Environmental Scan Summary

National - Economic Outlook

The state of the economy is particularly uncertain at the moment. Economic growth slowed in 2007, and this downturn is likely to continue further in 2008. Problems in the housing and financial markets and the high price of oil will curb spending by households and businesses this year and trim the growth of GDP. Recent data suggest that the probability of a recession in 2008 has increased. Economic performance worse than that suggested in the Congressional Budget Office’s (CBO) forecast could significantly decrease projected revenues and increase projected spending. Furthermore, policy changes intended to mitigate the economic slowdown would, by design, tend to increase the budget deficit in the short term (CBO, January 23, 2008).

An economic rebound is expected after 2008, when the negative effects of the turmoil in the housing and financial markets fade. Given the CBOs baseline assumptions, the budget deficit will amount to 1.5 percent of GDP or less each year from 2009 to 2011. Subsequently, the budget will show a small surplus of 0.5 percent of GDP in 2012 and remain near that level each year through 2018 (CBO, January 23, 2008).

The employment picture looks bleaker after the Labor Department said the economy shed 63,000 jobs during February. It's the second consecutive month of job losses, and the monthly drop was the worst in five years. Factory and construction jobs led the declines, but retailers were cutting back too. The jobless rate fell back to 4.8 percent from 4.9 percent, but analysts blamed the decline on more unemployed Americans leaving the job hunt (US News & World Report, 3/7/2008).

Arizona - Economic Outlook

Arizona Department of Economic Security (ADES) Research Administration’s (RA) Year-to-Year employment statistics depict a deteriorating picture of job loss from January for 2007 through January 2008. Ten of 11 major industry sectors in Arizona reported job losses in January 2008. Employment levels in the Tucson Metropolitan Area are especially bleak as slow job growth turned into job losses in the last quarter of 2007. (Arizona Workforce, February 2008).

In January 2008, Marshall Vest assessed the state economy as having “deteriorated significantly in recent months and forecasters have been revising their forecasts downward as 2007 comes to an end. Most forecasts for the U.S. now show the economy teetering on the brink of recession, but remaining in the black. We have revised our forecasts downward as well. Given recent evidence, we believe that Arizona’s economy is already in a recession that will stretch well into 2008”. While the recession is expected to be mild and last about one year, persistent troubles in the housing, credit and oil markets could extend the recession through another year and increase in severity (Vest, Arizona Economy, January 2008).

According to Arizona’s Joint Legislative Budget Committee (JLBC), for the first 7 months of FY 2008, General Fund collections are down 3.5% when compared to last year, and are $619.2 million less than the enacted forecast. When factoring in Urban Revenue Sharing, year-to-date collections are 5.1% below last year.

The January decrease represents the largest percentage year over year decline since April 2002. The dramatic drop in January revenues was across the board in all three main revenue categories:

• Sales tax collections were down 7.5% compared to January 2007, and were $71.9 million short of the monthly forecast. This is the largest percentage year over year decrease since at least FY 1991.
• Individual income tax collections were down 11.9%, which was $98.7 million below forecast.
• Corporate income tax collections were 138.9% below last year, and $35.7 million below the forecast.

Based on the January data, the FY 2008 Baseline Revenue Projection appears substantially overstated. The JLBC Staff now estimates that General Fund revenues will only reach $9.15 billion, which is $226.5 million less than the January Baseline. This revenue level would translate into a 0.7% decline compared to FY 2007 revenues prior to tax law changes, and a 3.2% decline after tax law changes (JLBC, Monthly Fiscal Highlights, February 2008).

Budget shortfalls of between 764 and 1,252 million dollars are estimated for FY 2008 and likely to continue through 2011. There are clear differences between the  JLBC and the Governor’s Office projections of future budget shortfalls (JLBC Baseline Comparisons, January 29, 2008).

