Coordinating Board for Higher Education Meeting Minutes 06-03

June 5, 2003

The Coordinating Board for Higher Education met at 11:00 a.m. on Thursday, June 5, 2003 at the Truman State Office Building in Jefferson City. Members present were:

Sandra Kauffman, Chair
Marie Carmichael, Vice Chair
Mary Joan Wood, Secretary
John Bass
Diana Bourisaw
Lowell Kruse
Robert Langdon
Kathryn Swan

Members absent from the meeting were:

Dudley Grove

Others attending included:

Quentin Wilson, Commissioner of Higher Education
Trudy Baker, Administrative Assistant for EPPIC
Becky Brennecke, Research Associate for Fiscal and Legislative Affairs
Debra Cheshier, Director of Educational Policy, Planning and Improvement Center (EPPIC)
Amy Fennewald, Public Information Specialist
Scott Giles, Director of Lender, Institutions and Student Services
Gina Hodge, Director of Information Technology
Donna Imhoff, Research Associate for Fiscal and Legislative Affairs
Chris Kelly, Director of Communications
Joe Martin, Associate Commissioner for Fiscal and Legislative Affairs
Jim Matchefts, Associate Commissioner and Director of Legal Affairs for MOSTARS/General Counsel for Coordinating Board for Higher Education
Natalie Miles, GEAR UP Coordinator
Brenda Miner, Administrative Assistant to the Commissioner
Robert Stein, Associate Commissioner for Academic Affairs and Planning
Laura Vedenhaupt, Administrative Assistant for Academic Affairs and Planning
Melissa Vineyard, Accountant
John Wittstruck, Senior Research Associate (EPPIC)
Wei Zhou, Senior Associate (EPPIC)

Chair Kauffman called the meeting to order. A list of guests attending the meeting is included as Attachment A.

Minutes of April 10, 2003 CBHE Meeting

Dr. Bourisaw moved that the minutes of the April 10, 2003 board meeting be approved as printed. Mr. Bass seconded the motion, and it passed unanimously.

Presentations of Proclamations and Recognitions

Chair Kauffman, on behalf of the board, presented two proclamations recognizing the contributions of Mary Findley and Adam Fischer, who provided service to postsecondary education in Missouri as members of the Coordinating Board for Higher Education. Jim Summers, Jr. was not present to receive his proclamation. The proclamations are included as Attachment B. Dr. Edwin B. Strong, Jr. retiring president of Culver-Stockton College was also recognized for his service to Missouri's students and stewardship to Missouri higher education.

Mrs. Findley expressed her thanks to all who contributed and assisted her while she served on the Coordinating Board. She commended everyone on their accomplishments and cooperative efforts to improve conditions for the citizens of Missouri through the higher education system. Mr. Fischer, likewise, expressed his thanks to everyone.

Report of the Commissioner

Commissioner Wilson stated that department staff continue to cope with the budget challenges of FY 2003 and FY 2004. The Commissioner, Joe Martin, Becky Brennecke, and Donna Imhoff have attended hearings and participated in discussions with legislators. A report on the status of the budget is provided in agenda item, FY 2004 Budget Update (Tab A).

The department has begun innovation efforts for performance improvement, which will be discussed in the near future. In response to those efforts, a customer assistance unit has been created from existing staff to provide the institutions, students, and public with valuable information on school specific issues, financial aid, and the department's efforts toward meeting the present challenges and improvement strategies. Cost reductions and efforts to achieve the most efficient methods possible are the incentives supporting higher education's improvement efforts.

While progress has been accomplished on the Community College Administrative Rule, new issues have developed. New petitions for the election may be required because of the timeframe involved. Every effort is being made to avoid delay of the election.

The Commissioner reported that he has delivered several commencement addresses in which he focused on the budget and other issues requiring improvement. He spoke with students about their public involvement and participation on issues that they can support to serve humanity, stressing that academic involvement and civic engagement does not end on graduation day.

Commissioner Wilson also met with the University of Missouri Board of Curators in May at their meeting in Kirkwood. Institutional governing boards represent a large sector of the state system of higher education and relationships with them contribute to establishing strong, forward thinking initiatives.

Commissioner Wilson attended the dedication of the Emerson Physical Education and Visual and Performing Arts Building at Harris-Stowe State College. The new structure provides an efficient, organized facility, which establishes a positive addition to that area of St. Louis.

He also attended the groundbreaking of Southeast Missouri State University's River Campus. This event illustrates that higher education continues to move forward during these times of tough fiscal constraints.

Report of the CBHE Presidential Advisory Committee

Dr. Henry Shannon, chancellor, St. Louis Community College, reported on four items that were discussed at the Presidential Advisory Committee meeting:

• FY 2004 Budget Update - Although the budget has not yet been finalized, the possibility of shortfalls, which higher education has experienced regularly during the last few years, still exists. Dr. Shannon commended the Coordinating Board, the Commissioner, and the staff for their work with the institutions to alleviate some of the burden of these shortfalls.

