University Business - December 2007 - (Page 31)

ON THE HILL Election Year Looms HEA and endowment payments are among the key issues awaiting action. By Alan Dessoﬀ ITH AN ELECTION YEAR about to begin, all bets are oﬀ on what Congress is likely to do on postsecondary education matters and just about everything else when it reconvenes in January. Whatever the issue, political considerations are likely to color its outcome in the year ahead. Even reauthorization of the Higher Education Act, which seemed to be on course for passage earlier this year, is facing political debate. While approval still seems likely, it awaits action by the House Education and Labor Committee, where it is stalled while the committee focuses on reauthorizing the No Child Left Behind (NCLB) Act, a more politically controversial issue. In late October, the House gave HEA another temporary extension—this time for six months. Meanwhile, Republican members of the Education Committee introduced their own version of HEA reauthorization—the “College Access and Opportunity Act.” Among other things, it calls for giving consumers more information about college costs, protecting students from conﬂicts of interest between lenders and colleges, making accreditation agencies more accountable, and updating programs to give students access to college and to help them pay for it. As David Ward, president of the American Council on Education, described it in a letter to presidents of other higher education organizations in Washington, many of the provisions in the GOP legislation are ideas that have been ﬂoated previously. “This is very much a ‘message’ bill designed to spark discussion and pre- W Rising college costs appear to be driving interest in a mandatory endowment payout rate. view ideas that House Republicans want to work on as part of reauthorization,” Ward explained. He added that Republicans were optimistic about the prospect of working in a bipartisan way on the bill when it ﬁnally comes up for House action, now not likely until the new year. ENDOWMENT PAYMENTS Higher ed authorities in the capital are also watching closely what’s developing in the Senate Finance Committee. Its members are considering legislation that would aﬀect colleges and universities with large endowments by imposing a mandatory endowment payout rate for the ﬁrst time. As analyzed by ACE, rising college costs appear to be driving legislative interest in the issue, with the assumption that tuition increases could be controlled if well-endowed universities spent a little more of their endowments. But that assumption “mistakenly views endowments as large sources of unrestricted money that colleges and universities could easily use to moderate tuition increases,” ACE declared in a background document. Actually, according to ACE, most if not all higher ed institutions with the largest endowments already provide a substantial amount of aid to students from lowincome families, with the average grant covering tuition and expenses including room, board, and books. Therefore, mandatory endowment payments to cover the ﬁnancial needs of low-income students are not necessary, ACE concludes. Further, it maintains, endowment spending already contributes signiﬁcant resources toward operating budgets at a number of IHEs and, in some cases, may be the largest source of revenue for an institution. In that way, endowment spending already serves to hold tuition rates below the level necessary if tuition alone paid the true cost of educating a student. The Finance Committee also has called for increased disclosure of endowment information. IHEs, as tax-exempt organizations that also are committed to appropriate transparency, would support that, according to ACE. A key concern raised by the committee’s exploration of mandatory endowment payouts is the possibility that it could lead to unprecedented federal intrusion Alan Dessoﬀ, a former reporter for The Washington Post, is a Bethesda, Md.-based freelance writer. universitybusiness.com December 2007 | 31 http://universitybusiness.com

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University Business - December 2007 Contents College Index Company Index Advisory Board Editor's Note Behind the News Viewpoint Admissions On The Hill Marketing Future Stock Independent Outlook Technology Spending Survey '08 Conference Call A Working Education 30 Smart Business Ideas Educause in Emerald City What's New Calendar of Events End Note

University Business - December 2007

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