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Governor Jindal Signs GRAD Act 2.0 into Law

Press Release

Location: Baton Rouge, LA

Today, Governor Bobby Jindal signed into law HB 549, or GRAD Act 2.0 -- part of the Governor's 2011 Legislative Package, which builds on the LA GRAD Act to provide more flexibility for colleges and universities in return for improved student outcomes.

Governor Jindal said, "We've made some important strides in increasing student performance and graduation rates, but we know we have more work to do to improve our higher education system. To address our higher education system's low performance measures, last year we passed the LA GRAD Act, which created a strong performance-based foundation for improving outcomes in higher education. This year we're taking another big step to boost student success by building on that landmark piece of legislation with GRAD Act 2.0. The reforms in this legislation will cut red tape and give schools more autonomies, which LSU estimates will save $52.4 million over just the first five years of implementation.

"The framework of the GRAD Act empowers the folks who work with our students on a daily basis--the ones who know best how to manage their own campuses, instead of trying to micromanage from the state level. In exchange, campus leaders in GRAD Act agreements commit to graduating more students in less time, and in high-demand fields that will jumpstart their careers upon graduation. Many schools made this commitment last fall. They recognized that student outcomes in Louisiana were too low and entered into performance agreements that set short and long-term benchmarks for their graduation rates, retention rates, workforce readiness, operational efficiency, and articulation and transfer. GRAD Act 2.0 takes the next step by operationalizing key components of last year's framework. Specifically, it minimizes state micromanagement of campus operations to allow our institutions to achieve to their potential and provides institutions with better and more streamlined data on student progress."

Chancellor of Louisiana State University Dr. Michael V. Martin said, "Despite the budget challenges of recent years, these common sense business practices allowed by GRAD Act 2.0 will enable us to cut red tape and save money. Like Louisiana businesses, we are trying to be more efficient, while maintaining transparency and commitment to mission."

Co-chairman of the Louisiana Flagship Coalition Sean Reilly said, "GRAD Act 2.0 empowers our universities, and our flagship in particular, to use the resources it has more effectively. With more operational freedom, LSU will be able to make key changes in areas like facilities, investment, and purchasing that will save money, streamline operations, and ultimately direct more resources into the classroom. That's why the Flagship Coalition endorsed this bill and we appreciated working with the Governor on this important piece of legislation this year."

Spokesman for the Businesses for Improving Louisiana's Development (BILD) Coalition Dr. Phillip Rozeman said, "GRAD Act 2.0 continues our progress in restructuring higher education so it delivers better results for our children. Balancing operational freedoms and higher expectations is the only way we will be able to make significant improvements in the middle of difficult budget years, and we were happy to work with the Governor and the Legislature to pass this bill."

GRAD Act 2.0 enhances the original GRAD Act in three key ways:

1. GRAD Act 2.0 prioritizes key "Student Success" metrics so that institutions know which of the 52 metrics they should prioritize. This new law puts special emphasis on "Student Success" metrics, which include six-year graduation rates, first-to-second and second-to-third year retention rates, and overall completers, by making them required. The Governor noted that these are the key components of improving outcomes - and these are the data that schools should focus on to improve graduation rates and ensure students get the skills they need to succeed in the workforce.

2. GRAD Act 2.0 boosts the data and transparency required under the original GRAD Act, including streamlining and operationalizing a single student tracking system that will have student records follow students from one institution to another, ensuring that students are completing their required credits to graduate, and also serving as an early warning system when they are not on track to graduate.

Research shows that transparent tracking of student progress, through transcript analysis and degree auditing, can improve graduation rates by facilitating early intervention for students who may be behind on their credits or not fulfilling their degree requirements. Additionally, what schools spend per student varies widely--and is not clearly correlated to their outcomes. Therefore, this new law will further enhance the first GRAD Act with a system to track per-student expenditures and outcomes by field so schools can be compared with their peer institutions, which will help identify best practices for investing higher education dollars.

3. GRAD Act 2.0 strategically overhauls the way the state manages higher education operations in areas of purchasing, facilities, personnel and investment by making state oversight less bureaucratic and burdensome.

The operational autonomies provided for in GRAD Act 2.0 are a comprehensive redesign of how higher education could make better, more efficient spending decisions. Schools qualify for these autonomies by meeting their targets and by streamlining different functions that will improve academic functions.

o For example, GRAD Act 2.0 will reward schools that have a high-quality review of programs they no longer need. In fact, Regents recently eliminated 109 programs and terminated an additional 172 programs through consolidation that were no longer needed.

o GRAD Act 2.0 will also reward schools that are already performing close to their peers by granting those schools the highest level of autonomy.

* The autonomies schools receive in return for increased performance are significant. In fact, over the first five years of implementation, LSU estimates it will save $52.4 million. Before the GRAD Act, a contract at LSU worth over $100,000 would previously require as many as 13 steps and up to 22 weeks to be finalized. This costs LSU time and money in manpower while hindering its ability to be competitive. Under this new law, LSU will be able to cut down on the time it takes to execute contracts and also be able to contract with a wider range of providers.

o For example, LSU recently found a contract for package delivery services that will lower the cost of an overnight shipment from Baton Rouge to Houston $38.28 to $16.40, a savings of over 50 percent. Considering LSU spends roughly $750,000 a year on delivery services, LSU could save over $300,000 a year with this switch.

* GRAD Act 2.0 will also lower the time and cost of simple facilities projects, such as repetitive renovations that don't require an architect or engineer, by letting LSU manage the project rather than using the state as the middle man. This autonomy will have some direct expenditure savings -- estimated to be around $725,000 at LSU over five years -- and also generate future savings through the ability to renovate buildings faster and at a more competitive price.

* The new law will allow schools to seek a more competitive price and a more targeted plan for their needs on different types of insurance, such as worker's compensation. LSU estimates it would save around $4.4 million over five years with the ability to purchase various types of insurance on the private market.

* GRAD Act 2.0 allows for higher education to develop and pilot a procurement code that is specifically crafted for higher education, making it less bureaucratic and more tailored to high education needs. The Governor noted this would greatly improve schools' ability to save money on everyday items they buy in bulk, like paper towels and rubber exam gloves.

o Last year, LSU paid an average price of $6.21 per box of scientific gloves. Under this new law, LSU will be able to buy these same gloves at an average of $4.30 a box, a savings of over 30 percent. Considering LSU buys 14,000 boxes of gloves per year, this is a savings of $26,000 for this one product alone.

o With this change in law for procurement, Louisiana will join 24 other states that have separate higher education procurement codes, recognizing that public postsecondary institutions need more autonomy and are not typical state agencies. LSU estimates it will save around $27.3 million over five years by cutting red tape and buying lower priced items.

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