This is a very interesting survey by an organization called Next Avenue, which focuses on older adult issues and research. It seems that higher education should spend more time thinking about and creating programs for adults in the post 50 year old range. There is going to be more demand for not only courses to increase new job related skill, but also for programs related to "third wave" life styles. This might include skills needed in new volunteer opportunities, new part time employment in retirement, or intellectual pursuits that one has always wanted to do but never had the time while working.
State & Local Government Pensions Confronted With New Costs and Complications in US House Tax Proposal
This is an interesting article on impact of the federal tax code changes proposed in the US House of Representatives. Highlights the principle that there are always consequences, intended and unintended, policy proposals at all levels of government.
It seems that if this proposal is passed it will cause a lot of state and local public administrators to have to restart discussions with bargaining groups and other employees about their pension plans and the additional cost/impact on retirees and current employees. There will also be a close look at at state and local budgets and how they will be impacted by this proposal.
From Route Fifty Online Post, 11.24.17: "State and local government pension plans would be confronted with new costs and complications under the Republican tax bill the U.S. House approved last week.
Some, but not all, public pension investments would become subject to what’s known as the Unrelated Business Income Tax, or UBIT, if the current version of the House bill were to be enacted. The proposed change to how the tax is applied would make it so state and local government pension plans are treated in a way that is similar to private sector pensions, or nonprofit organizations.
Hank Kim, executive director of the National Conference on Public Employee Retirement Systems, said that if the House proposal were to go into effect, it would be the first time that state and local pension systems would have to pay federal tax on their investments.
“It's a huge burden,” Kim added by phone this week.
Retired police, firefighters and teachers are a few examples of people covered by the state and local government pension plans that could be affected by the House proposal. Legislation the U.S. Senate Finance Committee has passed does not include similar UBIT provisions.
A Ways and Means Committee summary of the House bill says that the UBIT proposals in the legislation would increase federal revenues by about $1.1 billion between 2018 and 2027. GOP lawmakers are trying to revamp the tax code in a way that would not add more than $1.5 trillion to federal deficits over a decade, while also providing tax cuts for corporations and individuals.
Implications for Pension Funds
Although the health of public pension systems varies widely across the U.S., there are many examples of states and localities that are struggling to adequately fund the retirement plans.
The House bill raises the possibility that some plans would face new costs in the form of federal tax payments, which could eat into investment returns.
It would also introduce a new layer of considerations as pension fund managers decide how to structure investments. Additionally, they would have to weigh whether investments subject to the UBIT would yield adequate cash distributions each year to cover tax liabilities
Public plans would enter into uncharted administrative terrain as well, as they would have to begin filing federal tax returns, something they do not do currently.
“There’s probably a lot of spillover complexity and compliance cost and unintended consequences that you just don't see when you sort of first say: ‘well, why don't they pay tax like a corporate pension plan?’” Richard Zarin, a partner who specializes in tax matters with the law firm Morgan, Lewis & Bockius, LLP, said during an interview.
Unrelated Business Income Tax would not apply to more traditional forms of investment income that pension funds might generate, like corporate stock dividends, capital gains, interest, and rent earnings from real estate holdings that do not involve debt-financing.
Where the tax could come into play is if a pension system puts money into more complicated real estate ventures, infrastructure projects, or certain private equity funds that invest in startups, or other businesses that are limited liability companies. (There are ways tax-exempt investors can shield themselves from UBIT liability by using intermediaries called “blockers.”)
Douglas Schwartz, a partner who focuses on tax law at Nossaman, LLP, flagged what are known as prepackaged funds as a special concern. He said that while pension systems could structure other investments to avoid the UBIT, with prepackaged funds this would not be so.
“They’ll take out debt, or they’ll invest in startups, and the investor has very little control over that,” he said of the funds.
Schwartz also pointed out that with the House bill's UBIT provisions, which would go into effect in 2018, there is no “grandfathering.”
So, in other words, a fund might have put money into an investment five or ten years ago assuming that it would be exempt from federal taxation. But, if the House measure were to win final approval, this would not be the case in the years ahead.
The National Conference on Public Employee Retirement Systems, National Association of State Retirement Administrators and the National Council on Teacher Retirement wrote joint letters to congressional leaders earlier this month, urging that the UBIT language affecting state and local public pension plans be left out of any final legislation to overhaul the tax code.
In the letters, the groups allude to constitutional concerns. “State agencies are Constitutionally exempt from taxation and application of UBIT to public pension plans erodes the immunity states and the federal government each enjoy from taxation by the other,” they wrote.
