Source: John G. Kilgour, Compensation & Benefits Review, OnlineFirst, Published August 7, 2018
From the abstract:
With 70% of recent hires being encumbered with student-loan debt, employers and employees have recently become interested in repayment assistance benefits. Since about 2015, 4% of employers and 8% of large employers have adopted such plans. An estimated 20% will have them by 2018. This article examines the background, growth and magnitude of federal and private student loans. It also examines those programs that have been adopted and gleans from them a number of questions that will help in the design and implementation of new programs by employers.
Source: Susan E Shaffer, Susan I Fitzgerald, Kendra M. Smith, Moody’s, Sector Comment, August 6, 2018
While our outlook for the higher education sector remains negative, 2018 growth of several revenue streams has been more favorable than anticipated. Both an improved federal research funding environment and ongoing favorable investment returns are credit positive for the sector. For public universities, overall state fiscal conditions are improving, leading to stable-to-growing appropriations for fiscal 2019. However, moving into fiscal 2019, flat enrollment — declining in certain regions of the country — and a continued focus on affordability will likely continue to limit growth in tuition and fees, the largest revenue stream supporting the sector….
Community Colleges – Reauthorization of federal career and technical funding credit positive
Source: Patrick McCabe, Susan I Fitzgerald, Kendra M. Smith, Moody’s, Sector Comment, August 6, 2018
On July 31, the Strengthen Career and Technical Education for the 21st Century Act (Perkins V) was signed into law, reauthorizing the Carl D. Perkins Career and Technical Education Act initially approved in 1984. This federal grant initiative, centered on state and local career and technical education (CTE), serves as an important funding source for secondary and postsecondary programs designed to align training and work-based learning opportunities with evolving workforce needs. Perkins V renews and updates the federal government’s commitment to these goals, an overall credit positive for the community college sector and community colleges’ efforts to improve cooperative education opportunities.
Source: Prosperity Now Scorecard, 2018
The Prosperity Now Scorecard is a comprehensive resource featuring data on family financial health and policy recommendations to help put all U.S. households on a path to prosperity. The Scorecard equips advocates, policymakers and practitioners with national, state, and local data to jump-start a conversation about solutions and policies that put households on stronger financial footing across five issue areas: Financial Assets & Income, Businesses & Jobs, Homeownership & Housing, Health Care and Education.
The Scorecard assesses all states on their relative ability to provide opportunities for residents to build and retain financial stability and wealth. The state outcome rankings are a measure of financial prosperity and how that prosperity is shared and safeguarded. The Scorecard ranks the 50 states and the District of Columbia on 62 outcome measures in the five Issue Areas. Data for an additional four measures are published, but states are not ranked on these measures due to insufficient data at the state level. The overall state outcome rank is determined by the rankings each state receives for outcome measures within each issue area. The issue area grades in the Scorecard are distributed on a curve, based on how each state fares compared with all other states.
The Scorecard also separately assesses states on the strength of 53 policies to expand economic opportunity. Taken together, these 53 policies provide a comprehensive view of what states can do to help residents build and protect wealth in the issue areas described above. Unlike the outcome measures, the strength of states’ policies are assessed based on fixed criteria arrived at through consultation with issue experts and Prosperity Now’s own knowledge of policies that are promising, proven or effective in helping families build and protect financial stability and wealth.
In addition to the outcome and policy measures used to assess states, the Scorecard provides additional data to understand financial stability and prosperity in states and communities. For 44 outcome measures, trend data are available for states to track progress over time. The Scorecard also allows you to drill down to the local level—city, county, Congressional district, tribal area and metro area—on up to 26 measures. Additionally, for 21 outcome measures at the state level and 11 at the local level, the Scorecard includes outcome measure estimates disaggregated by race and ethnicity. The Scorecard also disaggregates 14 outcome measures at the state level by disability status, providing for the first time in 2018 a glimpse into the financial challenges facing people with disabilities. While these additional data do not factor into a state’s overall performance in the Scorecard, we provide the data to allow for a more meaningful analysis of financial security and stability in the United States.
Source: Denise Rappmund, Matthew Butler, Moody’s, Sector Comment, July 18, 2018
On June 25, the Kansas Supreme Court ruled that the Kansas (Aa2 stable) state legislature’s latest K-12 public school funding bills still do not meet the state’s constitutional standards for adequately funding public education. This ruling is a credit positive for Kansas school districts because it will mean a modest amount of additional operational revenue to districts, on top of the $643.9 million in additional funding over the next five-year period covered by the legislature’s current funding plan. Further, the court has also stated that the current plan is to remain in temporary effect with a stay on the ruling through June 30, 2019, during which time the state will need to re-submit to the court a remedy that will bring funding up to state standards for student achievement.
Source: S&P Global Finance, July 16, 2018
The credit quality of most rated U.S. public colleges and universities was relatively stable in fiscal 2017, except for lower-rated schools, whose credit issues continued. Enrollment and demand metrics were favorable across higher-rated categories and as a sector, although schools in the ‘BBB’ and speculative-grade categories generally saw theirs weaken.