Tucson Regional Economic Organization (TREO)

TREO has identified five strategic areas that will help improve the region’s economy (Securing Our Future Now: An Economic Blueprint for the Tucson Region). These strategic areas target:

High-Skilled/High-Wage Jobs – Increase regional prosperity by focusing resources on growing industry sectors with high-paying jobs while developing a world-class workforce

1. Educational Excellence – Inspire talent and innovation, while preparing children and adults with the skills necessary to compete in the knowledge-based global economy
2. Urban Renaissance – Revitalize Tucson’s urban center so that it excites, attracts, and benefits the entire region
3. Livable Communities – Build on the unique assets and attributes of the Tucson region in order to be globally-recognized and valued for livability
4. Collaborative Governance & Stewardship – Foster and support an innovation-based economy with efficient and enlightened government services and committed collaborative private sector leadership

TREO expects to pay close attention to industry clusters identified using the Harvard Cluster Analysis Model. Of 24 potential clusters located in the area, 10 have particular significance to the plan. The 10 sectors include

1. Aerospace and Defense
2. Analytical Instruments/Optics
3. Medical Devices
4. Bio-Industry
5.  Environmental Technology
6. Institutional/Private Research and Development
7. Information Technology
8. Business Services
9. Financial Services
10. Transportation and Logistics

Occupational Areas of Significance

In addition to the industryclusters above, there are occupational areas of importance to the region. Of particular significance to the College are those occupations identified by the Bureau of Labor Statistics as High Technology and Healthcare Practitioner/Technician (Hecker, 2005).

High Technology Jobs

The local economy demand for high technology jobs will continue to grow. High Technology occupations account for more than 25,000 jobs in Pima County. Those occupations assigned Bachelor Degree education levels comprise 61 percent of these jobs. Twenty-seven percent of this important workforce sector is composed of occupations with education levels of Associate Degree or lower (Economic Modeling Specialists, Inc [EMSI] and Bureau of Labor Statistics). Remaining jobs include those occupations requiring post-graduate or first professional degrees or are typically management occupations that require considerable experience in addition to a degree. The local high technology occupations typically are proportionally more concentrated in the local workforce than they are at the state level. The concentration of these occupations in the local workforce will become more intensive in the future (10 years projections from EMSI 2007).

Healthcare Practitioner/Technician Occupations

The college has several occupational programs that support the Healthcare Industries in the local economy, and specifically, those associated with the Healthcare Practitioner/ Technician Occupations (EMSI, 2007). This occupational category houses more than 22,000 jobs in Pima County. Occupations assigned education levels higher than Bachelor degree level occupations constitute 27.6 percent of these jobs while Bachelor degree occupations are associated with 9.3 percent of these jobs. Slightly more than 14,000 jobs (63.1 %) have Associate Degree level or lower education assignments. Included in this latter category are Registered and Licensed Vocational (Practical) Nurses. Jobs in each of these 3 education level breakouts are more concentrated in the local workforce than they are at the state level. Growth of jobs in occupations assigned the Bachelor Degree level will continue to outgrow the state’s growth while the higher and lower level education occupations will be on a track towards equalization with that of the Arizona workforce.

One of the conclusions of the NCHEMS study (NCHEMS, 2006) is that there is an unmet need for baccalaureate education in the following occupations:

• Nurses and allied health professionals
• Teachers — especially math, science, and special education
• Aeronautical and systems engineers
• Social workers
• Engineering technologists
• Recreation workers/managers
• Construction managers

Political Climate and College Agenda

Continued hostilities in Iraq and Afghanistan, the inability of the Iraqi government to forge a national identity and failed policies in providing aid to Katrina survivors in the New Orleans and surrounding areas are key issues that resulted in the Democratic Party taking control of both the US House and the Senate in the November 2006 elections.

The 48th Arizona Legislature ended its regular session in June and State funding for community colleges remained unchanged (Chancellor’s Report for August 2007). State legislators adjourned before reaching agreements on several key issues that the College will continue to focus on during next year's legislative session. Pima Community College's legislative priorities include:

1. the creation, composition, and governance role of a state-wide community college oversight board,
2. the passing of legislation that would authorize community colleges to offer bachelor's degrees as needed by their local districts, and
3. recalculating the formula on state funding for students enrolled in occupational and workforce programs.

In the College’s 2006 Environmental Scan Summary, Mr. David Baime, American Association of Community Colleges Vice-President for Government Relations, noted that federal funding has held steady for five years, with Pell grant amounts frozen at $4,050 for four years (College Planning Committee 2006-2008).