But Daniel Hemel, a law professor at University of Chicago Law School whose research covers tax law, noted in an email that “states do not enjoy absolute immunity from federal taxation.”
He highlighted a 1988 U.S. Supreme Court opinion, in the case South Carolina v. Baker, that says while “all federal activities are immune from direct state taxation … at least some state activities have always been subject to direct federal taxation.”
Hemel also referenced the opinion of former Chief Justice Harlan Fiske Stone, in a case from the 1940s, New York v. United States, which seems to say that a nondiscriminatory federal tax can be applied to state governments as long as it does not “interfere unduly with the State's performance of its sovereign functions of government.”
“By that standard, it's very hard for me to see how the application of UBIT to state and local government pension funds would violate any constitutional provision,” Hemel said. “The tax is nondiscriminatory—it applies to other generally tax-exempt entities as well.”
He added: “The argument that the House provision violates the Constitution strikes me as a creative one but not a winning one.”
Kim, with the National Conference on Public Employee Retirement Systems, acknowledged that as the GOP-led tax overhaul effort has unfolded on Capitol Hill, state and local government groups have so far been largely preoccupied with issues other than the UBIT.
For instance, lobbying against proposals that would rollback the deduction for certain state and local taxes and that would eliminate tax-exemptions for interest earned on certain bonds.
“As they become more aware of the policy implications of UBIT,” Kim said of the state and local groups, “I think it will quickly rise to the top of the priority list.”."
Bill Lucia is a Senior Reporter for Government Executive’s Route Fifty and is based in Washington, D.C.
Tuition Discounting Policy Change at University of Detroit Mercy Is Innovative Move
From Crain"s Detroit: "Effective with the next academic year that begins in fall 2018, tuition for new students(at University of Detroit/Mercy) will be $28,000 per year, down from the current annual cost of $41,158.
Current students' tuition will decrease to $28,840 next year, reflecting a 3 percent tuition increase upperclassmen are charged.
The current sticker price had been deterring parents and students from considering the Catholic university, President Antoine Garibaldi said.
Since joining Detroit Mercy six years ago, Garibaldi has gotten to know many of the local high school principals. They tell him students and parents think highly of Detroit Mercy but don't even consider it once they see the price of tuition.
"Now we will really be in the ballpark with other prospective schools so that parents and students will take a serious look at us," Garibaldi said.
The University of Michigan and Michigan State University, the Detroit university's largest competitors, are charging in-state freshmen $14,826 and $14,516 for the current academic year, respectively."
This will be an interesting marketing and recruiting move to watch among the private/non profit colleges and universities. It could make a huge difference or just be a flop like all marketing moves.
However I do believe what President Garibaldi says he was hearing from parents and students about tuition sticker shock keeping them from considering UDM. Public college and university presidents are hearing the same message about their tuition. Private/Independents and public colleges and universities are all confronting the issue of parent/student concerns about ever increasing cost of higher education. For middle class families I think sometimes it is difficult for them to understand why they should pay $41,000 plus at a private/independent institution when a neighboring public institution is charging $14,000 plus. Many will say both choices are high quality institutions so why burden our child with a $100-$200,000, or even more, student loan burden.
UDM's move I am sure will be watched by the other private/independent colleges and universities who are doing the same tuition discounting that UDM does. If this works they too can begin to look at their tuition discounting policies and go to the so-called "real tuition cost" right up front.
Governance of Public Universities: One Nudge For Change--Board Governance
Each of our states has its own higher education management system. Some are more effective than others. Some are statutory and others are constitutionally mandated.
Michigan's 13 public universities get their board members in two distinctly different ways. University of Michigan, Michigan State University and Wayne State University have their board members elected in a statewide election. They are nominated in partisan political conventions and then run state wide. The other 10 public universities have their trustees appointed by the Governor. Every two years two of the trustees at each institution are up for appointment or re appointment by the Governor (unless their has been a resignation or death of a trustee before their term is up). After nomination by the Governor their names are sent to the Michigan Senate for advice and consent. All of this is provided for in the Michigan Constitution.
When the Governor and the Senate are of the same political party there rarely are any public hearings on the nomination. When the Governor sends it to the Senate it is almost automatically approved. This has been the procedure usually, although not always, used by most Governors when they find themselves in this situation. Hearings are held when the Governor and the Senate are of different political parties--not always but usually. This often may lead to some partisan political gamesmanship, so Governor's prefer not to have these public hearings if at all possible.
