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Board Report #01-2

2001-03 Biennial Budget Issues

 

When reviewing the following points, please keep in mind the 1997-99 Biennial Report which outlines the rationale and policy framework for Wisconsin's Student Financial Aid Structure. Additional pieces of information that I have attached to this report as Appendix A are the 2001-2003 Biennial Budget Instructions and the Timetable for Budget Development. All of this information along with this report and the discussion that will take place at the July meeting should provide a basis to act on the budget issues presented.

Per the Budget Instructions in Appendix A, for 2001-02 the General Purpose Revenue (GPR) funding should not exceed 100% of the 2000-01 appropriation. For 2002-03, GPR requests should not exceed 101% of the 2001-02 appropriation. These instructions apply to all Agencies. Each Agency may be required to submit a reduced base budget plan reflecting a 5% reduction of the base for each year. It is clear that, in terms of requesting additional funds for the next biennial period, the opportunities are limited.

Funding Increase Requests
The 1997-99 and 1999-01 biennial budgets increased the Wisconsin Higher Education Grant (WHEG) and Wisconsin Tuition Grant (WTG) Programs as follows:

These were very substantial increases for both programs particularly when compared to funding increases/decreases that occurred in the last ten years. Prior to 1997, the last substantial increase for both the WHEG and WTG Programs occurred in 1989-91. Total funds available for the academic year 2000-01 under the WHEG and WTG Programs total $53,140,300 compared to $38,134,300 ten years ago (39% increase). Currently, Wisconsin ranks 12th in the country for providing need based grants like the WHEG and WTG to undergraduates.

Programs other than the WHEG and WTG Programs have experienced sporadic funding increases/decreases in the last ten years. The 1999-01 biennial budget included the following increases in the Talent Incentive Program (TIP):

Historically, funding for programs administered by the Higher Educational Aids Board was tied to the cost of education. For example, funding for the WHEG Program when it was initially created was tied to meeting 33.33% of the cost of education. To meet 33% of the Wisconsin student's cost of education today (excluding the Expected Family Contribution and other available need based assistance) funding for the WHEG and WTG Programs would need to increase by approximately 59% for 2000-01. Most recently, funding requests have been tied to tuition increases. Tuition increases from year to year can range from 5 to 9%.

The maximum one can be awarded under the WHEG program per statutes is $1,800 per academic year. The current level of funding allows a maximum of $1,050 for WTC students (with an average award of $750 in 99-00) and $1,500 for UW students (with an average award of $1,012 in 99-00). In order to fund students to the statutory maximum award of $1,800, funding would need to increase 112% for WTC students and 59% for UW students in 2000-01.

The maximum one can be awarded under TIP per statutes is $1,800 per academic year. The current level of funding allows a maximum of $1,216 for continuing students (with an average award of $1,081 for all students in 99-00). In order to fund students to the statutory maximum award of $1,800, funding would need to increase 59% in 2000-01.

In 1988-89 nine percent of the financial need, calculated for Wisconsin students receiving State assistance, was met by the TIP, WHEG, and WTG Programs. In 1998-99 eight percent of student's financial need was met by the same three programs. An additional $6,371,644 (12% more in funding) in 1998-99 would have brought these three programs back to meeting nine percent of financial need as ten years prior.

What should funding requests be tied to? What is the role of state funded higher education financial assistance programs in meeting the need of its residents?

Increase Maximum Award for Wisconsin Tuition Grant
The Wisconsin Tuition Grant (WTG) Program provides grant assistance to undergraduate, Wisconsin residents enrolled at least half time in degree or certificate programs at Independent colleges or Universities throughout Wisconsin. Awards are based on financial need and partially based on that portion of tuition in excess of UW - Madison tuition. Grants range from $250 to $2,300 per year. Eligibility cannot exceed ten semesters.

The Statute indicates a maximum Wisconsin Tuition Grant of $2,300 per academic year and $1,150 per semester. The maximum was last increased in 1998-99 from $2,172. Prior to 1998-99, the last maximum grant adjustment occurred in 1986 when it went from $2,078 to $2,172. During the 1998-99 academic year, 9,406 students received a Wisconsin Tuition Grant. The average grant was $1,923. Currently over 80% of the grant recipients show eligibility for the maximum $2,300.

