Queen Essays

DOCUBENT RESUHE

ED 202 405 HE 013 926

AUTHOR Gladieux, Lawrence E.; And-Others TITLE The Federal Government, the States, and Higher

Education: Issues for the 1980s. INSTITUTION College Entrance Examination Board, New Yorx, N.Y. SPONS AGENCY National Inst. of Education (ED), Washington, D.C. PUB DATE Apr B1 NOTE 27p.: Prepared at the request of the National.

Conference of State Legislatures, with supplemental assistance from the Ford Foundation.

AVAWBLE FROM College Board Publication Orders, Box 2815, Princeton, NJ 08541 ($4.00).

EDRS PRICE DESCRIPTORS

ABSTRACT

rF01 Plus. Postage. PC Not Available from EDRS. Educational Finance; *Federal Aid; Federal Regulation; *Federal State Relationship; Governance: *Government School Relationship:- *Higher Education:, Need d-AnalysiS (Student Financial Aid); Policy. Formation:. Public Policy: *State Government; Student Financial Aid

Federal policies toward higher education and their interaction (or lack of interaction) with state policies are described. Characterized are the differing historical. roles,Tlayed by the state'and federalgovernments in shaping American. higher education. AdminiStrative arrangements, types, and dimensions of federal funding for students and institutions are outlined, alohg with the trends.and proSpects for such support during the T980s. The discussion on state and federal roles examines- federal programs in terms of bypassing the states, the types and dimensions of federal support, federal regulation-, 'and. some assumptions about the .1980s.

The'section on student aid focuses on: the dilemmas caused by the expansion of federal programs, state responses, expansion of state aid, the creation of no-need awards, the shift in-focus to the private sector, cutbacks,-changing features of. the federal /state partnership, enrollment shifts, and the reauthorization of the Higher Education Act. Federal funds'and state prerogatives are discussed with focus on the federal budgetary outlook, fiscal control and the issue of reappropriation, and the status of education:in the federal establishment. Among the conclusions are: the principal object of federal funding will remain the individual student; federal dollars for the most part will not wind their /way through the states; and key decisions affecting colleges and universities will be made uy or at least within.. the States, not by the federal government. (LC) .

*****:%**************************************************************** * Reproduct-ions supplied-by EDRS are the best that caa be made *

* from the original document. *

***********************************************************************

Nr3

The Federal Governhient,* the States, and Higher Education: issues for the 1980s

Lawrence E. Gladiebx Janet S. Hansen t,

with Charles R. Byce

U S DEPARTMENT OF HEALTH.

EDUCATION & WELFARE NATIONAL INSTITUTE

OF

EDUCATION

THIS DOCUMENT HAS BEEN. REPRO

DUCEO EXACTLY AS RECEIVED r ROM

THE PERSON OR ORGANIZATION ORIGIN-

A T INC, IT POINTS or VIEW OR OPINIONS

STALED DO NOT NECESSARILY REPRE.

SENT OI T ICIAL.N4110NAt INSTITUTE OF

EDUCATION POSITION OR POLICY

College Entrance Examination Boa- New York, 1981

rd

r

"PERMISSION TO REPRODUCE THIS MATERIAL IN MICROFICHE ONLY HAS BEEN GRANTED BY

TO THE EDUCATIONAL RESOURCES INFORMATION CENTER (ERIC)."

The College Board is a nonprofit membership organization that provides tests and other educational services for stu- dents, schools, and colleges. The membership is composed of more than 2,500 colleges, schoolsi-zschool systems, and education associations. Representatives of the members serve on the Board of Trustees and advisory councils and committees that consider the programs of the College Board and participate in the determination of its policies and activities.

The Washington Office of the College Board conducts re- search relevant to public issues in education, with emphasis on the financing of postsecondary education. The office is located at 1717 Massachusetts Avehue, N.W., Washington, D.C. 20036.

Additional, copies of this report may be obtained from College Board Publication Orders, Box 2815, Princeton, New Jersey 08541. Please send $4.00 to cover the costs of postaci, and handling.

Copyright ©1981 by College Entrance Examination Board. All rights reserved. Printed in the United States of America:

Staff of the Washington'Office

Lawrence E. Gladieux, Executive Director o f the Washington Office Charles R. Byce, Policy Research Associate Pamela IL, Christoffel, Research' and Development Associate .

Martin A. Corry, Program and Policy Assistant Janet S. Hansen, Policy Reseg.Th Associate.' Nancy Carlson, Research Assistant Julia M. Gordon, Secretary. Diane C. Erving. Secretary/Receptionist

Washington Office Advisory Panel

Donald M. Stewart, President Spelman College (Chairman)

Gregory R. Anrig, Commissioner of Education Commonwealth of Massachusetts

Joseph A. Chalmers, Senior Consultant American Management Systems, Inc.

Eileen D. Dickinson, President New York. State Higher Education Services Corporation

Margaret S. Gordon, Economist Emeritus Institute of Industrial Relations,, University of California at Berkeley

Robert P. Huff, Director of Financial Aids Stanford University

William J. Maxwell, President Jersey City State College

Heidi Todd, Student Carnegie Mellon University

James W. White, Director of Financial Aid Oberlin College

Contents

Acknowledgments

Summary

Introduction

vii

1

2

State and Federal Roles: Pgst, Present, Future 3 Federal Programs: Bypassing the States 5

Types and Dimensions.of Federal Support 6 Federal Regulation: The Backdoor Issue 6 The 1980s: Some Assumptions 9

Student Aid: The Uneasy Partnership Dilemmas Caused by the Expansion of

Federal Programs State Responses Changing Features of the Federal/State

Partnership

Federal Funds and State Prerogatives The Federal Budgetary Outlook Fiscal Control and the Issue of

Reappropriation The Status of Education in the Federal

Establishment

11

12 15

17

19 19

20

20.

Acknowledgments

The Washington Office of the College Board con- ducts research on public policy issues in education, with an emphasis on postsecondary finance and the evaluation of programs designed to broaden access and choice in higher education. Legislative and policy analyses.are shared-With the membership of the College Board, state and federal policymakers, and other researchers.

Grants from the Ford Foundation have enabled the office to focus particular attention on the interaction of federal and state student assistance policies.

This study was prepared a.t the request of the National Conference of State Legislatures (NCSL) as part of a project, funded by the National Insti- tute of Education (NIE), designed to help state legislators concerned with problems of financing higher education in the 1980s. NCSL plans to pub- lish a handbook on the subjectin 1981, including a version of this paper by the Washington Office of the College Boird.

Support from NCSL and NIE helped make the study possible, supplementing assistance by the Ford Foundation. The material is printed here with permission of NCSL.

LaWrence E. Gladieux and Janet S. Hansen pre- pared the study, with the assistance of Charles R. Byce. The authors are grateful for the comments and suggestions of Lois D.Rice, David Breneman, and Richard Ramsden, as well as Sandra Kissick and Harlan Cooper of NCSL and the state legislators they brought together iih two workshops examining the issues of higher education finance.

The work presented hereinddesriot reflect-e. policy or position of the College-Board, NCSL, or ME, nor any endorsement by the Ford Founda- tion.

vii

Summary

Constitutionally and historically, the primary gov- ernmental responsibility for higher education in America has rested with the states. The federal role has been secondary, though nonetheless substantial in particular periods and areas, such as the land- grant college movement in the nineteenth century, the post-World War II GI Bill, research support in recent decades, and, since the mid-1960s, student assistance to equalize educational oppOrtunity.

The federal government now spends about $15 billion annually on postsecondary education: $9 billion to students to help them meet college-costs, $2 billion to institution§ for a variety of programs, and $4 billion to pay for research at universities.

For the most part, federal dollars go directly, to individuals and institutions rather than to state governments as intermediaries. Federal and state policies toward higher education are largely made independently of one another; and federal policy itself is fragmented, with only about one-fourth of Washington's estimated 400 postsecondary pro- grams and less than one-third of all federal post- secondary expenditures centralized in the recently established U.S. Department of Educatron. Money and accompanying. regulationsthus flow from a variety of federal agencies.

This overall pattern will likely continue in the 1980s, a decade that poses difficult problems for postsecondary education because of population changes and fiscal restraints. Governmental policy- making for higher education can be expected along the following lines:

The key decisions affecting colleges and uni- versities will be made by, or at least within, the states, not by the federal-government. General federal aid to institutions is not likely, although the federal government may recognize and help to shore up institutions in particular areas of need, such as renova- tion of aging physical facilities. The federal government will direct particular attention to maintaining the capacity and quality of research in the universities; a num- ber_of emerging problems need to be ad-_ dressed, such as the importance of insuring an adequate flow of young scholars into the academic ranks of major research irstitu-' tions.

There will be continued protest about the burden of federal requirements on col.',!eges and universities, but progress toward "de- regulation will be incremental; the problem will have to be dealt with agency by agency, issue by issue, case by,case. Federal dollars will continue to wend their way through various channels to students and colleges, but not for the most part by

ay of the states.. .

e principal object of federal funding will ref 4ain the individual student.

Federal student aid policies will raise many issues for states, which are themselves quite heavily committed to this kind of assistance. Some states have a much longer history in student financial as- sistance than the federal government, though fed- eral expenditures now dominate the student aid system. Current appropriations for the major federal programs of need-tested aid to students total close to $4 billion, compared to state funding of something over $1 billion.