However when public hearings are not held the public is usually not well served and loses an opportunity to know about who is being sent to govern our public universities. The public has a right to know about these individuals--most of whom are smart, well intentioned and ethical people. However the question that needs to be answered is what in their background will enable them to be an effective university trustee. What do they know about higher education? What are their personal and political values? How do they feel about cost of tuition at our institutional? How do they see the issue of access to higher education and what will they do to increase it? Transparency and public access to university information? Presidential evaluations? What are the higher education issues they believe are most important in the coming six years? If they are being reappointed their should be a public hearing and the same questions should be asked of them--as well as what did they do about these issues in their immediate past term.
Public hearings will give taxpayers a change to comment to the Governor and the Legislature on their thoughts about this nomination. Especially if the public hearing process is given a chance to work--notice of the hearing and publication of the nominees answers to questions (written or in video or podcast format). Final approval by the committee members conducting the hearing only after 30 days to allow public comment on the nomination. The legislature and the Governor could consider these comments and then either withdraw the nominee if their is new concern on a nominee or send it to the full Senate for a vote. If nothing else the publication of the answers from nominees will give the public a chance to ask questions of the trustee(s) during their term based on their answers to the questions.
These trustees are responsible for setting policies and governing/spending billions of dollars in taxpayer money and tuition money. The public should know more about who is being entrusted with governing our public universities--again most of whom are honorable, well intentioned and qualified individuals. Cities, counties, townships, school boards and the state itself has more scrutiny for the public dollars they are responsible for--and they stand for election every X number of years.
Changing the Michigan Constitution to accomplish any of this would be near impossible. So maybe this is one of the "nudges" we could debate and maybe implement.
Taxpayers and voters could "nudge" the candidates for Governor in 2018 about this nudge and about their views on higher education and needs for reform. We could "nudge" them to commit to working with the Senate (regardless of which party controls the Senate) to create responsible and effective public hearings on candidates for university trustee. Commitment by Governors and Senators to not make these public hearings into partisan political hearings but a vehicle for taxpayers to know more about who is governing out state's amazing public universities.
Another nudge another day!
Higher Education Mergers, Acquisitions and Closures
This week Marshall Law School and University of Illinois Law School announce a merger. Valparaiso Law School announced that it was closing. Last week we read about other mergers and some closure speculations. Seems obvious now that more and more of this will happen as the higher education market place shrinks and tries to re-position itself in this "new" economy.
Might be interesting to see what public policy "nudges" the federal and state governments can put in place to encourage more re-arrangements and re-organizations in higher education. Seems the more we can do to make universities and colleges more financially secure, fiscally responsible and to increase degree completion percentages the better off we would all be.
Michigan has 13 public four year universities (plus Flint and Dearborn UM campuses), 29 community colleges and many, many non profit and for profit colleges and universities. They are all trying their best to serve the citizens of this state and to be innovative and financially responsible. Most of Michigan's four year public universities have constitutional protections to protect their independence and limit legislative/executive branch interference. Maybe a few "nudges" and/or incentives might encourage some innovations on how we can more effectively the cost of higher education and increase opportunity. Might show us some ideas to increase success for students and get more students enrolled and completing a degree.
What are some possible "nudges" that might assist in this effort?
What changes can we make in higher education public policy without having to amend the state constitution or spend years and years in court?
What can we do to increase board member effectiveness and governance quality?
What are some of the best practices in other states that we in Michigan (and other states) might learn from that have worked in these other states?
More later on some of these questions.
Michigan's Terrible College Drop Out Problem
http://www.bridgemi.com/talent-education/michigans-college-dropout-dilemma
Very important data in this article. Be interesting to see what colleges and universities are doing about this issue. How are they trying to reduce their "dropout" problem and what are they doing to encourage those dropouts to re enter the college programs and get their degree completed. What are they doing out there--what are the best practices?
Five Facts About Mich State Employees
http://www.lansingstatejournal.com/videos/news/2017/09/02/5-facts-michigan-state-employee-unions/105237058/
Some very interesting facts about state employee unions in this article. Always helps to have good data and facts with so much misinformation out there. Interesting that public sector unions are growing nationally.
USDOE/DeVos Signals New Approach in Sexual Assault
Citing Obama-Era Failures, DeVos Signals a New Approach to Sexual Assault
The Future of Higher Ed in Michigan
http://www.michiganfuture.org/08/2017/end-public-education-michigan/
Reading Lists A Window Into Universities
Some interesting choices on this reading list.
