>> i agree with everything she said. she didn't exactly say this, but accountability, i think, is key. we're going to have problems with money. we haven't talked about it here, but i do a lot of work on federal debt and deficit. and we've already started cutting spending on children's programs in the last two years which we had not done for the previous 30 years. there's a real issue of how much money the federal government's going to be able to spend. and the states are if anything even more financially strapped. so what we have to learn to do is to do better with what we have now and accountability is definitely the answer. so we need to accountability in the k-12 schools, we need accountability in the community colleges. we need accountability at the university. and 2 of the 3 recommendations i made you were accountability recommendations. i think it's very important that we spend about $1 billion now, for example on these college prep programs that are supposed to be focused on low-income kids and very good research, they

produce modest impacts with some exceptions. why wouldn't we make it more demanding, force them to evaluate, that's the condition of they're getting the money. they have to do good studies to show they're producing impacts. and if they're not, give the money to someone else. that should be a principle of funding. >> what would be the metrics? not just a diploma, but say five-year income rates or something of that. looking at a study of what does the person do with that particular diploma? >> i think a high school graduation would be the least desirable, but nonetheless, a good measure. college entry's a good measure. college completion is a much better measure. and did they get a job when they graduated? and what is their wage would be the best of all. >> i'm going to first of all say that funding is absolutely not the answer. more funding is not the answer. we spend more on education all levels than almost any other

country. there's lux mberg. what we've seen it translate into is largely a lot of waste. i mean if you look at -- i know it's cherry picking to say, look at the water parks that are springing up in college and universities. many of these public and college universities. there's a reason for that. what we've seen of that is research evidence that shows what most people do when they're choosing between colleges now. they don't choose based on academics, based on amenities. we're using third party funding to pay for it. partially, it's grants, i think it's much bigger a problem of loans and that loans you can get very easily any amount from the federal government. and so -- and same at the k-12 level. we spend a lot of money. and we haven't seen any real correlation in improving outcomes as a result of it. i always worry about accountability because accountability sounds good but we need to look at something

like no child left behind supposed be about accountability. what we found, though, is that people who would be held accountable are good at finding the ways of being held accountable. no child left behind said, well, you're going to have all kids proficient by 2014. and what did states do? in most cases they had a definition of proficiency which was incredibly low. and so, we have to be realistic about how much the accountability system might lead to. >> as mr. haskins was talking about, if you look at five years out from a period of time when somebody graduates, if he's got a job in making $50,000 a year you know that's a metric you can look to as opposed to somebody saying another college. >> i can tell you one problem with that -- if you're less

well. less well prepared, you don't have to earn as much. then you start to see all sorts of loopholes and things working their way into regulations. so that's what we've seen repeatedly when we talk about accountability. >> transparency, some transparency, would that assist in terms of if you provide students' parents with all the information you possibly can. a number of metrics. that would establish. there's no perfect metric, right? and you can fudge almost anything. give them a lot of information about which institution do you want to go to? inject some competitiveness in the process. so college a competes against college b for the same student i've got to be better than these guys. >> and i think that intuitively that would work. the problem is, we actually see lots of data's already available for colleges. nobody likes the u.s. and world report evaluations. but they do tell you stuff like graduation rates and cost per student and things like that. the federal government has had the college navigator now for several years.

and what we've seen is that people tend to not use a lot of the information we make available. i think part of that problem is we want to do good with aid. and part of aid, make this decision. we'll pay for you decision. and it's not necessarily your money or money you have right now that is part of that. i actually think part of the solution is counterintuitive. people selecting the schools need to have more of their own money involved rather than third party funding. because that incentivizes making more disciplined decisions. and that's actual accountability. and especially when people using their own money and they hold the school accountable. and that school isn't giving them what they want. >> i'm going to move on. three other commissioners that want to ask questions and we're getting close to the end. commissioner and then the vice chair. >> thank you, mr. chairman. >> you're welcome.

