Environmental Scan

April 2011 Update

INTRODUCTION

This report provides an overview of the current socio-economic conditions impacting the local community. While the focus is on local issues, national topics also are included as they directly impact Pima County. Specifically, the following areas are discussed:

1. Federal and State
   1. National and Local Economic Outlook
   2. Political Climate
   3. State of Arizona Education Funding
   4. P-20 Council
2. Pima County
   1. Demographics
   2. Sectors Identified by the Tucson Regional Economic Opportunities
   3. Other Occupational Areas of Significance
   4. Education Issues Facing the College

Note that the issues discussed in this report provide current information as it relates to Pima Community College. The challenges identified in other publications continue to warrant attention. Specifically, the report produced by the National Center for Higher Education Management Systems on the state of education in Arizona, and America’s Perfect Storm by Educational Testing Service provide essential insight into the broader issues facing the community.

A. FEDERAL AND STATE

A.1: National and Local Economic Outlook

The US economy has faced significant challenges in recent years, with significant decreases in property values and widespread unemployment. Though the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) released a report establishing the official end of the 2007 recession in the second quarter of 2009 (NBER, 2010), economic recovery is likely to be slow.

The Congressional Budget Office (CBO) estimates that the federal budget deficit for 2010 will exceed $1.3 trillion. This is $71 billion below the previous year’s total and, relative to the size of the economy, the shortfall is expected to be the second largest shortfall in the past 65 years. At 9.1% of gross domestic product (GDP), the 2010 deficit is exceeded only by 2009’s deficit of 9.9% of GDP (see Figure 1). The 2010 deficit is attributable mostly to a combination of weak revenues and the policies implemented in response to the economic downturn (CBO, 2010).

Figure 1: Total budget deficit or surplus as a percentage of gross domestic product (CBO, 2010).

Unemployment continues to be an issue, both nationally and in the local community. In February 2011, the national unemployment rate was 8.9%, while the Arizona rate was slightly higher at 9.6% (Arizona Workforce, 2011). In both cases, this represents a minor improvement over the previous February, but it is notable that the Arizona rate has been fixed at 9.6% for four months in a row. In Pima County, the unemployment rate was 8.8% in February 2011 (Arizona Workforce, 2011). Figure 2 shows recent job gain or loss by sector in Arizona. The Government sector saw the largest increase, while construction continues to see a decline in the number of jobs.

Figure 2: February 2011 job gain or loss by sector, in thousands (Arizona Workforce, 2011).

In general, the employment by sector for February 2011 is a continuation of trends over the last few years. Figure 3 presents employment trend information for Arizona over quarters since February 2007. There is evidence that the professional and business services, and manufacturing sectors are beginning to stabilize after a downward trend from a high in October 2007. The construction industry, which in 2006 contributed approximately $2.4 billion to Pima County’s economy, accounted for only about $300 million in 2010. While construction is arguably one of the hardest-hit sectors and one that continues to show a decline, the rate of job loss is much lower than in the period from October 2007 through to February 2010 (Figure 3). However, the residential and commercial real estate markets in Pima County are likely several years away from a substantial turnaround.

Figure 3: Industry employment trends in Arizona (Arizona Workforce, 2011).

A.2: Political Climate

The challenges associated with the recent recession have prompted several initiatives at the federal level to support education. Perhaps the most significant of these was the American Recovery and Reinvestment Act passed by Congress in February 2009. The bill provided more than $100 billion in new funding for education, including $53.6 billion for a State Fiscal Stabilization Fund. This provided funds to local school districts facing possible cutbacks and layoffs due to state budget shortfalls, and allowed for school modernization. Arizona’s educational institutions benefited from stimulus funds in several areas:

