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1 STEM STUDY Review of the Impact of STEM Weights in the State Share of Instruction (SSI) Funding Formula for Public Institutions of Higher Education in Ohio 2017
2 Replace with Name of Section ii
3 Table of Contents Introduction Impact: Funding Formula Impact: STEM Program Participation & Degree Completion.. 8 STEM-Related Occupations: Current Status & Growth Next Steps Appendix
4 Replace with Name of Section iv
5 Introduction Amended Substitute House Bill 49 of the 132nd General Assembly included the following charge to the presidents of Ohio s public colleges and universities in consultation with the Chancellor of Higher Education: STUDY ON THE USE OF SCIENCE, TECHNOLOGY, ENGINEERING, MATHEMATICS, MEDICAL, AND GRADUATE WEIGHTS The presidents of public institutions of higher education as defined in section of the Revised Code, or their designees, in consultation with the Chancellor of Higher Education, shall study the effectiveness of the science, technology, engineering, mathematics, medicine, and graduate weights as originally recommended by the 2006 State Share of Instruction Consultation and the Higher Education Funding Study Council and as implemented in division (C) of this section. The study shall identify the extent to which STEM and graduate weights re-allocate resources among institutions within the State Share of Instruction line item, the extent to which the resource re-allocation affects institutional production of STEM and graduate completions, and the extent to which the weights are appropriate given current workforce data associated with emerging and in-demand fields. The study shall be completed by October 15, Notwithstanding any provision of law to the contrary, the presidents of public institutions of higher education as defined in section of the Revised Code, or their designees, in consultation with the Chancellor, shall use the results of the study to recommend changes in the science, technology, engineering, mathematics, medicine, and graduate weights as originally recommended by the 2006 State Share of Instruction Consultation and the Higher Education Funding Study Council and as implemented in division (C) of this section. Not later than December 1, 2017, the members shall report any changes to the Governor, the General Assembly, and the Office of Budget and Management. In response to this legislative charge, this study will 1) review the impact of STEM weights on the funding formula and SSI allocations since inception, 2) provide a summary of course taking, certificate, and degree attainment patterns, and 3) discuss the labor market outlook for STEM careers in an attempt to inform the next steps of the STEM weight review process. In 2006, educators and policymakers in Ohio began considering proposals to increase degree production in the state, with particular emphasis on science, technology, engineering, math, and medical/health (STEM) fields. The implementation of enhanced STEM reimbursement weights in the State Share of Instruction (SSI) funding formula was a recommendation of the 2006 Taxonomy Subcommittee. This committee proposed 1
6 Introduction significant SSI formula changes including: (1) a new aggregation of funding models based on subject field and cost (taxonomy changes); and (2) a new SSI formula that transitioned from a component cost model, with a fee assumption, to a funding model based on total cost. The total cost funding model allowed for the introduction of a uniform state share that was intended to quantify the percentage of total costs funded through state operating support. The combination of taxonomy changes and the uniform share had the most dramatic impact on the most expensive higher education offerings; namely the STEM subject fields. Specifically, in 2006 the Taxonomy Subcommittee provided the following justification for the STEM weights: Given the interest in encouraging enrollments in these [STEM] subject fields to enhance economic development, the Committee felt that we should adjust the SSI calculation to ensure that each STEM model be brought to its existing reimbursement rate. For those models where the reimbursement rate for the new taxonomy and formula exceed the current model and formula, the new taxonomy rate and formula has been used since it already offers more encouragement than the current model and formula. However, the Committee recommends that STEM models be reviewed in the future, with the goal of achieving a more standardized