>> everyone has a different dog in the fight here. focus toward the same solution seems to me all the different schools, colleges, community colleges where you talked about k-12 all have issues. the same issues, are they all different issues toward accomplishing a goal of getting more students and minority students through higher education? i'd like to hear some priorities, programs that you proposed and whether you believe that to be a correct statement that different schools face different problems and how are you going to evaluate them? the commissioner spoke about in, excuse me, how -- it seems like a very sprawling problem.

very unwielding situation from all the testimony. so i was wondering if we could get some commentary more focused on the solutions besides just accountability. how do you go about that? >> going back, again, to my suggestion that we allow title 4 money to flow to schools that are showing they are having success with students by showing student learning gains. why is this a good solution? because it's not one-size-fits all sort of exam.

institutions that are transparent in terms of their financial stability. what they're able to do, and the fact that they are actually providing value to students. because, if the students are leaving with student learning gains, that presumably is going to be a helpful predictor that they will succeed once they get out of the institution. >> anyone else? >> so the schools would compete individually to show these different gains and go about it in different ways? >> well what i'm proposing is that we move away from the accreditation system which is very opaque and has money flowing to every institution regardless of its performance. baa because as i indicated we're seeing graduation rates at schools still receiving title 4 funding. what i'd like to see is a system where title 4 flows directly to institutions that show that they are providing education to students and the students are graduating at our above predicted learning gains after they've attended institutions. this way, we're able to highlight schools that are

successful at whatever price and we're able to show those who were affected, the students who are looking to find schools that are doing well with their particular cohorts. they will be able, now, to have data enough to make an informed decision which they can't make under the current system. >> anyone else on the panel? >> i would like to endorse the idea and defend the idea that we have to measure what we want to do. process measures are almost always a mistake. we need to specify the outcomes we want and then pay for those. that has to at least be part of an accountability system. we have all kinds of techniques to adjust where the students started. it doesn't throw the whole system off just because some schools specializes in kids who graduated in the top third of their class and others around the middle or a little below the middle. there are funding would be based

on starting with low income. lots of things we can do. accountability has got to be part of the system and it has to be based on outcomes, not processes. >> i guess my job is to throw a wrench in ideas. you still have problems, though. think about enough, you know, we talked about controlling for who your student population is. when you get to college, you also run into very big problems. what is it you want to measure? you want to measure what every student knows when they leave that college? do you measure it by the program they're in? so you have some set exam for all engineering students, english majors, for all accounting majors. is it supposed to be a measure like we've seen typically used in critical thinking. what does it mean to be critical thinking? i say these things to point out that using the term accountability is certainly intuitively, it's something we

want to have. we want to have accountability, but we've seen repeatedly that actually operationalizing accountability becomes a difficult thing. because we're talking about very fine grain decisions ultimately that are made by lots of individuals. >> it is a fine grain thing. and there are problems. but we're getting better all the time. we'll get better and better. and where are we without accountability? that's the counterquestion. >> well, how will the colleges and universities accept your form of accountability? >> control the pursestrings, you can make them dance to your tune. the federal government certainly has a right and so does state government to say if you want our money, you have to meet these criteria. >> you wanted to say something? >> i agree, we shouldn't let the perfect be the enemy of the good. we might take some examples from what's happening in the states. and i don't know the details to a great degree. but i believe in wyoming and

massachusetts massachusetts. they have a set-up. and based on how they are assessed in terms of college readiness. it'll give them access to community college, it'll give them access to a full year. so it's calibrated and more nuanced system so that if someone needs, for example, more remediation, that student then gets state aid to go into the community college, which is a much cheaper way to deliver remediation and ultimately can succeed there and move into the four-year. so it's a graded system that's designed to take students where they are, not push them ahead to a four-year school when they're not college ready but to give them access to college post secondary education at a level where they can more likely succeed and then continue to move up if they do so. >> going to move on to commissioner and then the vice chair. >> i'd like to take us back to

where we started. if the achievement of the back degree is the goal is one of the goals. i'm not saying certificates that lead to middle income jobs and the resurgence in advance manufacturing that we also want to be promoting and all the -- there's a lot of good things going on. and technical training of all kinds could make us more -- could make students, some students who choose to pursue that much more employable with skills that are translatable and career paths that are pursuable. and all of that is absolutely