Federal-state relations in the student Ulu arena have become strained in recent years by two devel- opments. First, the explosive growth of the federal Basic Educational Opportunity Grants (recently .

renamed Pell Grants), a nationally administered pmgram, tends to give -the federal government in-

-. creasing influence over the entire aid system, including state and institutional programs. Second, mixed sii-mals abOut federal plans for student loans have left states confused about the future of their own loan guarantee agencies. –

States face a number of dilemmas as they ad- just to federal student aid expansion. State policy- makers must ask themselves how much additional aid students need above that provided by federal programs. State responses to date have included:

coordination with federal programs; expansion of state scholarship assistance; creation of "no-need" awards for students; cutbacks in state grant aid; and I.

a shift in state aid toward students in private colleges (insuring student "choice").

Some observers have worried that states may also be increasing tuitions in public institutions to "cap-

1

ture" federal student aid dollars, though there is little evidence, of this at present.

One uncertainty for States has been the outcome of the 1980 congressional reauthorization of the Higher Education Act. Even though Congre3s has now authorized more generous student benefits, the reality of budgets may not match the promise of the legislation. The legislation also attempts to consolidate and simplify operating procedures in federal assistance programs, with unclear implica- tions for state policies.

A question mark hangs over the entire budget process in Washington:' Research expenditures may grow because of increasing concern. over Anierica's competitive technological position in the world, but student aid spending Could; plateau after the enormous increases of the 1970s. The budget squeeze in student aid is likely to be aggravated by the rapid (growth in mandatory costs of the,Guar- =teed StUdent Loan program, which could drain resources-lrom federal need-based programs into, subsidies for loans that are not based on the finan- cial need of borrowers.

Frustration with the complexities and distor- tions of intergovernmental aid has led some legislatures in recent years to "reappropriate" or otherwise monitor federal funds flowing into the states. State legislatures will have to take care not to jeopardize federal student aid funds by imposing pro forma review processes. Student. assistance is at the heart of equal access and 'opportunity for

Introduction States, rather than the federal government, have' the primary governmental responsibility for higher learning in America. -Yet Washington contributes significantly to financing colleges and universities, providing close to one-fourth of the total national bill for postsecondary education.' In the process, agencies of the federal government also impose a variety of requirements, some costly, on institu- tions of higher eduba.tion. The — federal –impact on the campuses is substantial, it is diverse, and it has important implications for the states. This study explores these implications.

During the 1970s, many state legislatures de- voted considerable attention to school finance reform. During the 1980s, state legislatures are likely to be increasingly concerned with higher education finance as an era of population decline finally arrives on the campuses and competition for enrollments and resources intensifies among all

types of postsecondary institutions. States have

2

individuals. The timing of such assistance is critical. Research- support to higher education institutions and faculty is also appropriately exempted or treated specially, linked as it is to national research agenda and policy objeCtives.

Finally, what are the implications of the ad- ministrative restructuring-of education programs in Washington? Education has recently been eleimied 'to cabinet status in the executive branch, only to face reappraisal and possible reorganization once again_under a newly elected Administration.

Realism should temper expectations for consoji- dating or "rationalizing" federal activities in educa- tion through bureaucratic reshuffling. On balance, the new. U.S. Department of Education is not apt substantially to alter intergovernmental relations in financing and governing edUcation. The department is not in a position to bring about a single, coherent set of federal policies toward education, nor will it be able to streamline regulatory and funding prac- tices affecting eduCation that ,stem from a variety of federal laws and agencies.

Whatever the fate of the new department, a continued pattern of decentralized, fragmented sup- port is likely to characterize federal involvement in higher education. Such support will not be tidy or without 'headaches for colleges and states. But the pattern serves a range of national purposes, and it better serves to protect academic independence and diversity than would a monolithic national policy or plan.

relatively little control over federal funds for higher education. But the patterns of support flowing from Washington, as well as the ramifications bf federal regulations, are important for state policy:' makers to recognize as they come to grips with higher education planning and budgeting in the current decade.

This paper describes federal policies toward higher education and their interaction (or lack of

1. This estimate- is derived from analysis by the National Commission on Financing Postsecondary Education, FinancingPostsecondary Education in the United States. Washington, D.C.: Government Printing Office, December, 1973. The analysis takes into account all forms of financing; including parental support and student aid from public and private sources. Other estimates reflect primarily institu-, tional financing and show a smaller federal contribution. For example, the National Center for Education Statistics publishes data on current fund revenues of postsecondary institutions, about 15 percent of which are accounted for '. by federal payments.

interaction) with state policies. After-characteriz- ing the differing historical roles played by the state and federal governments in shaping American higher education, it outlines the administrative arrange- ments, types, and dimensi6ns of federal funding for students and institutions; and the trends and prospects for such support during the 1980s. The

discussion then centers on direct student assistance, where federal ,activity has increased most rapidly and recent developments pose important policy questions for many states. The paper concludes with a look at.budgetary constraints and some ob- servations on fiscal federalism in postsecorldary education.

State and Federal Roles: Past Present,. Future That the' states have the basic responsibility,; for higher educationindeed,. for .education at all levelsis an .American tradition. Historically, the Tenth Amendthent and the fact that "education" is nowhere mentioned in the U.S. Constitution pointed toward a .secondary role for the federal

. government in this field. While some of the Found: ing Fathers urged a 'national system of education run by the central government, the majority favored state, local, and private control, perhaps with a national university to cap the system. All proposala to establish such a university in the capital city failed, despite the fervent support of George Washington and several of his successors in, the presidency, and to this day the federal government does not directly sponsor institutions of higher learning apart from the military academies and a few other Specialized institutions. Nevertheless, early federal policy was important in, promoting higher education as an adjunct _of western migra- tion and.,public land development in :the late eigh- teenth and nineteenth centuries, and the Morrill Land-Grant College Act of 1862 was instrumental in founding what are now some of the nation's great public, as well as private, universities.2

The federal investment .n university-based re- search ,,and development boomed following World War II; Congress in the 1960s funded a variety of categorical aids for postsecondary education; and, in the 1970s, the federal government became the largest source of direct 'aid to individual students for financing their college costs. But fundamentally federal expenditures have remained supplementary to state and private support of higher- learning. Terry Sanford, former ,governOr of North Carolina and now president of Duke University, once'ptit it this way:'

The money for the, extras came from the national funds. . ,This is the glamour money.. .. It is needed, it has improved the quality. . .. It ip proper to re- member, however, for all the- 'ailvantages'brought by the extras, the train was put on the track in the first place by the states, and continues to be moved by', state fuel and engineers.3

Over the past two centuries the states have moved with varying speeds and approaches to create and expand public systems of higher educa- tion and, more recently, to assist (or purchase educational 'services from) private colleges and universities. Today, the major 'public support of postsecondary institutions continues to come from the states. Figure 1 illustrates the proportionate contributions of the different levels of government to public financing of higher education' (for the most part excluding student aid). The states now provide 65 percent of governmental revenues to colleges and universities, more than twice the fed- cr eral share.

The traditional division of responsibilities ,between the federal and state governments was reaffirmed in the early 1970s, when Congress di- bated and ultiinately rejected proposals for general– purpose federal institutional aid. In passing the 1972 amendments to the Higher Education. Act:

Congress pulled up short of a plan that amounted to federal revenue sharing with institutions of higher educationacross-theboard general operating sup- port distributed on the basis of enrollments. It was unwilling to underwrite the entire system without reference to any national objective other than pre- serving and strengthening educational institutions… .. The responsibility for general support of institutions, it was decided, should continue to rest with the States

The federal_ government would continue to aid higher education indirectly, by supporting programs in areas of special national concern.

2. For the Historical develoiiment of federal involvement .C.,:with higher education, see George N. Rainsford, ngress

and Higher Education in the Nineteenth Century. kbs…ville, Term.: University of Tennessee Press, 1972. .

'3. Quoted in Thomas R. Wolanin and Lawrence E. Gladieux, "The Political Culture of a Policy Arena," in Matthew Holden, Jr. and Dennis L. Dresang, eds., What' Government Does. Beverly Hills; Calif.: Sage Publications, 1975, pp. 184-5. 4. Lawrence E. Gladieux and Thomas R. Wolanin, Congress and the Colleges: The National Politics of Higher Education. Lexington, Mass.: Lexington Books, 1976, p. 226.

9 3

FIGURE 1, Governmental Sources of Current Fund Revenues to Higher Education Institutions, FY 1978

Source: U.S. Department of Health, Education, and Welfare, National Center for Education Statistics, Financial Statistics of Institutions of Higher Education, 1978, based on data gathered in

the Higher Education General Info'rmation Survey (HEGIS).

Instead of aid to institutions, the 1972 amend- ments established .aid to students, based on finan- cial need, as the primary mechanism of federal support for higher education. A central objectiVe of federal policy came into clear focus: to broaden and equalize opportunity by helping to ensure that students had the resources to obtain a college ed- ucation best suited to their abilities and interests. The 1972 legislation created the Basic Educational Opportunity Grant (BEOG) program, recently re- named Pell Grants, as a floor of direct support for all' needy students and State Student Incentive Grants (SSIG) to provide federal matching for need-based state scholarship programs. BEOG and SSIG rounded out the federal commitment to student aid, which in the course of the 1960s had already come to include the National Defense Student Loan.(NDSL), College Work-Study (CWS), Guara' tPed Student Loan (GSL), and (as renamed in 19'. supplemental Educational Opportunity Grant .1.20G) programs. The "consumer not the conduit" of higher education was to be the major focus of federal support, in the phrase ofSenator Claiborne Pell of Rhode Island, one of the chief sponsors of the 1972 law.

This is not to say that the federal government has been totally unconcerned with tile health and capacity of institutions. Certain types of institu- tions have been the object of special federal atten- tion because 'of their particular contributions to the national interest. The major research and graduate-oriented universities, particularly their medical schools, are one such category. They draw heavily on grants and contracts from multiple federal agencies. The,. historically black colleges are another, many or them drawing, substantial operating support as "developing institutions" under Title III of the Higher Edfication Act. In 1972 Congress authorized federal assistance for the establishment and expansion of community col- leges, though this provision was never funded and was allowed to lapse in the Education Amendments of 1980.