  The revised budget offers Missouri a flat increase based on the federal budget cuts. Presidents and chancellors are hopeful that these funds can be enhanced, sparing them the repetition of previous financial burdens in the FY 2004 budget year. There was a restoration of the Bright Flight Scholarship and an additional $12 million redistributed to higher education with the modification of the House budget.

• Final Summary of Legislation-First Regular Session, 92nd General Assembly - Some of the Truly Agreed To and Finally Passed legislation included the following:

  SB 55 changes Missouri Southern State College to Missouri Southern State University-Joplin and provides related items. This bill awaits the Governor's signature.

  SB 686 requires every public institution of higher education in Missouri to require all students who reside in on-campus housing to sign a written waiver stating that the institution has provided the student with detailed written information of the risks associated with meningococcal disease and the availability and effectiveness of the meningococcal vaccine.

  SB 688 creates the Life Sciences Trust Fund and the Life Sciences Board.

  HB 444 alters distribution of Gaming Commission Funds, which transfers $4.5 million upfront to the Missouri College Guarantee Fund, including an additional transfer of $500,000 from the Gaming Commission Fund to the College Guarantee Fund if the net proceeds exceed $28 million.

• Commission on the Future of Higher Education - The commission will meet on June 17 in Kansas City. Presidents and chancellors discussed what the present and future might hold in terms of planning the role Missouri should play to make higher education systematically stronger. Planning is important to everyone in higher education and, during critical times of budget shortfall, the challenge to become more effective and efficient remains. Presidents and chancellors will respond to the Commissioner's request and provide input to the commission both formally and informally.
• Results and Discussion of Identified Priority Outcome Measures - This work in progress has the support of presidents and chancellors and has been discussed with the Missouri Community College Association (MCCA) and the Council on Public Higher Education (COPHE). Again, presidents and chancellors will provide input as requested. The combination of faculty, staff, and the planning process working together will yield rewards and results for all sectors as a whole. As presidents and chancellors think about the higher education system as one entity and not segmented by institutions or by sectors, it will support and shape the future for higher education in the next decade.

Dr. Shannon applauded the audience and the presidents and chancellors, for their input and involvement over the last year and for the opportunity to participate in this healthy process of meeting and discussing their issues through the Presidential Advisory Committee.

Chair Kauffman, at the request of Dr. Richard Wallace, chancellor, University of Missouri-Columbia, shared with the board and attendees that the presidents and chancellors believe that the Commissioner had reported very accurately the discussions that had taken place in regard to the process of identifying priorities. Chair Kauffman encouraged attendees of the Presidential Advisory Committee to take advantage of the opportunity for direct exchange with and presentation of issues to the board during these sessions.

Mr. Kruse expressed admiration for the manner in which the board and staff had responded and led their organization through the difficult budget cuts with their exemplary conduct.

FY 2004 Budget Update

Commissioner Wilson stated that the institutions have undertaken creative and innovative efforts to survive the financial crisis and in their ability to participate fully in one of higher education's major efforts to communicate to the legislature the efficiencies they have initiated. The department and the institutions share this challenge to maintain operations and continue to make improvements, even though additional money is not available.

Mr. Martin stated that during the current Special Session, a new budget passed by the House Budget Committee, is being discussed on the House floor today. The coordination unit of administrative appropriations received an approximate 20 percent cut in the FY 2004 budget compared to the FY 2003 budget. Since FY 2001, there has been a 40 percent reduction in coordination administration, a 31 percent reduction in proprietary administration, and a 44 percent reduction in grants and scholarship administration. There has been a total administrative reduction of 40 percent, including a 36 percent reduction in FTE over the last three years. The department is reorganizing the work it performs by consolidating, refining, and processing for efficiency with the limited resources available.

The FY 2004 budget affected MOSTARS in reductions to the student aid programs. In the proposed budget, the previous 15 percent reduction to the Bright Flight Scholarship Program has been restored, providing full funding for those students who qualify for Bright Flight Scholarships. The Gallagher Program did not receive any reductions and is still unaffected by the new budget. The Missouri College Guarantee Program, Advantage Missouri Program, Public Service Officer Grant Program, Vietnam Veteran's Survivor Grant Program, and Margaret Ross Barnett Memorial Scholarship Program all received 15 percent reductions, which will result in fewer students receiving financial aid from those programs. The other appropriations for the student loan program are unchanged.

The institution appropriations report, which was distributed at the Presidential Advisory Committee meeting (included with the Presidential Advisory Committee minutes), explains how the proposed budget will restore about $12 million in funding to the institutions. The University of Missouri-related appropriations were not reduced in the original "regular" session budget or in the proposed House budget.

Mr. Martin reiterated strongly that FY 2004 remains uncertain. July 1 is near and the amount of funds appropriated or how much of that appropriated amount will actually be available has not been decided. He asked the institutions to budget carefully by looking for the actual amounts that might be available for expenditures from the appropriated dollars.