It is because the majority of the program's recipients are receiving the maximum grant that it is becoming more difficult to distinguish the neediest students, who should receive larger grants, from those who show less need. In essence, the grant is losing its effectiveness of providing the greatest assistance to the neediest student.

Should an increase in the maximum WTG be pursued?

Expand and Increase Maximum Award for Indian Student Assistance Grant
The Indian Student Assistant Grant (ISAG) was established to assist Wisconsin residents who are at least twenty five percent Native American and are undergraduate or graduate students enrolled in degree or certificate programs at a University of Wisconsin, Wisconsin Technical College, an Independent College or University or a Proprietary Institution in Wisconsin. Awards are based on financial need with a limit of ten semesters of eligibility.

Currently the maximum award under this program is $1,100. Prior to 1995-96, the maximum award was $2,200. The award had been split in half in 1995-96 because funding available dropped by 50%.

Since the decrease in the maximum, there has been an increasing amount of Native American students who have been forced to drop out of school due to lack of funding. It appears that, although not all students would be eligible for a maximum of $2,200 under this program, students who have financial need have very high financial need and require the highest maximum grant possible in order to afford to stay in school.

In order to fund an increase in the maximum, the program's appropriation would also need to double. The ISAG Program is funded through Gaming Funds unlike other programs HEAB administers which are funded through General Program Revenue.

Should an increase in the maximum ISAG and its appropriation be pursued?

Expand and Increase Maximum Award for Minority Undergraduate Grant
Awards under the Minority Undergraduate Grant Program are made to resident minority undergraduates, excluding first year students. The student must be enrolled at least half-time at an Independent or a Wisconsin Technical College institution. According to the statutes, a minority student is defined as a student who is an African American, American Indian, Hispanic, or Southeast Asian from Laos, Cambodia, or Vietnam admitted to the U. S. after December 31, 1975. Awards are based on financial need with a maximum grant of $2,500 per year, which can be received for up to eight semesters. The University of Wisconsin System has a similar program for students attending those institutions called the Lawton Grant.

During the 1998-99 academic year, 354 Wisconsin Technical College students received on average $994 grants under this program. That same year, 271 Independent College and University students received on an average $1,263. A total of $693,960 was awarded to all recipients in 1998-99. If funds were available, best projections indicate that an additional $900,000 could have been spent beyond the $693,100 allocated for 1999-00.

Based on projections, in approximately 2017 our minority population will become our majority population. In 2012 it is expected that 40% of our high school graduates will be minority students. The question has been raised, "will our future majority residents be educationally prepared?" Colleges and universities around the State see a need for increasing the maximum and the overall funding in addition to expanding the eligibility to include first year students. This would allow not only the retention of today's minority students but would also provide a mechanism to recruit students.

Should an increase in the maximum Minority Undergraduate Grant and its appropriation be pursued? Should the program be expanded to also include first year students?

Expand and Increase Maximum Award for Minority Teacher Loan
The Minority Teacher Loan (MTL) Program provides loans at five percent interest in amounts of up to $2,500 per year (with a maximum of $5,000 total) to Wisconsin resident, minority, undergraduate juniors or seniors. Recipients must be enrolled at least half-time in programs leading to teacher licensure at an Independent or University of Wisconsin Institution. According to the statutes, a minority student is defined as a student who is an African American, American Indian, Hispanic, or Southeast Asian from Laos, Cambodia, or Vietnam admitted to the U. S. after December 31, 1975. The student who participates in this program must agree to teach in a Wisconsin school district in which minority students constitute at least twenty nine percent of total enrollment or in a school district participating in the inter-district pupil transfer (Chapter 220) program. For each year the student teaches in an eligible school district, 25% of the loan is forgiven. If the student does not teach in an eligible district, the loan must be repaid at an interest rate of 5%.

During the 1998-99 academic year, 127 students received on an average $1,833 in loan assistance under this program. A total of $232,852 was awarded to all recipients in 1998-99. If funds were available, best projections indicate that an additional $240,000 could have been spent beyond the $240,000 allocated for 1999-00.

