New Jersey Commission on Higher Education

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Higher Education Costs and Revenues

The Second Annual Systemwide Accountability Report

Adopted May 1997

Executive Summary

New Jersey Commission on Higher Education
Accountability Committee

Lawrence R. Codey

Mr. Alfred J. Cade

Dr. William J. King


In October 1996, the Commission on Higher Education adopted Looking to the New Millennium: New Jersey's Plan for Higher Education. The plan includes a vision for the state's higher education system which emphasizes excellence, access, and affordability and stresses the importance of teaching, research, and public service in achieving the state's public policy goals. The plan also recognizes institutional and systemwide accountability as essential for achieving the vision.

Government and educational policy makers across the nation look to accountability measures in such areas as higher education quality, effectiveness, efficiency, and productivity to guide state planning, form a context for budget decisions, and monitor the return on public investment in colleges and universities. In New Jersey, annual institutional accountability reports and the Commission on Higher Education's systemwide accountability reports inform the public and provide valuable information for policy discussions and decisions.

Last year, the Commission's first accountability report provided a broad overview of New Jersey's higher education system and reported on performance indicators in various areas such as affordability, time to degree, equality of access, and return on the public investment in higher education. This year's report is a first attempt to look extensively at higher education costs, comparing New Jersey's system of higher education and its individual sectors with national counterparts. To provide an accurate comparison with revenue sources and spending patterns across the nation, a number of factors are taken into account, such as differences in cost of living and the size and relevant structural characteristics of a state's higher education system.

State Resources for the Higher Education System

The data included in this report indicate that higher education in New Jersey, compared to other states, is relatively well supported considering the small size of the system and the large proportion of students (38%) who attend college out of state. The long-standing pattern of outmigration in New Jersey can be attributed in part to the state's small geographic size and its relative affluence. Other influencing factors may be the large number of institutions within 30 miles of the state's borders and perceptions of institutional quality. The issue of outmigration will be addressed by the Blue-Ribbon Task Force to Study the Capacity of New Jersey's Higher Education System, which is expected to make recommendations to the Commission in January 1998. Nevertheless, it is important to recognize that New Jersey's high rate of outmigration indirectly affects the allocation of resources to higher education, because the size of the system and number of students it serves significantly affect resource requirements and the need for government funding.

The state is especially generous to higher education in the amount of funding provided for student assistance programs. A high proportion of the state's affluent students attend out-of-state colleges; many of the remaining students require financial assistance, and the state has a long history of supporting access and affordability.

Sector Resources

The data on resources indicate that the state college sector, the independent college sector, UMDNJ, and Rutgers rely upon tuition and fees for a share of their costs at a level which is relatively consistent with their peer institutions. NJIT relies more heavily on tuition and fees than its peers, and at the community colleges, tuition and fees account for a share of total revenues that far exceeds their peer institutions.

While the state's percentage contribution to revenues for the state colleges, Rutgers, and UMDNJ is higher than the average for their identified peers, New Jersey's percentage contribution to revenues for community colleges is below the national average for peer institutions. Even when New Jersey's higher than average local government contributions are considered, the combined share of state and local support for New Jersey community colleges is significantly less than at peer institutions, causing considerable over-reliance on tuition and fee revenues.

Sector Spending

Generally the data on institutional levels of spending and allocation of resources indicate that New Jersey varies somewhat from peer institutions throughout the nation. New Jersey's public research universities and independent institutions spend less than their peers in most areas, while spending by the state college and community college sectors is higher in New Jersey than at peer institutions.

While lower than average spending in some areas may be interpreted as evidence of efficiency, low spending on research at New Jersey's public research universities is a cause for concern, because university-based research has a significant impact on the state's economic growth and competitiveness. Although New Jersey's public research universities are relatively young, and last year's accountability report demonstrated that Rutgers, NJIT, and UMDNJ had all made significant gains in the amount of research funding generated between FY 1983 and FY 1993, the institutions lag significantly behind their peers in research spending. Similarly, low spending on public service at independent and some of the public universities raises concerns, because all institutions have significant responsibilities for addressing critical state needs through public service.

Uses and Limitations of This Report

This first effort to compare higher education costs and resources at New Jersey institutions with those of their peers in other states provides baseline data for future accountability reports. While the data are limited and open to varying interpretations, they provide valuable information which policy makers can use as they consider the level and allocation of resources for colleges and universities in New Jersey.

However, the comparative data in this report alone do not provide definitive answers to policy questions regarding higher education spending and resource allocation, nor do they address the kind of system the state wishes to support. Rather, the information is provided for use in planning to achieve New Jersey's vision for higher education excellence, access, and affordability. For example, knowing that New Jersey is supporting its higher education system at a level consistent with that of the national average is important information; it can assist in determining the level at which the state should support the higher education system in the future in order to achieve the excellent system it desires. Similarly, institutions can use the report's comparative data to guide their future budgeting decisions, consistent with state and institutional goals.

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