true. and this is not meant to suggest everyone should go to college or only the four-year degree is the only thing we need to be focused on. it happens to be what this hearing is focused on and trying to figure out whether or not the federal investment that is being made could be made better by focusing on practices that work in institutions that have shown by virtue of enrollment, persistence and current graduation rates. that they have an inclination. some level of expertise and a commitment to graduating students in general. and specifically to addressing

some of the gaps in attainment that we see in particular communities, which, of course, that being the particular issue of concern to the united states commission on civil rights. having said that all of these other things are of concern and, you know, certainly are truly the case with regard to that particular issue, if there were to be reformulation -- reallocation of existing dollars to some extent -- we're not talking about more money. better to achieve the outcome of more degrees in general, as you said. we need that. and we also need more

achievement in underachieving communities. we need both those things. that's my proposition. to the extent that we need both those things and we had the opportunity to reallocate existing dollars. mr. haskins, what would you focus those dollars on? you've said we have accountability. and i don't disagree that we shouldn't be paying for things we're not getting or conversely we want to pay we'd even be willing to pay more if we were getting the thing that we wanted, right? i mean, so -- accountability is extremely important, focusing on outcomes i agree with that, as well. not so much inputs, but who's achieving the goal.

what other things might that money be focused on. >> i have a simple answer. and performance should be graduation rates and employment and wages. those are the main outcomes that we're looking for. and the system would be skewed so that if you could do that achieve those ends, graduation rates, employment, and wages with kids from low-income families that you would get some kind of extra credit. you would get extra money of some sort. that's the way i would do it. >> thank you. >> i think the answer to your question is, yes, the federal investment in higher education in this country can help address these issues of producing more graduates, if that's a defined goal. you know the investment has multiple goals, right?

so i think probably the first step is do we get commonality around, do we have a common goal that increasing attainment is important? that closing the gaps and not doing it in 300 years is important amongst our diverse populations. and ensuring that everyone regardless of income status has access to a higher education is important. if the answer to those three questions is yes then, the investments could be targeted in a way that we ask the next question, which is how do we scale? because we could invest and continue to invest a lot of resources in private institutions that have good results but aren't necessarily scaleable. or we could focus more of our resources on comprehensive universities that will have greater scale in terms of producing graduates that we need. and going back to your question

commissioner, around what's most important. i think all three of those things are important, but certainly having transparency so you can have accountability around the outcomes that you want with your resources is clearly important. and i would just add to what mr. haskins has said is that you do have to be thoughtful about what that accountability looks like. but i don't think it's too much to say that every institution that gets federal resources should be demanded to improve their graduation rates and close their gaps at their institutions. and do a better job than they did the year before. but until we articulate that as a goal and hold the pursestring to achieve that, i'm not sure that's going to happen. >> thank you. >> madame vice chair, you have the last question. >> thank you. thank you very much mr. chair. this is for mr. mcclusky and mr.

haskins. i've been following the arguments that we've been hearing regarding outcomes and accountability. at one point, it seemed you were saying that you would measure success by graduation jobs wages and then you went on to put a value, i think you threw out $50,000. in terms of income. and i guess what i found myself thinking is that when we're talking about educating in an educated citizenry must we put an income, a wage value on it? understanding, of course, there are many occupations and roles and services that our states and our federal government needs

that there's just not a real big value income placed on it. you weren't saying that there's not success if you fail to make after attending college in graduating "x" number of dollars, did you? >> i don't think -- oh, sorry. i don't think i was the one that said it. i was the one saying be no measures, i don't want account nlt. i do want accountability. but it does bring up an important point. we're not actually -- doesn't seem to be agreement about what the outcome should be. should it be graduation rates, should it be what you earn as you get older? but one of the things that concerns me is in the state of florida, a year or two ago, the governor said, you know should we really be spending money to produce anthropologists? >> and that's the reason i asked that question. that same argument has been made by some of our leaders in the state of north carolina.

