The Thomas Jefferson Institute for Public Policy is a non-partisan research and education organization devoted to improving the lives of the people in Virginia. The Institute was organized in 1996, and was the only state and local government focused public policy foundation in Virginia based on a philosophy of limited government, free enterprise and individual responsibility. It is a “solutions tank” seeking better ways to accomplish the policies and programs currently being undertaken by state and local government – always based on the Institute’s underlying philosophy.
The work of the Thomas Jefferson Institute for Public Policy is geared toward educating our political, business and community leadership about the issues facing our society here in Virginia. The Institute offers suggested solutions to these problems in a non-partisan manner.
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This Campaign *99 Issue Paper, “The 1999 Virginia Plan for Higher Education: Providing New Opportunity for Academic Leadership,” is published by the Thomas Jefferson Institute for Public Policy. It is sent to all state elected officials, all candidates running for state office in 1999, business executives, academic leaders, policy experts, and the media in Virginia.
The ideas in this Issue Paper do not necessarily reflect the views of the Thomas Jefferson Institute or its Board of Directors and nothing in this study should be construed as an attempt to hinder or aid any legislation.
The Thomas Jefferson Institute for Public Policy offers this Issue Paper, as part of its Campaign ’99 Project. This is one of several Issue Papers that will be distributed in an effort to help all the candidates running for state office this fall to have a better understanding of some of the critical issues facing Virginia. These Issue Papers are also being sent to business leaders, academic leaders, political leaders and the media here in Virginia.
The State Council of Higher Education for Virginia (SCHEV) has offered a dramatic proposal for restructuring the method used for managing and funding our system of higher education.
This proposal has caused a wide range of comments from enthusiastic support to dramatically stated opposition.
As our state reconsiders government’s role in K-12 education, in the restructuring of the utility industries, in improving our transportation infrastructure, and how to better manage state and
local government in general, it is imperative that the state’s management role in higher education also be reviewed and reconsidered. The attached explanation of the SCHEV proposal offers an exciting future where our campuses will be free from past management restrictions thus allowing those institutions of higher learning the ability to use its resources more creatively and efficiently.
This Issue Paper is authored by the team that oversaw the research and development of this new proposal. It is a clear statement of what the proposal is and what it is not. This will give the reader a better understanding of what is being suggested and what our state legislators will consider in January of 2000.
Michael W. Thompson Chairman and President Thomas Jefferson Institute for Public Policy September 1999
The 1999 Virginia Plan for Higher Education: Providing New Opportunities for Academic Leadership
By William B. Allen, Phyllis Palmiero, and Karl Schilling
Over the last twenty years, western nations, in particular we in America, have been re-examining our fundamental institutions and considering whether they are serving us as well as they might. The hard look we are taking at our government and business sectors is being cast as well onto our nonprofit, service, health, and other institutions. Technological advances and renewed confidence in the wisdom and discipline of the market encourage this reevaluation. The subsequent devolution of power from hierarchical structures to teams and individuals represents an inspiring countervailing force in this bureaucratic age. These dynamics are reviving recognition of the need for leadership, allowing men and women with direct responsibility to make decisions.
The 1999 Virginia Plan for Higher Education: Advancing the System of Higher Education in Virginia sets forth the means of implementing this new reality for the Commonwealth’s colleges and universities. In the spring of each odd-numbered year, the Council of Higher Education is required by the Code of Virginia (23-9.6:1) to prepare a comprehensive vision for—and overview of—Virginia’s system of higher education.