Mr. Bass asked Mr. Martin's perspective on the effectiveness of higher education's interaction with the legislature's Budget and Appropriations Committees. Mr. Martin stated that higher education fared better this session in terms of being a part of the overall education agenda and being held in a more favorable light, given the large reductions received in FY 2002 and the somewhat disproportionate 10 percent core cuts in FY 2003. The board, staff, and institutions have succeeded in creating a common message that extols the virtues of economic development and the relationship between economic development and the institutions in contributing to a better educated society and workforce. Higher education effectively delivered those messages to the General Assembly and, because of the large reductions previously received, benefited in an overall budget impact - more a K-16 approach than a K-12 approach.

Dr. Bourisaw added that Commissioner Wilson, and Mr. Martin had evaluated those issues that increased the effectiveness of higher education's ability to address their relationship with the legislature. She hopes additional planning will further increase the effectiveness of this relationship in securing funds and decreasing further reductions.

Mr. Bass requested a profile on Bright Flight Scholarship recipients that would explain how these funds are distributed to help underrepresented students. Commissioner Wilson stated that several types of data on Bright Flight funding are available, including the names of institutions receiving aid, the race/ethnicity of the recipients, and the income distribution of recipients and that it would be provided to Mr. Bass.

Commissioner Wilson stated that from the beginning of this session to the end, the legislature wanted to know what higher education was doing to improve the financial situation, how improvements were being accomplished, and how higher education would change. The performance improvement work now taking place will be beneficial in future sessions when higher education has more quantifiable evidence that situations and conditions are changing. This process will help yield the kind of information and results the legislature wants. Higher education must be proactive, making a case for higher education and its future. Dr. Bourisaw suggested that the legislature clarify their expectations so higher education can provide applicable information.

Chair Kauffman expressed the board's appreciation to the institutions and to the Department of Higher Education staff for a successful legislative year. Success was due to the leadership of presidents and chancellors and the leadership exhibited by staff in making higher education's issues known to the legislators in a way that preserves a good relationship with them.

Commissioner Wilson stated that the department and the board are responsible for providing an estimate of actual state funding available to the institutions. According to the Division of Budget and Planning, the primary impact was the revenue shortfall of $284 million, which was due to the continuing slumping economy. Using an estimate of $95 million for federal tax cuts, these two shortfalls total about $380 million. Budget and Planning estimated the new revenue package to be $37.8 million short along with a $99.6 million shortage in the area of cost containment which created a $516.4 million shortfall in the recently passed budget. The federal revenue that was distributed throughout the states had a one-time impact of $375.6 million, creating a $140.8 million shortfall in the budget passed by the legislature. These calculations were based on the Senate's and the Division of Budget and Planning's projections.

The House has not yet appropriated $113 million in federal relief money or determined how much money will address the potential shortfall. It is difficult to know how much money is actually available for the institutions without a projection from the House, delaying the department's state-level responsibility of informing the institutions. However, the institutions may closely estimate how their budgets will be decreased next year, based on their past experience of withholdings, regardless of what has been appropriated.

Final Summary of Legislation-First Regular Session 92nd General Assembly

Mr. Martin stated that HB 444 affects the department most directly and provides additional funds for grants and scholarships. Revenue packages were introduced in the Special Session, which could result in additional funding for higher education if additional revenue becomes available. The referendum bill, SB 4, contains a tax increase on cigarettes and other tobacco products as well as an increase on gaming tax and admission fees for gaming boats, and levies a surcharge on taxpayers earning over $200,000. A miscellaneous revenue bill closes some of the corporate tax loopholes, decouples Missouri from the federal tax system, provides sales tax refunds to purchasers, and includes the yacht tax loophole, an in lieu of tax fee assessed to large boats. SB 2 increases the gaming admission fee by one dollar and earmarks the entire dollar for higher education. These funds will be held in a separate account and will generate about $50 million. Schools seeking name changes were included to garner support for the bill, i.e., Missouri Western State College, Missouri Southern State College, and Southwest Missouri State University.

Mr. Bass asked for commentary about the increase of revenue from casinos for education. Mr. Martin stated that when the lottery was first established, the money was designated for education. Due to much controversy, a constitutional amendment was added in the mid-90s, which specifically directed all gaming revenues towards public education. Currently, higher education receives about $75 million of lottery money in its budget, which is distributed to the College Guarantee Scholarship Program and the institutions. Gaming money from the gaming boats is not available to higher education as it is earmarked for K-12. Theoretically, that additional funding for K-12 should free up general revenue for other purposes such as higher education. If that would happen, it could provide an indirect benefit to higher education.

MOSTARS Update

Dr. Jim Matchefts introduced Mr. Scott Giles, director of Lender Institutions and Student Services for MOSTARS, who prepared the financial statistics for this agenda item.