1. $742,438,293 through the State Fiscal Stabilization Fund (SFSF) Program which aimed to:
   1. Stabilize state and local government budgets in order to minimize and avoid reductions in education and other essential public services.
   2. Ensure that local educational agencies (LEAs) and public institutions of higher education (IHEs) had the resources to retain educational personnel and staff.
   3. Support the modernization, renovation, and repair of school and college facilities.
   4. Advance early learning through post-secondary education reforms to benefit students and families.
2. $195,087,321 in Title I funds for state education agencies (SEAs) and LEAs to support schools with high concentrations of students from families that live in poverty. This was intended as an aid to improving teaching and learning for students most at risk of failing to meet state academic achievement standards.
3. $195,709,675 for Parts B and C of the Individuals with Disabilities Education Act (IDEA). Part B of the IDEA provides funds to SEAs and LEAs to help them ensure that children with disabilities, including children aged three through five, have access to a free appropriate public education. Part C of the IDEA provides funds to each state lead agency designated by the Governor to implement statewide systems of coordinated, comprehensive, multidisciplinary interagency programs and make early intervention services available to infants and toddlers with disabilities and their families.
4. $12,454,386 in Education Technology Grants, the primary goal of which was to improve student academic achievement through the use of technology in schools.
5. $13,086,333 for the Vocational Rehabilitation State Grants Program which helps individuals with disabilities prepare for, obtain, and maintain employment.
6. $560,374,577 in Pell Grants to promote access to post-secondary education for low-income undergraduate and certain post-baccalaureate students attending schools in Arizona. The additional funding allowed the Department of Education to raise the maximum Pell Grant award from $4,731 to $5,550. In 2013 this will be tied to the Consumer Price Index plus 1%, rather than remain subject to the yearly budget appropriations process.
7. $2,210,509 in financial need-based Work Study funds to provide student jobs to help with college and living expenses.

The President’s Higher Education Budget Plan for Fiscal Year 2010 supported a variety of activities designed to improve access to, and success in, post-secondary education (US Department of Education, 2010). This included:

1. $454 million in discretionary funding for the Aid for Institutional Development Programs This is an increase of $31.6 million over the 2009 level and demonstrates the administration's commitment to assisting institutions that enroll a large proportion of minority and disadvantaged students.
2. $97.9 million for developing Hispanic-Serving Institutions (HSI) This is a 5% increase over the 2009 level. The purpose is to enable HSIs to improve and expand their capacity to serve Hispanic and low-income students.
3. $905.1 million for the Federal TRIO programs This maintains 2009 levels for college preparation and college student support services.
4. $313.2 million for the Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) This remains at the 2009 level and will help an estimated 765,000 middle and high school students prepare for college.
5. $118.9 million for the International Education and Foreign Language Studies Programs This also remains at the 2009 level. The purpose of the programs is to help meet the nation's security and economic needs by expanding the number of individuals with expertise in foreign languages and international studies.

In a sign of the ongoing economic challenges facing the country, a tentative budget for Fiscal Year 2011 was agreed upon late on April 8, 2011. The agreement cuts $78.5 billion from the President’s FY 2011 Budget request (White House Blog, 2011). This includes a cut of $13 billion from funding for programs at the Departments of Labor, Education, and Health and Human Services. Despite the cuts, current funding levels will be maintained in some education areas. This includes maintaining the Pell Grant maximum award, and funding for Race to the Top.

A.3: State of Arizona Education Funding

Pima Community College historically derives most of its operating income from property tax revenue, tuition from students, and state appropriations. The economic downturn has adversely impacted all three income sources. Property tax increases are capped at 2%, plus tax revenue derived from year-over-year real estate growth, which has been virtually nonexistent during the economic crisis. PCC students are of modest means and annually absorb tuition increases; the College is committed to holding students as harmless as it can.

For the College, the most acute consequence of the weak economy has been reductions in appropriations from the state. The Arizona Legislature, which is obligated by the state’s Constitution to produce a balanced budget, has responded to billion-dollar structural deficits by proposing sharp reductions to education, one of the largest elements of the state budget.

PCC has not been immune to these cuts. State appropriations have been reduced by more than 30% over the past two years, from approximately $23 million to just under $16 million. For Fiscal Year (FY) 2012, Arizona reduced its appropriation to PCC by 55%. The cut created an immediate $9 million shortfall that the College had to address within a few weeks. Figure 4 presents budgeted state aid as a percentage of total revenue over several recent years. The estimate for FY 2012 is 3.2%, less than half of the percentage in the previous year.