That document is commonly known as the Virginia Plan. A full text of the Plan is available on SCHEV’s website: http://www.schev.edu. The 1999 Virginia Plan from the State Council of Higher Education for Virginia (SCHEV) applies the newly recalled ancient wisdom concerning leadership to the Commonwealth’s institutions of higher learning. Its fundamental premise is that more of the power- as well as the responsibility- of leading our system of higher education should be placed in the hands of institutional leaders and boards of visitors. For too long, micro-management by the political-bureaucratic partnership in Richmond has undermined legitimate academic responsibility. By examining SCHEV’s historic purposes and legal obligations and recommending new means by which they will be fulfilled, including incentive-based funding and performance-based grants, we can build on our institutions’ prior successes and break new ground. To achieve this goal we must encourage on the campuses bold, clear-headed and articulate academic leadership.1
Virginians have shown boldness and leadership in the face of earlier educational challenges. Consider Thomas Jefferson’s pedagogic revolution in establishing a distinct alternative to his alma mater, William and Mary, in the University of Virginia. Recall the boldness shown in the state’s establishment of the Virginia Community College System and reform of higher education three decades ago. Note the fierce opposition to the recently promulgated Standards of Learning at the K-12 level—which are already showing good effects. Such actions have created the nation’s premier system of public higher education. The University of Virginia constantly ranks at or the near the top of significant categories. So, too, do Mary Washington College, James Madison, the
College of William and Mary, and Virginia Polytechnic Institute and State University within their categories.
Despite Virginians’ justified pride in their colleges and universities, we see disturbing signs. Our institutions are not immune from questionable intellectual trends that grip the academy around the world. Consider the example of responses to a perceived weakening of general education requirements. The fragmentation of the curriculum followed from the loss of academic rigor and subsequent diffusion of requirements in science, humanities, and the social sciences. SCHEV’s 1999 General Education Study, as well as the concerns of faculty members and Boards of Visitors, led our institutions to review these developments. Each institution will have to make its own decisions, but the issue is on the table.11
The need for academic leadership is particularly acute in the financing of higher education. The financing mechanism is fraught with uncertainty: The current biennial process, subject to annual revision, leaves institutions uncertain of their funding until annual General Assembly sessions conclude, usually only two or three months before the start of the institutions’ next budget year. This makes institutional planning and resource management an ad hoc affair. No business could be run without sufficient long-term planning, nor can colleges and universities. To note a more recent example, the Governor introduced a 20 percent tuition rollback, which the General Assembly adopted. This affected a restraint on costs on at least part of the price of higher education despite the effect of fees that offset some of the reduction. At the same time Virginia’s funding of financial aid remains at high levels. What is a parent (and taxpayer) to make of all this? Now is the time to remove higher education management from legislative whims and maintain our leadership, while other states are moving on reforms that will make them more competitive with us.
Virginia’s success in higher education and the complex system that funds, makes policy, and administers it can never be taken for granted. It must be continuously tended to as one would a garden. But the state system of higher education is not some collective farm, directed by centralized planning and a commissar; it is a vast and varied oasis of many plots. And this in turn means that the Commonwealth should provide the conditions for greater academic leadership, so that each institution can flourish to fulfill the richness of its potential.
In developing the 1999 Virginia Plan and in all its deliberations, the State Council is mindful of the ultimate purpose of higher education. Here let Thomas Jefferson be our guide.
We hope to avail the state of those talents which nature has sown as liberally among the poor as the rich, but which perish without use, if not sought for and cultivated – But of all the views of this [education] law none is more important, none more legitimate, than that of rendering the people the safe, as they are the ultimate, guardians of their own liberty.111
It is only with this preface to the general, civic purpose of education that Jefferson will then proceed to discuss the colleges of Virginia (at that point only William and Mary.) Liberal education is intended to make men and women liberal, that is, free and capable of self-government. It is not the buildings- alumnus Jefferson sneers at the ‘‘rude, misshapen piles” of brick at his alma mater, which “would be taken for brick-kilns”- that constitute the college.IV Rather, a school must be judged by the thought, character, and accomplishments of its graduates, who will be self-governing citizens of a Commonwealth. But this civic purpose of higher education cannot be fulfilled by institutions which themselves are not the ultimate “guardians of their own liberty.” The liberation of these institutions and their reclaiming of their futures are the tasks at hand.
For there cannot be academic leadership without responsibility, and no responsibility without an educational vision, and no vision without control over budget, staffing, curriculum, and grounds.
By law the State Council on Higher Education must prepare a plan for higher education in Virginia and to update it every two years. Our just-published update results from a team effort, including the Members of the State Council, the SCHEV professional staff, state officials, business leaders, students, and educators from Virginia’s colleges and universities, private as well as public.