Dr. Matchefts thanked Commissioner Wilson, Mr. Martin, and the staff of Fiscal and Legislative Affairs for their efforts on the success of HB 444, a remarkable achievement for the institutions. Individually, and through the Missouri Association of Student Financial Aid Personnel, presidents and chancellors made written requests for passage of this legislation. The extra $500,000 for the need-based College Guarantee Program is an added bonus.

Dr. Matchefts presented information on the Guaranteed Student Loan Program at the April 10, 2003 board meeting. MOSTARS offers students loan benefits in conjunction with MOHELA, the Missouri Higher Education Loan Authority, which is the state designated secondary market. Dr. Matchefts provided detailed information on the benefits MOSTARS offers and the manner in which those benefits are delivered as follows:

The MOHELA flyer (Attachment C) describes what MOHELA, in conjunction with MOSTARS, offers student loan borrowers who are in repayment in terms of reduced interest rates. While the student is in school and their grace period is in deferment, the basic rate for a Stafford Student Loan is 2.82 percent as of July 1. When the student goes into repayment, an extra .6 percent is added to the interest rate, raising it to 3.42 percent.

MOHELA offers a rate relief program for borrowers who meet the following criteria: 1) their loan must be held and serviced by MOHELA; 2) it must be guaranteed by MOSTARS; and 3) they must sign up for auto-debit payments. Upon meeting these criteria, they receive a 2.5 percent rate reduction immediately upon repayment, giving them a rate of .92 percent beginning July 1.

PLUS Loans are parent loans for undergraduate students, whereby the parent is the borrower. The PLUS Loan rate, which is higher, is set by the federal government and is now at 4.22 percent. With the MOHELA/MOSTARS benefit of a 2.5 percent rate reduction, the rate is lowered to 1.72 percent.

The Carnahan Public Service Reward Program, provides peace officers, teachers, members of the National Guard, social workers, and nurses with an additional reduction of .17 percent, lowering their rate for a Stafford Loan to .75 percent.

An article in The Wall Street Journal (included in Attachment C) points out that MOHELA benefits are superior to those offered by other lenders and guarantors in savings for the borrower.

Students get a .75 percent rate with their loans held by MOHELA and guaranteed by MOSTARS, deriving the greatest benefit when their loan is guaranteed by MOSTARS. The preferred channel for loan guarantees for MOHELA is MOSTARS. Committed to serve the citizens of the State of Missouri, it is accountable to the state, and for this reason, provides greater benefits. By using the Missouri guarantee, students receive a 2.5 percent benefit rather than a 2.0 percent without the Missouri guarantee. The MOHELA benefit is primarily available due to their tax-exempt bond funding from the State of Missouri. The Department of Higher Education is responsible for approving their requests for tax-exempt bond funding, which comes through the Department of Economic Development. The loans that MOHELA holds and services are mainly disbursed through the MOSTARS Automatic Transfer of Money System (ATOM), which is free.

The Stafford Borrower Benefit Program Comparisons (Attachment D) explains the benefits and savings of the various loan programs. A borrower with the MOHELA benefit, the MOSTARS' guarantee, and the Carnahan benefit could save $2,400 and pay off their loan 19 months early. The significance of these benefits will surely increase as student lending increases, as tuitions rise, and as state and federal aid is cut. It is conceivable that Congress will increase the loan limits when it reauthorizes the Higher Education Act next year.

Dr. Matchefts explained to the board that MOSTARS has an operating fund from which expenses are paid, and a separate federal fund which is the property of the federal government. There are profits in the operating fund, which supports a default prevention grant program that has, since 2001, awarded $25,000 in annual grants to institutions that had historically high default rates. A larger amount was provided to the two historically Black institutions in Missouri. The money is available to all institutions that qualify regardless of whether they use MOSTARS guarantee. Training programs are established from this operating fund and the possibility of developing a MOSTARS or DHE grant program has been discussed.

Dr. Matchefts referred to the 2002 Guarantee Volume Statistics (Attachment E) which describes the volume of MOSTARS' guarantee services to the institutions of Missouri. MOSTARS guaranteed 42 percent of all student loans made in Missouri in FY 2002. The remaining 58 percent are guaranteed by other guarantors with 23 percent from Direct Lending, a program operated by the US Department of Education. The public two-year institutions had a volume of $31 million in MOSTARS' guarantees, which represented 99.1 percent of their loan volume. Those institutions are not attractive to out-of-state guarantors because in some cases their default rates are higher, their tuition is low, and their loan balance is low. MOSTARS is the primary guarantor for most of the four-year institutions (excluding the University of Missouri System), guaranteeing $110 million in loans last year. Central Missouri State University, Missouri Southern State College and Northwest Missouri State University are still in direct lending. The institutions select the guarantors and lenders they want to use. Missouri Southern participated in the department's default prevention grant program and received grants of $25,000 during the last two years.

