Jamie P. Merisotis, President & CEO Lumina Foundation
Maryland Higher Education Commission, Statewide Completion Forum, Morgan State University, Baltimore, MD

Thank you, and good afternoon everyone. I’m very pleased to be with you today, and I’d like to thank the Commission for inviting me to join you for this important forum. I also want to thank Morgan State for serving as our hosts today … and to recognize Governor O’Malley and Lieutenant Governor Brown for their leadership in helping to champion the college-attainment agenda here in Maryland. That leadership is clearly reflected in the size of this gathering and in the level of engagement and enthusiasm that you’ve all shown today.

For someone like me—a person who’s spent his entire professional life advocating for higher education and the enormous benefits that it affords, and who once called the state of Maryland home—a forum like this is just about as good as it gets. After all, I’m surrounded today by dedicated, like-minded people … people committed to one vital cause: increasing college attainment. What’s more, you’re in a position to act on that commitment, to make decisions and take steps that can really make a difference. So, I hope you’ll forgive me if I seem irrationally exuberant this afternoon.

Many of you know me and the organization I lead, so to you my exuberance probably comes as no surprise. Lumina’s raison d’etre for the last five year—what we call Goal 2025—has put us in a unique leadership role nationally. That goal, of course, is that by the year 2025, we want 60 percent of Americans to hold high-quality college degrees, certificates or other credentials.

Lumina’s work in recent years—bolstered by ongoing research from many noted economists, labor experts and thought leaders—tells us that the Goal 2025 effort is more than just a good cause. In fact, it is an urgent need … a national imperative.

The economic evidence for this urgency is clear and compelling. The Georgetown University Center on Education and the Workforce predicts that 65 percent of U.S. jobs will require some form of postsecondary education by 2020. And that figure is even higher here in Maryland where, in just five years, fully two-thirds of jobs are expected to require college-level learning.

Low-skill jobs–those requiring no more than a high school diploma–are disappearing by the millions.

Recent employment data show clearly that low-skill jobs—those requiring no more than a high school diploma—are disappearing by the millions. During the Great Recession that officially ended in 2010, four out of five jobs lost had been held by Americans with a high school education or less. By comparison, Americans who held at least a bachelor’s degree steadily gained jobs during the recession and have seen an increase of more than 2 million jobs during the recovery that began nearly three years ago.

Of course, the arguments in favor of Goal 2025 aren’t limited to the economy or the job market. Increased education attainment also generates significant social benefits, including greater civic and social engagement, higher rates of voter participation and volunteerism, healthier lifestyles, less dependence on public assistance, and so on. These benefits have enormous implications for the health and vitality of our democracy.

And speaking of a healthy democracy, there is also a compelling equity case to be made for achieving Goal 2025. Since increasing college attainment is critical to a strong economy and a strong society, the gaps in attainment that have long persisted among certain groups are simply intolerable. We must increase attainment among those who have been traditionally underrepresented in higher education, including low-income and first-generation students, racial and ethnic minorities, immigrants and adults.

I realize that virtually everyone here shares my views on increasing college attainment. This is, after all, a Statewide Completion Forum—and it comes after many years of progress in supporting student success in this state. All of you have been part of that progress here in Maryland, and you have much to be proud of.

Maryland has a strong tradition of collaboration among all of the sectors on the education pipeline. It also boasts a proud history of inclusion and access, thanks to a vibrant group of institutions that includes four HBCUs and a statewide system of 16 community colleges educating nearly a half-million students every year. Another 64,000 students are well served by the 16 institutions affiliated with the Maryland Independent College and University Association.

State policymakers and leaders have worked hard to keep college affordable, maintaining funding even during the recession and freezing tuition rates for four consecutive years. And the University of Maryland system, under the leadership of Brit Kirwan, is a nationally recognized leader in the effort to enhance college affordability and improve productivity. Moreover, as a state, Maryland has helped pioneer a number of “best practices” to increase student success, including your work in accelerating developmental education, in reverse-transfer and “near-completer” programs, and in aiding first-generation students.

All of this is nicely encapsulated in the fact that state leaders have publicly adopted a specific, concrete, statewide goal for college completion: the 55 percent goal set recently by Governor O’Malley.

These trends and others I could mention demonstrate an important truth: that you fully recognize the importance of improving education attainment here in Maryland, and that you’re working diligently to make that happen.

But here’s the thing: Despite all of the excellent work you’ve done, the fact is, it isn’t enough. You and the students you serve face significant challenges, and the stakes are very high.