Figure 4. Budgeted state aid (operations and capital) as a percentage of total revenue (Pima Community College, Department of Finance, 2011).

To put the state's funding of PCC into perspective, the governor's proposal allots $325 per full-time student equivalent, even though the College’s average cost is more than $6,000 for each full-time student equivalent, and more than $18,500 for each Nursing student.

A.4: P-20 Council

Arizona Governor Jan Brewer issued an executive order establishing the Governor’s P-20 Coordinating Council of Arizona. Citing the need to maximize the effectiveness of our educational systems at all levels, Governor Brewer has charged the Council with devising and articulating ways to achieve a more streamlined system of education while improving academic achievement (Arizona Governor's Office, 2009).

The Council will provide a statewide forum that will, in turn, provide recommendations to the Governor on specific education reforms outlined in the American Recovery and Reinvestment Act (ARRA). In Arizona’s State Fiscal Stabilization Fund application, the Governor offered assurances to make progress on four key education reforms:

1. Improving the distribution of qualified teachers
2. Establishing a longitudinal data system
3. Enhancing academic standards and assessments
4. Supporting the state’s struggling schools.

Governor Brewer asked Arizona’s Board of Regents to produce new reform models that would increase affordability, accountability and predictability.

The P-20 Council participated in the development of the state’s educational reform plan that was submitted to Race To The Top (RTTT), a grant sponsored by the federal government. The proposal was supported by the Arizona Community College Presidents’ Council, the Arizona Board of Regents, and locally by the Pima County Workforce Investment Board. Arizona’s plan reached the final group but ultimately did not receive an award. However, Governor Brewer announced earlier in 2010 that the RTTT plan would become the state’s education reform plan regardless of whether RTTT funding was forthcoming or not (Arizona Governor's Office, 2010).

The Governor charged the P-20 Coordinating Council with the task of providing oversight and accountability for implementation of this reform plan starting with prioritization. The Governor stated that the two common themes found throughout the plan are the need for strong data systems, and training for teachers and principals (P-20 Coordinating Council, 2010). Efforts are continuing in both of those areas. In the case of the data systems, a new Educational Data Governance Task Force is being established to ensure the state meets its requirements by the September 2011 federal deadline. A technology review has been carried out by an external consultant assessing the state’s data collection and reporting plan per the State Fiscal Stabilization Fund requirements. Four major areas of focus were identified (Ehlinger, 2011).

B. PIMA COUNTY

B.1: Demographics

Prior to the recession, growth estimates for Pima County indicated that increased development and population growth were likely. It was suggested by the National Center for Higher Education Management Systems (NCHEMS) that growth alone would fuel considerable additional demand for post-secondary education in Pima County and elsewhere in Arizona (NCHEMS, 2006). In light of the economic challenges in recent years it is uncertain how the region will evolve as commercial and real estate values remain low. However, while local growth is uncertain, the current high unemployment levels indicate that a larger proportion of the local community may seek additional education and training to enable them to obtain employment during these challenging conditions. Indeed, PCC has experienced significant enrollment increases in recent years, most notably between Fall 2008 and Fall 2009 when headcount increased by 7% and full time student equivalent (FTSE) by 12%. An analysis carried out by the Office of Planning and Institutional Research in late 2009 indicated that the increase in FTSE was primarily the result of students in the 25-40 age range taking more classes. This is likely indicating that more working age adults are seeking to expand their skills to increase their ability to maintain their current employment or obtain a new job.

A comparison of demographics for the US, Pima County and PCC is given in Table 1. Current information on a range of demographics, comparing PCC with County data, is available online. These data are updated each term and the new American Community Survey (ACS) data are added as they become available.

Table 1. Comparison of key demographics for USA, Pima County and PCC.

American Community Survey 2009 and PCC Fall 2009 Characteristics Report.