Reading lists a window into universities.
http://detne.ws/2xOmnOr
Blacks and Hispanics More Underrepresented At Flagship Colleges Than 35 Years Ago
https://nyti.ms/2vrKY9V
Some alarming data in this article. University leadership need to be held responsible and to come forward with a plan to correct this issue.
Which Michigan Colleges Draw Most State Grads
http://on.freep.com/2xuBDjj
UP Rural Strategy Plan
Tom Watkins has written a very interesting article in Dome Magazine (online) about how to get the leadership of downstate Michigan and the Upper Peninsula to work together on an rural policy for Michigan--Michigan clearly has an urban policy that is evidenced by its state appropriations, regulatory and statutory policies enacted over the past few decades. This is not the case for rural Michigan--mainly the Upper Peninsula and northern Michigan (north of Clare). Of course there have been state policies that benefited rural areas but not necessarily to the same degree as those that benefit urban areas--content, state funding and/or economic/human impact.
The questions raised here are how do we get the statewide leadership to work together--the legislature, local governments, business and labor leaders, faith leaders, education leaders, etc.. Leaders from the rural areas have a good idea of what they need in their communities, as do the urban leaders. What needs to happen is before future governors and legislators begin debating and passing public policies advocated by urban area leaders they should ask some questions: "how does this impact rural areas; what could we add to this proposal that would assist in rural areas and support a state rural policy; why should this public policy pass without an equal or relevant public policy that is beneficial to rural areas, etc., etc... Same questions should be asked when the legislature or a governor is about to consider a public policy that is proposed by rural area leaders.
As rural area voters consider who to vote for in 2018 primary and general elections they should ask the candidates what is your proposal for a rural policy agenda, how would you implement it, how would you pay for it and how would you get urban leadership (in the private and public sectors--the public square) to support your proposals? Ask the candidates for Governor and US Senate what are their specific proposals and plans. No generalities. No political blah, blah. Assure that they have specifics when they speak at political gathering and insist that they develop written proposals that rural voters can review before they vote for him or her. Rural voters should not vote for candidates who do not have a commitment to a rural policy that they developed with real area residents and they are committed to implemented.
Read the Watkins article below. What ideas do you have that should be included in a Michigan rural policy and how to implement your ideas. The Watkins article is a good beginning.
Affirmative Action and Higher Education Policy on Enrollment and Diversity
This is going to be an even bigger higher education policy and political/judicial issue in coming immediate years. Important also becaus of enrollment declines now and in future, but also because of policy issues in higher education.
http://www.chronicle.com/article/What-You-Need-to-Know-About/240820?cid=wcontentlist_hp_latest
Affirmative Action Shift By USDOJ
A major shift in federal education policy. Important new legal development within USDOE. All eyes will be on relevant cases before US Supreme Court and lower federal courts.
https://www.washingtonpost.com/amphtml/world/national-security/justice-department-plans-new-project-to-sue-universities-over-affirmative-action-policies/2017/08/01/6295eba4-772b-11e7-8f39-eeb7d3a2d304_story.html
Big Enrollment Drops until 2031
The midwest and northeast hit the worst as described in this article. Are public university operational reforms, mergers and/or closures solutions to financial and academic problems as a result of these enrollment drops?
This issue will continue to be a huge problem in Michigan with such dismal demographic numbers for high school graduates. The pool keeps shrinking. It will difficult for small public universities to complete with the larger recruiting/enrollment budgets of bigger state universities.
Michigan and other states facing similar demographics will have to begin discussions about how many public universities are appropriate in their state with these declining numbers. Public policy makers will start asking this question more regularly and will most likely ask questions like should we merge some of our smaller public universities with larger universities and create campuses that report to the larger parent university. Or should we merge small public universities with other smaller universities. The public policy question is whether allowing smaller, declining public universities to continue to receive public funds for operation or would we be better off merging them and have a more effective use of public funds. The question that arises then is whether it would lower costs for students? Would mergers result in significant savings in operations or is this "majoring in minors" with little dollar or significant budget savings. What is needed is data, data and more data to effectively evaluate this concept. Data on exact costs at smaller universities and data on impact of operation and programatic savings--at smaller and larger public universities.
In those states confronting these issues, regardless of any constitutional or statutory complications/prohibitions, it might be interesting for the legislature and the governors to appoint citizen commissions to look at this data and the proposals--and to come up with a set of recommendations for that state on how to position higher education in that state in the future. Should there be mergers, should there be prohibitions on program duplications in the state, should there be a change in funding process and levels, etc., etc.. Better to do this now before a crisis is presented and emergency measures are needed.