Let’s look at the facts. At its current pace, Maryland will reach a degree-attainment rate of 52 percent by 2025. True, that is well above the 46.5 percent rate that’s expected nationally if we project current trends out in a linear fashion, but it’s still below the national target of 60 percent. More to the point, it’s far less than what economists and labor experts say will be necessary to build a truly skilled workforce here in Maryland. Remember, experts say that by 2018, just five years from now, two-thirds of all jobs in the state will require some type of postsecondary credential. Seven years later, in 2025, that job market will surely be even more demanding.

So, the question is: How can you accelerate progress toward Goal 2025 … especially since you’re not likely to find much extra money to fuel that acceleration? And how can you close those attainment gaps and respond to what is clearly an imperative to increase equity? Census data show that more than half of white, working-age residents of Maryland have at least a two-year degree. Among African Americans, the rate is far lower, just 33 percent; and among similarly aged Latinos, it’s lower still: only 24 percent.

For the state to address the equity imperative and reach its college-attainment goals, the state—indeed, the entire nation—must have a preeminent higher education system. And that system simply can’t be a clone of the one that’s now in place. It needs to be a redesigned system, one that is flexible, affordable, and quality-focused to properly serve the needs of students, employers, and the state’s civic and social well-being.

At Lumina, we’ve thought a lot recently about this redesigned system. We’ve had to … because it is becoming increasingly clear that the current system just can’t get us where we need to be as a nation.

It’s not just a capacity issue. Even if it were possible simply to “super-size” the current system, we’d still fall short of Goal 2025. That’s because the problem isn’t just about scale. It’s about structure. The fact is, higher education needs to operate in new ways. It needs to be redesigned so that it better meets the needs of today’s students and positions the nation for success in our 21st century global society.

This redesigned system must deliver high-quality education to the growing numbers of low-income, first-generation, minority and adult students who represent our future as a nation. And it must do so with a specific eye toward what the state needs to thrive economically and socially. In other words, higher education must be retooled so that it is both more affordable and more productive. It must become a truly student-centered system—one that ensures access to all types of students, gives those students the support they need to succeed, and enables them to earn credentials that demonstrate real and relevant learning.

More and more of our work at Lumina is aimed at building this student-centered system. It’s not a task that can be accomplished quickly, and it certainly can’t be accomplished by any one organization. It will take sustained and cooperative effort from many stakeholders, both inside and outside the higher education community. But it’s an effort that must be made, because this redesigned system holds such great potential for progress in this country.

Here in Maryland, work is under way on some of the building blocks of this new system. You’ll hear more about some of those ideas at this conference. But the fact is, we must do even more to find new and effective ways to advance the college-attainment agenda. The new models and approaches—Massive, Open Online Courses, or MOOCs … digital badges … intrusive, intensive advising programs … reverse transfer … prior learning assessment … programs that are competency-based rather than time-based—all of these trends are promising. They need to be explored thoroughly and employed thoughtfully wherever and whenever they can help put high-quality credentials in students’ hands.

But again, these individual trends and efforts are merely the building blocks. Taken separately, they all have promise. The real key is to make sure that they fit together … that they become part of a new and better system—a student-centered system that broadens opportunity and increases attainment for all.

So what should that new student-centered system look like? While there are many dimensions that will need to be addressed, for the remainder of my time today, let me zero in on two key issues: how we award credentials, and how the higher-ed system is financed.

First, let’s talk about credentialing.

Right now, we’re operating under a system of credentials that is still far too closed and rigid to meet our needs. There are exceptions, but for the most part it is still a system that awards credit not for actual learning, but for seat time. It’s a system in which the recognized levels of achievement—associate, bachelor’s, master’s and doctorate—are too few, too widely spaced and too loosely connected. It’s a system that too seldom credits students for what they have learned on the job or in life. It’s a system in which students—first-generation students in particular—often can’t understand the pathways to degrees and other credentials. In short, it’s a system based mainly on time spent in classrooms and on campuses—not on learning and acquiring the skills that are genuinely valued in the workplace and can be linked to future opportunities.

We need a new system of credentials to assure that high-quality learning is recognized and rewarded—no matter where or how that learning is obtained. What this will require is an alignment of the postsecondary education and workforce development systems in new and stronger ways, using the new system of credentials as the mechanism for achieving this alignment. We expect that early work in the new credentialing efforts will focus on the high demand fields like health sciences and technology to more quickly adapt programs of study to workforce needs and match newly-credentialed students with jobs.

In truth, the shift to a learning-based, flexible, stackable credentialing system has been little more than an intriguing idea for a long time. But it is now an idea whose time has come. In fact, the task of defining and improving learning outcomes has risen to the top of policy agendas in several states … largely because of its clear connection to workforce needs. That connection puts many of you in the position to be real influencers and leaders—vital catalysts in the effort to redesign higher education.

