SADOW: You’d Better Address Cost And Standards If You’re Reforming TOPS

Another calendar year, another attempt to reform Louisiana’s Taylor Opportunity Program for Scholars comes to the Legislature. It’s actually a retread of failed previous legislation by state Sen. Blade Morrish, and it continues to make incomplete progress towards the real solution needed to both contains costs and to make the free tuition program work more efficiently so that the state’s higher education system works more effectively.

Morrish’s SB 34, similar to last year’s SB 83, which would cap tuition paid by TOPS by an inflation index for higher education. Currently, it pays the tuition charged at a state school if attending that, and for any other school pays a weighted average of all state school rates, adjusted every two years. This is in response to escalating program costs, thought to total $235 million for this fiscal year, in large part driven by tuition increases now allowed without legislative oversight if schools hit performance benchmarks that mostly have replaced the taxpayer dollars that previously funded higher education.

While it’s a start, the bill does not address the real issues behind the program that now costs nearly a penny on every dollar spent by the state, because it adopts the confused idea behind the program. What started as a need-based enterprise in name was made into a scholarship program, but never has operated as a scholarship program because its standards – basically the same as admissions criteria to get into most baccalaureate-and-above public universities in the state – are relatively so low. It’s more like a promise that if one can get into directly from high school that kind of college, tuition is free, making it really an entitlement more than anything else as its merit standards are undemanding. For that reason, about 70 percent of first-time, full-time freshmen entering in a fall semester end up qualifying.

As such, proposals like Morrish’s are cost containment measures that address only how much money gets spent, but ignores how well it gets spent. Any crisis in total money spent supporting the program is not really a function of burgeoning tuition, but that the base is counterproductively inflated. That is, too many marginal students for reasons of academics and commitment are allowed into the program by having minimal qualification standards. This is why more than a third of all recipients have their awards canceled at some point in their post-secondary educational careers, as likely the majority of these were marginally qualified students and/or students whose commitment to higher education was such that the only reason they attempted it was because they could do so at very low cost (the basic TOPS awards does not provide money that could cover fees, books, and living expenses if needed).

By funding these kinds of students, it wastes resources because many of the defaulters do not graduate and the state has no legal means of recovering this money (although attempts have been made to turn TOPS into a loan forgiveness program to enable collection efforts). Properly understood, then this means that part of the program cost that concerns legislators comes from funding wasteful activities, an inefficient resources use that would be cut significantly if standards were increased.

The best strategy here would be to provide a free tuition ride to anybody who scored at a certain level on the American College Test and class graduation rank comparable to top out-of-state institutions (for example, at Texas A&M a student must get a 30 on the American College Test and a minimum of 27 on each section and be in the top quarter of class; contrast this with LSUBR’s standard, which for most entries is a 22 composite), and then graduate awards downwards as credentials decline. Thus, a student who hits the bare minimum now might receive an award equal to the school that charges the lowest tuition in the state, one with minimal qualifications to get into LSUBR might get 50 percent of its rate, and so on.

This regime brings the advantage of better matching student ability to school, motivating students to perform better in high school to earn more of their tuition thus improving eventual outcomes, and discouraging marginally-motivated students from wasting theirs and taxpayers’ time and resources (where this level could increase over time, leaving the door open for future studies with a blank slate). Hard-working students who don’t meet these standards but who do meet admissions standards somewhere still have plenty of financing options, such as generous lending from the federal government, generous need-based funding from the federal government and even some from the state, and other kinds of scholarship aid from schools and other sources.

Combined with an inflation-adjusted bill, this would work. Schools might resist the idea since it would reduce enrollments, but at the same time the financial retrenchment might be minimal as it would allow them to reduce costs and plan better for more efficient resource use with the number of students who flunk out at term’s end or who drop out in the middle of a term smaller, and it would improve their overall retention and graduation rates. However, they should not have the luxury of thinking of TOPS as a cash cow from the taxpayer, but instead as a mechanism to attract truly meritorious students to their classrooms. Legislators also might be wary, for too many see it as an extension of the populist state giving yet another benefit away, which in turns attracts votes – a mindset that long needed has to go to give Louisiana a high-performing, right-sized government.

Alone as it stands, the bill merely reduces state costs to an entitlement program that has marginal incentives for achievement and excludes only the least capable and interested. Add in graduated awards that make it a true scholarship program, and costs will go down further and probably overall produce better outcomes. Only in that form does this kind of legislation deserve passage.

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