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Cost Study for Higher Education

pdficonCost Study Workplan

Background

The 2021 General Assembly provided $300,000 in general fund for SCHEV to lead the study of costs and funding needs for Virginia public higher education institutions. This funding was originally appropriated in the 2020 session but was unallotted by the Governor due to the COVID pandemic.

The current funding model (base adequacy) was last updated in 2000. Since then, the Commonwealth has experienced two recessions resulting in budget cuts and changes have occurred in student demographics, instructional delivery modes and program offerings. As a result, institutions have raised tuition and fees to meet these changes.  SCHEV is tasked to do the base adequacy calculation annually. The majority of institutions are at-or-above the required funding need calculated by the base adequacy funding formula. Consequently, the current state funding is primarily driven through individual-institution needs versus a comprehensive statewide strategy.

To address these concerns and at the request of SCHEV, the 2021 General Assembly included a review of higher education costs to assess Virginia public postsecondary funding and spending, make national comparisons and recommend methods to allocate limited public resources that align with state goals of access, affordability and equity.

Project Goals

The vision of the study is to create a funding strategy model or set of principles that is fair and equitable based on alignment to goals of the Commonwealth and The Virginia Plan for Higher Education. SCHEV anticipates taking the following steps to address the legislative mandate:

  • Seek consensus of defining “reasonable” cost and identify current gaps to meet those costs.  Determine the appropriate cost share between the Commonwealth, institutions and students;
  • Establish a methodology for equitable resource allocation required for different student demographics and institutional mission;
  • Determine the expected interrelationship of state funding for affordability and financial aid and the impact on tuition pricing;
  • Identify measures of efficiency and effectiveness.
  • Create a model or set of principles to allocate limited public resources that align with the strategies and goals of the Virginia Plan.

Stakeholder Input

Throughout the cost study process, SCHEV staff will coordinate with a working group made up of Capitol Square and institutional leadership and staff. SCHEV will also gather feedback from the General Professional Advisory Committee,  Instructional Programs Advisory Committee, Finance Advisory Committee, and Student Advisory Committee. SCHEV will organize meetings with advocacy and public interest groups as well as the business community. Stakeholders will have the opportunity to provide input  multiple times throughout the process.

Project Deliverables

In the past two months, SCHEV staff interviewed various stakeholders and received their feedback regarding concerns and expectations of the upcoming cost study. The interview results laid the foundation for the staff to write the request for proposal (RFP). The RFP provided deliverables and guidelines for the potential contractor to conduct the study as follows:

Deliverable 1: Review of funding policies: The contractor shall assess national practices related to the funding of public higher education and compare these practices to Virginia’s current funding model to identify strengths and opportunities for improvement. The review in Deliverable 1 is expected to be more qualitative, while the cost-review data in Deliverable 3 is expected to be more quantitative.

Deliverable 2: Efficiency and effectiveness review: With the assistance of SCHEV staff and a workgroup of representatives from public institutions and state stakeholders, the contractor shall survey and compile Virginia institutions’ practices related to efficiency and effectiveness in their operations. 

The contractor shall research other states’ and institutions’ practices for efficiency and effectiveness; and assess and identify opportunities for mitigating costs, increasing financial efficiencies, and incorporating current best practices employed by Virginia institutions and other institutions nationwide. These analyses shall answer the following questions:

Deliverable 3: Identification of trends in costs and determination of estimated costs for higher education: With the assistance of SCHEV staff and a workgroup with representatives from public institutions and state agencies, the contractor shall review funding and costs related to public higher education. The data shall include state appropriations (general fund and non-general fund), as well as expenditures and peer comparisons on a total and per-student basis. These data are expected to help create benchmarks for determining reasonable costs and serve as a baseline for how the state might provide future funding. (Note: SCHEV staff will compile these data and review with institutions prior to the start of the contract. The expectation of the contractor is to focus on the analysis of these data and to document these costs with institutions.)

Deliverable 4: Recommendations for a new funding model: With the assistance of SCHEV staff and a workgroup with representatives from institutions and state agencies, the contractor shall create or modify a funding model or models. The proposed model(s) should consider the following: The funding model(s) should include: (1) basic cost and aspirational funding goals for higher education; (2) documentation as to how cost and funding amounts are calculated; (3) reporting and data publication requirements to ensure transparency of funding; (4) legislative proposals and state-budget changes that needed to support the funding strategy; and (5) a timeline for implementation.

Key Dates:

  • Work plan to Joint Subcommittee on the Future Competitiveness of Higher Education in Virginia due August 15, 2021
  • Preliminary report due December 1, 2021
  • Final Report due July 1, 2022

For questions or input, please contact Tom Allison at tomallison@schev.edu


SCHEV values honesty, quality, diversity, inclusion, growth-orientation, personal well-being, equity, transparency and accountability.
Through these values, we create a welcoming work environment that represents the best of who we are as an agency and as individuals.


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