weighting structure. The initial STEM weighting that applied to the FY SSI calculations were done in a manner that held STEM and Medical models harmless relative to the amount of state support the same instructional model would have earned in the previous SSI formula, using FY 2007 as the base year. The formula moved to an adjusted Uniform State Share of Instruction as the method of calculating earnings by model, rather than using Local Contribution (fee assumption). The plan in 2006 included gradually phasing out this addition for the STEM models, with the exception of the Medical 2 model, as the Resource Analysis average cost calculations for the models began to reflect this additional SSI funding (Subcommittee, 2006). 2
7 Introduction Comparing the costs of each subsidy model from 2006 to 2015, there has been a shift in costs within the STEM subsidy models, with the lower-level courses increasing and upper-level courses decreasing in costs, as shown in the following table: Along with instituting the STEM weights, the course alignments and the subject area models in the taxonomy were updated to three broad subject areas: Arts and Humanities; Business, Education and Social Sciences; and STEM, increasing the number of models to 26 models from the old taxonomy that had 16 models. Within each subject field grouping, the subject field/level of instruction combinations were made according to costs and aligned to the most appropriate category in the new taxonomy. It is important to note that because the formula and taxonomy are so intertwined, when the formula is adjusted in a major way, the taxonomy also needs to be adjusted to reflect costs appropriately. 3
8 Impact: Funding Formula To examine the impact(s) of the STEM weights on SSI funding, the formula was run in two ways: once as it s currently calculated using the STEM weights and once without. The reallocation of the SSI funding based on the STEM weights was captured by removing the differential weights from the degree costs and model costs utilized in the FY 2017 and FY 2018 SSI calculations. The following summarizes the sector level estimates of SSI re-allocation resulting from the STEM weights: In FY 2017, the STEM course and degree weights in the University formula reallocated an estimated $13,700,145 (0.90% of total funding) in SSI funding toward the STEM disciplines. In FY 2018, the amount totaled $13,945,098 (0.92%). In FY 2017, the STEM course and degree weights in the Community College formula reallocated an estimated $3,728,717 (0.82% of total funding) in SSI funding toward the STEM disciplines. In FY 2018, the amount totaled $3,766,716 (0.83%). Based on the analysis of the FY 2018 SSI, the following tables provide a summary of the institutional reallocation resulting from the STEM course and degree weights. A positive number means that an institution received additional resources as a result of the STEM weights, and vice versa. Please note that the names of each individual institution have been removed to allow for an impartial review of the findings contained within this report. Four-Year Institutions: Universities SSI Impact Resulting from STEM Weights (FY 2018) 4 Yr Institution A 6.32% 4 Yr Institution B 2.22% 4 Yr Institution C 1.09% 4 Yr Institution D 0.86% 4 Yr Institution E 0.65% 4 Yr Institution F -0.02% 4 Yr Institution G -0.72% 4 Yr Institution H -0.21% 4 Yr Institution I -1.17% 4 Yr Institution J -1.23% 4 Yr Institution K -1.84% 4 Yr Institution L -2.67% 4 Yr Institution M -4.41% 4 Yr Institution N -8.41% 4
9 Impact: Funding Formula Two-Year Institutions: Community Colleges SSI Impact Resulting from STEM Weights (FY 2018) 2 Yr Institution A 6.97% 2 Yr Institution B 4.93% 2 Yr Institution C 4.06% 2 Yr Institution D 3.63% 2 Yr Institution E 3.45% 2 Yr Institution F 3.30% 2 Yr Institution G 2.36% 2 Yr Institution H 1.71% 2 Yr Institution I 1.30% 2 Yr Institution J 1.18% 2 Yr Institution K 0.82% 2 Yr Institution L 0.21% 2 Yr Institution M 0.10% 2 Yr Institution N -0.11% 2 Yr Institution O -0.18% 2 Yr Institution P -0.44% 2 Yr Institution Q -0.64% 2 Yr Institution R -0.90% 2 Yr Institution S -1.33% 2 Yr Institution T -1.75% 2 Yr Institution U -1.99% 2 Yr Institution V -2.31% 2 Yr Institution W -3.68% When the initial STEM model weights were calculated, there was a recognition that the new funding formula significantly reduced state operating support for STEM courses. In response, the STEM weights helped preserve state operating support such that (in aggregate) the non-doctoral STEM courses maintained funding that was approximately 45.3% of the total SSI. Since that time, the sector specific SSI funding formulas have undergone significant changes such that course completions and degree completions are now the primary basis of funding, rather than course enrollments. Non-doctoral STEM courses accounted for 54.3% of the total SSI in the FY 2018 allocation, as detailed in the following table. 5