The MTL is also tied to the concern that we may not be sufficiently meeting the needs of the future (similar to the concerns indicated under the previous point related to the Minority Undergraduate Grant). MTL, however, is specific to training minority teachers. K-12 schools with greater than 29% enrolled minority students or schools who participate in the inter-district pupil transfer program have indicated that an enormous need to educate more minority teachers exists. Enrollment at Milwaukee Public Schools in 1998, for example, consisted of over 68% minority students. The same year, just over 21% of the teachers came from minority backgrounds. By increasing the maximum award and funding, the gap between minority students and minority teachers would decrease. A similar concern also exists at the post-secondary level. It has become increasingly difficult to recruit minority faculty. By expanding this program to include the participation of students intending to become post-secondary education faculty would contribute to meeting this increasing need.

Should an increase in the maximum Minority Teacher Loan and its appropriation be pursued? Should the program be expanded to include the participation of students intending to become post-secondary education faculty?

Expand Dental Capitation Program
The Dental Capitation Program provides tuition subsidy for a limited number of Wisconsin residents who attend Marquette University's School of Dentistry. The program was originally established to educate and keep Wisconsin dentists. The number of participants in the program for 2000-01 is 100. Each recieves $11,670. It has been suggested by public health associations that there is an increasing need to provide dental care to rural areas and medicaid clients; and to increase the number of dentists in Wisconsin. Data from the School of Dentistry indicates that the current capitation program has been successful in retaining Wisconsin dentists and is in the process of collecting information related to dental care provided to rural areas and medicaid clients by its Wisconsin graduates.

Should the already successful capitation program be expanded in order to increase the number of Wisconsin dentists? Should another program also be developed to address the needs of Wisconsin's rural residents and medicaid clients?

Brain Drain and Labor Force Deficit
Recently there has been a great deal of discussion centering on the issues of "brain drain," or "labor force deficits." There is the concern that Wisconsin colleges and universities educate its residents only to see them leave the state once they graduate. There is also the concern that in approximately the year 2015 there will be more 65 year olds leaving the workforce than 18 year olds entering it.

According to data collected by the Higher Educational Aids Board, in 1998-99 approximately 83% of all the students enrolled at Independent Colleges and Universities, University of Wisconsin schools, and Wisconsin Technical Colleges are Wisconsin residents. Some systems have not collected the percentage of Wisconsin residents who stay in Wisconsin after graduation. However, for those who have, it appears that the great majority of Wisconsin residents do stay in the State after graduating from a Wisconsin college. For example, the WTC System Board indicates that based on their studies 90% of their graduates stay in Wisconsin after graduating. In a 1997 national study Wisconsin ranked seventh in the nation to hold onto college graduates after they graduate, but ranked 50th in recruiting non-residents.

The question becomes how can Wisconsin avoid or reverse a brain drain and/or a labor force deficit? How can Wisconsin more highly educate its residents and retain or continue to retain them once they complete their degree? How can Wisconsin recruit nonresidents who want to be educated in Wisconsin AND retain them after they graduate? There is no one solution to either of these challenges.

Following are three possible solutions to reverse these potentially dangerous trends:

  1. Increase Maximum/Awards for the Academic Excellence Scholarship
    Academic Excellence Scholarships are awarded to Wisconsin high school seniors who have the highest grade point average in each public and private high school throughout the State of Wisconsin. The number of scholarships each high school is eligible for is based on total student enrollment. In order to receive a scholarship a student must be enrolled on a full-time basis, by September 30th of the academic year following the academic year in which he or she was designated as a scholar, at a participating University of Wisconsin, Wisconsin Technical College, or Independent institution in the State. The maximum scholarship is currently $2,250. The maximum scholarship for students awarded in 1995-96 and prior was full tuition and fees at a UW campus or Wisconsin Technical College, or an amount equal to the UW - Madison tuition and fees for the students attending independent institutions in Wisconsin. Half of the scholarship is funded by the state, while the other half is matched by the institution.

