversees the collection of unitary student records for the 112-campus system, all system wide technology initiatives, and of the Institutional Research unit responsible for all accountability reporting.  In this capacity, he has leveraged data matching opportunities with external data sources that have allowed the system to fully capture student demography, progress, transfer movement, peer grouping, and wage outcomes to create a comprehensive reporting and accountability framework for two-year institutions and their student populations. Additionally, he has implemented any number of centrally-provided technology services to the CCC system, including internet connectivity, electronic transcripts, e-conferencing services, and a common student application. He was recently appointed by Arne Duncan, U.S Secretary if Education,  to be one of the 15 members of the “Committee on Measures of Student Success” making recommendations on alternate measures of student success and progress for two-year institutions.

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Patrick Perry, Vice Chancellor of Technology, Research, and Information Systems

The budget has gone south again, and an 8% cut in system funding to the CCC is causing a ripple effect through the colleges as they scramble to try to adjust to life over-cap and an ever-increasing wave of student demand spurned by a 12% unemployment rate.  Using the only enrollment management tool available, colleges set about slashing course section offerings in Summer and Fall 2009 to reach a new equilibrium, only to find course section size soaring and more FTES generated.  Meanwhile, the students face an ever daunting task of simply getting a class…any class.  Those with enrollment priority are advantaged, but those on the outside trying to get in take the brunt of the lost access, and a much smaller first-time freshman class of Fall 2009 starts it journey through the CCC’s.  It is not a new phenomenon; the same thing occurred in the early 90’s and 2000’s, and the outcomes are somewhat predicable. But this time around, two new forces have descended upon the higher education landscape: the rise of the for-profit institution, which has effectively diverted transfers, many of whom are underrepresented, into their sector, and the underlying drumbeat of change at two-year institutions coming from the halls of Washington and other think tanks and policy organizations nationwide.


It has become painfully obvious that the greatest system of higher education in the US, the California Community Colleges (CCC), suffers from having its horse tied to a post that is sunk in quicksand: our almost solitary reliance upon getting our operating revenue from the California Legislature.  I once asked one of our esteemed senators how such budget volatility came to afflict us, and he answered quite honestly, “it was everybody’s fault. When the coffers were flush with excess capital gains revenue from the dot-com boom in the late 90’s, both sides, Republican and Democrat, did what they were supposed to do. The Democrats saw excess cash and promptly spent it.  The Republicans saw excess cash and promptly gave it back by lowering taxes.  A few years later, we had permanently upped our programmatic spending and lowered our tax base.  When the bubble burst, we had created our own little chronic deficit.”
Now a bit of budget volatility is not new to the State and how it applies to the CCC’s. A few of you may recall the early 90’s when things got tight and we had our first real round of fee increases and enrollment prioritization…anyone remember the “BA/BS differential fee” of $50/unit? (Students quickly figured that one out by playing possum and self-identifying as never having even stepped foot on a 4-year campus.)  And then there was the period directly after the dot-com implosion in the early 2000’s, a time marked with more fee increases and a significant thinning out of the student population (311,000 students lost, to be exact).  So to see this again, for some of us, is yet another bottoming out of the sine wave.  But the anxiety caused by having to go through it at all still does not makes one comfortable enough to accept it as a fact of life.
So for those of you who are going through this for the very first time, let me give you a crash course on what’s about to happen.  And for those of you who have been there before…consider this a refresher.
Things had recovered nicely from the early 2000’s; annual system headcount reached its all time peak in 2008-09 at nearly 2.9 million students.  The system generated 1.25 million FTES, and it seemed like demand was booming; healthy and increasing volumes of transfer, degrees and certificates on the rise, freshmen getting their classes, almost everybody’s bond issues passed, new buildings and even three new campuses coming online. Even with some underlying budget volatility, we increased our relative importance in the State budget pecking order and managed to get growth funds.
But there were some ugly clouds on the horizon.
First, we were so popular that we went over cap…we were only paid for 1.16 million FTES, so we were already going to have to deal with the issue of being 92,000 FTES over cap.
Second, we were starting to truly suffer from the housing meltdown and subsequent recession.  Our last budget in 08-09 spanned the remaining good times, but the recession had already reduced state reimbursements, so there was to be a day of reckoning ahead.  However, the countercyclical supply and demand caused by recessions (at 12% unemployment, citizens clamored for our services, right at the time when the State has no money to pay for it) was about to create a huge gap between what we could offer and what was needed.
I’ll add a third issue, a bit more subtle than the harsh reality of the first two: there was, and still is, a national groundswell coming from the halls of Washington, any number of education-related Foundations and think tanks, and advocacy groups that was and is calling for a dramatic shift in the priority of community college operations.  More specifically, you’ve done a nice job with access, but a lousy job with success (I’ll comment more on this a bit later.)
The system subsequently lost about 8% of its total budget in 09-10.  Categoricals were cut in half and rolled up.  What happens next is very predictable, given the two prior events, with the sole exception being this time there was no fee increase involved. 
