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The Clouded Crystal Ball: Higher Education and the 2004 Elections

Pat Callan
The National Center for Public Policy & Higher Education
February 2005

I can draw only one fairly certain conclusion for higher education from the 2004 elections. The rest is inference, speculation and reading tea leaves. I claim no special competence at political prognostication, but since I was asked . . .

The obvious—and most important—lesson from the 2004 national elections is that domestic policy generally and higher education specifically lack visibility and salience as a federal issue. Terrorism, the war in Iraq and fiscal policy are likely to dominate the national policy and political agenda, absorbing the policy attention and the financial resources of the federal government. For higher education as a national priority the presidential election changed little if anything. Nor is it clear that a different outcome would have altered this reality.

One of the few domestic policy issues that did attract campaign attention was school reform. But note that the issues now focus on implementation and funding, not the basic principles and structure of No Child Left Behind (“NCLB”). The latter were not challenged by either side in the presidential election. Despite the dire warnings of a few higher education lobbyists, I see little national appetite and even less capacity for replicating the specific accountability mechanisms of NCLB in higher education. Nevertheless, some of NCLB’s underlying concepts of accountability are certain to find their way into discussions about reauthorization of the Higher Education Act. The central concept, I believe, is accountability based on educational outcomes. For higher education, results-based accountability might be expected to encompass both access and student achievement. The current accountability systems at the federal level provide policy makers and the public little in the way of timely and relevant information on either of these traditional policy goals. So, I suggest, a debate on appropriate accountability measures for higher education is needed. And I would urge college and university leaders to prepare now for engaging this issue and contributing to policy deliberations. It is instructive that public school leadership, perceived as lacking initiative, ideas and proposals, were largely left outside to look in during much of the development of NCLB.

The campaign, and its aftermath, particularly the appointment of an architect of NCLB as Secretary of Education, leave little doubt that NCLB and its extension to high school will be the initial educational priorities of the Bush second term. As administration spokespersons have pointed out, higher education has much to gain from greater student achievement—better-prepared students and reduced costs of remediation. However, significant improvements in elementary and high school education would almost certainly stimulate greater demands for college access, particularly among low-income students, bringing even greater pressure on the Pell Grant program. Conversely, if the financial barriers to college continue to escalate, a major incentive for low-income students to take more rigorous high school curricula and to complete high school will be in jeopardy.

On the programmatic level, neither candidate dealt with the decline in the Pell Grant vis-à-vis the rising costs of college. The program has become increasingly costly because of growing numbers of eligible students, but the maximum grant has not risen in this decade. President Bush advocated a thousand dollar increase of the maximum to $5,000 in his 2000 campaign. Neither candidate advocated such increases in 2004 despite several years of double digit tuition increases. Senator Kerry proposed expansion of tax credits, an expensive, unproven, and inefficient mechanism for increasing college access, particularly for low-income students. This lack of enthusiasm for Pell seemed to be shared by Congress; in the aftermath of the election, it authorized adjustments reducing eligibility and grants for some low-income students. The Pell Grant program has been the cornerstone of the national effort to eliminate financial barriers to college access, but its future, its effectiveness and whether it retains a political base seem to be open questions at this point.

The president’s campaign pledge to reform and simplify of the tax code is a “wild card” for higher education. If, as has been suggested, the president’s proposal includes elimination of federal deductibility of state and local taxes, the implications for all of education are great. The deductibility of property taxes is an indirect federal subsidy of public schools and community colleges in many states. In addition, the political impact of the loss of federal deductions could trigger another round of taxpayer revolts in the states. In most states, higher education funding, including institutional subsidies and state student financial aid, is the largest “discretionary” portion of the state budget, and the first to fall victim to recessions and tax cutting. The ultimate impact of elimination of tax deductions on colleges and universities would probably be greater than any impact of likely changes in the reauthorization of the Higher Education Act.

Another “lesson” from the election is that major initiatives in the foreseeable future are more likely to come from state and private sources than from federal ones. As seems so often the case, this is both good and bad news. State budgets are gradually (although unevenly) recovering after three very difficult years. Higher education appropriations for the current fiscal year increased by an average 3.8 percent after a decrease in the previous year. More than half the states, however, face long-term structural deficits; that is, their current programmatic commitments outstrip their revenues. Competition for state dollars is intense; the health care costs in general and Medicare in particular are growing at a rate significantly faster than state revenues.

States will eventually have to address their structural imbalances, and no sector has more at stake than higher education, including private higher education in states with financial aid programs. In the short term, history and the increase in state higher education appropriations for 2004-2005 would suggest that higher education is reasonably competitive in the state budget arena. In the 1980s and 1990s state commitments to corrections threatened to squeeze and, according to some forecasts, even eliminate state financial support of higher education. Yet between 1980 and 2000 state appropriations for public four-year colleges and universities, adjusted for inflation, improved by about twenty-five per cent per student.

Finally, another and perhaps most important political “wild card” at both the federal and state levels may be the growing Hispanic population, which is young and coming of college age in this new era of a knowledge-based global economy. Education and training beyond high school has become a prerequisite for virtually any employment that supports a middle class lifestyle. The Hispanic community has an enormous stake in the future of college opportunity. Assuring opportunities for this community will require simultaneous improvements in college preparation, in college capacity in many parts of the country, and in college affordability. And all of these will require renewed federal and state financial and policy commitments. The competition among political parties and candidates for Hispanic votes in recent national and state elections has intensified. Mobilization of this potential constituency on behalf of college opportunity—at the broad access institutions as well as the elites—would dramatically increase higher education’s political saliency, would reshape federal and state politics of higher education, and would certainly unravel all predictions, including mine.