a liberal arts education isn't worth anything. >> and that concerns me. i don't think a lot of education is something you necessarily monetize. but, i am very sympathetic to the huge concern that we spend a gigantic amount of money on higher education. we don't seem to be getting anything like commensurate outcome. but this is why i think, and this becomes counterintuitive. a lot of the problem is, we have a lot of money that comes from somebody other than the student when they consume education. they may decide i'll study anthropology for four years because it doesn't seem to be costing me and maybe i want to do four years of college. there's a balance there, but i don't want to go to a system where you essentially have a bureaucracy say if you don't earn $50,000 within three years of graduating, there was something wrong with your education. >> can i just add a quick point? you know, i -- i'm all for institutions and students having

skin in the game, but one could make the opposite argument that high-income students don't have any skin in the game when their parents fund their college education. and i don't think anybody would object to having parents fund their education. i think we need to be careful we're not putting additional barriers for low-income folks that really shouldn't have to put anything in. because if your family is barely surviving on $16,000 a year why should you have to put anything into your college education? >> okay. well, that concludes this panel. thank you, everyone. we appreciate it. we're going to take a few minute break until 2:45. then we'll come backen o on the record with the final panel of the day.

the education on civil rights recently held this all-day event looking at access to higher education for minority students. the next discussion focuses on ways to improve federal financial aid programs, including pell grants and policy remss for federal financial aid. this is an hour. i think most of you were here earlier, but just in case you each have seven minutes to speak. this system of warning lights will guide you. green, go, yellow, two minutes to wrap up and three. red, we will then begin to ask you some questions. our first panelist this afternoon is miss megan mclean. our second panelist is dr. richard vetter. and our third panelist is elizabeth baylor for the center of progress.

mr. good is not here yet, we'll continue, and when he arrives, we'll introduce him. i want to ask the panelists to raise your right hand and swear and affirm to the best of your knowledge and belief the information that you're about to provide to us is true and accurate. is that correct? >> yes. >> okay. mr. mclean, you have the floor. >> thank you. >> you're welcome. >> good afternoon to the members of the commission. >> your microphone? you need to press the button there. should've mentioned that. >> we'll try again. good afternoon and thank you for inviting me to speak today on behalf of the national association of student financial aid administrators or nasfa. represents more than 3,000 public and private universities and trade schools across our nation. collectively, nasfa members serve 90% of all student aid recipients. focusing specifically on the title 4 federal student financial aid programs a central tenant is to advocate for public policies that increase student access and

success in post secondary education for low-income students. we know that financial aid has an impact on access and persistence as just under 75% of pell grant recipients had a family income of less than $30,000. we also know that we need to do a better job of enrolling and supporting traditionally underrepresented students. as they continue to represent a small portion of enrollment compared to white students and granting institutions. knowing this context, we should be considering improvements to the federal financial aid programs with an eye to how they may best serve students most at risk. in the short time i have with you today, i'll share with you policy concerns and recommendations related to two different areas of the federal student aid programs. first, the federal pell grant program and second, the federal campus programs. the pell grant program is widely known as many of you know taz the corner stone of the federal student aid programs. today, though, there's a need to examine the program with an eye

toward making sure the program is meeting its original and intended goal. for example, according to the pell institute, in its first full award year 1976 '77 it covered 72% of the cost of attendance at a four-year public institution. starkly, the maximum pell grant for this current academic award year is $5,730 representing only 36% of the cost of attendance at a four-year public institution. the decrease in purchasing power is dramatic. although the program has seen increases over the past several years for which we are grateful covering only 36% of the cost of attendance at a four-year public institution no longer provides access to that four-year post secondary education for the lowest income students. while the program generally provides adequate funding for a community college, we should be focused on how to make direct access to four-year institutions an option for qualified students. we are hindering opportunity