The only lever of enrollment management the CCC system has at its disposal is that of the course schedule.  Unlike CSU and UC who have the luxury of simply admitting or not admitting students to control their limits, we simply make rough estimates as to how many courses to cut to reach a FTES target, then sit back, see what happens, then make further refinements at a later date to adjust.  It is a crude and inexact science.
In Summer 2009, the CCC system collectively cut 23% of its courses; the following Fall 2009, we cut another 6%, all in hopes of first getting back under cap, then below it to reflect the ongoing 8% budget reduction.  And, as expected, students jammed themselves into every last available seat possible and remaining.  As a result, that 6% cut in Fall 2009 remarkably increased our FTES by 1.3%.  For the first time in the history of the CCC system, our course section size went above 30, and peaked out at 31.3 in Fall 2009.  Our headcount in Fall 2009 barely moved from that of Fall 2008 (the system lost a grand total of 3,000 students between Fall 08 and Fall 09.)  The mechanics of rationing the educational commodity were in full operation.
So what happens when you ration your access with the course schedule?
When you lay off your adjunct faculty (the first to go), the availability of evening and other non-traditional hour courses drops, and as a result, the number of students over the age of 35 drops (we lost 5% of our students in this age group). Unfortunately some of these are the very same people that just lost their jobs and desperately need some type of retraining.
You can forget about K-12 special admits…we lost 16% of this group…the very same students that are currently in high school that have the highest likelihood of collegiate success.
Students that are already in the system (continuing students) have enrollment priority, and thus first crack at what sections you are still offering (this group increased by 4%).  Seeing the rationing, they tend to accelerate a bit, take higher course loads, and do less course “shopping”, which isn’t that bad of a thing inherently.  However, once they are done, the decreased supply of courses leaves far fewer seats available for those with lower enrollment priority: first timers and returning students (down 12% and 15% respectively).  It is these latter two groups that show up on our doorstep that take the brunt of the lost access. Combined, the incoming class of fall 2009 first-timers, returning students, and special admits was a whopping 113,000 students smaller than the class of fall ‘08. Those that did get a class took pretty much anything available, regardless of its applicability; in order to get future enrollment priority, you had to get in somehow...even if it meant enrolling in things you’ll likely never use.
More than likely, only the most diligent incoming student was able to navigate their way in; imagine the first-gen student facing this scenario (and a 2000 to 1 student to counselor ratio).  Many of them didn’t make it, and for many of them, their lives are permanently altered and now on another course…one that probably doesn’t include college, or at the very best, might include college at a later date.  This generational phenomenon, of being a person randomly assigned to a high school graduating class that just happens to hit their collegiate years at a time when the State is in the throes of a budget crisis, is probably the single biggest social injustice produced by all of this.
The system, now with only two terms remaining in FY 09-10 (Spring and Summer) undoubtedly had to cut even more to get under cap.  One cannot place blame here; a district must operate in a fiscally responsible manner.  My gut says we will still need a second and possibly third round of continued course section reductions in the next 1-2 years to fully work this through to the new equilibrium.
When it all breaks and things get better again, all the existing continuing students and the FTES they generate will be long gone.  The much smaller incoming freshman classes that came to replace them will generate far fewer FTES than their predecessors.  The number of incoming high school graduates will steadily decline for the next 10 years (the children of Generation X, a post baby-boom demographic trough), with the only growing segment of the population, Hispanic/Latinos, having the lowest college-going rates of the major populace.  At that time, we will attempt to grow again, but when we turn the spigot back to fully open, the water pressure will not be nearly as high as it is now.  It’s a potentially bad scenario, because historically we will do or put on just about anything that produces FTES to reach targets, and this historically can get us into trouble when it comes to the perception of curricular priority.
And speaking of curricular priority: times of rationing do tend to hone us. The courses we have cut have tended to spare areas such as credit offerings, degree-applicable and transferrable courses, basic skills courses, and the one area where we actually grew amidst all of these cuts, distance ed courses. Vocational courses unfortunately took a hit, but this is somewhat fiscally understandable given their higher cost.
For those that manage to get through a transfer path, getting out isn’t a walk in the park, either.  CSU, our primary transfer partner, is having their own woes, and a decline of over 5,000 transfers (about 10%) in 08-09 occurred.  Students on the bubble at their point of transfer who did not get accepted where they wanted to go had far fewer public choices; either you stayed at the CCC (and potentially accumulated excess units) or you found another path.  This path, more often than not, is beginning to involve a transfer sector whose capacity to absorb our diminishing market share is virtually unlimited: enter the for-profit university (rising out of the ashes, if you get my drift.)
Ten years ago, transfers to for –profits represented 6% of all transfers from the CCC. Last year, they represented 13%. Ten years ago, the CCC system transferred 2,800 students to the University of Phoenix; last year, we transferred 9,600.  This delta of almost 7,000 students, over the same period of time, is greater than the increase in transfer volume to the CSU and UC systems combined.