10 Impact: Funding Formula * Assuming All Degree Funds equals Course Completion Funding Along with the change to the SSI allocation models, the cost of courses in the STEM area were thought to be increasing as technology and equipment modernization projects were undertaken to keep pace with labor force needs. It is reasonable to think that the enhanced reimbursement rates within the SSI model would lead to increased spending within the STEM models, as reported in the annual resource analysis data. 6
11 Impact: Funding Formula One intent of adding weights to the STEM courses was to incentivize institutions to increase their expenditures on STEM courses; indeed, a comparison with the (uninflated) costs from 2006 to 2015 shows there has been an increase. An examination of the Resource Analysis data, as outlined in the following table, shows that unrestricted expenditures in the weighted STEM models represented approximately 41.8% of all higher education spending in FY 2015, as compared to 37.1% in FY Resource Analysis Total Costs $15,976,107,480 $21,760,441,903 STEM, net of STEM 1 $5,932,316,787 $9,101,132,575 % of Total Expended on STEM 37.1% 41.8% *The STEM 1 expenditures were excluded since its reimbursement rate is not weighted and the SSI funding for STEM does not include STEM 1. The sector-specific share of student FTE and cost per FTE for STEM courses are generally proportional to one another, with the two-year sector comprising 33% of student FTE and 38.1% of cost per FTE, as compared to 67% and 61.9% in the four-year sector, respectively. For STEM courses, the average cost per FTE is $3,477 higher in the two-year sector. Sector Percentage of FTE Average of Cost Per FTE Percentage of Total Cost Per FTE 2 YR 33.0% $36, % 4 YR 67.0% $32, % Grand Total 100.0% $34, % 7
12 Replace with Name of Section Impact: STEM Program Participation & Degree Completion As part of Ohio s effort to address a widely reported mismatch between employer needs and job-seeker knowledge and skills, particularly in STEM fields, the state has created an attainment goal, stated as: 65 percent of Ohioans, ages 25-64, will have a degree, certificate, or other postsecondary workforce credential of value in the workplace by In order to successfully compete for business investment and jobs, Ohio must significantly increase the number of its citizens with postsecondary education credentials relevant in the workplace. For Ohio employers to prosper in a global economy, they must have world-class talent with verifiable knowledge and skills aligned with specific workplace needs. Not only is increasing educational attainment important, aligning the degrees with the needs of the labor market is a critical component of this goal. This section of the STEM study will focus on the behavior changes that may have partially come about due to adding STEM weights to the funding formula. 8
13 Impact: STEM Program Participation & Degree Completion Course Taking Patterns In aggregate, the percentage of students enrolled in STEM courses has increased slightly as a percentage of all courses attempted since 2010 from just under 39% to 41%, excluding the medical areas. This increase is entirely attributable to increases that occurred in the four-year sector, as detailed on the following pages. See appendix for a list of subject fields included in the STEM grouping. 9
14 Impact: STEM Program Participation & Degree Completion In the two-year sector, the percentage of students enrolled in STEM courses has decreased slightly since
15 Impact: STEM Program Participation & Degree Completion In the four-year sector (main and branch campuses combined), the percentage of students taking STEM courses increased by 4.4% across the study period from 34.3% to 38.7%. Enrollment in the medical areas also increased over the study period and exceeded 5,000 students in the most recent year. 11
