Is TOPS doomed? No, but sharp course correction needed to avoid Titanic’s fate

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Queensland State Library

The Titanic is portrayed on a postcard in circulation two years after "unsinkable" ship was done in by an iceberg.

The Titanic is portrayed on a postcard in circulation after the "unsinkable" ship was done in by an iceberg. For TOPS, the iceberg ahead is the inflation of college costs.

The Titanic was the grandest ship of its time. Perhaps the only thing more astonishing than the ship itself was its demise. How could a ship so large and “unsinkable” meet such a tragic fate? The legacy of the Titanic leaves an important lesson: Be on the lookout for icebergs.

The TOPS program may lack the grandeur of the Titanic, but it’s a strong source of pride for the people of Louisiana — or should be. TOPS puts approximately 15,000 of our sons and daughters through school annually, yours truly having been among the recent beneficiaries. It’s something to tout in a state that so often falls behind when it comes to education.

Here’s the bad news: The program is headed straight for an iceberg. To save TOPS for the next generation we must change course immediately.

What I am suggesting are a few small changes that will greatly assist the program in becoming efficient, competitive, and strong — adjectives that would be nice to have associated with Louisiana for a change.

TOPS, launched in 1989 at the initiative of the late oilman Patrick Taylor, essentially covers tuition and some fees for any qualified Louisiana high school graduate enrolling in a state college or technical school. When times are good, it has been financed through the state’s General Fund; more recently TOPS has tapped a state trust fund set up with proceeds from the tobacco settlement. In a nutshell, the problem is that the General Fund is maxed out and trust fund money will begin to dwindle so fast that the program will founder and sink in just a couple decades if no action is taken.

The reason? Inflation. During the latest budget crunch, the state has cut funding for higher education to keep the budget above water, and the state’s colleges and universities have been allowed to raise tuition to help bridge the gap. This has caused the overall cost of the TOPS program to rise an average of approximately 11 percent per year from 2007-2012, with no sign of slowing down. A program that cost $139 million in 2010 will have skyrocketed to a projected $177 million by the end of this year.

Fortunately, there is still time to act. I have great admiration for TOPS, and have spent the better part of the last year and a half studying, researching and formulating a plan to save it. The plan is balanced, innovative and will be effective.

First, stipends on top of tuition should be eliminated. These $800 and $400 stipends are given yearly to students who achieve a higher ACT score. They go overwhelmingly to the most fortunate students who can otherwise afford the extra costs of college. The result of eliminating such stipends would save $11.5 million per year, or $115 million over a decade.

Next, we must continue to strive for excellence and to demand more of our students — they’re undoubtedly capable of it — by requiring a 21 on the ACT for admission to the program. This is only a one-point increase over the current requirement of 20 and would save $300 million over the next decade.

Lastly, students who accept the scholarship but do not finish their degree will be required to repay the award with interest. Of course, exceptions will be made for severe hardship and military service. The TOPS award is a contract between student and state, and the student is responsible for following through with graduation. Savings from this reform would amount to $159 million over the next decade (with non-payers estimated at 15 percent of TOPS dropouts).

At this point, we have not done much to change the program, but in a balanced manner have saved more than half a billion dollars — $575 million.

However, that iceberg of inflation still looms large.

The green line represents the projected costs of an unreformed TOPS program if inflation continues at 5% per year.  The initially solid red line that fades into the dotted red line is spending projection if the three small reforms are implemented, without restructuring the program to control inflation. The solid red line is the projection if all proposals are implemented.

The green line represents the projected costs of an unreformed TOPS program if inflation continues at 5% per year. The initially solid red line that fades into the dotted red line is spending projection if the three small reforms are implemented, without restructuring the program to control inflation. The solid red line is the projection if all proposals are implemented.

How will we ultimately save the ship? Over time, after the above reforms have kicked in, TOPS will be transformed into a competitive market-based program forcing colleges and universities  to compete for students. Schools will be given control over the allocation of their own TOPS funds and will be held accountable for the results.

Schools will begin with the same proportion of overall TOPS funding that they have enjoyed historically. They will be allowed to offer the money to Louisiana residents in any amount up to the full cost of tuition. Students will receive offers from competing colleges and they will choose what makes the most sense for them.

The academic recruiting process will more closely resemble the athletic recruiting process that allows student-athletes to weigh offers against one another, as they seek out the best deal. Because schools will decide whom to offer scholarships — based on grades, test scores, diversity and other factors — a minimum test score will no longer be the sole criterion. The change will be all-inclusive; no student will be disqualified from TOPS because they scored poorly on a single test.

The trade-off is that not all participating students will be guaranteed full tuition; they will receive what their performance merits. They will, however, be guaranteed a free ride at a trade or professional school. This will funnel students toward the two-year community colleges that fuel Louisiana’s industrial economy.

As for the colleges and universities, they will be ranked according to an efficiency formula made up of factors such as college rankings from national publications, peer reviews, graduation rates, student evaluations and other factors. As an institution rises or falls in the rankings, it will gain or lose its percentage of TOPS funding. Efficient schools will be rewarded; struggling schools will be gradually weaned off the state dole.

Louisiana will come out of the transformation with stronger, more competitive schools.

TOPS funds will be allowed to grow in pace with overall inflation as measured by the federal government’s Consumer Price Index, not by the current 10 percent rate at which tuitions have soared. But ambitious colleges and universities will have discretion over funding in ways that allow them to build programs that have a shot at national prominence. For example, a school that feels it has a competitive advantage in engineering will offer available funds to strong students in that field, leaving competing colleges and universities to develop centers of excellence in other disciplines. Not only does this kind of specialization carry the prospect of national prominence for well-nurtured departments, it provides another potential benefit: paring back the abundance of duplicate programs that are an inefficient drain on Louisiana’s system of higher education.

Change is in the air. In his own effort to make higher education more affordable, President Obama recently suggested a ranking system for colleges and universities much like the one I have just described. His ideas, like mine, should be palatable to both liberals and conservatives. The savings in my plan come both from small cuts in benefits that chiefly go to the most advantaged and by incentivizing market-based competition among colleges and their departments. Louisiana can lead the nation with this innovative model.

And if we don’t? Ready the lifeboats!

Dane Harris, a commercial credit analyst, is an alumnus of Louisiana Tech University with a master’s degree in international business from Germany’s Munich Business School.  His ideas on saving TOPS are developed at greater length in his master’s thesis. For the full 80-page report, email d.c.harris028@gmail.com

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