In addition, some of the black colleges and other institutions serving substantially low-income populations, notably independent institutions with little access to the state fisc, have become increas- ingly dependent on federal aid to their students especially on BEOG. And the same is true of some proprietary postsecondary vocational schools, `whose students make extensive use of the Guaran- teed Student Loan program as well as of BEOG. Student aid in some measure is an indirect form of institutional subsidy,, and the vigorous politics surrounding congressional reauthorization and re- vision of the student aid programs in 1980 attest to the high stakes involved for postsecondary institu- tions. Representatives of the various sectorspublic and private, two-year and four-year institutions struggled over scores of amendments to the alloca- tion formulas, eligibility criteria, and definitions of student need that determine who gets what, where, and how from the several billion dollars now spent annually in student aid programs under Title IV of the Higher Education Act.

But the broad historical delineation of federal and state roles persists in the early 1980s: The states are still primarily responsible for maintaining the structure of higher education, mainly through the maintenance of systems of public colleges and universities. The federal government provides par- ticular kinds of support to meet perceived national objectives, without distinguishing for the most part between public and nonpublic recipients of this support. The federal government purchases services (research), fills gaps (whether in college library sup- port, foreign language and area studies, health pro – fessions' development, or undergraduate science curricula), and channels the bulk of its aid directly- to students rather than to institutions, with the aim of removing financial barriers facing individuals who aspire to higher education.

FIderdi Programs; bypassing the States p*

StateS_served,as intermediaries under federal legis- lation for higher education in the nineteenth century. Proceeds from the sale of public lands pr6villed eridoviments that helped the states estab- lish and finance'the eafly land-grant institutions, agricultural – extension programs, and other fore- runners of toddy's comprehensive colleges' and universities. 'File federal grants to the states were broad and carried few restrictions.

Toward, the beginning of the twentieth century the pattern began to change:. Federal support be- Came piecemeal and started going directly to the institutions themselves, not by way of the states. In recent decades, nearly all federal monies have ., been channeled to institutions (or to departments, schools, and faculty members within institutions) or to individual students.

Speechmakers sometimes refer to a federal- -state "partnership" in supporting higher education, a phrase with meaning only in the general sense of the historical roles and governmental division of labor we have described. There is, in fact, little conscious meshing of funding purposes and patterns between the two levels of government. By and large the federal ac_ tivity proceeds independently. As one observer has noted:

With a few modest exceptions, federal poscsecondary spending arrangements make no-attempt to stimulate state spending, to. compensate for differences in state wealth or effort, or to give state governments money to allot as they see fit.5

Nor, it might be added, would it be easy or even feasible to design a program or funding formula that would effectively achieve any combinationcof such objectives. —

Some provisions of current higher edueati-On law recognize the states, but primarily in incidental ways. Several of the categorical programs authorized in the 1960s, such as college construction assistance and continuing education grants, called for a state commission or other responsible body to review institutional applications for funds. But states vary widely in the ways they have handled the federal program authorities, and, in many cases, the com- missions have existed outside the purview of proper state legislative or executive authority. Moreover, some state commissions ?Were established to ad- minister federal programs that now either no longer funded pr arer§urviving on marginal appro- priations. Under some of the federal student, aid programs, statutory formulas (based on such factors as the national distribution of college enrollments or of high school graduates) first divide the avail-. able funds among the states, thence they are allo- cated to .individual campuses that finally make the

awards to tatticlents. Brit no state authority helps determine the institutional allocations or student awards:

The Education Amendments of 1972 intro- duced two new federal policies involving the states. One was the State Student Inuntive Grant pro- gram, designed .as a directly collaborative federal/ state venture in higher,; education funting. Howe ever, the federal appropriation available for matching state scholarship funds remains small (currently' ,$77 million), and tensions have strained the partnership, as many states chafe under the requirements that' accompany the fairly, small

_

amounts of federal money.6 ."

The other state-related innovation in the 1972 legislation was what came to be known as the "1202 Commissions." Section 1202 of the law authoriied federal funds for comprehensive state- wide planning for postsecondary education, to be conducted by a single state commission "broadly representative" of the public and the higher educa- tion community. Circumstances have limited the impact'of Section 1202, however. Very little money has been appropriated; $2-3 million, annually pro- vides no more' than a token 'amount per state. Moreover, the proposed federal rules implementing the provision created a storm of controversy. Rep- resentatives of public and private institutions alike, both as fearful of state domination as they are of federal control, generally opposed any reinforce- ment of statewide planning. Various state authori- ties were divided on the wisdom of specific federal rules concerning the designation of the appropriate state agency. A furtherattempt to clarify and strengthen the statewide planning provisions of the law hasbeenenacted as part of the 1980 Higher Education Act reauthorization.

During the Nixon years, the idea of revenue sharing was in the air, and some advocated replacing the patchwork of federal education assistance with block grants to the stateswith "special revenue sharing" for education. The Nixon Administration actually. proposed, without success, such a lumping together of school aid programs. But there seemed little Merit or , feasibility in such an approach to federal higher education funding, and it was never seriously pursued.

' It seems probable that the supplementarypur7 poses of federal support will continue to be carried out directly in relation to students and institutions, for the most part bypassing the states.

5. Chester E. Finn, Jr., "A Federal Policy for Higher Edu- cation?," Alternative, Vol. 8, No.. 8, May 1975, pp. 18-19. 6. Indirec.tly, in the case of statecinstitutions, states pro- vide the matching funds required for institutional participa- tion in certain federal programsfor example, National Direct Student Loans and College Work-Study.

5

Types and Dimensions'qf Federal Support

The federal ,government's sources of money tor higher education are so decentralized and inter- mixed with other policy objectives that trying sim-, ply to 'enumerate the programs and to tally the total investment can be an accounting and def- initional headache. It has been estimated that Washingtc:n sponsors over 400 programs, adminis tered by some 25 separate agencies and cabinets" level departments, that provide some measure of support for postsecondary education. The annual dollar outlay is on the order of $15 billion.

A sampling suggests the far "reaches of federal . involvement:

Purposes vary widely and include, for example, agri- cultural research, innovative approaches to the educa- tion of the -handicapped, and training professionals in the study and control of water pollution. Students can receive financial assistance … if they are veterans or are willing to study in a field of special interestto the federal government, such as mental health, law enforcement, or urban mass transportation. Indians, So"cial Security beneficiaries, or persons related to miners with black- lung '.disease are eligible as studentS for special federal support…. The "federal govern- ment even provides assistance "in-kind" to post- secondary institutions, ranging from loans of machine tools and dispersal of surplus government property to provision of films for educational purposes….?

And not much change is in the offing. The newly created U.S. Department of Education consolidates only about one-fourth of the, 400 programs and less than a third of total federal expenditures for higher education, not substantially more' than were en- compassed by the old Office of Education in the U. S. Department of Health, Education, and Welfare. The remaining programs and funds are still scattered across the federal scene, from the U.S. Department of Defense and the .Veterans Adminis- tration to the U.S. Department of Agriculture, the National Aeronautics and Space Administration, and the Smithsonian Institution.

Table 1 shows trends over the past decade in the major types of federal support. Direct expendi- tures to students, which include the major programs of Veterans and Social. Security education benefits as well as the need-tested student aid programs ad- ministered by the U.S. Department of Education (such as BEOG), have grown most quickly, reach- ing nearly $9 billion in 1980, an increase of 196,

percent since 1972. In real terms, adjusted for in- flation over the past decade, the increase in aid to students has been 50 perdent. These figures include

(all payments to students, those that .wind up in institutional coffers in the form of tuition and other charges, as well as those that go, toward books and

personal expenses. University-based research and development funding has expanded more slowly; in real terms, it has increased 32 percent. Direct pay- ments to institutions have declined by about 34 percent in real terms.

Not included in Table 1 are so-called tax ex- penditures, a recent addition to federal budget accounting procedures. In the case off higher educa- tion, this category would inclUde the estimated value to institutions and students of provisions in the federal income tax code, such as deductibility of contributions to colleges, the nontaxability of scholarships and fellowships, and the personal ex- emption that parents may claim for students aged 19 and over. The.estimated value to higher educa- tion is the amount of federal revenue that would be collected but for such provisions, an amount that in 1980 is about $2.8 billion.

Table 2 shows the distribution of federal ex- penditures by state.

Federal Regulation: The Backdoor Issue

As federal activities have increased and, diversified over the past two decades, few institutions have re- fused to take funds from Washington. Some inde- pendent, religiously affiliated colleges, fearing federal control, continue to, resist the "taint'2 of federal money.' But many other institutions that have accepted the money have come by experience to learn that federal patronage does indeed exact a price. College and university administrators are in- creasingly restive under the volume of government mandates. In addition'to the usual reporting and other rules of accountability 'to federal agencies., institutions seem to face a growing list of nondis- crimination, affirmative action, n assorted directives; accompanied by legalistic and sometimes (as perceived by campus officials) cumbersome or arbitrary e aforcement procedures. In some cases, the burden of federal regulation is magnified by the existence' of duplicative; but different, state rules and repOrting requirements.

One-university president argues that the effect of overlapping, often conflicting government regu- lations "amounts to something like confiscatory behaviour because of the amount of time and money equired."8 No movement is afoot in higher

7. Pamela Christoffel and Lois Rice, Federal Policy Issues Data Needs in Postsecondary Edu&ition: Report to the

National Center for Education Statistics. Washington, D.C.: U.S. Departrrient of Health-, Education, and Welfare, 1975, pp. 4-5. 8. Quoted in Lawrence E. Gladieux . and Thomas R. Wplanin, "Federal Politics," in David W. Breneman and Chester E. Finn, Jr., eds., Public Policy and Private Higher Education. Washington, D.C.: The Brookings Institution, 1978, p. 223..