The University of Missouri-Kansas City left direct lending three years ago. MOSTARS guarantees their undergraduate volume with $23.7 million, or 32.5 percent of their loan volume, but the National Student Loan Program of Nebraska guarantees their graduate volume. They have a school-as-lender agreement, whereby the school receives the line of credit from the lender, becomes the lender, and receives the benefits of a lender under the program.

The University of Missouri-St. Louis began their PLUS Loans with MOSTARS this year in the amount of $418,000. This institution will move out of direct lending completely this fall, bringing their entire Stafford volume of $44 million to MOSTARS.

The University of Missouri-Rolla moved their PLUS Loan volume out of direct lending in FY 2003, leaving the remaining volume of Stafford Loans in direct lending.

The University of Missouri-Columbia brought their PLUS Loan volume out of direct lending, using a selected group of 12 lenders, with MOSTARS being the guarantor for eleven of them. The MOSTARS staff assisted in making their transition from direct lending to the MOSTARS Guarantee Program as smooth as possible. It is conceivable that they will convert their Stafford volume to MOSTARS next year. MOSTARS is pleased with the direction in which the University of Missouri system is moving with respect to its loan volume.

The board recognized that institutions using MOSTARS as their guarantor can save their students significant amounts of money. In the past, many state institutions that relied upon the federal government for large amounts of their funding chose direct lending, which was promoted by the federal government. Direct lending was attractive, because it was a one-stop loan process and was believed to be administratively easier for institutions to provide than acquiring loans through the FFEL Program. The University of Indiana, one of the largest student loan volume systems, moved out of direct lending recently. In Missouri, their market share will be much less as the University of Missouri System transitions.

Mrs. Carmichael stated that it was unconscionable not to go to a guarantor where students receive the most benefits. While financial aid is so difficult to obtain, institutions should take advantage of MOHELA since the benefits would be far greater.

Mr. Bass stated that in the last three years, the MOHELA board has developed ways to attract more students in higher education and reward those different disciplines by reducing their loans. MOHELA's contributions back to the student population benefits the student, higher education, and the economy. The business community began using the statistics now available for making comparisons and sharing that information. Competitiveness in the financial market among the banking industry and lenders plays a major role as they attempt to keep their clientele.

Commissioner Wilson, Dr. Matchefts, and Mr. Giles visited with David Kemper of Commerce Bank and informed him of higher education's progress in customer satisfaction and other improvement efforts. The purpose of their visit was to solidify and improve the department's relationship with Commerce Bank, the department's largest lender. Chair Kauffman stated that as the department moves forward with building stronger relationships and conveying to the institutions the benefits to be received by future graduates, more changes will be evident. As the department focuses more on the customer and how it serves them, those customers will want their loans guaranteed by MOSTARS.

The federal government's fund is unlimited in that student loans are always available. The loan limits will probably be increased by reauthorization, since the last increase was in 1992. Mr. Giles stated that there are currently many lending limits. For dependent students, Stafford Loans range from $2,625 for an incoming freshman, $5,500 for juniors and seniors, and $23,000 maximum for graduates. PLUS Loans are limited by the cost of education at each institution. The general feeling is that $2,625 is no longer sufficient, particularly for students at a public or private four-year institution. There is a different set of limits for independent students.

The department's early awareness and outreach activities inform high school students throughout the state of MOHELA/MOSTARS loan rates. Staff attends and provides literature at financial aid nights offered at high schools statewide. The department's new focus on the customer is crucial to the loan program. Mr. Robert Langdon suggested adding guidance counselors to the outreach program's contacts.

Dr. Matchefts stated that the state database integration project attempts to consolidate the administration of the five primary state student aid programs into one consolidated database. Mr. Dan Peterson is conducting training for college and university financial aid administrators throughout the state. The project is on schedule for deployment in January 2004, with processing to begin in the 2004-2005 academic year.

Progress on the issue of scholarship-matching funds in the GEAR UP Program is being made. After discussions with the program officer at the U. S. Department of Education, the Department of Higher Education is optimistic that a solution to this situation is forthcoming. Dr. Matchefts and staff will focus on this complicated issue in the near future.

State Student Financial Assistance Programs, FY 2003

The following programs offer eligible Missouri residents a valuable financial resource for an opportunity to attend the postsecondary institution of their choice in the State of Missouri.

Advantage Missouri Program
Charles Gallagher Student Financial Assistance Program
Marguerite Ross Barnett Memorial Scholarship Program
Missouri College Guarantee Program
Missouri Higher Education Academic Scholarship Program (Bright Flight)

An annual report on the Student Financial Assistance Programs which describes the distribution of awards during FY 2003 among these five programs by number of students and dollars awarded to each institution is included in Tab C. Research is being conducted for MOSTARS in conjunction with the Educational Policy, Planning and Improvement Center (EPPIC) staff, which will describe where higher education's state student financial aid dollars are distributed in terms of race, socio-economic status, and geographic area. Awards are determined largely from the information students and parents provide on their applications for federal student financial aid. Demographic type information may be more limited regarding Bright Flight than for other programs. Dr. Bourisaw suggested that the origin of recipients, their high schools, or their districts might give a good indication of representation.