16 Impact: STEM Program Participation & Degree Completion Degree Attainment in the STEM Fields Since the 2006 STEM weight recommendations, the number of students earning degrees and certificates in the fields defined as STEM has increased. The number of programs offered in the STEM fields has also been increasing over the study period, as demand from the labor market, changing economic conditions, and advances in technology drive institutional innovation. Looking at the trends in programs offered since 2006, the largest increases came in 2012 and after. For the purposes of this analysis, programs include all credentials ranging from certificates requiring at least 30 credit hours through doctoral programs. 12
17 Impact: STEM Program Participation & Degree Completion Examining the percentage of certificates awarded in a STEM area, it has remained relatively steady since The percentage of associates degrees awarded in a STEM area has decreased slightly since
18 Impact: STEM Program Participation & Degree Completion The percentage of bachelor s degrees awarded in a STEM area has increased steadily from slightly below 30% in 2006 to just over 40% in Master s degrees in STEM areas have also increased steadily to just over 50% as a percentage of all upper level degrees awarded. 14
19 Impact: STEM Program Participation & Degree Completion In terms of aggregate number of degrees awarded, professional degrees in the medical fields have also increased over time. This is partially attributable to an expansion in osteopathic medicine; dual degree programs combining medical degrees with business, biomedical fields, or related fields; and new research opportunities in the state. 15
20 STEM-Related Occupations: Current Status & Growth This study identified 264 careers that were used to define STEM. Using a predefined set of occupation codes (SOC Codes), the STEM career fields were grouped into the following categories: business, education, engineering, health, natural science and mathematics, social and behavioral sciences, and trades and repair technicians. Overall, STEM employment in Ohio grew an average of 1.5% per year from 2012 to However, there is a projected job growth of 16.3% growing to over 1.89 million jobs in these same STEM careers in Ohio by The data cited below is from the Occupational Employment Statistics (OES) program, which conducts a semiannual mail survey designed to produce estimates of employment and wages for specific occupations. The OES program collects data on wage and salary workers in nonfarm establishments in order to produce employment and wage estimates for about 800 occupations. Data from self-employed persons are not collected and are not included in the estimates. The OES program produces these occupational estimates for the nation as a whole, by state, by metropolitan or nonmetropolitan area, and by industry or ownership. Considering all occupations that are in STEM fields, the number of employees has grown since
21 STEM-Related Occupations: Current Status & Growth Using the same STEM career definitions, the likely level of educational attainment necessary to place into these jobs was evaluated. While many of the jobs can be obtained with a high school diploma or equivalent (18.9%), the vast majority require some type of higher educational degree or certificate (65.6%) 4. 17
22 STEM-Related Occupations: Current Status & Growth The following tables evaluate the current status and future outlook of specific STEM career fields. For examples of jobs that exist within the specific STEM career fields outlined below, please see the list of STEM Career Areas outlined in the Appendix. The STEM Business Fields have seen an overall decrease of 2% in employment since The Location Quotient 5 for Ohio Business STEM fields has decreased 17% since 2012, from 1.06 in 2012 to 0.88 in For the purposes of this analysis, the Location Quotient means the ratio of an occupation s share of employment in a given area to that occupation s share of employment in the U.S. as a whole. According to the Ohio Means Jobs InDemand Occupations Report 4, there will be an estimated 447 additional jobs created in these fields, with total annual openings reported to average over 10,000 per year. There is also a projected job growth of 17.4% by
23 STEM-Related Occupations: Current Status & Growth The STEM Education Fields have seen an overall increase of 8.8% in employment since The Location Quotient 5 for Ohio Education STEM fields has decreased 7.9% since 2012, from 1.08 in 2012 to 0.99 in The Ohio Means Jobs InDemand Occupations Report does not include data for STEM Education fields 4. There is a projected job decline of 3.3% by