TABLE 1. Federal Outlays to Postsecondary Education

FY 1972, FY 1975, and FY 1980 (in millions of dollars)

Program 19'2 1975

1980 (est.)

% Change

1972-1980 (Current Dollars)

% Change

1972-1980 (1972 Dollars)

DIRECT EXPENDITURES TO STUDENTS

U.S. Department of Education student aid programs (BEQG, STOG; SSIG, NDSL, CWS, and GSL) $ 943 $ 1,587 $ 5,505

Social Security education benefits 521 B40 1,565

Veterans benefits 1,436 3:479 1,757

ether student assistance 65 45

SUBTOTAL $3,002 $ 5,971 $ 8,872 196% 50%

a DIRECT EXPENDITURES TO (.2?

INSTITUTIONS

Programs for disadvantaged students and developing institutions $ 94 $ 180 $ 261

Occupational and vocational 132 137 226

Military academies 208 239 326

Speciaf institutions 56 89 93 Construction and facilities 265 29 131

Health resources 456z— -662- 270-

Scientific-training programs 328 298 266

Other institutional assistance 253 481 275

SU BT $1,792, $ 2,115 $ 2,048 13% 34% ,

RESEARCH AND DEVELOPMEN:f $1,671 $ 2,228 $ 3,827 129% 32%

TOTAL $6,465. $10,314 $14,747 128% 18%

Note: Between 1972 and 1980, the"Consumer Price Index increased 98 percent and the Higher Education Price Index, a special measure of the behavior of costs of higher education institutions developed by the National Institute of Education, increased 73 percent. In order to adjust for inflation and calculate the'change in real terms, we used the CPI in the case of direct expenditures to students and tax expenditures and the Higher Education Price Index in the case of expenditures to institutions and for research and development.

Source: Based on data analysis derived from the Budget of the United States Government and the Special Analyses of the Budget, 1974-1980,

as well as analysis by the Economic and Finance Unit, American Council on Education

education to.., spurn needed federal dollars for institutions or 'students, ,ut higher education's leaders are as concerned these days with the costs imposed through the backdoor of regulation as they are with the frontdoor benefits of federal largesse.

Studies by the American Council on Education and by individual institutions have tried to docu- ment, the costs of compliance with federal 4ules.9 Ohio State University, for example, has estimated

that it spends annually $50,000 to comply, with waste disposal regulations of the Environmental Protection Agency, $250,000 to, carry out proce- dures regulating the privacy of student records (Buckley Amendment), and $885,000 over two recent years to meet Occupational Safety and

9. See Carol Van Alstyne and Sharon F. Coldren, The Costs of Implementing Federally Mandated Social Programs at Colleges and Universities. Washington, D.C.: American Council on Education, 1976.

13

7

Health Act (OSHA) rules: The University of Mary- land spent an estimated $1 million on a single affirmative action case, including extensive liti-

, gation. Some say there is a need to regulate the regula-

tors. The Carnegie Council on Policy Studies in Higher Education has called for preparation of a

"regulatory impact statement" before the issuance of any new set of regulations 'affecting higher edu- cation. No simple solution, however, has been found.

10. The Entangling Web: Federal Regulation of Colleges and Universities. Washington, D.C.: Editorial Projects for Education, 1979, pp. 14-15.

TABLE 2. Federal Funds to Postsecondary Education, FY 1979

Direct Expenditures to Students

Direct ExPenditUres to Institutions

Research and Development Expenditures Total

Alabama $132,263 $ 31,616 $ 40,956 $ 204,835

Alaska 9,242 4,128 21,615 34,985

Arizona 101,289 17,496 33,933 )52,718

Arkansas 60,039 18,532 12,772 91,343

California 748,067 130,395 524,624 1,403,086

Colorado 94,118 131,163 71,059 296,340

Connecticut 123,651 22,760 79,222 225,633

Delaware 23,512 5,892 7,752 37,156

District of Columbia 96,105 178,458 45,142 319,705

Florida 247,994 38,490 70,284 356,768

Georgia 133,462 36,366 52,115 221,943

Hawaii 37,885 9,720 25,562 73,167-

Idaho 22,559 4,561 5,573 32,693

Illinois 318,179 64,682 154,142_ 537,003

Indiana 131,777 27,479 59,672 218,928

Iowa 81,036 22,139 37,093 140,268

Kansas 76,783 18,875 24,564 120,222

Kentucky 91,196 28,863 18,891 138,950

Louisiana 105,763 25,379 26,877 158,019

Maine 46,218 7,747 5,592 59,557

Maryland 118,951 121,115 194,696 434,762

Massachusetts 257,743 56,185 417,088 731,016

Michigan 237,855 51,048 113,586 402,489

Minnesota 138,186 29,216 65,860 233,262

Mississippi c'5,660 28,149 15,522 129,331

Missouri 140,310 32,536 71,630 244,476

Montana 24,372 8,439 5,559 38,370

Nebraska 61,324 12,660 13,761 87,745

Nevada 17,482 3,966 25,246

New Hampshire 32,233 5,153 13,603 50,989

New Jersey 239,337 29,745 46,449 315,531

New Mexico 55,205 15,001 35,012 105,218

New York 760,671 236,661 397,935 1,395,267

North Carolina 178,417 58,879 94,516 331,812

North Dakota 31,626 8,235 5,590 45,451

Ohio 261,107 58,906 101,597 421,610.

Oklahoma 93,323 19,833 17,140 130,296

Oregon 84,444 14,635 47,204 146,283

Pennsylvania 371,262 65,041 198,072 634,375

Rhode Island 933 2,860 21,860 25,653

South Carolina 102,664 23,932 15,928 142,524

8

TABLE 2. (Continued).

Direct Expenditures to Students

Direct-Expenditures to Institutions

Research and Development Expenditures Total

South Dakota "33,537 8,426 4,251 46,214

Tennessee 128,663 42,808 57,937 229,408

Texas 389,672 74,791 192,905 662,068

Utah 38,758 10,232 46,145 95,135

Vermont 23,368 5,809 12,380 41,557

Virginia 169,104 36,875 56,555 262,534

Washington 137,467 28,037 92,423 165,504

West Virginia 49,091 13,783 7,434 70,308

Wisconsin 147,743 34,845 93,729 276,317

Wyoming 9,694 2,827 4,503 17,024

Note: Some federal programs, such as vocational education, support elementary/secondary as well as postsecondary activitiee,

The postsecondary share of expenditures in such programs is estimated.

Sources: Based on data obtained from the U.S. Department of Education, U.S. Department of Health and Human Services, the

National Science Foundation, and the U.S. Department of Defense.

For the states, the effect of federal regulation of colleges and universities may be indirect but still potentially sizable. The cost of compliance by pub- lic institutions comes, one way or another, out of state budgets. And there are major fiscal liabilities implicit in recent social mandates passed by Congress,' the dimensions of which have not yet

-become-fully-apparent:–For-example-,-equality of campus opportunities for women, as called for under Title IX regulations, could force athletic budgets much higher in coming years, depending upon how the issues are ultimately interpreted and litigated. Regulations for the handicapped ("Sec- tion 504") have major cost implications. Neces- sary alterations of physical facilities, it is estimated, could cost higher education as much as $2 billion. Added instructional and other costs are likely. There are already signs of increased demands on student financial aid budgets as more handicapped students enter postsecondary education and find that vocational rehabilitation funds do not always meet their needs.

– Several states have been feeling very directly the effects of federal desegregation enforcement as it affects colleges under Title VI of the Civil Rights Act. The Adams case will surely alter the financing and character of public higher education systems in the six affected states."

The 1980s: Some Assumptions

We foresee the following in governmental policy- making for higher education in the 1980s.

The key decisions in the period ahead will be made by, or at least within, the states, not by the

federal government. The Carnegie Council among others recently asserted this point in its report, Three Thousand Futures, which argues that each .college and university in the country will fare dif- ferently as higher education weathers the long- anticipated hard times of the 1980s and that the .primary action in government policymaking will occur at-the state 1-6-61:12 The landscape of post- secondary education, the division of responsibilities among different types of institutions, the probable adjustments that will need to be made to deal with excess capacity in higher education systems, the assurance of educational quality-all of these funda- mental matters will and should be decided by a combination of market forces and action by state planning and governing bodies.

The federal government will not directly inter- vene in these matters, nor will federal policymakers be especially tempted to try, for many of the deci- sions shaping and reshaping higher education in the 1980s are going to be politically painful. History and the diverse conditions of 50 state systems of

11. Adams v. Hufstedler is the latest in a series of suits going back to 1970, in which the NAACP Legal Defense Fund sought to end segregated systems of postsecondary education in 10 states. Under Adams six states were ordered to develop desegregation plans acceptable to the U.S. Department of Health, Education, and Welfare (now the U.S. Department of Education) or face a cutoffof fed- eral funds. 12. Carnegie Council of Policy Studies in Higher Education, Three Thousand Futures: The Next Twenty Years for Higher Education. San Francisco: Jossey-Bass, 1980. See also David W. Breneman and Susan C. Nelson, "Education and Training," in Joseph A. Pechman, ed., Setting National Priorities: Agenda for the 1980s. Washington, D.C.: The Brookings Institution, 1980.

9

I5

higher education dictate that the major questions be resolved at the state level.