B.2: Sectors Identified by the Tucson Regional Economic Opportunities

The Tucson Regional Economic Opportunities (TREO) agency is focusing on four industrial sectors for the region (BizTucson, 2010):

1. Aerospace/Defense
2. Biosciences
3. Solar/Alternative Energy
4. Transportation/Logistics

The troubled economy has resulted in TREO experiencing funding cutbacks from the City of Tucson and Pima County. The county cut its funding of TREO by almost 50% from $800,000, while the city support has been limited to about $1,000,000 (a 20% cutback). As a result of these changes, TREO is becoming increasingly dependent on the private sector component of its public-private partnership. The organization is expected to expand its Board of Directors to a total of 51 members and will also develop its advisory board. Both boards are expected to help create a balanced funding mechanism between private and public entities (Arizona Daily Star, 2010).

TREO Fiscal Year 2009-2010 highlights include:

1. $51.2 million in capital investment is projected to be generated in the region, and 91.8% of the projected capital investment is in the targeted industries.
2. 894 new jobs were supported.
3. Developed and executed five sales missions to recruit new companies to the region.
4. Developed and launched a California job creation program in partnership with the Greater Phoenix Economic Council to recruit California companies to the region. This was later expanded to include Yuma and Flagstaff, and generated 156 leads.
5. Led a Leadership Exchange trip to Albuquerque in September 30 - October 2, 2009. Thirty-five local leaders from public, private and non-profit sectors attended with very positive feedback.
6. Conducted over 151 retention meetings with regional businesses to discuss current and future issues associated with operations, workforce, sales, and local government. These meetings focused on businesses within TREO’s four targeted industries.

B.3: Other Occupational Areas of Significance

In addition to the industry clusters discussed previously, there are other occupational areas of importance to the region. Of particular significance to Pima Community College are those occupations identified by the US Bureau of Labor Statistics as High Technology and Healthcare Practitioner/Technician (Monthly Labor Review, 2005). These occupations have also been previously identified as important by TREO.

High Technology Jobs

The 2007 recession has taken its toll on the local economy, including the demand for high technology jobs. In 2007, high technology occupations accounted for more than 25,400 jobs in Pima County. Through the third quarter of 2009, almost 1,400 jobs (5.5%) were lost during the recession (Economic Modeling Specialists, Inc.). High technology jobs in Pima County are projected to increase by 3,200 jobs (13%) between 2010 and 2015. The high technology sector targets occupations that are typically assigned educational levels of Bachelor degrees and above, and are almost exclusively science, technology, engineering or math related occupations.

Healthcare Practitioner/Technician Occupations

The College has several occupational programs that support healthcare industries in the local economy and, specifically, those associated with the Healthcare Practitioner/Technician Occupations. In 2007, this occupational category included more than 24,000 jobs in Pima County. Despite the recession, the total number of healthcare jobs expanded to almost 25,400 (an increase of 5.4%) based on estimates in the third quarter of 2009. While occupations assigned an education level equal to or higher than bachelor-degree level constituted one-third of those jobs, more than 16,000 jobs are assigned an associate-degree educational level. The latter includes Registered Nurses. This profession increased by 432 jobs from 7,477 in 2007 to 7,909 in the third quarter of 2009, a 6% increase. This was the largest increase amongst the healthcare occupations (Economic Modeling Specialists, Inc.).

Five-year labor market projections from 2010 through to 2015 for Healthcare Practitioner/Technician occupations indicate a likely growth of almost 4,000 jobs, a 15% increase (Economic Modeling Specialists, Inc.). Occupations projected to see an increase of over 90 jobs in that timeframe include:

1. 1,229 for Registered Nurses
2. 357 for Pharmacy Technicians
3. 251 for Licensed Practical Nurses
4. 161 for Medical and Clinical Laboratory Technologists/Technicians
5. 124 for Radiologic Technologists/Technicians
6. 109 for Veterinary Technologists/Technicians
7. 103 for Medical Records and Health Information Technicians
8. 95 for Dental Hygienists

Labor Market Trends and Projection

Table 2 presents labor market information trends in Pima County over the most recent 5-year period. Job information is shown by North American Industry Classification System (NAICS) major sector. Pima County lost more than 29,000 jobs since the end of 2007 when the recession started. The only industry sectors with 2010 job estimates higher than those seen in 2007 are:

1. Finance and Insurance
2. Educational Services
3. Health Care and Social Assistance

Five-year job projections for 2015 (Table 2) suggest little improvement in the local labor market.

