Lawmakers mull State Grant cuts for low-performing MN colleges

Minnesota's colleges and universities that don't make the grade would lose State Grant money under an emerging plan to make schools accountable for performance goals.

The idea, which is similar to two federal measures, comes as lawmakers and the public express alarm over the high price of higher education and question whether colleges are providing good value for the money.

"What does it mean to be a good (college)?" asked Sen. Terri Bonoff, a DFLer from Minnetonka who chairs the Senate higher education committee. "What does it mean to be mediocre? And what does it mean to deliver results that are frankly so bad that we shouldn't move students to them, we shouldn't give incentives for students to be at their institutions?"

A working group of state and industry representatives has been meeting since last summer to discuss measuring college performance, though the state Office of Higher Education has been researching the issue for about two years.

Bonoff says she hopes to introduce legislation this session that would provide incentives for reaching performance goals.

Having State Grant funding on the line could be a big motivator to improve, she said.

"A school can't stay open if their enrollment declines, and if a student can't afford to go there, that's going to hurt their enrollment," she said. "So I think it's a big stick."

The State Grant program helps students from low- and middle-income families pay tuition and other educational expenses at eligible Minnesota schools.

Nearly 80 percent of State Grant money distributed in fiscal 2013 went to students with annual family incomes of $50,000 or less. Maximum awards this year run from nearly $7,000 at a public two-year college to $10,745 at a private four-year college.

According to state data, the smallest Minnesota public and private campuses received tens of thousands of dollars each in State Grant funding in the 2012-13 school year, while the largest received several million dollars. The University of Minnesota's Twin Cities campus topped the list with $24 million.

John Manning, spokesman for the Minnesota Private College Council, said the State Grant makes up about 3 percent of the total revenue of colleges in his association. He said that's generally similar to the share for for-profit and public colleges in Minnesota, about 2 to 4 percent, according to public data reviewed by a council staffer.

This month, the state Office of Higher Education released a report that lists potential measurements for determining how much access colleges are providing to various target groups, how affordable their degrees are, and whether their graduates obtain good jobs.

The report lists nine possible measurements, including enrollment rates for key target groups such as low-income students, cumulative debt of students, graduation and employment rates, and, ultimately, a college degree's "return on investment."

How tough the requirements would be, and how many schools would fail, is unknown. Bonoff said the number failing would probably be "limited," and that the minimum standards would be designed to catch "true outliers."

Her idea isn't the first.

In July, the Obama administration's hotly contested "gainful employment" rule will go into effect. It's designed to ensure that career-training programs — especially those at for-profit colleges — produce graduates with incomes high enough that they can make their student-debt payments. Colleges not meeting federal standards would be ineligible for federal student aid.

Late last year, the feds also rolled out the framework for a college-ratings plan, which would also tie access to federal student aid to college performance.

"We're on a parallel path," Bonoff said.

Industry representatives say they're not against assessing colleges but they declined to comment specifically on Bonoff's idea because of the lack of details.

University of Minnesota Provost Karen Hanson said she agrees with the principle of accountability but approached the idea with caution.

Manning warned of the "complexity" in developing accurate measures for a diverse array of schools. Minnesota State Colleges and Universities system finance chief Laura King said, "We would be very cautious with any change that could limit access to an affordable higher education."

Katie Misukanis, chair of the Minnesota Career College Association, called the notion of tying State Grant funding to the measurements "harsh," because yanking such funding hurts the individual student.

But she added, "I also understand accountability and transparency is important, so I think we want to get the right mix."

Bonoff said she hopes to introduce a bill complete with benchmarks this session, but said timing will be tight.