General federal aid to institutions is not likely, although the federal government may recognize and help to bolster institutions in particular areas of need, such as renovation of aging physical facili- ties. To say that the primary action will be at the state level is not to say that higher education's leadership will ignore Washington in the search for assistance. There will be renewed pressures from the national associations of colleges and universities for some form of broad institutional support, or for a bail-out authority to rescue individual or particular types of institutions whose survival is reportedly threatened. But the odds are still against such departures in federal policy.

More conceivable is a revival of special types of federal aid to deal with documented problems. Notwithstanding expected enrollment declines,.. parts of higher ethication's physical plant will'need to be replaced, or renovated in the next 20 years (and alterations to meet the requirements of legis- lation for the handicapped, as noted, are also in store). Some version of Title VII (college construc- tion assistance) of the Higher Education Art, still on the books but unfunded in recent years, might be viable in the 1980s.

The federal governMent in 'the 1980s will direct utter -ttOntonINFaainiiig the capacity and quality

universities. … And with each new set of relation- ships comes a new set of regulations.I3

Federal agencies can do much to lighten the burden by consolidating reporting and enforcement procedures. For their part, representatives of higher education need to be concrete, rather than rhetori- cal, in pointing out where rules and mechanisms of enforcement are inappropriate to higher education and where the costs, monetary and otherwise, to the academic enterprise outweigh the social bene- fits of regulation. But as long as government agen- cies insist on accountability for the proper expendi- ture of funds and as long as congress.)nal mandates addressing a range of social problems remain in force, there will be complexity and tensions in the relationships between the federal government and higher education. And there will be budgetary implications for the institutions and indirectly for the states.

Federal dollars will continue to flow through various channels to students and colleges, but not for the most part by way of the states. As in the past, the discrete and supplemental types of support provided by the federal government will for the most part be routed directly to individuals or insti- tutions, rathro. '?-an through checkpoints at the state level.

The-principa. abject-of-federal-funding will re-

of research in the universities. Federal support of basic research in the national interest will and should continue. A number of emerging problems should be addressed, particularly the importance of insuring an adequate flow of young scientists and scholars into the academic ranks of the major re- search institutions.

There will be continued protest about the burden of federal requirements on colleges and- universities, but the problem will have to be dealt with agency by agency, issue by issue, case by case. The problem of government regulation cannot be wished or complained away. As one. observer ad- vises:

10

Don't believe any politician who promises "deregula- tion." . Regulation is here to stay, in a growing variety of forms. And in one respect, this fact is a tribute to the special place of higher education in our society. In its search for solutions to complex national problems, the government inevitably turns to the ex- pertise and research capabilities of the colleges and

main the individual student. Federal student aid policies will raise many issues for states, many of which are themselves quite heavily committed to this kind of assistance. Unlike support of post- secondary institutions (whieh is primarily a state and private responsibility) and research (more a federal than a state interest), student aid is an area where both the federal and state governments have assumed significant responsibility. For the most -part; the two levels of government have developed their student aid – programs indepen- dently..Having expanded dramatically in the 1970s, however, these programs will come under closer scrutiny in the 1980s. The interaction of policies and programs will cause more concern because of the large expenditures involved, but it will pose dif- ferent questions in each state. To these issues we turn in the next section.

13. Charles B. Saunders, Jr., "Is Regulation Strangulation?" College Board Review, No. 100, Summer 1976, p. 4.

Student Aid: The Uneasy Partnership

Washington's part in insuring equal opportunity for higher education by removing financial barriers to students is of fairly recent origin, as we have seen. States have a much longer history of providing financial aid to students. From their beginnings most public colleges and universities charged little or no tuitionan indirect form of aid for all enrolled students. Several states preceded the federal gov- ernment in establishing direct student assistance programs. For example, New York created Regents Scholarships in 1913 and began a loan program in the. 1950s. The five states with the largest need- based grant programs (New York, Pennsylvania, Illinois, New, Jersey, and California represented about 65 percent of all state grant expenditures in 1979-80) can trace their efforts to 1960 or before. Most state programs, however, date from the same era as federal programs, the 1960s and 1970s.

Today federal and state governments provide more financial aid by far than institutional and private sources. The principal overlap, and our 'Principal concern here, is in programs of general assistance for undergraduates in which eligibility is based on a measure of student (family) financial need.

As Table 3 'shows, federal and state programs have burgeoned. Current' appropriations for the major federal programs of need-tested aid to stu-

TABLE 3. Federal and State Student Aid Funds

dents total nearly $4 billion, compared to state funding of something over $1 billion: Included in the federal tally are the aid programs authorized under Title IV of the Higher Education Act, which are administered by the U.S, Department of Educa- tion.14 For purposes of comparability with state figures, we exclude the costs of Guaranteed Student Loans, which (since 197$) are not based on need. It should be noted, however, that GSL costs are substantial (currently over $1.5 billion annually and growing) and the nondiscretionary expense of this program to the federal government could seriously erode future appropriations for the need- based aid programs,

The tally of federal student aid also excludes the entitlement programs under the GI Bill and the Social Security Act, and it leaves out a-number of smaller programs, such as health-professions student

14. Also, we are discussing here programs primarily provid ing financial assistance to undergraduate students. Under- graduate grants and loans constitute the bulk of federal direct studelit aid programs, though graduate students may participate in some programs. Most graduate students who receive federal assistance, however, get research assistant- ships or traineeships that are part of federal research and development activities. Overall, federal support for graduate students has declined dramatically since the late 1960s.

General Need-Based, Focused Primarily on Undergraduates (in millions of dollars)

FY 1972 FY 1975 FY 1980

(est.)

Federal Programs BEOG $ $ 356 $2,609

SEOG 2.10 240 340

SSIG 20 77

NDSL 286 321 329

CWS 272 420 550

TotalFederal Programs $768 $1,357 $3,905

State Programs (lesi federal SSIG component) . $269 $ 421. $ 775

Notes: (1) State amounts reflect only need -based grant programs. No state work or loan programs are in-

cluded. (2) Federal programs do not include the Guaranteed Student Loan program.

Sources: For federal programs: U.S. Department of Education. For state programs: annual surveys of the

" National Association of State Scholarship and Grant Programs.

11

loans and grants. 15 The state total includes almost $800 million fol.. comprehensive undergraduate need-based grant programs, plus an estimated $200- 300 million in other grants, loans, and work-sturdy, but does not include state appropriations (of un- known but probably significant size) to public institutions for institutionally awarded student assistance.

As always, such a comparison of aggregate fed- eral and state funding disguises wide variations across the states. No state actually spends. in its own direct student aid programs more than the federal student aid programs that flow into it, and many contribute only a small fraction of the amount from federal sources. Some states, however, make a substantial effort relative to federal dollars. Until very recently, New York and Illinois spent more in their grant programs than the federal gov- ernment awarded in BEOGs to students in these states. Table 4 shows the distribution of federal and state student aid monies by state. .

The biggest factor on the federal side has been the explosive growth of the BEOG program in the mid-1970s, followed by passage of the Middle- Income Student Assistance Act of 1978, which greatly broadened eligibility for federal. grants as well as for loans. Not only has the expansion of BEOG pushed total federal spending well beyond total state effort in this area, but the nature of the BEOG program has increasingly tended to cen- tralize the student aid process.

Nationwide procedures and standards, set_ in Washington, determine whether students are eligible for BEOG awards and how much they receive. The BEOG program's growth has made student aid a more salient issue in Congress and- the executive branch, with the result that mane policyrnakers want to extend .BEOG application and eligibility rules to other federal programs, thinking this will foster simplicity and consistency. Thus magnified, BEOG has the potential for exerting enormous in- fluence over the entire student aid system, a situa- tion that could increase tensions between the federal and state partners (and institutions as well), particularly in those states that have big grant pro- grams and long traditions_of _their_own in directly_ aiding students.

Federal/state relations in the loan area have also been strained in recent years, largely because of mixed federal .signals about what the responsi- bilities of states should be. The original legislation setting up the Guaranteed Student Loan program provided for federal reinsurance of state guaranteed loans, with direct federal insurance provided where state guarantees were absent. Federal legislation in the 1970s spurred.the creation of state loan guara:n- tee agencies; for example, the federal government

12 .

offered bonuses and incentives to states that had such agencies. Recently, however, Washington's in- terest in continuing the partnership with states on student loans has been uncertain. Some of the loan proposals under congressional review in 1979 and 1980 seemingly posed a threat to state lending activities. Even though Conp-ess ultimately did not create a national student loan bank as such, states have complained that their own efforts to get agencies underway in response to earlier federal encouragement have been hampered by uncertainty over future federal directions.

In this section we discuss three noteworthy as- pects of the shifting federal/state partnership in student aid: (1) some of the dilemmas facing the states as they consider whether and how to adjust to new levels and patterns of federal spending; (2) the variety of changes in state programs in the wake of federai expansion, from further growth or targeting of new eligibility groups in some states to cutbacks in others; and (3) prospects for further change in light of pending federal issues With sig- nificant implications for states. This discussion is intended to give an idea of the questions and con- cerns that federal policies raise for states. We draw no conclusions. State postsecondary systems and financing patterns are so diverse that each state will have to decide for itself how to implement its ver- sion of the federal/state partnership in this impor- tant area.

Dilemmas Caused by the Expansion of Federal Pro- grams

How much student aid is needed? Because BEOGs are supposed to be the foundation of the aid sys- tem and are often the first grants awarded to stu- dents, states (and institutions as well) are usually in the position of asking "how much additional aid do students need?" There are conceptual and prac- tical, problems in answering this question.'6 So far aggregate statistics on the financial need and aid available to individual students are insufficient for determining conclusively whether students are getting adequate assistance Furthermore, how

15. GI Bill education benefits, which provided as much as $3 billion annually in postsecondary assistance in the mid- 1970s, have. been declining rapidly in recent years as the eligibility of Vietnam era veterans runs out. Social Security. education .benefits, which currently total over .$1.5 billion a year,. are extended to students, 18-21 years old, who are children of deceased, disabled, or retired Social Security beneficiaries. .