One other fact to ponder: whereas one-eighth of the transfers from CCC to UC are either African-American or Hispanic, and whereas one-quarter of those that transfer to the CSU are, almost one-half of CCC transfers to University of Phoenix are either African-American or Hispanic. It is, to the best of my knowledge, the only major student outcome metric where these two underrepresented groups are completely overrepresented.
Before you get your hackles up, recognize that this is the educational marketplace simply responding to demand, and doing what good capitalist businesses do: finding a market niche where they have a competitive advantage.  The University of Phoenix exists only where the CCC and CSU have failed: we don’t offer full programs online (or very few), we do not offer a viable CCC to CSU undergraduate transfer option online, we make our transition points incredibly difficult, we don’t offer accelerated learning, we don’t offer much flexibility for working adults, we don’t offer adequate academic guidance or technological support. Lately, we don’t even offer courses you can get into.  You may question the value of the resulting for-profit degree, but consider the fact that they are a huge trainer of K-12 teachers, and if estimates of an ongoing gap between future jobs requiring a degree and the available pool of Californians with a degree, more than likely the for-profit grad will at least get their fair share of interviews.  And, when push comes to shove, one does have to grit your teeth and admit…it is better that a student transfers somewhere, anywhere, than lose their momentum and leave CCC with nothing to show for it but an accumulation of units and no degree.
But once again, an injustice occurs. Of all the people that truly need and deserve a low-cost (now a relative term applied to public four-year institutions), publicly supported four-year education, it appears these are the very people that attend a for-profit institution and end up spending (and going into debt) far more than they should have to.  I’d like to think there is a happy ending on the other side of the transfer rainbow, but the truth is we simply don’t know what happens to them after they transfer because we have no data sharing agreement with a for-profit like the University of Phoenix.  Kaplan University, another smaller for-profit now operating in California, should be applauded, as they have stepped up and engaged the CCC Chancellors Office with a desire to perform a data match to examine the outcomes of students that move to their system, and we anxiously await the opportunity to explore this research.
Finally, the “Call for Change” drumbeat that we have all been hearing has integrated its message into many influential places, and failure to acknowledge this and react accordingly would be naïve.  On one hand, it is hard not to embrace the message; name an organization that cannot challenge itself internally to serve its customers better.  More often than not, the CCC system is ridiculed as being the poster child of how rampant focus solely on access and presumed “right to fail” policies have damaged our students prospects of achieving success (usually very narrowly defined as being only degree attainment, which we all know is but one form of student success.)  But, using these same metrics viewed over time, one sees that the CCC system has been slowly undergoing a quiet revolution, and you may not have even noticed it...even though you likely were a part of it.
Between the years 1993 and 2008, a fifteen year period that saw three recessions and two periods of lengthy increases, the headcount of the CCC system went up 28%.  It had some peaks and valleys during this time, but the overall trend line grew steadily at 28% over this 15 year span.
During that same period of time, a time when headcount went up 28%, the annual output of degrees and certificates rose 82%, from 72,000 per year to 131,000 per year.  Now, all things being equal, had we been only concerned about access, a 28% headcount increase would have netted a 28% increase in output. But it went up 82%.  The call for change may be a more recent phenomenon, but let’s look at the data for a minute…we’ve actually been making some significant progress over the past 15 years.  Even transfer to CSU and UC went up 35% over the same time span, and CSU has serious capacity issues that directly affect our transfer output figures.
Can we do more? Absolutely, we should never rest.  We desperately need to work on easing our transition points to reduce friction for the student. We need to simplify the experience and setup as many paths to success as we can muster with what limited resources we have.  We have yet to fully maximize the potential of technology as a tool to guide the student, and even deliver the educational commodity.
A recent study contracted for by the Chancellor’s Office looked at the properties of states with high outcomes per FTES along with high participation rates…the golden quadrant we want to be in.  The result: it wasn’t about how much your student fees were, or your financial aid policy.  It wasn’t about how many full-time students you had in your system.  It wasn’t even necessarily about your total reimbursements per FTES.  It was about how easy you made it for the student to navigate your system. 
Properties like clean articulation, common course numbering and common core curriculum, well-defined and universal transfer guarantees, common assessments, transfer pathways for CTE students, strong and well functioning online student supports and planners, and transfer scholarship programs all defined high-output/high-participation states.  CCC fell well above all other states on participation for sure, and we have much to be proud of for that; we were below the average on outcomes per FTES, but not last.
But there is good news here: the things we are taking about are all things that we can fix and do; we are not talking about huge structural changes being needed to get our outputs into the golden quadrant.  Our system (locally, by the Chancellor’s Office, and the Legislature) is actively working on the majority of things that define high-output systems.  One silver lining in what we are going through is that some of our sacred cows have been broken down. Slowly, carefully, and deliberately, we are making progress.
Ultimately, it is the image of progress and the CCC as a pathway to success (versus frustration) that needs to be conveyed, because students, for many of whom the CCC is the only chance for a higher education and the gateway to the prosperity of the middle class, are the last group we want to leave a discouraging impression upon.