Business

Tom Martin Q&A: Is Kentucky’s workforce equipped for today’s labor market?

Bob King
Bob King

Math. Analytical, theoretical thinking. Problem solving. Is the American workforce equipped with these essential skills? There is evidence that it is not. Discussing this concern with Tom Martin is Bob King, president of the Kentucky Council on Postsecondary Education.

Podcast: Tom Martin Q&A with Bob King

Q: How would you characterize the readiness of the Kentucky workforce relative to labor market demands?

A: A survey undertaken just last year by the Educational Testing Service in 20 different countries, looking at young adults ages 16 to 34, found that the American workforce ranks third from the bottom in terms of necessary literacy skills, second from the bottom in terms of numeracy skills and dead last in terms of problem-solving skills. It’s particularly troubling because the state Chamber, surveying their members, asked them what was most important to them, and it was exactly those skills. The modern workforce today requires higher and higher levels of education. It doesn’t mean everybody needs a bachelor’s degree, but it does mean that at least two-thirds of our workforce need some postsecondary, post high school education to be able to secure a decent job with decent wages.

Q: You mentioned a Kentucky Chamber of Commerce survey of business owners across the commonwealth; what are our employers looking for in new hires?

A: Certainly, students with degrees in the STEM disciplines (science, technology, engineering, mathematics) are very highly sought-after. 92.8 percent of Kentucky employers said that students with those kinds of degrees were important, very important or critical. 98 percent of our employers in Kentucky said that literacy skills were important, very important or critical. And problem-solving skills, 99 percent. So, our employers are telling us that the skills they’re looking for are exactly the skills that our community and technical colleges, our universities are attempting to provide.

Since the recession nearly every other state has managed to begin reinvesting in their higher education systems. Kentucky is one of a handful of states that has not done that yet.

Bob King

Q: Are students arriving at college today with the kind of skills and preparation they need to accomplish these goals?

A: Too many students that are coming to the universities and to the community colleges are coming in need of some remedial assistance before they can take credit-bearing courses, although that number is starting to go down. We need to find the strategies that will help more of our students who start to complete their education.

Q: It’s easy to blame the recent recession, but are there other reasons that our legislators have been decreasing funding for our colleges and universities?

A: While those pressures are substantial, since the recession nearly every other state has managed to begin reinvesting in their higher education systems. Kentucky is one of a handful of states that has not done that yet. And we’re hoping that despite the challenges, the legislature and our new governor will realize that this really is among the most significant investments that any state can make: in the human capital which is our citizens.

Q: Money is tight, and one reason is public employee pension funding and significant exposure to liability. We only have so many dollars so that would, I would think, lead us toward efficiencies.

A: The great universities of the world aren’t great because they are more efficient than anybody. But that said, there certainly is an expectation of public universities to treat the public and tuition dollars we get as efficiently and as effectively as possible. Since the recession, here’s what I can tell you: In addition to the cuts that the campuses have sustained in terms of reduced state support, they’ve also had to pick up additional pension costs to the tune of $175 million in new expenses. Health insurance costs for their employees have gone up almost $620 million.

Fixed-cost unemployment insurance, worker’s compensation, utilities, contractual obligations particularly for all of the equipment, the computing equipment, and all that stuff that you see on our campuses: over a billion dollars. The legislature has shifted from what they used to cover in the state General Gund to the campus budgets $180 million of maintenance and operating costs for buildings. And the campuses themselves have increased financial aid to students by nearly a half billion dollars.

So, when you combine all of that with the cuts, you’re looking at about a $3.5 billion impact on the campuses. In turn, we’ve allowed the campuses to raise tuition by about $2.5 billion. So, the difference between the tuition revenue we’ve allowed them to raise and the combination of the cuts and the costs that they’ve had to shoulder leaves them with a shortfall of a billion dollars. And so, when people say the campuses aren’t being efficient, the reality is that they’ve had to find a way to reduce their operating expenses by that amount.

Q: Efficiency, accountability, do they bring us to the concept of performance-based funding?

A: A number of states have implemented what we call either outcomes-based or performance-based funding. That’s something that we actually have been recommending to the legislature over the two previous budget cycles. It is a central part of the proposal that we’ve made to the governor and to the General Assembly.

Q: And as I understand it, performance-based funding establishes a set of metrics or goals that must be met by the universities.

A: There’s two different things. There are the metrics, the things that we will agree to measure. And then second, for each campus we then have to set targets which we expect them to attempt to achieve. So, the metrics are the things that most people would expect: improving the number of degrees and credentials awarded, increasing graduation rates, increasing retention rates and reducing achievement gaps — the results that are being experienced by students who may be underrepresented minority groups or low-income students compared to the general student body at an individual campus. We’ve also allowed campuses to select a single metric that they want to be measured by, specific to their campus. We then have to set targets for each campus; they’re all at different starting points.

Q: And what if an institution fails to meet these goals?

A: In the model that we’ve proposed we set seven targets. And each target is worth a point. And so, the campuses perform. They try to improve graduation rates, increase degrees and credentials, close those achievement gaps, etc. Let’s say at the end of a two-year period they’ve achieved 75 percent of their targets. What would happen is the money that we’re seeking, and that would hopefully be funded in this biennium, 75 percent of that money would stay in the campuses’ budget for the next biennium. The 25 percent that they didn’t earn would then come into a pool that would be hosted at our office in a special fund. They would then be given a second chance to earn that money. But in order to do it, they would have to come with a proposal that said, ‘We’re going to change our strategy. Here’s how we’re going to attempt to try and improve that.’

Q: And is there consensus among the university presidents?

A: All eight of our four-year institution presidents and President Jay Box on behalf of the community and technical colleges signed a document expressing their support for this full proposal.

Tom Martin’s Q&A appears every two weeks in the Herald-Leader’s Business Monday section. This is an edited version of the interview. To listen to the interview, find the podcast on Kentucky.com. The interview also will air on WEKU-88.9 FM on Mondays at 7:35 a.m. during Morning Edition and at 5:45 p.m. during All Things Considered.

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