Now let’s address that second area where redesign is necessary, an area that is absolutely critical to the college-completion agenda: I’m talking about how higher education is funded.

Stated plainly, the current student financing model is broken. Our tuition and student aid systems were designed decades ago to meet student needs and social and economic conditions that are dramatically different from those we face today. Fewer than 1 in 5 of today’s college freshmen graduated from high school in the prior year and immediately enrolled in a residential four-year institution. So the 18-year-old who attends full-time and lives on campus is increasingly the rare bird among students today. And yet, a student financing system designed largely to serve that student of the past remains intact.

We know that it’s well past time to fundamentally rethink our national approach to student finance. We need a system in which resources are used to support the success of a much larger—and infinitely more diverse—population of students.

Building this newly designed student financing system can’t happen overnight, of course, but there are several criteria that we already know it should meet.

  • First, grants, loans and tax credits, particularly at the federal level, should be incorporated into a common system to meet a clear objective: supporting the success of low-income students. That means taking steps to reduce confusion among various programs, to better align aid levels to best meet student needs, and to ensure seamless eligibility, application and aid disbursement systems.
  • Second, the new system should incorporate innovative approaches to various sources of student income and benefits. The idea here is to assure that funds from sources other than financial aid—including unemployment insurance and workforce development funds—are pooled to create an income stream that supports and rewards steady progress toward degree completion.
  • Finally, the system, especially state financial aid, should feature strong incentives for students to complete programs—and to do so as rapidly as possible—including continuous enrollment with sufficient course loads that lead to timely degree completion.

These incentives should apply to student performance, of course, but they should also apply to institutional performance. In other words, just as students are expected to make satisfactory academic progress to retain their financial aid, so should institutions and systems be expected to show progress toward their student-success goals—and goals set at the state level—to retain their funding.

As you know, the concept of outcomes- or performance-based funding is a topic of intense conversation right now in the state. And it’s a timely and important discussion, given the fact that the legislative session opens tomorrow. As the discussion begins, I’d like to urge everyone involved to consider just a few points.

First, it’s important to understand that, in a sense, performance incentives have always been in play in American higher education. Think about it this way: in most states, colleges and universities have historically been funded on the basis of enrollment. In other words, they’ve been paid for providing access to higher education—and they have done an excellent job of responding to that incentive. The challenge now is to add incentives for success to the formula. And clearly, many states are moving to meet that challenge. In fact, more than 30 states now either use some type of performance-based funding for higher education or, as is the case here in Maryland, are in the process of developing and refining such models. So this is not a new policy approach; it is a continuous process of aligning and matching the state’s needed student outcomes with financial incentives for institutions.

Second, there is a growing body of information out there, from several states, about how outcome-based funding programs are actually working to help support student success.

  • Data from the Pennsylvania state system show that graduation rates are up 10 percent and second-year persistence among Latino students is up 15 percent since its program was implemented.
  • In Tennessee, Austin Peay President Timothy Hall says that, thanks to innovations developed in response to that state’s outcomes-based funding formula, his institution has increased its number of graduates by 25 percent over five years.

These and other example show that performance-based funding can work, and work well. But not all performance-based funding is the same. Nonpartisan researchers have looked closely at these funding models in several states, and they’ve compiled a list of recommendations for states and systems that may be considering such policies. Some of those recommendations include:

  • Build incentives for all of the state’s colleges and universities around state goals.
  • Focus on rewarding improved outcomes and gains, particularly for degree completion of underrepresented students.
  • Allocate at least 5 percent of existing funds through performance funding.
  • Measure and publicly report annual progress on the state’s postsecondary attainment goal.
  • Maintain your commitment to the financial incentives for outstanding performance through good times and bad.

All of these recommendations—in addition to a wealth of other information about outcomes-based funding—are available through the college productivity work that Lumina has helped support in recent years. I urge you to visit the website—collegeproductivity.org—and use what you find there to help inform the college-attainment dialogue here in Maryland.

That dialogue is a vital one, not just for the people in this room who are focused on college attainment, but for hundreds of thousands of students and would-be students who stand to benefit from the decisions you make.

Everyone in this room understands the enormous power and potential that higher education provides. In fact, we’re all here for the same reason: to multiply that power and maximize that potential. I thank you for embracing that challenge, and I urge you to use this forum as a jumping-off point for even greater progress. And as you do, I want to assure you that my Lumina colleagues and I are proud to be your partners in this vital work.

Thank you.

Related:
Institutions Must Invest in Retention Efforts, Panel Says | Diverse Issues in Higher Education | Jan. 8, 2012

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