Mr. Langdon stated that it is important to know the number of Bright Flight students located in Missouri and how many students are retained. The objective of this program is to educate the highly intelligent students in this state, and to encourage them to remain in the state so they may impact Missouri's socioeconomic status.

Commission on the Future of Higher Education

Governor Holden addressed the commission and identified priority areas for its consideration at its first meeting on Monday, April 14, 2003, in Jefferson City. He charged the commission with developing recommendations to improve Missouri higher education by examining five major issue areas: preparation, participation, affordability, completion, and benefits. The focus of the recommendations is to insure that the system of higher education is efficient, effective, and fiscally responsible.

The presentation that Mr. Dennis Jones, president of the National Center for Higher Education Management Systems, made to the Commission on the Future of Higher Education at its first meeting is located behind Tab D. The Commissioner, Dr. Debra Cheshier, and others in the department provided information about the State of Missouri, its educational system, its economy, and the role of higher education in workforce development, for inclusion in Mr. Jones' presentation. The presentation began with the status of Missouri relative to other states with regard to the areas that were measured in Measuring Up 2002: preparation, participation, affordability, completion, benefits, and learning. There was a slight improvement in the areas of preparation and participation between 2000 and 2002.

The Student Pipeline chart (Attachment F), describes the transition points in the lives of students as they move through the educational delivery system. It describes how the states rank in loss of students as they transition from 9th grade through college graduation. Of 100 Missouri 9th-graders, 27 are lost between 9th-grade and high school graduation, 34 are lost between high school graduation and entering college, and 39 enter college. This is similar to the results of the nation as a whole, but it is far behind some of the top performing states with top educational delivery systems - high numbers of high school graduates and large numbers of students entering college. Of the 39 who enter college, Missouri loses 12 students between the freshman and sophomore year, leaving 27 students entering their sophomore year, and results in 18 graduates from college.

This transition data describes where the focus of higher education's energies, initiatives, and strategies should begin addressing the participation issues. Mr. Jones implied that no one policy fits every state, because each state requires different strategies to address their transition shortage. In Missouri, students' participation in, and completion of, college should be the focus of higher education's strategies.

The department is beginning to GEO-code its data to graphically describe where higher education should focus its energies in collaboration with schools to increase participation and academic success in the state's colleges and universities. The Commissioner referred to the chart found behind Tab D, Percent of 25- to 64-year Olds with a Bachelor's Degree or Higher (%) - 2000. This chart reveals that educational attainment of the adult population is non-existent in some areas of the state. Evidence confirms that there is a close association between a college or university's presence in a county and the educational attainment of the population of that county. Per capita income is highest in those counties whose citizens have high educational attainment. The chart entitled, Median Earnings by Degree-Level ($) (Tab D), describes a labor force issue that explains the median earnings of individuals with certain levels of educational attainment. In terms of earnings in Missouri, there is not a significant difference in having some college versus having a high school diploma, but the monetary difference between graduating with a bachelor's degree or a high school diploma is $8,000. It is the degree completion that results in these earnings and this has been the focus of the Coordinating Board for Higher Education in recent years.

Mr. Kruse stated that looking toward the workforce needs of Missouri requires higher education to correlate the data collected and measurements established to the positions available in Missouri. The Commissioner, Dr. John Wittstruck, and others in the Department of Higher Education, worked with the workforce development agencies, departments, and programs, and have found that one of the real issues facing the employers and the state is the nature of the jobs available and the retention of skilled labor and workforce. Employers need to inform the population of the required educational attainment levels necessary to adequately perform the announced jobs, and possibly discuss salary adjustments. There are many meaningful jobs in the state that can be performed well with a high school diploma, but the demands placed on quality workers in high-technology fields, especially in the life sciences area, require more than a high school diploma. Mr. Kruse suggested the board be provided with such reports and analyses as soon as they are available to enable the board to work within that context and focus their energies toward that end.

Mr. Bass added that students should be encouraged, made aware of apprenticeships and entrepreneurships, and motivated toward those different industries. A disservice is made to industries and to students of K-12 and K-16, if that data is not made available and shared in student counseling and parental discussions.

Mr. Langdon stated that he hopes the group planning for the future of higher education realizes that higher education's goal of increasing the number of students, who not only attend college, but graduate from college is the same goal of the legislature. The materials presented today visually depict the areas of focus if Missouri intends to promote life sciences and intends to be a center of learning. It is evident that Missouri must increase the number of students it graduates from its institutions of higher education.

Mr. Kruse reiterated that the work accomplished with the Workforce Development group focuses on the creation of the kinds of jobs desired in Missouri. Higher education must prepare accordingly to fill these new positions.