Since 1974 the broad aims of access, quality, affordability, and accountability have been the guiding principles of public higher education in the Commonwealth. The 1999 Virginia Plan strives to enhance Virginia’s preeminence in this nation through five goals. These five approaches can help keep Virginia the leader and a national model of emulation by allowing the academic leaders of each institution to be free to excel.
The Plan’s five goals are as follows:
1: Decentralizing the system, while maintaining continuous quality assessment.
2: Focusing on educational outcomes and the value added to each student.
3: Planning system-wide so that the needs of all constituents of higher education are met.
4: Encouraging collaborative programming across institutions.
5: Ensuring the planning and funding needed so that the physical campus sustains the educational mission.
Just as America had its original contract in the Declaration of Independence, so there has existed an education contract for Virginians. The Commonwealth acknowledges the benefits to society when our citizens are well-educated, life-long learners—combining useful careers with civic participation. Public education seeks intellectual, cultural, and economic development of a self-governing citizenry.
Moreover, Virginia needs researchers who expand our knowledge of science, medicine, t
law, engineering, business, and the other useful arts as well as the liberal arts.
Recognizing the public benefits, the Commonwealth commits to the investment of public funds in higher education, both through its support of the public system and through its appropriation of Tuition Assistance Grants to defray part of the cost for
Virginians to choose a private college for their study. Further, the Commonwealth has long been committed to make access to a college education at the appropriate level. Finally, the education contract requires accountability and responsibility on the part of Virginia colleges and universities to Virginia’s taxpayers and governing officials in return for public support.
To assure the preservation of this contract between the Commonwealth and its citizens, the Virginia Plan proposes five broad principles.
I. Decentralizing. College presidents oversee their campuses in all dimensions— academic standards, hiring, student conduct, long-term funding, and strategic planning. But in the past they have had to come to Richmond to lobby for changes both significant and trivial. Past policy distorted the function of an academic leader. The return of responsibility to the appropriate level, which is advocated by the 1999 Virginia Plan, is common sense, as it matches authority with responsibility. This step will remove much bureaucracy and politicking from education and restore (or inject) business planning sense. The academic leadership, together with the local Boards of Visitors, will be free to make long-term plans, without second-guessing from Richmond.
At the same time as institutions of higher learning are given more autonomy, we also want to create the incentives for them to meet and exceed their capacities to educate. So the Council has proposed incentive funding based on performance indicators. This will be a statewide standard that gives each institution accountability for the taxpayer dollars and tuition funds it receives. We will encourage academic leadership, not gamesmanship. We will elaborate on this complementary aspect of decentralization below, in our discussion of Performance Funding. These standards are closely tied to our second principle, assessment.
II. Assessing is not some attempt to impose a straitjacket of uniform measures on all the colleges and universities. Assessment is rather an invitation for each institution in our diverse system to challenge itself to be the best in its class. We will discuss this “value-added” approach below. Important to note is that the means of assessing will steer institutions away from making, say, graduation rates the sole criterion of success. Impressive graduation rates can be increased simply by lowering standards. We need to examine a combination of factors, including exit examinations (as developed by each institution), professional and licensing examinations (such as the Graduate Record Exam), and post-graduate success.
In assessing itself, each institution would compete with itself and also use standards it derives by looking at institutions of the same type– community colleges with community colleges, for example. Like a golfer judging herself on her improvement, not how she compares with Nancy Lopez. This represents an extraordinary opportunity for v all our diverse institutions- the historically black colleges and universities, Virginia
Military Institute, Virginia Polytechnic Institute, George Mason, and the private colleges as well—to build story upon story of achievement.
It is a difficult balancing act to maintain standards, while allowing institutional autonomy, but the 1999 Plan aims to do this. Such diversity points toward the need for system-wide planning that serves the needs of all constituents of higher education. By decentralizing power, the Plan puts the burden where it belongs: on the academic leadership of each institution.
