Gov. Rick Perry outlined a bold plan Thursday that would increase state money flowing to universities, but tie the funds to incentives that push students to graduate faster and steer them toward high-demand engineering and computer degrees.
The money, a net increase of $1.7 billion over two years for schools, also would be tied to the students more than to the institutions they attend. And part of the program would be linked to a new, nonbinding exam that students would have to take before they graduate - a kind of TAKS goes to college.
"We're looking at an entirely new way of funding higher ed," Mr. Perry said. "If lawmakers adopt this plan, the ultimate result will be a higher-education system that is more affordable, more accountable and more focused on meeting the needs of tomorrow's global market."
The governor's plan, while far-reaching, would do nothing directly to push the brakes on skyrocketing tuition costs that have students, parents and many lawmakers concerned that many Texans are being priced out of a degree.
Standing with the governor were 90 of the state's top educators - including regents, chancellors and university presidents - who were enthusiastic about the new money dangled before higher education. Lawmakers and other educators also praised the plan as a "good first step," and indicated they still were skeptical and intended to debate aspects of the plan.
Four years ago, the Legislature, with Mr. Perry's backing, cut funding to universities, and in exchange, removed a state-mandated cap on tuition rates and fees. Unregulated tuition rates have increased about 40 percent across the state on average.
"We all have our concerns about the rising costs of living in this world today," Mr. Perry said. "In the area of higher education, we have very appropriately and adroitly focused on how to best impact those costs, spread them out so that more Texans have access for it and get a bill they can afford."
The plan is the first major proposal to address higher-education funding in many years and would reverse a trend where the state is supplying less of the operating costs of universities and colleges.
Under the governor's proposal, universities would receive 8 percent more money over the next two years - an additional $1 billion projected from new students, federal money and a variety of other sources and $711 million in state-provided money.
He said he would end much of the $600 million in special earmarks added into the state budget for pet projects at universities and instead fully fund a state formula that equally allocates state funds based on the number of students and other benchmarks.
With that money equalized, Mr. Perry intends to allocate remaining funding based on results, including whether students graduate in four years; whether they gain degrees in high-demand technical fields; whether students complete courses; and how high they score on newly crafted exit exams.
Flunking such a test would not mean a student is held back from graduation, but it would cost the school incentive money. Exit exams would not be required for programs that have licensing requirements, such as law and architecture.
Mr. Perry said the tests give accountability to parents who are often footing the bills and give consumers a way to measure how well schools are performing.
"From time to time, there may be skeptics about this, but it's happening all over the country," he said.
In Texas, 43 percent of college students fail to graduate within six years. The long matriculation means fewer students are educated, the state subsidizes education of students longer and there is a delay in graduates entering the workforce and adding to the economy.
To improve graduation rates and make college more accessible, Mr. Perry would combine the state's three financial aid grants and add $362 million - an increase of 60 percent. Money for student grants would be allocated on a debit card that can only be used at universities and colleges, rather than having the money channeled through a university financial aid office.
Four years ago, student grant programs were slashed to balance the budget. While 67,400 students receive aid, 54,000 more are eligible.
Under the governor's plan, students would be eligible for a grant if they showed financial need and had a 3.0 high school grade point average. But if they graduated from college with a 3.0 GPA and on time - four years for most bachelor's degrees - the grant would be forgiven.
Sen. Florence Shapiro, the Plano Republican who chairs the Senate Education Committee, and Rep. Geanie Morrison, chairwoman of the House Higher Education Committee, called the plan historic and said they would work to move it through the Legislature.
"Higher education has not been at the forefront for many, many years," said Ms. Morrison, R-Victoria.
But Sen. Royce West, D-Dallas, said that while the plan has some strong points, he fears that too many students would be left behind because they couldn't meet the B-grade mandates of the grant program.
"I still have a lot of concerns about eligibility for financial aid," said Mr. West, who sits on a higher-education subcommittee.
He also said there is more to discuss about exit exams on the college level.
"When you graduate from a university, there should be the presumption that you have that expertise, unless there's something that I haven't read or seen that suggests our institutions are not turning out persons that meet the demands of our workforce," Mr. West said.
The senator said he is also concerned about whether having money follow students will hurt efforts to start new programs, such as a downtown Dallas law school.
James Huffines, chairman of the University of Texas board of regents, welcomed the plan, saying, "We're talking about a major infusion of new funds."
He said he did not know how that might affect tuition rates at the flagship university in Austin.
"We'll be following it closely," he said. "It could change some of the dynamics of setting tuition."
Alan Richard, spokesman for the Southern Regional Education Board, a nonpartisan think-tank of 16 states including Texas, said any effort to improve graduation rates and get students to finish faster is laudable.
"We would like to see more states push colleges and universities to meet completion rates," Mr. Richard said.
Regarding exit testing, he said there is still "a lot of debate out there about moving the types of standards and tests we see in K-through-12 to higher education," he said. "There are plenty of questions about how well it translates."
Story courtesy of ABC News.