One cooperative research project with the Department of Economic Development's Missouri Economic Research and Information Center (MERIC), is looking at the kinds of industries clustered in certain regions of the state, the kinds of occupations they require, the trained workforce residing in that area, and the kinds of training programs higher education provides in the region. One of the things that helps industry clusters compete economically is having access to a pool of qualified workers. Much of this is new and has not been undertaken nationwide. Hopefully, material will be available for conversations to take place within a year. Once there is an awareness of what is happening, it can be determined what kinds of industries are going to thrive, what occupational groups are needed, and what particular skills are required.

Quality and Performance Excellence - Departmental Performance Measures

The data in this agenda item was presented to the Commission on the Future of Higher Education by the National Center for Higher Education Management Systems. This information is beneficial to the commission, to the department's planning efforts, and to the board in establishing new policies. In each of the groups that participated in the exercise of prioritizing specific outcome measures, the issue of the economic impact of students with degrees was stated many times, and may become part of the future measures as it is driven by the data in this agenda item.

Dr. Cheshier stated that in April, 42 specific outcome measures as identified on the basis of the measures in Measuring Up 2000 and its studies were presented during an exercise with the board. Additional measures were added that tapped into specific areas that staff felt were lacking from the Measuring Up 2000 focus. The most notable was an emphasis on how well higher education serves underserved populations. The board also suggested additional measures they felt were important. The 42 separate outcome measures are listed behind Tab E. All participants were asked to prioritize the top five outcome measures on which the department, the Coordinating Board, and the system of higher education should focus quality improvement efforts and strategic planning in the near future. The top six measures identified were:

• Increase need-based financial aid for both low- and middle-income families;
• Increase the percentage of the population aged 25-65 with a one- or two-year certificate or degree, or with a bachelor's degree;
• Increase the percentage of teacher education graduates meeting CBHE test goals;
• Increase completion rates among underserved students;
• Increase the number of institutions undertaking and assessing improvement initiatives, with measurable goals and targets; and
• Increase the percentage of employer workforce needs.

At the department level, planning sessions with each unit of the department will examine these priority outcome measures and refine the kinds of products, processes, and strategies contributing to those outcomes for which they have major participation. This work in progress will continue to be refined as each unit becomes involved in the process. The areas of primary participation by each unit is provided in this agenda item and will serve as a tool to define products, processes, and measures for improvement.

Some areas have baseline data, and some have proxy baseline data, which come from secondary national data sources. Targets will be established during the planning sessions with each unit and the board will receive reports at intervals determined by the product and the process. A scorecard will be developed. The board responded with the following:

• Separate workforce development into two segments: current needs and anticipated future needs to assist the board in knowing if existing needs are being met, or if the state is being positioned to attract more industries in the future.
• In what manner will data on workforce development needs be disseminated to elementary, secondary, and postsecondary schools? Dr. Cheshier stated that early awareness and outreach efforts would disseminate the information to middle and high school students.
• The Coordinating Board has influence over many issues. Hopefully, those will be separated, i.e., reporting data is not controlled by the board. Commissioner Wilson stated that the focus of the improvement plan is higher education's impact on the priority measures and higher education's improvement of the measures. This will be the source of the scorecard.

Report of the Nominating Committee and Election of Officers

Mr. Bass presented the report of the Nominating Committee to the board as follows:

Chair - Sandra Kauffman
Vice-Chair - Lowell Kruse
Secretary - Dudley Grove

Mr. Langdon moved that the nominations cease, the nominative ballot become the elective ballot, and the elective ballot be adopted by acclamation. Mrs. Swan seconded the motion, and it passed unanimously with the following vote:

Mr. Bass - yes
Dr. Bourisaw - yes
Mr. Langdon - yes
Chair Kauffman - yes
Mrs. Swan - yes
Mr. Kruse - yes
Mrs. Wood - yes
Mrs. Carmichael - yes

Chair Kauffman thanked the board for their confidence in providing her the opportunity to serve as chair of the Coordinating Board for Higher Education for another term. The board has been unbelievably supportive of the tasks undertaken during the last year. She thanked Ms. Carmichael, who served as vice-chair and Ms. Wood, who served as secretary during the past year.

Chair Kauffman requested Mr. Bass to continue serving as the department's representative to the MOHELA Board. Mr. Bass accepted, stating it has been a good experience and a good partnership has developed with MOSTARS and MOHELA sharing information concerning national and legislative changes.

The board received the following information items:

Update on Recent Audits

Mr. Martin distributed the Performance Audit, issued by the state auditor, regarding tuition levels and what drives tuition increases from the perspective of the state auditor, along with her recommendations for the institutions and for the department concerning these areas.

The MSLP Audit Report, an annual audit of the department's student loan program, was also distributed. This routine audit contained no significant findings and the department has responded to the suggestions of the state auditor, making revisions to procedures to address her concerns. Regarding the audit finding related to the cost allocation plan, the department uses appropriated general revenue funds, federal government funds, and loan operating funds to fund operating costs. The state auditor suggested that better record keeping on the implementation of the cost allocation plan be available during the next audit to provide information on how these funds are spent and if the spending is appropriate. The federal government conducted an audit on the department's allocation of federal funds and their preliminary findings determined that the audit was clean with no recommendations.