Thinking in state- or system-wide terms. As we consider appropriate amounts of financial aid, the establishment of new schools and new programs, we need to consider the appropriate use of technology, such as distance learning possibilities. This means evaluating the contributions each institution can make to the Commonwealth. Are all institutions linking their own strategic plans with the evolving Virginia Plan? What impact will the Standards of Learning have on those going on to college? How should the system deal with the differences in quality and numbers of college-bound high school students? These questions and considerations then point toward the need for collaborative programming throughout the State. The system will not be a leviathan of centralized power, because, again, the academic leadership of each institution will have the ultimate authority on each campus.
IV. Programming Collaboratively. This refers not merely to coordinating resources such as technology and programs, but also developing relationships between the private business sector and our institutions of higher learning. The research element of Virginia’s comprehensive institutions clearly benefits our industry. Here we see the direct contribution of higher education to Virginia’s economic development. How can each piece, contribute to make the whole much greater than the sum of its parts? Finally, with all this focus on the achievements of minds, we must not forget the physical aspects of the campuses, the “capital infrastructures”- that is, buildings and other infrastructure.
V. Building on Buildings. Simply looking at our older campuses— we think immediately of the Wren Building at William and Mary or the Lawn at Mr. Jefferson’s university— makes us treasure the relationship between venerable buildings and hallowed ideas. Architecture itself is a part of the educational environment. But beside the need to maintain the excellence of the past, we also need to construct academic buildings, laboratories, dormitories, student centers, and other structures. We need to investigate the extent to which distance learning technology might replace the need for classrooms and other facilities. These considerations require a far-sighted capital investment vision for the entire Commonwealth. No one today would compare the architecture of William and Mary to “brick kilns,” precisely because its alumni took a self-critical stance and realized the need for thought-out construction and long-term investment.
All of the above principles provide the academic leadership of the community colleges, four-year colleges, and universities with a framework for not only maintaining but also exceeding the respective excellences of their institutions. To reward particularly meritorious leadership the 1999 Virginia Plan proposes performance-based funding in block grants and a specific incentive funding.’
Performance-Based Funding: The Character of Learning
Our current system of governing state universities is now as out of date as the royal prerogatives that existed at the time of the founding of William and Mary. Public universities have been drawn into the partisan political vortex as interest groups fighting > for a place in the state budget. Rather, their interests and those of the Commonwealth as
a whole would best be served by congruence with a dynamic, democratic, and increasingly meritocratic public life. While expanding opportunity, higher education also fosters actual achievement. Our institutions guide, inspire, and refine, even as they support the aspirations of those entering the marketplace. “Can the graduates compete?” is just one question. Can they read critically and write intelligibly? Will they be good citizens? Will they use their heads and their hearts as liberally educated men and women have throughout the ages? This is a crucial moment for higher education, a crisis created by a confluence of scientific, technological, academic, societal, and political trends. How can higher education be responsible and govern itself, without falling prey to hucksterism? How can our Commonwealth’s system best continue to fulfil its education contract with Virginians?
The most intriguing proposal, now actually enacted in various forms in half this nation’s states, is a combination of decentralization and incentive-based budgeting and funding. Half of our states have performance budgeting, with a fourth of all states having incentive funding. By substituting multi-year block grants for micro-managed two-year state budgets, Virginia would allow those responsible for formulating and implementing educational policy to have the power and wherewithal to do so. “Richmond made me do it!” could no longer be the excuse. College and university administrations would have to perform more efficiently, with business and common sense guiding more of their decisions. Local boards of visitors would exercise their legal responsibility to assure that the institution was honoring its commitments. Each institution would play its unique role in a diverse system encompassing community colleges, Virginia Military Institute, historically black colleges and universities, booming new schools, and research institutions.
More important still, decentralization not only enforces the obligation on our colleges and universities to manage like businesses, it requires academic leaders to practice the business of articulating a coherent vision of higher education.
