College Completion: A Comparison Of States Return on Investments

July 21st, 2009

The Delta Cost Project  released a white paper—The Dreaded P Word: An Examination of Productivity in Public Postsecondary Education— that presents a new market-based methodology for estimating productivity in state public higher education systems, and compares results across the states. The new measure relates state and student spending on higher education to the market value of degrees and credentials produced.

The market-based productivity estimates show that the costs per credential are lowest in the states of Florida, Colorado, Washington, Utah and North Dakota; these states convert resources into credentials that have value in their marketplaces. The least productive states – those with the highest costs per credential – are Alaska, Wyoming, Delaware, Rhode Island and Connecticut.

The market-based methodology uses data on state median earnings by education level to weight each state’s certificate and degree production so it reflects the market value of the credential. The weighted certificate and degree awards are then compared to state and student spending on higher education, producing a market-based productivity estimate (spending per credential). The methodology was developed by Patrick Kelly, Senior Associate at the National Center for Higher Education Management Systems (NCHEMS), and author of the report (download it now).

An example of the methodology is presented in  (using data for the state of Alabama). The cost per degree/certificate using reported awards is $59,380, while the weighted cost (factoring in the value of the credentials on the market) is $56,280. The difference arises because after weighting the completion data, a smaller share of all awards are accounted for at the sub-baccalaureate level (21 percent) than when using the reported share of certificates and associate’s degrees (28 percent). Thus, the “productivity” of Alabama’s public higher education system is higher (i.e., the cost of completion is lower) than would be expected looking at degree/certificate production alone.

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