economic mobility and growth and our nation's national competitiveness. in addition to recommending more funding for the program, we also recommend making the pell grant program more flexible. particularly for nontraditional learners. the legislation and regulation currently governing the pell grant program are very much geared toward the student entering college at 18 years of age at a traditional four-year brick and mortar school and program. we know that many low-income students did not fit the traditional mold. for example, some don't start right after high school. some begin or return as adult learners and some are not able to enroll continuously due to financial or family obligations. nasa has a series of recommendations that would make the program more flexible and thereby increase success for low-income students. i'll briefly outline two of them. the first one is called the pell well. this pot of funds or pell well would be available for students to draw down from as needed until the student completes the academic program or runs out of pell funds rather than allotting

a certain amount of pe willll dollars for each award year. a student attending a college continuously through the fall, spring and summer semesters would temporarily run out of pell funds at a certain point because there are only certain amount awarded per award year. and that so called gap semester before the eligibility resumes, the student is faced with turning to student loans, attempting to work and attend school simultaneously or perhaps even stop out. the pell well would help to mitigate these negative consequences. the second proposal is providing a federal pell promise. would act as an early commitment program for the pell grant program. would teach students as early as ninth grade by notifying by how much they will be able to receive in the future and a guarantee of that amount if they complete high school successfully. we believe strongly that making the pell grant program more flexible and continuing to advocate will help this country

move the needle for low-income and at-risk students. i will now talk about the federal campus based programs which are a critical piece of student financial aid and include the federal supplemental educational grant. federal work study and the federal perkins loan program. these are deemed campus based because even though they are federal funds, the funds are allocated directly to participating institutions based on a formula. and the institutions then determine using federal guidelines which of their students receive the funds as well as those award amounts. the formula, the place where many believe the inequity exists is based on two principles. primarily calculates the amount of funds an institution receives based on the relative need of their students. and second a base guarantee that ensures that participating institutions receive at least as much as received in prior years. as a result of the latter, a portion of the funding is dedicated to maintaining

traditional funding levels at specific institutions and does not necessarily reflect the national need. this has the effect of some institutions receiving higher allocations simply because they have been in the program longer. this funding pattern does not reflect growth or shifts among students or across institutions creating a situation where underresourced institutions often have fewer access to those dollars than institutions that have more resources. consequently, nasfa has made the following recommendation to change the way the program are allocated to institutions so they will become more targeted to low-income. we propose an elimination of the base guarantee and rely solely on a fair share funding model. based in part on historical allocation and introduce more fairness into the program by basing the allocation on the institutional need instead. in closing, i want to thank you for the opportunity to discuss some of these programs and challenges that exist,

particularly for low-income students. we're happy to provide additional information and, of course, to work with the commission in the future. thank you. >> thank you. >> yes. >> there you go. >> i'm technologically inept. i only have a ph.d. this oral presentation is expanded somewhat in an accompanied written statement. it is conventional wisdom that greater participation and higher education is necessary for social economic achievement and achievement of the american dream. and it's true that on average americans with four-year degrees earn dramatically more than those with a high school education and that the college earning differential is a good deal larger today than it was at the time that the civil rights act of 1964 passed. that said, however, my message today is that higher education is no panacea for eliminating disparities in income and wealth between individuals based on group characteristics such as

race and gender. a fervent drive to increase educational attainment among minority groups will likely lead to disappointment. as in some sense, it already has. let us look at african-americans. in 1970 for every hundred whites enrolled in american colleges, there were 11 blacks. by 2013 there were 25. a dramatic growth in educational access by african-americans. yet, the narrowing of income differentials between blacks and white have been very modest. for example, black household income rose rose by 2% to 5%. for maybe 60%, 65%, for example. eliminating 10% or 12% of the differential. the fact remains that increased educational attainment among

blacks has succeeded in eradicating only a very small proportion of racial income differentials. and the future prospects of doing so in the future do not appear to be particularly good. and the question is why is this so? and, first of all the evidence is clear that the proportion of minority groups like african-americans and hispanics entering college that actually graduate within six years is below the already abysmal national average of about 60%. schools under pressure to admit minorities often accepts students with low prospects for success. special remediation education programs have had relatively low success rates. we had many urban universities with high minority participation where far more students drop out than graduate within six years. a contributing factor no doubt is the generally inferior quality of the inner city public