16. See Susan .Nelson, Community Colleges and Their Share of Student F;nancial Aid. New ,York: The College Board, 1980.

should financial need be defined? And how can state policymakers determine how much of the financial need of individual students is being satis- fied by federal programs?

As federal spending has grown, it has become possible, that in some states (especially those with generous state-grant programs) some students (especially those at low-cost institutions) may not need much more help than they are already receiv- ing. In some states the combination of a BEOG and a state grant provides 80-90 percent of costs for some students in some institutions. But policy- makers must be cautious in drawing conclusions. For very disadvantaged students, such funding may be necessary to ensure access to higher education.

State officials also face a difficult political di- lemma in answering the question "how much stu- dent aid is enough?" Often they have, like the federal government, created_ student aid programs that benefit students in public as well as private institutions and that help low-income students in particular. If federal programs increasingly meet

much of the need of low-income students in low- cost institutions, states may find their own assis- tance shifting toward middle-income students and/ or those enrolled in relatively high-priced private institutions, especially if the state programs are also growing. Some state officials find such a shift acceptable, while others worry that it could threaten the political base of support for State-pro- grams.

Is the student aid system becoming too com- plex? The federal government supports three grant programs, two loan programs, and one work-study program in its arsenal of general student assistance, not to mention the specialized types of aid for students go:mg into health professions, law enforce- ment, and vt,iier fields. Many states have a variety of student aid programs as well. There are few signs that Washington is going to cut back on the number of federal programs, though Congress is caking steps to standardize the way financial need is determined under the Title IV programs and to mandate uni- form application requirements.

TABLE 4. Federal and State Student Aid by State, FY 1980 (est.)

(in thou d ads of dollars)

Total Federal, Student Aid

Total State Student Aid

Total Federal and State

Student Aid

Alabama 86,915 2,468 89,383

Alaska 1,853 240 2,093

Arizona '45,827 1,800 47,627

Arkansas 36,617 37,721

California 334,980' 83,478 418,458

Colorado . 41,484 8,060 49,544

Connecticut 37,488 8,619 46,107

Delaware 7,805 550 8,355

District of Columbia 29,230 1,073 30,303

Florida 129,436 10,400 139,836

Georgia 74,041 ,3,365 77,406

Hawaii 8,984 452 9,436

Idaho- .—10,387 494 10,881

Illinois 168,709 74,497 243,206 Indiana 71,831 21,479 93,310

Iowa 44,025. 15;302 59,327

KansaS 41,340 4,650 45,990

Kentucky 107,895 5,309 113,204

Louisiana 74,879 872. 75,751

Maine 27,110 1,350 28,460

Maryland 57,860 5,554 63,414

Massachusetts 148,171 16,249 164,420

Michigan 137,493 30,192 167,685

Minnesota 83,049 23,631 106,680

Mississippi 66,711 1,109 67,820

13

TABLE 4. (Continued)

(in thousands of dollars).

Total Federal Student Aid

Total State Student Aid

Total Federal and State

Student Aid

Missouri 72,515 9,000 81,515

Montana 13,003 412 13,415

Nebraska 27,646 856 28,502

Nevada 5,240 493 5,733

New Hampshire 19,920 517 20,437

New Jersey 99,810 37,979 137,789

New Mexico 27,928 720 28,648

New York 479,407 274,500 753,907

North Carolina 103,270 3,299 106,569

North Dakota 16,883 543 17,426

Ohio 144,828 30,916 175,744

Oklahoma 53,368 2,265 55,633

Oregon 52,168 5,707 57,875

Pennsylvania 183,721 81,100 264,821

Rhode Island 24,754 4,218 28,972

South Carolina 59,061 10,618 69,679

South Dakota 22,720 420 23,140

Tennessee 83,488 6,200 89,688

Texas 182,791 18,449 20,240 Utah 15,054 1,504 17,358

Vermont 16,592 4,253 20,845

Virginia 69,085 3,782 72,867

Washington 63,301 4,796 68,097

West Virginia 24,559 3,021 27,580

Wisconsin 80,561 20,967 101,528

Wyoming 4,842 251 5,093

Note: The federal portion of the SSIG program is included in the state totals. Available data

do not allow accurate separation of the federal SSIG portion from the state portion. Thus state dollars'are somewhat overstated (by a total, of $77 million) in this table, and federal

dollars are understated by the same amount.

Sources: U.S. Department of Education and National AssociatiOn of State Scholarship any

Grant Programs. 1 1 th Annual Survey, 1979-80.

States with multiple programs or programs that differ significantly from the federal approach also

__face the question_of_whether the- total- system -has- become too complex and confusing. Complexity can result from the sheer number of programs. 'Minnesota, for example, has undertaken a year-long study to see if all of its current programs are still necessary in the 1980s. Or complexity can result

' from state programs that are designed and operated quite differently from their federal and institutional counterparts.

Independent state programs can offer significant t advantages as well as possible disadvantages to stu- dents. New York, for example,' operates a very large Tuition Assistance Program (TAP), providing over $250 million a year in financial assistance. Appli-

14

cants must complete a. special form to apply for , TAP, while in other states students can frequently use-the-sam-e-aliplidatio-n-16-fstate awards and for institutional aid and/or BEOGs. At the same time, the separate New York approach has several virtues: TAP is conceptually a simpler program than most (financial need is based on income alone, without: considerati6n of assets), and the TAP application is comparatively simple and straight- forward.

Thus states face significant trade-offs in decid- ing whether and how to accommodate ,their pro- grams to federal policies and whether complexity in the system benefits or hurts students.

Are federal programs "fair" to states? There is tremendous diversity among states in the nature of

their postsecondary system's and in the patterns of postsecondary finance. Given this diversity, it is

-" not surprising that questions frequently arise about whether federal policies treat different states in an equitable manner.

In the SSIG program, for example, federal dollars are allocated to stages on the bases of head- count enrollment andirthe growth in state expendi- tures since a base year (no earlier than 1971-72, though later far states whose programs were created later). Officials in states with older programs that had attained significant size before their ,,,bt?se year frequently believe that they are not given appro- priate credit for the efforts they made even before creation of a federal incentive system.

In the BEOG prOgram, students can currently receive maximum grants of $1,800 or one-half of their educational costs, whichever is less. Some officials in low-tuition states feel that their low- tuition policies result in unfair penalties, with high-tuition states reaping more BEOG money.

In the .so-called campus-based programs,'7 fed- eral funds are divided among states primarily on the basis of enrollment and then within states., among institutions on the basis of so-called fair- share formulas. These formulas calculate the finan- cial need of students at each institution, after other

'forms of assistance are taken into account. Because students in some states may, on average, be poorer than students in other states, enrollment-based state allocation procedures may be morallisadvantageous to the poor than would interstate allocations made on the basis of financial need.

State choices about how to finance postsec- ondary education and how much money to provide can, therefore, influence the amount of federal student aid coming to the state. Especially in the heavily subsidized public sector, states have to bal- ance their interests in keeping tuitions low for all' students against their interests in raising tuitions

in order to capture the, additional federal aid for which–stmle-stUdetiiiiild* the qualify. The cost

of the latter approach, however, is higher fees for those.students who are not eligible for federal assistance. '-

nated in some way. Methods of coordination are diverse.

Initial evidence on the ways states have found to coordinate their own and federal effortS comes from an informal, survey the College Board con- ducted in 1978, to which 34 state student-aid agency directors responded. Most of the states pro- viding information appeared to have some kind of limit on the amount of aid a student could receive from a combination of BEOG and state grants. It was not clear, however, whether all of the limits reflected conscious consideration of the combined effects of BEOG and state grants,or whether some were, merely the maxima that resulted from quite separate decisions about maximum grant levels in

the different programs: Nine states reported that they imposed "abso-

lute dollar" limits on the awards students could receive from BEOG and state grants.

State Responses

The magnitude of federal student assistance has clearly affected state aid pigams, particularly in the: grant area.

Coordination: with Federal Programs. The most frequent response of states to the growth in fed-. eral student aid has been an adjustment inNstate programs so that federal and state aid are coordi-

Three of these states made uniform awards; their limits were the flat value of their grants added to the maximum BEOG. Five states reported that the absolute dollar limit was the maximum state grant plus the maximum BEOG. Wisconsin reported an absolute dollar limit of $2,075 at University of Wisconsin institu- tions and $1,870 at vocational institutions.

-Maine; 1Vfinuesuta-,'antrOtWh indicated that they limited the sum of BEOG and state awards to some preset proportion of "need (50, 75, and 50 percent, respectively). Five states limited the com- bination of BEOG and state grants to 100 percent of need.

Several other states have developed unique ways of coordinating awards:

In New ilampshire, total basic resources, self-help, _and_state grants could not exceed

In New Jersey, the family- contribution, BEOG, and New Jersey grant could not ex- ceed 85 percent of the cost of education as approved by the federal government for the BEOG program. In North Carolina, state grants equaled half of need after, family contributions, self-help, and BEOGs were considered.

17. The so-called campusased or institutionally adminis- tered federal programs are the Supplemental Educational Opportunity Grant, College Work-Study, and National Direct Student Loan programs.

15

Pennsylvania limited its state awards to the least of one-third of need, 80 percent.of tui- tion, $1,500 at in-state institutions, or $600 at out-of-state, with need determined after BEOG eligibility was considered as a re- source. In Vermont, the maximum a student could receive from parents, BEOG, and state grants was the lesser of $1,650 or of 55 percent of tuition, fees, room, and board.