On September 7, 2007 legislation (HR 2669) was passed that increases the maximum Pell Grant to $5,400 by 2012. Monies for these increases will be generated by cutting payments to student loan providers (Hebel and Selingo, The Chronicle, September 20, 2007).

The legislation will:

1. reduce lender profits on new federal loans by 0.40 to 0.55 points depending on the lender’s profit status accounting for savings of more than $12 billion over a five-year period,
2. produce a savings of close to $2 billion by cutting guaranteed rates that lenders are allowed to keep of funds collected from 23 to 16 percent,
3. increase the fee lenders pay to the Treasury for loan consolidations from 0.5 percent to 1.0 percent, yielding an additional $2.24 billion,
4. save an additional $6 billion by terminating the “exceptional performers” incentive program for servicing student loans and cutting other payments to guarantee agencies.

Nationally, educational costs of public two-year institutions for 2006-07 increased by 4.1 percent over the previous academic year and now average $2,272 annually. Educational costs at public four-year institutions increased by 6.3 percent to $5,836 (College Board). By comparison, the Consumer Price Index (federal measure of inflation) for February 2008 rose by 4.0 percent from February 2007 (Consumer Price Index Summary, Bureau of Labor Statistics, February 2008).

Nationwide, the 2,790 Title I schools that were in corrective action or restructuring status in the 2005-2006 school year were more frequently located in urban areas and in a few states. These schools served higher percentages of minority, poor, and middle-school students than other Title I schools, and many report that factors such as neighborhood violence and student mobility pose additional challenges to improving student academic performance. As state proficiency targets continue to increase to 100 percent in 2014, the number of schools in corrective action and restructuring may increase.

The Government Accounting Office (GAO) estimates that 42 percent of the schools in corrective action or restructuring did not receive all required types of assistance through their school districts, although most received discretionary assistance from their state educational agencies (GAO-07-1035).

In Arizona, Title I funded schools failing to make annual yearly progress for four or more years and targeted for corrective action increased by 44 percent from 25 in the 2005-06 school year to 36 in 2006-07. There was also a small increase in the number of failing schools that are “planning for” or “in the process of implementing” mandated restructuring activities. School districts are required to provide assistance to these schools in the form of analysis of students’ assessment data and/or revising school budgets so that resources are allocated to improvement efforts.

President’s Budget Plan for 2009

The White House released its budget plan for FY 2009 on Feb 4, 2008. Higher Education cuts are proposed to offset increased minority-serving institution funding established in last fall’s budget reconciliation bill (Inside Higher Ed, February 5, 2008). The plan includes cuts in funding of:

• $85 million for the Strengthening Historically Black Colleges and Universities Program
• $23 million for tribally controlled colleges
• $11.6 million from the Strengthening Alaska Native and Native Hawaiian serving Institutions Program
• $1.272 billion in funds distributed in 2008 through the Carl D. Perkins Career and Technical Education Act, including $103 million for the Tech-Prep Education State Grants that largely flow to community colleges

Educational Reports

P-20 Council

Governor Janet Napolitano instituted a P-20 Council in 2005, to serve as an oversight, governance process for education in Arizona from preschool through graduate school. Three community college executive officers serve on this Council, which has the goals of improving education, increasing graduation rates and college success, and preparing students for the workplace. In its 2006 report “From Education to Work: Is Arizona Prepared?” the P-20 Council found that:

1. College readiness needs to be the minimum requirement for high school graduates. – Every high school student who wants a high wage/high demand occupation will need some postsecondary coursework.
2. Arizona high school graduates need to be prepared for both college and career. – High wage occupations require both post-secondary education and work experience. High school students should not be classed as college and non-college bound. All high school students need to be both college and career ready.
3. High school rigor in applied math and reading comprehension is critical. – The skills and knowledge needed for career preparation require the ability to apply mathematical formulas and problem-solving techniques to work related problems and the ability to understand the meaning and purpose of written text.
4. Relevance in high school is critical. – High schools need to be better connected with the skills needed in growing industries and aware of the career opportunities available by pursuing post-secondary coursework.
5. Insufficient data hinder efforts to improve high school, postsecondary, and workforce alignment. – Data driven decision-making is critical to the design of effective programs that link high schools to postsecondary and career preparedness. Common measures and metrics are needed to evaluate the degree of alignment gaps that exist within Arizona’s high schools.