Table 2. NAICS major industry sector 5-year job estimates and projections (Economic Modeling Specialists, Inc.).

* Projection is a 5-year projection for base year 2010

B.4: Education Issues Facing the College

Establishing and maintaining successful articulation agreements are important to ensure that students have access to a range of education opportunities at four-year institutions, which match the diverse needs of the student population. The different agreements currently available to PCC students provide a range of different advantages, including:

1. Straightforward way to transfer credit
2. Locking in tuition fee rates
3. Ability to complete four-year degrees in Tucson at institutions other than the University of Arizona (UA)
4. Joint admissions status, giving students access to support from both Pima and the four-year institution.

Not all agreements include all of these options, but the College continues to work with other institutions to expand the opportunities for students. In 2009, Arizona State University (ASU) and the College established a Transfer Admission Guarantee (TAG) agreement. TAG is a degree-to-degree transfer program that guarantees admission into an ASU undergraduate-degree program to PCC students completing designated academic requirements. Under the program, students will complete associate degrees at PCC and bachelor degrees at ASU. Degrees currently covered under the TAG agreement include Social Work and Elementary Education.

The College has articulation agreements with Northern Arizona University (NAU) that cover degrees in Hotel and Restaurant Management, and Nursing. Early Childhood Education is covered under an agreement with the UA. Partnerships with these institutions are developing continuously and, most recently, the Pima2NAU agreement was signed on April 6, 2011.

The College also has agreements with several out-of-state institutions, including Eastern New Mexico University (ENMU) and the University of Maryland’s University College (UMUC). Degrees available through ENMU cover a range of subjects, including Applied Arts and Sciences, Aviation Science, Emergency Medical Services Management, Occupational Education, and Nursing. UMUC offers programs in Accounting and Psychology.

Though there are no current agreements between the College and in-state private institutions, there are agreements in place with out-of-state institutions including Park University and Strayer University. Most recently, a new articulation agreement was negotiated with Kaplan University to provide student access to all of Kaplan’s online degrees.

A list of all current articulation agreements can be found on the Pima Community College Transfer Partnership page.

Reaccreditation

Pima Community College was scheduled for reaccreditation by the Higher Learning Commission of the North Central Association of Colleges and Schools in 2010. Accreditation is well-imbued into the college planning process which was itself extended from a 2-year planning cycle to a 3-year planning period to accommodate the reaccreditation process.

Reaccreditation requires a self-study report that addresses five criteria that focus on:

1. Mission and Integrity
2. Preparing for the Future
3. Student Learning and Effective Teaching
4. Acquisition, Discovery and Application of Knowledge
5. Engagement and Service

The Higher Learning Commission of the North Central Association of Colleges and Schools sent its Accreditation Evaluation Team to visit the College in mid-September 2010. The team visited each campus and the District Office to gather information pertinent to the reaccreditation process. As a result of the team’s findings, the College has been reaccredited for the next 10 years and is required to submit a monitoring report on student learning outcomes in January, 2013.

State Universities and K-12

Economic conditions continue to constrain higher education budgets. These constraints have resulted in construction project delays or stoppages, increases in tuitions and fees, and reevaluation of academic programs. In Arizona, the average tuition and fees for resident undergraduates at the state universities increased by 29.7% from 2009-10 to 2010-11. The average increase at the community college districts, excluding PCC, was 5.9% over the same time period. Based on currently available information, the estimated increase from 2010-11 to 2011-12 will be 18.8% (universities) and 9.4% (community colleges, excluding PCC). At Pima, a tuition increase of $5 has been approved per credit hour for in-state residents for the 2011-12 academic year. Including fees, this is an increase of 8.6% over 2010-11, which is slightly lower than the average estimated increase for the other districts. While this is a higher increase than in previous years, the challenges presented by the cuts in state funding cannot be fully offset by College realignments and other budget adjustments.