Eight states reported no limits on combinations of BEOG and state, grants. However, in two of these states, institutions determined the amounts of state awards and, at a minimum, presumably r& stricted the combination of.awards to need.

. Additional evidence about coordination comes from a recent survey of state grant programs by the National Association of State Scholarship and Grant Programs. That group reports that 26 states and the District of Columbia calculate the ex- pected BEOG for which each state grant applicant is eligible and add it to the student's resources be- fore making a state award. 18

Yet another kind of coordination, affecting application procedures rather than grant levels, is made possible, by the Multiple Data Entry (MDE) system in the BEOG program. Through MDE, state and private agencies can simultan y_collec

dens a inancial information needed for determining BEOG eligibility and whate'Ver ,mation is needed by state 'and institutional aid ad-

, ministrators. MDE processor agencies, of which there are currently three (American College Testing. – Program, College Scholarship Service, and the Pennsylvania Higher Education Assistance Author- ity), extract from, the financial aid application forms they receive the data needed by the BEOG program and forward the data by means of _com- puter to -the- nationwide BEOG processing agency. For students, MDE has meant a reduction in 'the number of application forms they must complete to apply for Various financial, aid programs. Many states and institutions use the American College Testing Pr6gram , and/or College Scholarship 'Service forms in >their own financial aid programs,,. and the Pennsylvania agency form serves as an application for that state's grant program' as' well.

Expansion of State Aid. Sorrie states have re- sponded to the growth of federal student- aid by- making parallel changes in their own assistance pro -. grams. Over the years federal expenditures have grown for two reasons: federal policymakers have increased the maximum awards made to individuals, and they have extended eligibility to new groups of

students. Similar changes have taken place in some state programs.

In at least one instance, a-change in state policy was mandated by the federal government. In 1972, Congress made students in all sectors of postsec- ondary education eligible for all federal student aid programs, and in 1976 it decreed that within a few years state grant programs would have to be open to students in all nonprofit institutions to be eligible for State Student Incentive Grant niatchingfunds. This provision caused serious problems in a few states that had constitutional or statutory prohibi- tions against giving public funds directly or indi- rectly to certain kinds of schools (for example, church-related colleges). It was never enforced and was repealed by Congress in the 1980 reauthoriza- tion of the Higher Education Act. Nevertheless, while it was on the books, some states did change their programs to bring them into compliance.

The federal government also attempted to in- crease state spending on student aid through SSIG, which was intended to encourage the creation and expansion of state grant programs. SSIG has dot been the major reason behind the enormous growth in state spending in the last decade, but clearly it has had some effect.19

For the most part, however, state grant expan- sion has been influenced by the sames.onsiderations-

-thatirrflue As college costs have risen, state officials have increased the size of awards in an attempt to keep real levels-of aid about the same. Thanks to a broadening 'view in society about the nature of postsecondary education, the federal government had by 1972 extended eligibility for federal programs to half-time as well as full- time students and to students in proprietary a,KI certain kinds of vocational. schools; many states have done likeWise. A rising concern. over the ability__of middle-income families to finance higher education led Congress in the Middle-Income Stu- dent Assistance Act of 1978 to. extend BEOG eligi- bility to families earning as much as $30,000: Some state legislatures responded to the same con- cern by extending eligibility for state programs up the income scale.

16

Creation of No-Need Awards. There has been a quickening of interest in so-called no-need awards sponsored by state governments. Some states have made such awards, based-on academic merit rather

18. National Association of State Scholarship and Grant ,, Programs, 11th Annual Survey, 1979.80.

19. See Janet S. Hansen, The State Student Incentive Grant Program: An Assessment of the Record and Options for the Future. NewYork: The College Board, 1979.

than financial need, for many years; others, such as Maryland and Michigan, have created new merit- based programs only recently.

State officials offer a number-of-reasons foi launching no-need scholarship programs. With the federal government meeting so much of-the finan – cial need of low-income and (more recently) middle-income students, state policymakers may feel -that they can use state funds to achieve differ- ent goals, such as recognizing academic accomplish- ment. Some state officials hope to keep the state's most talented students at local rather than out -of- state institutions by offering them prestigious and lucrative awards. Some states also share the feelings of some parents that the financial aid system had become too heavily weighted toward meeting

,financial need rather than rewarding academic ex- cellence, which was the traditional purpose of most scholarships.

Cutbacks. The expansion of federal student aid has caused some states to decide,that they could cut back on their own assistance programs. Colorado, for example, where legislators adopted an expendi- ture limitation in 1977, reducethits-flu-iding-O need-basecl-grants ercent in 1979-80, after a legislative review of need-based aid in sur- rounding states. Colorado expected the cut in its own, fund' to be made up by increases in federal funds, especially in BEOGs. In 1979-80, Wisconsin reduced funding for the Higher Education Giant program (which aids students in the public sector) in anticipation of increased BEOG allocations as a result of the Middle-Income Student Assistance Act.

captUre federal student aid money by increasing public sector tuitions, thereby increasing student eligibility for federal assistance. Concern centers on public institutions because, under current BEOG fading levels, most private college tuitions are al- ready* high enough to qUalify students for the maximum grant (if they have no other financial resources). The half-cost provision in BEOG, which limits grants to one-half the student's costs of attendance, does mean that low:income, high-need students in low-tuition colleges may get lower BEOGs than they would if tuition were higher. For states, the issue is whether they or the federal government should subsidize these low, tuitions.

Our. own research2° and other available evidence. suggest that to date federal student aid has not been a major factor in state decisions to raise tui- tion. The availability of this aid has certainly cush- ioned the political impact of such decisions, but increases have been primarily the result of other considerations.

The question is not moot, however. As federal programs have grown older and_largeri-th-eir pres- ence_has–inevitably-b-eFome more widely known at

fThe state level We hear anecdotal reports that state budget officials are asking more questions than they used to about the amount of federal student aid coming into the states. Whether such questions will lead to decisions about tuition levels that are more heavily influenced by the availability of stu- dent assistance funds is hard to forecast. Such a linkage would have some potentially serious repercussions. Congresiional champions of student., aid have already shown sensitivity about the pros% pect that states might raise tuition to capture fed- eral funds and would surely react negatively to any concrete evidence of this. Moreover, so long as BEOG is restricted to meeting less than 100 per- cent of a student's educational costs, aid recipients would suffer a real net increase in their costs from any tuition increase. Non-aided students, of course, would have to meet the entire amount of the in -. crease from their own resources, or from increased borrowing.

Shift in Focus to Private Sector. Rather than cur- tail their state grant programs in response to in- creases in federal funding, some states may shift their attention to meeting the needs of students in more expensive private colleges and universities. (Other states, such as California and NewL.York, have always viewed their state aid programs as designed at least in part to help the private sector.) Wisconsin did just this, increasing appropriations

'for the Tuition Grant program that aids students in nonpublic institutions at the same time it cut back funds for public sector Higher Education Grants. Other 'states are beginning to talk about the need to insure student choice between public and private 'institutions now that the federal government has virtually guaranteed' student access to at least .a low-tuition public school through a combination of BEOG, SEOG, and other aid.

Tuition Increases? An oft-mentioned but so far unsubstantiated concern is that states will try to

Changing Features of the Federal/State Partnership

The federal/state relationship in student aid is con- stantly shifting as new circumstances arise. States need to be aware of several developments that will influence the nature of the partnership in the next few years.

20. See, for example, Seth P. Brunner and Lawrence E. Gladieux, Student Aid and Tuition in Washington State: A Case Study of Federal-State Interaction. New York: The College Board, 1979.

23 17

Enrollment Shifts. With the number of students in the traditional college-going age bracket about to begin a decade -Long decline; all of higher educa- tion is bracing for as yet unknown but widely feared effects. Individual states will probably feel

the effects of this overall decline in quite diverse ways: some May see enrollments in postsecondary education decline drastically, others may see only small declines, and still others (especially in areas of population growth and/or with strong educa- tional interests among adults) may even see in- creases.

Since federal student aid is either distributed directly to students or allocated among states partly on the basis of enrollment, these shifts could have a dramatic effect on the interstate allocation of federal dollars. State officials may be more aware than ever, of the provisions made for allocating formula-based federal funds and for-determiiiiiig the student_aid-eligibility-iirtnew kinds of stu- ents (older, more paft-time) who are making up

an increasing proportion of postsecondary enroll- ments. There will probably be more tension than usual over student aid, between the federal govern- ment and the states, and among the states sever- ally, as policymakers try to accommodate diverse state interests.

Reauthorization of the Higher Education Act. Re- newal of the legislation authorizing federal student aid programs in 1980 raises some new uncertainties for states. Expanded authorizations for the campus – based programs, plus increases in the BEOG 50 percent-of-cost limit to 70 percent over a five-year peridd, might suggest that more federal money will be available for students. But budgetary constraints could override the effects of changes in the author- izing legislation. .

Even less clear are the effects that new federal provisions about application forms and about .financial need analysis will have on state programs. The 1980 amendments to the Higher Education Act call for a single applic'ation form and a single financial-need analysis system to determine eligi- bility for assistance in most of the major federal aid programs. The exceptions, significantly, are State Student Incentive Grants (administered by states) and Guaranteed Student Loans (adminis- tered priinarily by banks). Despite the formal ex- emption of state programs, .the new federal system will raise some serious questions for states.

18

Multiple Data Entry now allows states to corn- bine items needed for their 'own and federal pro- grams on the sarfie form, or at least ora basic and supplemental form distributed together. Some state grant agency directors fear that a federally mandated application will preclude states from adding their own information or questiotis. onse- quently, states could feel forced to change their own programs so they can operate with the federal form, or they could revert to a completely, separate application, causing more work for stacfents. The flexibility with which the U.S. Department of Education implements the single -form requirement will have a great deal to do with how easily states can accommodate to it. .