Who knows we might see creative and innovative ideas for the future of higher education come forward from these appointed citizen commissions.
Now is the time to think about the future of higher education in each state--before a financial or operational crisis occurs.
Eliminate State Board of Education
The US Department of Education was created by President Carter in the 70s. Every year since then someone in Congress, in the education community or in some political capacity (including pundits) has called for the elimination of the DOE. Once again there are those today, 35 plus years later, calling for the elimination of the US DOE. While most observers believe that under SOE DeVos there may be a reduction in DOE programs, scope and staff. She has not spoken out yet on the elimination of the USDOE. We shall see how that plays out in coming months.
Same is true on the Michigan Department of Education. I have been involved in state and local education issues for over 35 years. I heard the calls for MDOE elimination when I worked in the Michigan Senate, when I worked for the Grand Rapids Public Schools and when I was working on education public policy issues in Lansing and Washington over the last few decades.
I continued like everyone else to hear the class for MDOE eliminator or reform/reorganization as President of Northern Michigan University and as a faculty member.
Same is true for the debate on appointment or election of SBE members. One observation is if Michigan were to go to Gubernatorial appointment of SBE members then there ought to be a statutory/constitutional requirement of more transparency on the appointments and appointees background. There ought to be a requirement that the Senate in its advice and consent obligations must be required to hold public hearings for each appointee so the public can hear and see more about each nominee. Often in past years when the Governor's office and the Senate is of the same party there are not hearings held for the nominees. That is true today in this process.
The above ought to be true of the appointment of Gubernatorial appointees to public university boards. It is greatly needed. More on that later.
GVSU President Haas and the other members of this commission have done an admirable job in laying out a set of recommendations. State Representative Kelly has layer out his concerns over those recommendations and I am sure more in the legislature and in the educational community will weigh in now. What is important now is the this report and the recommendations get broad debate across the state and the legislature utilizes it public hearing process to dig more into these recommendations and find a way for us all to come together on how we want to govern education, who should do it, how to make it transparent and measurable. We should all get about this now.
Critical Competencies For Public Administrators
The job of a village, township, city or county manager is very complex and the complexities are getting bigger and stronger. Effeciveness in these jobs takes great care at knowing what are the critical competencies needed for the job and how effective is each individual manager at these required competencies.
The author writes: "Leadership involves a combination of both “vertical” competencies – the knowledge and skills needed to lead that are specific to one’s role as a local government official – and “horizontal” competencies – the generic knowledge and skills that cut across these competency areas. For example, your role as a public administrator likely requires an intimate understanding of local issues, but your success as a leader also very much hinges upon your analytical problem-solving skills, your organizational abilities, your enthusiasm for public service, and your effectiveness in communicating with the diverse constituents in your community."
No matter how small or large your village, township, city or county the above skills are crucial.
College Attainment Drives Per Capita Income
The author of this article writes:
"Michigan is 32nd in per capita income and 32nd is four year degree attainment. If the state doesn’t substantially increase the proportion of adults with a four year degree or more we almost certainly will be a low-prosperity state long term. End of story!"
Michigan will have to do a much better job of not only funding appropriately higher education but a better job increasing degree completion rates. That will take more work in retention programs for entering freshman and sophomores. The retention programs need to be monitored more by the state to make sure that colleges and universities have effective programs and they are benchmarking. Just having a president say they are doing a good job and they are the best at retention is not good enough. What is the program for retention, how effective is it and how much does it cost? The easy job for an institution is only admitting freshman with GPAs over 3.0 to 3.5 and very high SAT/ACT scores. State aid ought to be based on (among other things) how many eligible Pell students are admitted, how many first generation students are admitted and how does the retention program impact them.
If Michigan wants to be in the top 10 in degree completion then it has a long way to go from 32nd four year degree attainment.
It is worth the work and the commitment. It is important for Michigan and other states.
This article is worth a read and worth serious debate.
http://www.michiganfuture.org/03/2017/college-attainment-drives-state-per-capita-income/
Tuition Not Only Worry--Living Expenes A Challenge For Students
What often is written about higher education availability to many Americans is the rising tuition costs. While this is true for many, if not most, students , it is also true that the costs of housing, food, medical care, etc., etc., are also major factors for student non completion and dropout from community colleges and universities.