U.S. Not-For-Profit Private Universities’ Fiscal 2017 Median Ratios: Competition And Affordability Continue To Be Main Credit Risks
Source: S&P Global Finance, July 16, 2018
Despite the sector facing continuous challenges in the areas of competition and affordability, S&P Global Ratings’ key median indicators for U.S. not-for-profit private universities in fiscal 2017 were relatively flat as compared with those from a year earlier, reflecting the sector’s continued ability to withstand medium-term pressures.
Source: Ben Miller, Center for American Progress, July 12, 2018
It’s tempting to think that America has largely solved its problems surrounding access to postsecondary education. The rate at which recent high school graduates enroll in college is around an all-time high. There are more Americans who have started college—but have not finished—than Americans who have dropped out of high school. These trends have increasingly helped shift postsecondary education policy discussions toward issues of retention and completion.
While getting college students to graduation is critical, new federal data show that the United States still fails miserably at providing equitable access to learning beyond high school, particularly in terms of socio-economic status. Students from the lowest levels of socio-economic status (SES) enroll in college at a rate that’s 60 percent the level of their best-off peers. When they do enroll, they are far more likely to attend a nonselective college or pursue something less than a bachelor’s degree. This is particularly striking for black students in the highest SES group, who are still half as likely to attend a highly selective college as their white peers. And this story does not hinge on academic ability: The least-affluent students with good grades and scores on an assessment of math skills enroll in college at about the same rate as the best-off students with middling academic accomplishments…..
Source: Jen Mishory, Century Foundation, July 12, 2018
– Statewide free college, also known as “Promise” programs, have expanded rapidly in states across the country, and older free college programs can provide lessons for the design of these programs.
– Advocates of the model point to their structure as a free benefit and to the goal of universality as potential drivers of long-term political sustainability: that increased participation and a clear message will help increase and retain aid funding.
– This report identifies and studies six statewide Promise programs that were in operation through the Great Recession to see how they fared. Their resiliency during that significant downturn demonstrates that the model might in fact benefit from more enduring funding support, and that budgetary protections, social insurance-like design, and the defined benefit structure meant that means-tested free college programs also enjoyed that sustained funding.
Source: Matt Reed, Inside Higher Ed, Confessions of a Community College Dean, July 12, 2018
Can a college get better and smaller at the same time? ….The more common case involves sustained incremental cutting and watering-down. That takes the form of replacing full-time faculty with adjuncts, replacing administrators with contracted services, raising class caps, outsourcing campus functions, and the like. As short-term measures, many of those make sense at first, and a few may make sense generally. But after the low-hanging fruit has been picked, the trends don’t stop. This approach assumes, whether consciously or not, that the hard times are temporary. That might make sense in the aftermath of a natural disaster, but it’s delusional in the face of long-term demographic decline. Over time, the decline tends to outpace the incremental cuts, and the college has to resort to layoffs. Those are a nightmare for all involved. Aside from the frustration and hand-wringing of the usual approach, there’s a lack of vision. The challenge for each budget year is to keep doing essentially the same thing, but with less. But with long-term demographic decline, doing essentially the same thing guarantees continuing to get disappointing results. As a long-term survival strategy, it’s exactly wrong. ….
Source: Katharine O. Strunk, Dan Goldhaber, David S. Knight, Nate Brown, Journal of Policy Analysis and Management, Early View, First published: July 5, 2018
From the abstract:
Few studies examine employee responses to layoff‐induced unemployment risk; none that we know of quantify the impact of job insecurity on individual employee productivity. Using data from the Los Angeles Unified School District (LAUSD) and Washington State during the Great Recession, we provide the first evidence about the impact of the layoff process on teacher productivity. In both sites we find that teachers impacted by the layoff process are less productive than those who do not face layoff‐induced job threat. LAUSD teachers who are laid off and then rehired to return to the district are less productive in the two years following the layoff. Washington teachers who are given a reduction‐in‐force (RIF) notice and are then not laid off have reduced effectiveness in the year of the RIF. We argue that these results are likely driven by impacts of the layoff process on teachers’ job commitment and present evidence to rule out alternate explanations.
Source: Adebola Kushimo, Roger S Brown, Alexandra S. Parker, Moody’s, Sector Comment, June 27, 2018
On June 22, the Oklahoma (Aa2 negative) Supreme Court rejected an effort to nullify a legislative package that increases state taxes to provide teachers with a pay raise. The court refused to permit a referendum that would have given voters a chance to block the tax increases, which include tax hikes on gasoline and oil production. The ruling is credit positive for school districts because it preserves state funding for the teacher pay increases, which came as teachers threatened to strike earlier this year and eventually did. The activists opposing the tax increases could still mount another effort to hold a referendum, hoping voters will overturn the tax hikes. The court noted that they have until July 18 to submit a new list of signatures that could lead to a November vote…..