Behind much of the concern over the federal form and the fear that states-may-b-e-firessured into using_it,-is-the-Vidriithat states may then be forced to use a financial-need analysis system that depends only on those data the federal government chooses to collect. This seemingly technical point has in fact major policy implications, for the kinds of in- formation collected from applicants helps to deter- mine who is considered needy and who is not. The federal government has taken an increasingly gener- ous view of student financial need and became 'even more generous' in 1980. One reauthorization change, for example, is to eliminate home equity from consideration when calculating a family's ability to pay for college.

The importance of this debate for states is two- fold. First, if states (willingly or unwillingly) adopt the federal financial-need analysis system for their own, they may find themselves extending aid eligi- bility to large numbers of new students who were formerly considered unqualified. Second, states may find themselves under pressure to adopt the federal guidelines, because parents and students have a hard time understanding how one level of government' can declare them in need of financial assistance while another says they are not..

Finally,, a pererinial issue raised anew by re- authorization is the role played by state loan agencies. Even though the Guaranteed Student Loan program will continue, changes authorized in the National Direct Sttdent Loan program could significantly diminish the role of guaranteed loans (and therefore of state agencies) in the overall sys- tem of student financial aid.

Federal Funds and State Prerogatives

We have said. that federal dollars supplement the basic support of higher edkication provided from state and private sources, and that the objectives of federal policy are implemented primarily through students and to some extent institutions, not formally or substantially through the states. We conclude with a comment on budgetary constraints and the problems of fiscal federalism in higher education.

The Federal Budgetary Outlook

The preceding section discussed stresses and strains in the student financial aid system, following a decade in which the largest force for change 'has been federal budgetary growth. Now a major ques- tion ,mark hangs over the budget process in Washington. Under the new Administration and the .,97th Congress there maybe unprecedented pressdres to balanCe the federal budget as a way to combat inflation, and, during a time of apparent international danger, defense needs in priority over domestic social programs. Whether the federal commitment to higher education will continue to expand at the rate it recently has is in doubt.

The federal investment in university research could show signs of 'new growth. The need for solutions to national problemi, such as energy, along with concerns about the economy's lagging productivity, may help to boost research and development funding in coming years.

However, the outlook is cloudier for student financial aid. Even though Congress authorized more generous student benefits when it renewed the Higher Education Act in 1980, the- reality of budgets may not match the promise of the legisla- tion. The federal government will undoubtedly continue to focus on' equalizing opportunity for individual students, and the BEOG prograin will persist, in the words of one university leader, as "a powerful driving force in maintaining enrollment levels" in both public and private institutions.2' But state policymakers would be wise not to ..premise their decisions about higher education finance on additional federal monies for students. The dollars will still flow, but the rate of growth and the strength of the federal budgetary commit- ment in the 1980s remain to be seen.

.0 As college costs rise, will' federal student aid

keep up, or will states have to spend more to main- tain current of real assistance? Will federal policymakers Zontinue and/or expand their aid tb middle-iricome students? If federal spending cuts are made, will low-income students be given priority or will aids be spread over as many students as pos- sible? Will college-tuition tax credits be enacted and, if so, will they in time supplant direct aid to students based on need? The answers to such ques- tions will have implications for states as they frame their own student aid policies in the 1980s.

A fact likely to aggravate the budgetary condi- tion in student aid is the rapid growth in mandatory costs of the Guaranteed Student Loan program. The loans are now heavily subsidized, particularly since the explosion of interest rates beginning in late 1979. 'Students pay no interest during school years (and, if they began borrowing before 19g1, students pay only 7 percent during the repayment period) and lihe federal government pays partici- pating banks a special allowance that fluctuates with the going rate of interest. Moreover, the Middle-Income Student Assistance Act made all students eligible, regardless of family income. The more -students borrow and banks lend under the program, the 'more federal costs grow. These costs', likely to exceed $2 billiOn in fiscal 1981, have al- most quadrupled. in the past three years.

Will grant programs based on financial need suffer in the years ahead because of the budgetary

'drain into subsidized loans, which are not based on financial reed? Despite the increase in the GSL interest rate to 9 percent for new borrowers begin- ning in 1981,-will tight money conditions continue to force federal loan subsidy costs higher? Will fed- eral benefits start shifting from low and moderate to higher income students if loan spending con- tinues to grow? An illustration of the potential trade-off is already at hand. In the summer of 1980, Congress accepted an Administration proposal to cut $140 million out of the BEOG program in the 1980-81 academic year, a reduction which the Ad- ministration and other proponents justified in part

21. William Friday, quoted in The Report-of the Sloan Commission on Government and Higher-Education, An Overview. New. York: Alfred P. Sloan Foundation, 1980, p. 40.

25 19

4+

by pointing to the $650 million supplemental (and ,nondiscretionary) appropriation fot Guaranteed Student Loans.

/Federal budget constraints will affect the states in many other areas, too. Congress has threatened, for example; to reduce or eliminate the $2.3 billion states have received Under revenue sharing, much of which the states have been using for education.

Fiscal Control and the Issue of Reappropriation

Traditionally, individual states have- looked for ways to crease their intake of federal funds to- hel finance education and other social services.

ith the balances in many state treasuries declining and the economic. recession .deepening, states will no doubt be looking even harder. to.increase federal support. But; in the area of higher education;states have-little:direct leverage on federal spending pat- terns. There are few levers and there are trade-offs in using them. For example, because of the half-cost limit in BEOG, state officials can iefease BEOG awards to significant numbers of students in public

'collegesbut only if officials are willing'to raise undergraduate tuition across-the-board.

Malimizing federal dollars, however, is not the only-concern of the states these days. Some state legislatures have come to believe that they lack the ability to control or even monitor the vast

into of

federal- programS that funnel monies into their borders. With federal aid constituting an increasing share of state budgets (over 25 'percent in some states), state legislators have begun to question whether the purposes, categories Matching, and other requirements of federal supp4t 'have dis- torted state priorities and imposed liabilities on the states. There have been proposals to irittitute legis- lative oversight and review of incoming federal funds. In one state, Pennsylvania, the legislature has asserted the power to Ireappropriate" federal monies allocated to the state.,,,,A law is on the books- giving the Pennsylvania General Assembly in effect a line-by-line veto over federal funds.

This is ,not the place for a discussion of the complicated constitutional and legal issues involved in reappropriation. The Pennsylvania measure has already been a subject of extensive litigation, and the general issuethe control of federal funds within state borderscould be back in the courts in com- ing years. The .question nere is the potential effect of reappropriation on funding for higher educa- tionfor students as well as for institutions, aca- demic programs, and individual faculty members. Frustration with the complexities and distortions of intergovernmental aid is understandabie; that state legislatures are beginning to take initiatives is not surprising. But in the case of federal aid for 20

higher education, state legislative restrictions may have unintended consequences. Depending upon' how the oversight dr-review process is structured, legislative mechanics and timing could effectively if inadvertently deny benefits to" individuals or, institutions. Though the Pennsylvania General Assembly has not yet rejected an incoming federal grant, delay under the reappropriation procedure` has, in fact, cost Pennsylvania state colleges sizable

,federal grants in two cases so far. Thp National Conference of State Legislatures

Fiscal Affairs, and Oversight Committee has recom- mended that certain types of federal funds be ex- empted from state legislative oversight, including transfer pa ments to individuals (which would presumably cover student aid) and research grants to indivi als and institutions of higher educa- tion.22 Student assistance is at the heart of equal access and Qpportunity' for individuals and the timing of such assistance is critical. State legislatures should take dare. not to jeopardize federal student aid' funds by the imposition of a pro forma review process. Research support_ to higher education` institutions faculty members is also appro- priately e ed or otherwise treated specially, .linked as it is to national research agendas and policy objectives.

The Status of Education in the Federal Establish- ment . 41

A final word is in' order on the potential signifi- cance/of the administrative restructuring of educa- tion programs in Washington. Education has recently been elevated to cabinet status in the executive branch, only to face reappraisal and pOs- sible reshuffling once again under a newly elected Administration. ,

40

Realism should temper expectations for con- solidating or "rationalizing" federal activities in education-through bureaucratic reorganization.

We have noted that the new U.S. Department of Education houses only a portion of the myriad programs; budgets, and employees concerned with education throughout the federal establishment. It is clear that the department is not in a position to bring'about a single, coherent set of federal policies., nor will it. be able to streamline regulatory and funding practices affecting education that stem .

from diverse federal laws and agencies. Change in

22. "State Legislative Oversight of Federal Funds; Pre- liminary Report and Suggested Activities," Typescript report 'of Fiscal Affairs and Oversight Committee, National onference of State Legislatures, Denver, July 24, 1979.

the regulatory arena (even under a national Admin- istration committed broadly to "deregulation") is like to be incremental, not dramatic.

The statute creating the department includes language disclaiming any federal intent to usurp state responsibility for, education, and it further establishes' an intergovernmental Advisory Council on Education. The latter has modest potential to upgrade federal-state interchange on policies in education. On balance, however, the new Structure and status for education in Washington are not apt substantially to alter intergovernmental relations in financing and governing education.

Whatever the future of the 4new department and however it might be reorganized by a new Ad- ministration, a continued pattern of decentralized, fragmented support is likely to characterize federal involvement in higher education. Such support is certainly untidy and not without its headaches for states and institutions. But the pattern serves a multitute of national purposes, and it better serves to protect , academic independence and diversity than would a monolithic national policy or plan.

14L

4 4^. 1

2 7