    The intention of this program is to keep the best and the brightest in Wisconsin, as indicated earlier. Most recent data indicates that the program may no longer be fulfilling its purpose due to the $2,250 annual maximum. Tuition at UW - Madison (which the program was tied to in 1995-96 and prior) is $3,735 for 2000-01. Data is showing that more students who are designated the recipient of the scholarship are choosing not to stay in Wisconsin and therefore the alternate is accepting the scholarship instead. Some would argue that the alternate may be as academically strong as the designated recipient. Since the majority of AES participants stay in Wisconsin after graduating, consideration should be given to expanding the number of scholarships awarded.

    Doubling the program would increase both the appropriation and the total school's match each by approximately three million annually. If the maximum award were to be increased to $3,735, the additional commitment would be approximately two million annually by the State which would also have to be matched by the schools.

    Should the maximum AES be tied to actual tuition (as in the past) rather than be capped and/or should the number of awards be expanded?

  2. Develop a New Scholarship Program or expand an existing Program
    Develop a scholarship program designed for residents of states other than Wisconsin. Scholars would be required to meet a certain level of admission criteria to be eligible to participate. The program would have a repayment component attached for those who do not maintain the required grade point average, complete a degree program, or do not remain in Wisconsin for employment after degree attainment. Develop partnerships with Wisconsin employers to establish internships for scholars to participate in with the potential of the internship leading to permanent employment upon graduation. Amount of scholarship would cover up to full tuition at the highest University of Wisconsin System institution. Scholarships could be applied to tuition at any Private Wisconsin College or University, University of Wisconsin, or Wisconsin Technical College. The intention of this program is to bring academically strong non-residents to Wisconsin and retain the recipients after graduation from college as income earning Wisconsin residents.

    Should this program be established?

  3. Gather and Distribute names and addresses for Recruiting Purposes
    There has been a concern that Wisconsin's own academically strong high school graduates are increasingly being recruited away from Wisconsin by colleges and universities outside the State. One of Wisconsin's goals by developing the Wisconsin Academic Excellence Scholarship Program was to keep the best and the brightest in the State. Another solution to keep Wisconsin's best would be to gather and distribute to Wisconsin colleges and universities the names and addresses of Wisconsin high school sophomores or freshmen with Grade Point Averages of 3.0 or higher. This would allow Wisconsin colleges and universities more time to recruit these potentially academically strong high school students before other colleges and universities around the country would have the opportunity to. Typically, colleges and universities do not have access to this information until the student's junior or senior year of high school. Currently this information is not being collected by any one agency and therefore a new process and database would need to be established. The intention of establishing this new process is to retain the best and the brightest in the State.

    Should this proposal be pursued?

  4. Develop a New Scholarship Program
    There has been an effort to expand and/or develop the technology industry in Wisconsin. The State has also been experiencing a shortage in trained employees in this area. A way to support Wisconsin's efforts and to meet the State's need would be to establish a new scholarship program focused specifically on training individuals entering technology related fields. Develop a scholarship program designed for Wisconsin residents or residents of states other than Wisconsin. Scholars would be required to meet a certain level of admission criteria to be eligible to participate. The program would have a repayment component attached for those who do not maintain the required grade point average, complete a technology related degree program, or do not remain in Wisconsin for employment after degree attainment. Develop partnerships with Wisconsin employers to establish internships for scholars to participate in with the potential of the internship leading to permanent employment upon graduation. Amount of scholarship would cover up to full tuition at the highest University of Wisconsin System institution. Scholarships could be applied to tuition at any Private Wisconsin College or University, University of Wisconsin, or Wisconsin Technical College. The intention of this program is to encourage academically strong residents or non-residents to earn degrees in technology related areas and to retain the recipients after graduation from college as income earning Wisconsin residents.

    Should this program be established?

DISCUSSION

Consolidate Post-secondary Financial Aid Programs under HEAB
The majority of Higher Education State Student Financial Aid Programs are administered by the Wisconsin Higher Educational Aids Board. However, there are a number of programs that are currently administered by other agencies or systems. Having all programs administered by one agency eliminates confusion by students and their families who expect to deal with one agency when questions related to state assistance arise. Consolidation would also eliminate duplication of effort e.g. the screening of students for delinquent child support payments. In the future student records may need to be screened for participation in the EDVEST Program. Duplicating these efforts are error prone and require additional resources.

Appendix A

 

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