secondary education leading to students being admitted to college who are at best marginally qualified. colleges brag about high minority enrollments but often are guilty of luring students with very low realistic probabilities of success. they gain bragging rights in tuition revenues, but leave many students deep in debt with no degree or high-paying job. second, merely graduating from college provides no assurance of a good future income. growing evidence shows that a large proportion of recent college graduates are underemployed, performing jobs were a majority of job holders have high school diplomas. found that 1/4 of college graduates are living with their parents. two years after graduation. in a majority receive some financial support from their parents. moreover, as the proportion of adult americans with bachelor's degrees or more approaches 1/3

the receipt of a degree no longer indicates a person with above average skills and abilities. employers are becoming more particular. the high college earnings premium still applies to the graduates of the elite, mostly private schools who get good managerial and professional jobs. but those are far less to graduates of schools. schools where minority representation is historically very high. moreover. earnings college graduates vary considerably with a major field of study. some minorities disproportionately measure in fields who have low post graduate earnings. so too many students are unaware of the risks associated with college attendance. i think the law of unintended consequences has operated as an outgrowth of public policies and ways that have hurt low-income persons with minority status. for example the dukes power of

supreme court case emanating from the '64 civil rights act unintentionally increased the value of college diplomas by reducing the ability of firms to use alternative ways of certifying worker competency. thereby allowing colleges to raise fees more aggressively as did the various federal student financial programs emanating out of the higher education act of 1965. the fasfa form. the hated fasfa form enacted to help disperse aid has turned off minority group members bewildered by the complexity. i worry that burdening african-americans and hispanics by overselling the gains and understating the risks associated with going to college. colleges should have skin in the game. sharing in the adverse financial consequences associated with college dropouts falling

delinquency on large amounts of college debt. noble intentions were behind the civil rights act of 1960s. and arguably some real gains have occurred. for example, with respect to gender equity, it has men not women underrepresented in colleges. but putting aside past accomplishments, an honest appraisal suggests to me that an unrealistic promotion of college participation may now do minorities more harm than good. thank you very much. >> thank you members of the commission for inviting me to be part of this discussion. i'm the associate director of post secondary education of policy center for american progress or c.a.p. is an

independent, nonpartisan policy institute. and we are dedicated to creating new policies with bold, progressive ideas. we believe access to quality, affordable education beyond high school is a critical part of enabling our citizens to have economic mobility and to make sure our economy grows with sort of shared prosperity. today, i will describe our policy ideas for improving the higher education system and particularly how it serves people of color. the three policy areas that i'm going to discuss are increasing the federal and state investment in public colleges. guaranteeing that students will receive financial aid for -- enough financial aid to pay for college up front and making sure that students are prepared to do college work when they enter college and receive support from their institution to meet their academic goals. first, i'd like to set the stage a little bit. this might not be news to you as this is the last panel of the day.

but since 1970 the 1970s we've made significant investments in pell grants and student loans to make more americans able to pay for college. these programs have paid dividends. the college going rate has increased by more than a third since 1970s. and particularly for low income, middle income, and students of color. at the same time our higher education system is becoming more diverse. in 1976 people of color were 16% of the higher education system. today, they are happily 40%. part of this increase is because our citizenry is becoming more diverse, but also because of the increased participation rates among people of color. but at the same time there are troubling signs that people of color are not able to access some of our most well-resourced universities. research universities as categorized by the carnegie

classification system are some of our most well-resourced and academically rigorous programs. during the fall of 2012, students, undergraduate students of color were 37% of the degree enrollment. but at these research universities, they were 29%. and students of color were 41% of the students at two-year colleges. so you see a disparity there. and overall of the research facilities, have a specific mission of serving communities of color. hispanic serving institutions, travel colleges and historically by colleges. so the first step for addressing some of these inequities is to look at the cuts that have happened to public education. after the recession in 2008, many state governments had to