24 STEM-Related Occupations: Current Status & Growth The STEM Fields have seen an overall increase of 9.7% in employment since The Location Quotient 5 for Ohio STEM fields has increased 2.7% since 2012, from 1.06 in 2012 to 1.09 in According to the Ohio Means Jobs InDemand Occupations Report, there will be an estimated 13,966 additional jobs created in these fields, with total annual openings reported to average over 34,000 per year 4. There is a projected job growth of 5.9% by
25 STEM-Related Occupations: Current Status & Growth The STEM Fields have seen an overall increase of 5.4% in employment since The Location Quotient 5 for Ohio STEM fields has decreased 1.7% since 2012, from 1.04 in 2012 to 1.03 in According to the Ohio Means Jobs InDemand Occupations Report, there will be an estimated 29,347 additional jobs created in these fields, with total annual openings reported to average over 73,198 per year 4. There is a projected job growth of 20.3% by
26 STEM-Related Occupations: Current Status & Growth The Natural Science and Mathematics STEM Fields have seen an overall increase of 8.1% in employment since The Location Quotient 5 for Ohio Natural Science and Mathematics STEM fields has increased 3% since 2012, from 0.79 in 2012 to 0.81 in According to the Ohio Means Jobs InDemand Occupations Report, there will be an estimated 56,167 additional jobs created in these fields, with total annual openings reported to average over 6,765 per year 4. There is a projected job growth of 23.9% by
27 STEM-Related Occupations: Current Status & Growth The Social and Behavioral Sciences STEM Fields have seen an overall increase of 6.7% in employment since The Location Quotient 5 for Ohio Natural Science and Mathematics STEM fields has decreased 12.5% since 2012, from 0.78 in 2012 to 0.68 in According to the Ohio Means Jobs InDemand Occupations Report, there will be an estimated 4,290 additional jobs created in these fields, with total annual openings reported to average over 98 per year 4. There is a projected job growth of 68% by
28 STEM-Related Occupations: Current Status & Growth The Trades and Repair Technicians STEM Fields have seen an overall increase of 25.6% in employment since The Location Quotient 5 for Ohio Trades and Repair Technicians STEM fields has increased 41.4% since 2012, from 0.59 in 2012 to 0.83 in According to the Ohio Means Jobs InDemand Occupations Report, there will be an average of 29 positions per year 4. There is a projected job decline of 4.8% by
29 Next Steps The Chancellor of Higher Education has completed this study to inform the next steps of the STEM weight review process. The study provides a few key findings, including: 1. STEM weights do reallocate resources within the SSI formula. The funding impact to individual institutions as a result of this re-allocation can be as much as 8.4% in the four-year sector and 7.0% in the two-year sector; however, in aggregate, the amount of resources re-allocated as a percentage of the total SSI appropriation is less than 1%. 2. The proportion of state resources allocated in support of STEM-related instruction via the SSI has increased over the study period from 45.3% to 54.3%. 3. Likewise, the institutional cost of providing STEM-related instruction as a proportion of all other education has increased slightly over the study period from 37.1% in 2006 to 41.8% in Although the percentage of students enrolled in STEM courses has increased slightly in aggregate over the study period from 38.9% to 41.0%, it is notable that this trend is divergent between sectors over the study period. 5. Differences exist in the trend of STEM-related credentials as a proportion of all credentials awarded over the study period. STEM-related certificates and associate degrees comprise a declining share of all such credentials awarded, while STEM-related bachelor s and master s degrees are growing as a share of all such credentials. 6. Workforce data suggests that STEM-related careers have expanded and will continue to be in demand into the future; however, variability exists between and among STEM-related fields as to the extent of the labor market demand. As the presidents of our colleges and universities (and their designees) review this study and consider next steps, the Chancellor s staff remain ready and willing to assist in whatever way necessary to facilitate further dialogue on this important topic. 25