The Council also identified major gaps that impede progress in achieving educational goals. These gaps include:

1. Graduation requirements are insufficient. – The state graduation requirements for high school are insufficient in preparing students for college and career, especially math and science requirements.
2. There is a lack of identified college/career course curriculum. – No specific high school course curriculum has been identified for students, parents, and teachers regarding the scope and sequence of high school courses needed to start college or be prepared for a career that pays good wages.
3. AIMS testing is not aligned to college or career readiness. – Developed as a 10th grade proficiency assessment test, the AIMS test is insufficient for quantifying a student’s readiness for college or career readiness. Arizona does not have a standard assessment tool aligned to college and career readiness.
4. Data gaps prevent Arizona from pinpointing alignment gaps. – The biggest challenge is linking a common language and metric that identifies the skills needed across secondary, post-secondary and workplace sectors. In addition, data does not exist to identify the level of remediation occurring by college or university, nor does data exist on which high schools are sending students onto college that need remediation.

Currently, 37 states now require public high school students to take at least 20 credits of coursework; eight states require fewer than 20 credits; and other states' course graduation requirements are determined locally. Of those states with course requirements, 37 require four or more years of English, 31 require three or more years of social studies, 27 require three or more years of mathematics, and 23 require three or more years of science. Arizona had required 20 total credits, four of which must be in English/Language Arts, 2.5 in Social Studies, two in Science, and two in Mathematics.

In August 2007, the Arizona Board of Education voted to require students to complete three Mathematics credits and three credits in Social Studies. One additional Mathematics credit and one additional Science credit would be required for students entering school in Fall Term 2010. This legislation would require 600 more Mathematics teachers to carry out the mandate (Arizona Daily Star, August 11, 2007).

In March, the Arizona Board of Regents and members of the State Board of Education met to  identify tools for success that reflect the new high school graduation requirements recently adopted  by the State Board of Education. These tools will focus on increasing the number of math and science teachers. Nine other states are expected to participate in the study (ABOR News Release, March 6, 2008).

The P-20 Council has been working with the Arizona Department of Education and the state procurement office to have Arizona participate in this pilot study. The study would administer an Algebra II End of Course Assessment test to more than 1,000 Arizona university students this spring (ABOR meeting, Item #14, March 6-7, 2008). The objectives of the Algebra II End-of-Course Assessment are:

• To align with the P-20 Council’s math alignment work.
• To improve curriculum and instruction.
• To help postsecondary institutions determine if students are ready to do credit-bearing work.
• To compare performance and progress among the participating states.

Pima Community College

NCHEMS Report

• The National Center for Higher Education Management Systems Report (NCHEMS, 2006) described state higher education conditions as troublesome. In their findings, the three following observations were discussed:
• The U.S. basically has been stuck in one place for 30 years—adults age 25-34 are educated at about the same level as the cohort 30 years their elder, while the best performing countries have been making very substantial decade-to-decade progress.
• Using baccalaureate degree attainment as the benchmark, young Americans are much less well educated than their counterparts in many other nations. If this situation is allowed to continue for another decade, the American workforce will cease to be globally competitive.
• Arizona’s younger population (25-34) is considerably less well educated than the U.S. as a whole (22.9% with a baccalaureate versus 30.2%). More disconcerting is the fact that education attainment levels have been steadily decreasing; recent entrants into the workforce are much less well educated than those in their parents’ generation.

Distance Education

The College has expanded its distance education program by focusing on on-line courses, especially for students in post-baccalaureate programs in education. Fall Term enrollment in web-based classes (100% web and web self paced) has grown from 690 to 3739 (unduplicated) over the last five years. Enrollment in on-line only courses has increased from 160 to 1481 over the same time frame. During FY 06-07, the College ran 221 different courses on-line.