The Arizona Board of Regents has agreed to allow more transfer credits for students seeking a bachelor of applied science degree who have completed an associate of applied science degree at an Arizona community college. The transfer limit will be raised from 64 to 75 credits. This forms one part of an initiative to increase the number of baccalaureate degrees awarded in Arizona. This effort has been strengthened by a grant to the Arizona Board of Regents from the Lumina Foundation for Education. The award is for up to $1.5 million over several years and is one of seven awarded nationally. The grant is to support efforts to expand lower cost options for delivering bachelor’s degree programs in the state.

Arizona continues to struggle with its K-12 education system, which is arguably one of the lowest ranked in the nation. K-12 students are typically academically unprepared for making the transition to higher education, having low placement scores in the fundamentals of writing, reading and mathematics. One consequence is that developmental education continues to be a challenge for the College, as it is for community colleges nationally.

References

Arizona Daily Star, 2010. TREO seeks more private leadership, funding, D. Wichner.
URL: http://azstarnet.com/business/local/article_e26ee1e0-1e5d-5e19-adee-2aa2ce748edb.html

Arizona Governor's Office, 2009. Executive Order 2009-10. Executive Order Establishing “Governor’s P-20 Coordinating Council of Arizona”.
URL: http://www.azgovernor.gov/P20/documents/P20_EO2009-10.pdf

Arizona Governor's Office, 2010. Governor Brewer to Proceed With Proposed Education
Reforms Regardless of Federal Decisions, State of Arizona Press Release.
URL: http://www.azgovernor.gov/P20/documents/News/PR_030410_BrewerPursueEduReforms.pdf

Arizona Workforce, 2011. Employment report, March 24, 2011.
URL: http://www.workforce.az.gov/admin/uploadedPublications/PrMar24-11.pdf

BizTucson, 2010. TREO Targets Four Growth Industries, L. Copenhaver.
URL: http://www.biztucson.com/treo-report/special-edition/282-treo-targets-four-growth-industries

CBO, 2010. The Budget and Economic Outlook: An Update, Congressional Budget Office of the Congress of the United States.
URL: http://www.cbo.gov/ftpdocs/117xx/doc11705/08-18-Update.pdf

Economic Modeling Specialists, Inc.
URL: http://www.economicmodeling.com/

Ehlinger, 2011. Arizona Public Education Department: Information Technology Executive Summary, submitted to the Arizona Office of Economic Recovery.
URL: http://www.azrecovery.gov/Documents/Agencies/Gov/ExecutiveSummaryAZ.pdf

Monthly Labor Review, 2005. High-technology employment: a NAICS-based update, D. E. Hecker, Office of Occupational Statistics and Employment Projections, Bureau of Labor Statistics.
URL: http://www.bls.gov/opub/mlr/2005/07/art6full.pdf

NBER, 2010. Business Cycle Dating Committee of the National Bureau of Economic Research conference call, September 20, 2010.
URL: http://www.nber.org/cycles/sept2010.pdf

NCHEMS, 2006. Unmet Needs for Baccalaureate Education in Pima County.
URL: http://www.pima.edu/announcements/200612/documents/NCHEMS-report.pdf

P-20 Coordinating Council, 2010. Governor’s P-20 Coordinating Council Minutes, General Meeting – September 30, 2010.
URL: http://www.azgovernor.gov/P20/documents/Minutes/2010/P20Minutes093010.pdf

US Department of Education, 2010. Fiscal Year 2010 Budget Summary, May 7, 2009, Section III. E. Higher Education Programs.
URL: http://www2.ed.gov/about/overview/budget/budget10/summary/edlite-section3e.html

White House Blog, 2011. Details of the Bipartisan Budget Deal, posted by Dan Pfeiffer, April, 09, 2011.
URL: http://www.whitehouse.gov/blog/2011/04/09/details-bipartisan-budget-deal.