SCHEV’s 1999 Virginia Plan goes beyond its minimal legal obligations. In a pioneering series of meetings on all the four-year college campuses as well as some two-year ones, SCHEV involved administrators, faculty, students, business leaders, and state officials in freewheeling meetings intended to get their best criticism and opinions, and to better assess the merits and defects of the proposed Performance Funding Model. In the spirit of self-government it is intended to foster, the 1999 Plan thus evolves and reflects the best thought of those most closely affected. The Council unanimously approved its revised Performance-Based Funding Model at its meeting on May 18,1999. The focus is no longer on the “inputs,” that is, quantitative measures of entering student characteristics (such as SAT scores) and numerical measures of, for example, enrollment but rather on
the outcomes or performance of the institution. By considering a host of such characteristics, we can judge what value institutions add to their students. The new funding model features block grants, regulatory reforms, one-time technical adjustments, an inflationary growth factor, institutional base budget adequacy analysis and adjustments, and incentives through performance funding. The quality control of public funds centers on performance-based grants and incentive funding. This is the prudence of the 1999 Virginia Plan– it emphasizes both merit and market incentives, making these often-contradictory concerns complement one another.
The performance indicators for both Incentive Funding and Performance-Based Grants are derived from each institution’s own evaluation of where it has been and where it aims to be. This approach enables Virginia colleges and universities to build on their considerable record of achievement, while striving for even better results. Given longer-range budgets than the two-year cycles previously imposed, administrations can plan ahead, growing in confidence about the future each has mapped out for itself. Thus, institutions can be free of Richmond micro-management. Because public institutions use taxpayer monies, they must be subject to rigorous auditing procedures and a variety of “best practices” (which are really common-sense administrative standards), fiscal management standards, and student outcomes. In the rare event of continued incompetence in meeting these minimum standards, SCHEV might have to recommend probationary status for a delinquent institution. Following loss of the block grant, it might fall into receivership and, failing correction, closure. Though unprecedented corruption or incompetence would be necessary for such a drastic step, its possibility — as it exists under current law — should not go unmentioned.
The SCHEV Performance-Based Funding Model is appropriately contrasted with the system formerly used to guide appropriations, colloquially known as “Appendix M” for its placement within an outdated budget manual. Appendix M was an enrollment-driven “input” model that used discipline-specific average student/faculty ratios and other mathematical indices to project future resource requirements based on anticipated enrollments. In the early 1990s it was abandoned, when recession-engendered, across-the-board funding cuts rendered its formula-driven recommendations of little use. However, even before its demise, the never fully funded input-driven approach of Appendix M had begun to be questioned at both the conceptual and the practical levels. Incremental, ad hoc funding policies replaced the discredited Appendix M and produced a funding environment that is characterized by uncertainty, fragmentation, and intensified politicking. The current call for a more efficient, responsible, and education-oriented funding model is a result of that earlier crisis. SCHEV’s Performance-Based Funding Model answers that call.
In brief, performance-based block grants are comprised of several elements: the institution’s prior year’s base budget- i.e., the Educational and General (E&G) expenditures, with appropriate changes made for technical adjustments (e.g., Y2K and salary annualization); an inflation factor (calculated through a Virginia higher education-specific index); base budget adequacy (including triggers for review, such as changes in institutional mission, programs, enrollment, and new construction); and, finally and most
notably, incentive funding. Regard for past achievements, including corrections for historical funding issues, and flexibility for future development characterize each of these grant elements. The key to the potential of the 1999 Virginia Plan to transform institutions is the Incentive Funding component, which challenges each institution to reach beyond itself. Thus, the academic leadership of each institution will have to assure continuous improvement.
Some proportion of state higher education funding would be set aside to create a pool of monies that would reward an institution’s performance in relation to student outcomes and other areas of achievement. The actual amount to be set aside would be determined by the Governor and General Assembly. The focus of the incentive would be on outcome measures rather than input measures, that is, how well students achieve at the end of their program rather than how promising they are at their beginning. The question we want colleges and universities to ask themselves is what value they add to the lives of their students. It is obvious that, for example, students who are admitted to the University of Virginia or other selective institutions should do well in life. So the crucial question is “How does UVA ‘add value’ to these fine students?” That is, what is the institution doing for its students compared with some other outstanding state university, not to mention the great private universities? This is the benchmark, as interpreted by UVA itself, for measuring UVA’s excellence. Performance indicators to be considered include, among others, graduation rates, retention rates, passage rates on exit exams, post-graduate placement, faculty productivity, and transition rates to four-year institutions for community college students. These comparisons would be phased in over a period of a few years and be institution-specific. This last point is crucial in any merit system. On the basis of criteria the school itself selects, is it doing as well as it
should? The test can thus be a real test, while not stifling the individuality of diverse
institutions, each of which performs a somewhat different task within the Commonwealth. The exact proportions each of these elements should have in the final formula are certainly a matter of legitimate difference. Again, the contributions of members of different institutions have refined our efforts thus far and will continue to shape the emerging model.