Dual Enrollment

Dual Enrollment for FY 06-07 included 100 classes with an unduplicated enrollment of 1,039 at 27 different sites representing a 45 percent increase in class offerings, a 47 percent increase in enrollment, and an 80 percent increase in site access over the previous year. Students often take more than one class; the seat count enrollment for FY 05-06 was 1,261 and this past year was 1,857. Currently almost 2/3 of the classes are academic (writing, math, history). Occupational course numbers are expected to increase with emphasis on the county's Tech-Prep program.

Developmental Education

As reported in 2006, a majority of incoming students are in need of at least some developmental coursework. Placement test scores between 2003 and 2006 show progress is limited in reducing New To Higher Education student placement scores that result in remedial recommendations. Over this time period, remedial recommendation rates in Math dropped from 81 to 79 percent. Reading remediation rates dropped one percentage point from 33 to 32 percent. Writing remediation rates showed the greatest improvement falling six percentage points from 54 to 48 percent.

In Fall 2006, 76% of recent public high school graduates entering PCC had Math assessment test scores placing them in remedial courses. An additional 33 and 48 percent scored as remedial in Reading and Writing. Of incoming students from Charter high schools, 92, 37, and 58 percent placed as remedial in Math, Reading, and Writing, respectively. Private high schools had the lowest levels of remedial math, reading, and writing placements with 64, 18, and 31 percent respectively.

PCC Employee Ageing

The College employee community is ageing rapidly. As of August 2006, the average college employee was 48 years of age. Thirty percent (383 of 1,277) of employees are 55 years old or older. Forty-seven percent of administrators, 43 percent of faculty, 25 percent of exempt staff, and 23 percent of non-exempt staff fall in this age group. One hundred twelve employees are currently eligible for retirement based on reaching retirement age of 65, having accumulated 80 Arizona State Retirement System points, or because they have reached age 62 and have 10 years of accumulated service. An additional 371 employees are eligible for retirement because they meet the minimum retirement age of 50 and are vested in the retirement program (five years). The impact of possible growth in retirements presents potential structural changes and hiring opportunities.

Student Gender and Ethnicity

In September 2007, the National Center of Education Statistics released its report (NCES 2007-039) on “Status and Trends in the Education of Racial and Ethnic Minorities.” Between 1976 and 2004, the percentage of total undergraduate enrollment of minority students increased from 17 to 32 percent. By 1980, the percentage of females enrolled as undergraduates surpassed the percentage of males enrolled as undergraduates.

In 2005, minorities made up 33 percent of the U.S. population. Hispanics were the largest minority group, representing 14 percent of the population. They were followed by Blacks (12 percent), Asians/Pacific Islanders (four percent), and American Indians/Alaska Natives (one percent). Minority populations are projected to increase to 39 percent of the U.S. population by the year 2020.

The gender gap in undergraduate enrollments continues to increase. In 1976, 54 percent of enrollments were male students. By 2004, male enrollments dropped to 42.9 percent. The most recent statistics by race/ethnicity demonstrate that female enrollments outnumber male enrollments by 14.2 percentage points of all undergraduates, by 11.8 percentage points for Whites, 28.6 percentage points for Blacks, 17.1 points for Hispanics, 7.5 points for Asian/Pacific Islanders, and 21.8 percentage points for American Indians/Alaska Natives. By 2006, women were responsible for 56 percent of all undergraduates. Fall 2006 enrollments at the College were 57 percent female. By race/ethnicity, Pima enrollees were 51 percent White, 29 percent Hispanic, four percent Black, four percent Asian American, and two percent Native American.

Pima County and Tucson Demographics

Pima County is expecting increased development and population growth to the southeast and continuing growth in the northwest. Sahuarita (south of Tucson) will probably double in size, and the City of Tucson is anticipating continued, rapid growth in the southeast as well as in-fill throughout the metro area (College Planning Committee 2006-2008). NCHEMS findings suggest that growth alone will fuel considerable additional demand for postsecondary education (specifically baccalaureate level education) in Pima (and several other counties) in Arizona (NCHEMS, 2006).

The Tucson and Pima County area will see an increasing Hispanic population, a larger population of retirees, and an increasing requirement for a college educated populace. Efforts to position the city to attract more high technology and skilled crafts will require attention by the College to respond to the needs of the changing community.