Chair Kauffman requested the status of the department's response to, and implementation of, recommendations made in the first audit, completed in September 2002. Mr. Martin stated that all of the findings of the first audit have been implemented, with the exception of one item - Advantage Missouri, including a tracking system of its recipients.

"Adult Learners and State Policy," State Higher Education Executive Officers/Council for Adult and Experiential Learning Report

Dr. Wittstruck referred to pages two and three of "Adult Learners and State Policy," behind Information Item 2, which described state policies that encouraged or discouraged adult participation, including working adult participation, in state systems of higher education. When the policy audit is conducted by the national collaborative, they will examine the department's policies that promote participation and those policies that discourage participation. In some cases, higher education has not encouraged adult and working adult participation as well as it could have in this state's system of higher education.

In conversations with the Missouri Training Employment Counsel and others, the AFL-CIO was present and they did not understand why the Coordinating Board did not recognize the importance of apprenticeship training programs. About five years ago, the board approved the first Associate of Applied Science degree in Apprenticeship Training at Mineral Area Community College. However, it was not promoted. There were possible weaknesses in the data collection systems which were difficult for the presidents and chancellors to understand.

Dr. Evelyn Jorgensen, president, Moberly Area Community College, provides continuing education in Edina consisting of short-term welding, computer, and professional education for nurses. Those types of courses are part of the state higher education delivery system and need to be recognized and promoted in conversations of higher education and workforce development. At the same time, role and delivery of non-degree credit instruction needs to be included in these discussions. It is appropriate to do this given the changing times, demands, and challenges facing employers of this state. Dr. Wittstruck encouraged the board to conduct their own audits as they read this report and decide if policies exist that encourage or discourage the conditions necessary for adult participation in workforce development.

Mr. Bass stated that many non-traditional students are participating in the proprietary system which is not included in most of the auditing of the different layers of higher education, i.e., apprenticeship. If higher education supports these programs, and it is believed that they are a part of the system, they should be included in discussions of the higher education community.

Update on Two- and Four-year Review of Associate Degree Delivery Policies

Dr. Robert Stein reported that since the April 2003 CBHE meeting, the joint subcommittee, composed of representatives from the Council on Public Higher Education (COPHE) and the Missouri Community College Association (MCCA), engaged in discussions with Linn State Technical College and incorporated Linn State into the draft agreement.

The joint subcommittee reaffirmed its agreement on all major issues regarding associate degree delivery, acknowledged the role of the independent and proprietary sectors in providing higher education opportunities, agreed upon the criteria and a process for the development of appendices, and agreed upon a process and a timeline to provide review of the joint subcommittee's recommendations by the appropriate higher education councils in order to meet the CBHE deadline for submission of August 1, 2003.

Dr. Stein advised the board that upon receipt of the recommendations made by the joint subcommittee, the Department of Higher Education staff would engage in a statewide review and discussion of those recommendations. Any policy changes should undergo the board's processes for extensive dialogue and analysis prior to presentation to the board for action in October 2003.

Academic Program Actions

Dr. Stein briefed the board on the academic program changes that have occurred since the April 10, 2003 meeting. Dr. Stein focused the board's attention on new programs offered by Fontbonne University and Park University.

Fontbonne University is offering one new program both on-campus and off-site (BA, Organizational Studies) and three current programs that will be offered off-site (BA, Business Administration; MM, Master of Management; and MBA, Business Administration). DHE review identified no concerns in the new course or the off-site courses.

Park University offers one new program (BSW, Bachelor of Social Work). The Department of Higher Education commented on potential duplication of effort. Avila University, Central Missouri State University, and Missouri Western State College offer fully accredited baccalaureate degree programs in social work. In addition, Central Missouri State University offers a Two-Plus-Two degree completion program at Metropolitan Community Colleges on the Longview campus.

Proprietary School Certification Actions and Reviews

Dr. Stein briefed the board on actions that have occurred since the April 10, 2003 meeting in the Proprietary School Certification Program, including school certifications, school exemptions, denials that occurred, pending actions, and other elements affecting the program, including institutions that have submitted applications, and applications that have been withdrawn.

Distribution of Community College Funds

Mr. Martin stated that within the last two months, the department distributed over $21 million in state aid to community colleges, including $21 million in capital appropriations from general revenue and lottery funds.

There being no further business to come before the board, Dr. Bourisaw moved that the meeting recess until 10:30 a.m., June 6, at which time the board will go into executive session according to RSMo 610.021-3. Mr. Langdon seconded the motion, and it passed unanimously with the following vote:

Mr. Bass - yes
Dr. Bourisaw - yes
Mr. Langdon - yes
Chair Kauffman - yes
Mrs. Swan - yes
Mr. Kruse - yes
Ms. Wood - yes
Mrs. Carmichael - yes

The meeting adjourned at 3:30 p.m.