To show that these proposals are not idle pipe dreams, we can point to at least one nearby institution that has put into practice elements of our plan. If it appears that we want to encourage public institutions to adopt various aspects of private institutions, while remaining democratically focused in inviting participation to all, that suspicion is justified. St. Mary’s College, a venerable state institution, has become the public honors college of the Maryland system. Liberated from many bureaucratic constraints in academic and capital programs, it remains accountable to the public through an active local board of trustees and its State Higher Education Commission. It supplements state funding with enthusiastic private support. According to its latest accreditation report, St. Mary’s has become “a nationally recognized model in public higher education.” Such
models may all Virginia’s institutions ultimately become, each in their own way, under the new SCHEV proposals. At least let us allow the academic leadership of our institutions of higher learning to match the means to achieve such greatness with their aspirations to it.’1
In sum, the 1999 Virginia Plan presents a reflective set of proposals, tempered by experience and breadth of participation, to keep our institutions of higher learning in the forefront of teaching and research in the 21st century. Virginians have the opportunity to reform higher education in ways that add value to student lives, reward performance, enrich all who are touched by the higher education system, reduce politics and bureaucracy in favor of decentralization, and encourage an ethic of responsibility throughout the system, from the taxpayers to the students, from the parents to the presidents. From our earliest reflections on the character of public education, Virginians have noted the connection between liberal education and free government. The cynicism toward politics today may be at an historic high. That reflects in part a deficiency of our system for providing liberal education, the education in being free human beings. Institutions of higher education that are not free are unduly constrained in their ability to teach freedom. Relieved of the political burden, public institutions can exemplify what the liberal arts stand for, in their Jeffersonian sense. It is time that Virginia’s academic leaders are freed to show what they can do for the Commonwealth.
‘SCHEV is required by the Code of Virginia (23-9.9) to “develop policies, formulae, and guidelines for the fair and equitable distribution and use of public funds among the public institutions of higher education.” The Council is also required to use those policies, formulae, and guidelines in making recommendations to the Governor and General Assembly regarding the “approval or modification of each institution’s [budget] request.”
11A discussion draft of this study is available on SCHEV’s website: http://www.schev.edu.
1,1 Thomas Jefferson, Notes on the State of Virginia, Query XTV, in Thomas Jefferson:
Writings, ed. Merrill D. Peterson (New York: The Library of America, 1984), p. 274. iv Ibid. Query XV, p. 276.
‘ For more detailed discussion of Performance-Based Funding, see the SCHEV website: http://www.schev.edu.
vlFor more information about St. Mary’s College of Maryland, check its website: http://www.smcm.edu.
About the Authors
Dr. William B. Allen was Executive Director of the State Council of Higher Education from 1998-99. He is Professor of Political Science at Michigan State University and served as Dean of MSU’s James Madison College, 1993-98. He earned his doctorate degree from Claremont Graduate School and served as Chairman of the United States Civil Rights Commission. He is author of THE FEDERALIST: A COMMENTARY and editor of GEORGE WASHINGTON.
Phyllis Palmiero is the Acting Executive Director of SCHEV and immediate past Deputy Director for Administration for that state agency. She served as Deputy Director for Policy at the Virginia Department of Planning and Budget. Prior to this Ms. Palmiero worked for Salomon Brothers and Savings Banks Trust Company in New York. Her previous government experience was as a Budget Analyst in New York City’s Office of Management and Budget. She holds a MBA from Fordham.
Dr. Karl Schilling is Deputy Director for Policy at SCHEV. He served for two years as Director of the Assessment Forum for the American Association for Higher Education. Holder of a Ph.D. in Clinical Psychology from the University of Florida, he has taught interdisciplinary studies at Earlham College and at Miami University, Ohio, where he also served as Associate Dean.