The population of Hispanics has grown more than three times faster than all other groups between 2000 and 2006 adding more than 60,000 residents to Pima County. While the non-Hispanic population between the ages of 30 – 39 decreased by more than seven percent, the Hispanic population in this age group increased by 21 percent (Fischer, H. August 11, 2007, Arizona Daily Star).

Recent legislation (HR 2779) making it illegal for employers to hire undocumented immigrants may have a large future impact on the state and county workforce, especially in occupations associated with the farming, forestry, building/grounds cleaning and maintenance, and construction industries. The future impact on the College will likely be larger than that of Proposition 300 which saddled students with out-of state tuitions when these are unable to provide acceptable evidence of legal residency. The Pew Hispanic Center released a study of Arizona's Hispanic work force. According to the report, 29.1 percent of all Arizonans in 2006 were Hispanic, twice the national figure. Half of these were not born in this country. Of this latter group the majority are not citizens. PEW estimates that up to 10.5 percent of the state's 2006 workforces (>300,000 persons) came here illegally (Fischer, H. January 25, 2008, Arizona Daily Star).

According to recently released 2006 data from the American Community Survey (Census Bureau, 2007) for Pima County females outnumber males 51.1 percent to 48.9 percent, respectively. By race, Whites made up 70.0 percent of the population, followed by American Indian/Alaska Natives at 3.4 percent, Blacks or African Americans at 3.1 percent, Asians at 2.4 percent, and Native Hawaiians or Other Pacific Islanders at 0.2 percent. Hispanics (of any race) constituted 32.5 percent of the population.

References

ABOR. March 6, 2008. Arizona’s Children To Benefit from Tools for Success. ABOR News Release.

ABOR. March 6-7, 2008. Board of Regents Meeting Executive Summary, Item #14.

American Community Survey 2006. Census Bureau. http://factfinder.census.gov

Anonymous. December 1, 2006. Unmet Needs for Baccalaureate Education in Pima County. National Center for Higher Education Management Systems, 3035 Center Green Drive, Suite 150, Boulder, CO 80301-2251

Anonymous. March 7, 2008.Today's Nasty Jobs Report: What You Need to Know. US News & World Report.

Arizona Joint Legislative Budget Committee (JLBC). February 2008. Monthly Fiscal Highlights.

Arizona Joint Legislative Budget Committee (JLBC). January 29, 2008. Baseline Comparisons.

Arizona Workforce. February 28, 2008. Arizona Department of Commerce, Research Administration.

College Board, http://www.collegeboard.com/parents/pay/

College Planning Committee 2006-2008. Environmental Scan Summary.

Congressional Budget Office. January 23, 2008. The Budget and Economic Outlook: Fiscal Years 2008 to 2018.

Economic Modeling Specialists, Inc. 2007. Strategic Advantage Software. PO Box 9008 Moscow, ID 83843

Fischer, H. August 11, 2007. Arizona Capitol Times: State moves to increase graduation requirements. Arizona Daily Star.

Fischer, H. January 25, 2008. Arizona Capitol Times: Arizona workforce is heavily Hispanic. Arizona Daily Star.

Government Accounting Office. September 2007.No Child Left Behind Act: Education Should Clarify Guidance and Address Potential Compliance Issues for Schools in Corrective Action and Restructuring Status. GAO-07-1035.

Governor’s P-20 Council Report. February 14, 2006. From Education To Work: Is Arizona Prepared? The Alignment Project Report.

Hebel, S. and J. Selingo. September 20, 2007. To Pay for Aid Increases, House Agrees to Cut Lender Subsidies. The Chronicle, Volume 53, Issue 46, Page A19.

Hecker, D. July 2005. High-technology employment: a NAICS-based update. Monthly Labor Review. Bureau of Labor Statistics.

Louderman, D. February 5, 2008. The Fed Giveth and the Fed Taketh Away. Inside Higher Ed.

Office of the Chancellor. August 2007. Chancellor’s Report. Pima Community College.

Tucson Regional Economic Organization (TREO). March 2007. Securing Our Future Now: An Economic Blueprint for the Tucson Region.

Vest, M. January 28, 2008. Economic Outlook for 2008-2009: Turbulence Ahead. Arizona’s Economy, Winter Issue.