30 Appendix Citations (Table 1.7) 4 (Data used from 07/01/2017) 5 The ratio of an occupation s share of employment in a given area to that occupation s share of employment in the U.S. as a whole. STEM Subject Areas STEM Subject Area Business Business Education Education Subject Field Computer and Quantitative Business Fields Logistics Education Assessment and Research Science and Math Education Aeronautical/Aerospace Technology Architecture Automotive Technology Aviation CAD/CADD Drafting Chemical Civil Computer Computer Technology Construction Civil Architecture Technology Electrical Electrical Technology Electrical Electronics and Communications Technology Industrial and Manufacturing Technology Industrial/Manufacturing Materials Mechanical 26
31 Appendix STEM Subject Area Natural Science & Mathematics Natural Science & Mathematics Natural Science & Mathematics Natural Science & Mathematics Natural Science & Mathematics Natural Science & Mathematics Natural Science & Mathematics Natural Science & Mathematics Natural Science & Mathematics Natural Science & Mathematics Natural Science & Mathematics Natural Science & Mathematics Natural Science & Mathematics Subject Field Mechanical Industrial and Manufacturing Military Technology Other Other Technology Allied Athletic Training Communications Disorders Dental Dentistry Orthodontics Periodontics Dietetics & Nutrition Aides and Assisting Licensed Practical Nurse Medicine MD Mental Services Mental Services and Therapy Nursing Nursing Other Optometry Osteopathic Medicine Pharmacy Physical Therapy Physical and Occupational Therapy Rehabilitation Services Veterinary Medicine Agricultural Science Agriculture Biological and Biomedical Sciences Biology Chemistry Computer Science Forestry Wildlife and Natural Resources Geology Geology and Hydrology Interdisciplinary Math & Science Math Natural Resources Other Physical Science 27
32 Appendix STEM Subject Area Natural Science & Mathematics Social & Behavioral Sciences Social & Behavioral Sciences Social & Behavioral Sciences Social & Behavioral Sciences Trades and Repair Technicians Subject Field Physics Anthropology Economics (Social Science) Geography Psychology Communications Technology STEM Career Areas ODHE Defined STEM STEM Business STEM Business STEM Business STEM Business STEM Business STEM Education STEM Education STEM Education STEM Education STEM Education STEM STEM STEM STEM STEM STEM STEM STEM STEM Standard Occupational Classification First-Line Supervisors of Sales Sales Representatives, Services, All Other Computer and Information Systems Managers Transportation, Storage, and Distribution Managers Sales and Related Workers, All Other Post-Secondary Technology Teacher Education/Industrial Arts Teacher Education Teaching English as a Second or Foreign Language/ESL Language Instructor Middle School Technology Teacher Education/ Industrial Arts Teacher Education Learning Sciences Post-Secondary Trade and Industrial Teacher Education Heavy and Tractor-Trailer Truck and Bus Driver/ Commercial Vehicle Operator and Instructor Building/Property Maintenance Light Truck and Bus Driver/Commercial Vehicle Operator and Instructor Modeling, Virtual Environments and Simulation Quality Control Technology/Technician Registered Nurses Nursing Assistants Home Aides 28
33 Appendix STEM STEM ODHE Defined STEM STEM Natural Sciences and Mathematics STEM Natural Sciences and Mathematics STEM Natural Sciences and Mathematics STEM Natural Sciences and Mathematics STEM Natural Sciences and Mathematics STEM Social and Behavioral Sciences STEM Social and Behavioral Sciences STEM Social and Behavioral Sciences STEM Social and Behavioral Sciences STEM Social and Behavioral Sciences STEM Social and Behavioral Sciences STEM Trades and Repair Technicians STEM Trades and Repair Technicians STEM Trades and Repair Technicians STEM Trades and Repair Technicians STEM Trades and Repair Technicians STEM Standard Occupational Classification Licensed Practical and Licensed Vocational Nurses Medical Secretaries Accountants and Auditors Computer Systems Analysts Protective Services Operations Urban Studies/Affairs Public Finance Clinical, Counseling, and School Psychologists Psychology Teachers, Postsecondary Economics Teachers, Postsecondary Psychologists, All Other Anthropology and Archeology Teachers, Postsecondary Geography Teachers, Postsecondary Printing Press Operator Audio and Video Equipment Technicians Broadcast Technicians Digital Communication and Media/ Multimedia Film and Video Editors 29
34 Ohio Department of Higher Education 25 South Front Street Columbus, OH
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