Alexander: States are Leading in Higher Education Innovation, Washington Getting in the Way

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“Many states are doing innovative work…. I am interested in how the federal government is getting in the way of state innovation.” –Lamar Alexander

Washington, D.C., July 24 – U.S. Senator Lamar Alexander (R-Tenn.), the senior Republican on the Senate education committee, today said the Washington bureaucracy, regulations and mandates are getting in the way of innovation in higher education in the states, which run the public 2- or 4-year institutions that three quarters of American students attend.

“Many states are doing innovative work. Tennessee Governor Bill Haslam has launched a ‘Drive to 55’ campaign aimed at having 55 percent of Tennesseans with a post-secondary degree. As part of that effort, he has signed legislation this year to make two-years of community college free for every high school graduate in the state.” he said. “I am interested in how the federal government is getting in the way of state innovation.”

Alexander detailed three ways the federal government is getting in the way: 1) the complexity of the federal financial aid system, 2) too many federal regulations, particularly on research, and 3) unfunded federal Medicaid mandates soaking up state education dollars.

Alexander has proposed solutions to all three: 1) the bill he proposed with Senator Michael Bennet of Colorado to reduce the 108-question free federal application for financial aid form to a 2-question postcard, and simplify the federal grants and loans programs, 2) rewriting the federal higher education laws from scratch so that old regulations are weeded out before new ones are added, and 3) returning to states control over K-12 public schools and returning to the federal government all control of Medicaid—a “Grand Swap.”

At today’s hearing, Alexander said: “We all agree that that we should strive to have more Americans with a college degree…but we should keep in mind that in achieving that, the federal government plays a limited role. States must lead the way: three out of four undergraduate students attend public 2- or 4-year institutions that are governed by states and receive substantial state funding,” Alexander said.

“Despite the more than $30 billion in federal dollars that go to students each year in grants, the federal government remains a minority investor in higher education.”

Alexander detailed three ways the federal government is getting in the way of states’ innovation to improve their higher education systems so that more students can complete degrees.

1. The complexity of the federal financial aid system: “Senator Bennet and I have announced our effort to reform the free application for federal student aid—the FAFSA—which is 10 pages and 108 questions long. …Twenty million families are filling this absurd thing out and we have testimony from witnesses that say we can get 95 percent of what we need to know by asking two questions: What was your income? And, what is your family size?
2. Too many federal regulations. “The former president of Stanford said it cost 7 percent of their budget to comply with all of the regulations, the current president of Stanford was by this week and he said that, according to a March, 2014 National Science Board Study, 42 percent of an principal investigator’s time is spent on administrative matters. That’s probably twice the amount it ought to be—that’s billions of dollars wasted.
3. Medicaid mandates. “States are not spending as much on higher education—when I was governor, Tennessee paid for 70 percent of a student’s education and the student paid for 30 percent. That’s flipped. The principle culprit is Medicaid—the federal mandates on states to pay for Medicaid. Thirty years ago, it was 8 percent of the state budget—today it’s 30 percent, and those dollars come primarily out of education. That’s not just my opinion. Peter Orszag and Thomas Kane of the Brookings Institution have written extensively about that. Orszag was President Obama’s budget director….The Stimulus law made that worse, the health care law made that worse. Federal strings are well-intentioned but the unintended consequence is higher tuition and higher costs for states.”

A witness at the hearing Eric Kaler, President of the University of Minnesota, confirmed Alexander’s concern about federal regulations slowing down and increasing the cost of research at higher education institutions. “The regulation is just really quite remarkable,” Kaler told him. “It’s probably more apparent, more flagrant in the research space.  We have a variety of research reports that we have to send back to the federal government and our office of the vice president for research has done an analysis and about half of the information we send back to the federal government in one of those reports is information the federal government already has. And so there’s just this repetitive need to provide information that does not add value. I think the research community is deeply interested in accountability, we are interested in using our funds wisely, but the regulatory burden is just crushing elements of our scientific research community….In addition to the principal investigator’s time, these reporting activities require the hiring of additional staff whose principal job is to fill out forms for the federal government, and so there’s an added cost associated as well as the researcher’s time.”

Alexander said: “We have about $30 billion of federal research dollars that go out, so if we were able to find a way to reduce from 42 percent to 10 or 15 percent the amount of administrative time for the principal investigator—that’d be a lot of extra money for research.”

Another witness, Teresa Lubbers, commissioner of the Indiana Commission for Higher Education in Indianapolis, confirmed Alexander’s concern about Medicaid mandates soaking up education dollars.

Lubbers said, “You’re exactly right—Indiana would be a poster child for this.…. For the first time in the last budget cycle, we saw Medicaid bump higher education” as a higher percentage of spending.

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