cut back their funding for colleges. our research has shown that 29 states decreased their overall total investment in higher education. and 44 states decreased their investment on a per student basis. we also found that institutions that served a higher proportion of students of color were particularly hard hit in these -- with these cuts. so one of the things that c.a.p. has proposed to sort of address this situation is a program we call the public college quality compact. this would be a federal matching program that would jumpstart a reinvestment in state colleges. we believe that it is -- without this kind of reinvestment we're not going to see the gains that we need. under our proposal, states would be eligible for federal matching funds if they invested at least as much as the maximum pell grant per student. and we would give extra bonus funds for serving students pell

grant students and g.i. students. this provision would be explicitly aimed at increasing the investment in institutions that serve students of color. the second piece that i wanted to talk about is our college for all proposal. we want to make the funding guarantee for going to college much more certain. we think that education beyond high school needs to be universally available. and that needs to cover tuition and fees living expenses and making sure that students know going into high school that this award aid will be available to them. very similar to the pell promise. we think that's important because students will know in high school that college is available to them, and we want to see more high school students taking a college preparatory curriculum. and finally, i'd like to talk

about what happens once a student gets to a school. it's really important that students receive support from the institution that will make it less risky for them to attend. that includes bridge programs that have shown to boost student progress and student success. and the other piece we think is really important are communities, which are interventions where students have shared values, shared work, and they know that other people are participating in the program with them. they have students to interact with. they have professors who are tracking their progress. in conclusion, i thank you again for having me. and i'm happy to provide follow-up. >> mr. vetter? >> i read and then listened to you with great interest on what you conclude, what your position is.

and very similar to what mr. claig said yesterday as did steven thernstrom. and that is minorities, i agree there's individuals that may not want to go to college and may not be right for college. and there may be other opportunities for. you all tend to make these blanket statements as you did in your concluding remarks. minorities shouldn't really try for this. they're going to be disappointed. and you point to the fact that the wealth gap has not been narrowed for blacks and whites since the 1960s. and then you say they come to school -- they come to higher education not prepared because the system k-12 didn't prepare them well. you're blaming a community for a playing field that was set by discrimination in the past and discrimination in the present. as fabian fefr put yesterday on this point. the fact that wealth is such a

huge divide particularly with african-american communities is that up until the 1950s they were prohibited from purchasing the asset of a home. they are based on schools and communities that have a tax base that is virtually nonexistent compared to the wealthier whiter communities. so they have schools that are underresourced. they have schools that don't have access to advance placement and college preparatory courses. to the extent the students may be hamstrung, it is because of a system that has been rigged that way in my estimation. and then to say they've only come from here to 25, they haven't reached 100, why even bother? a very inappropriate way to

address this issue. if those are the concerns, we shouldn't be saying you're never going to hit -- that seems to me to be closing off an opportunity for a group of people based on their status. i know that it opened doors for me that i had not had going to a more prestigious school. to say as a blanket minorities shouldn't try for the prestige, maybe i got more "bs" in michigan than if i had gone to a local school without prestige, maybe i would have come out of there a plus but they would have never hired me if i hadn't come from a prestigious school. i think we're setting up the minority communities for something for failure. based on past failures of that the system has set them up for.

>> again, you're misrepresenting. >> that's how i interpreted. >> but let me -- well, let me say this. if my testimony came off it's saying i don't think blacks or hispanics or whatever minority groups should try because -- something of that nature -- that certainly was not the intention nor do i think it was expressed in my testimony. let's actually look at the -- i think the failure for minorities is a failure of public policy. i think public policy is hurting minorities in unintended ways. without using black, hispanic or names that might be inflammatory. let's talk about income. what percentage of college graduates today come from the bottom quartile.

and we know that the bottom quartile disproportionately includes minorities. let's put it in terms of income. in the bottom 1/4 of the income distribution, in the last few years, about 10% of the graduates come from that group of people. that's 25% of the population but they're only 10% of the graduates. what was it in 1976 the first year of the pell grant was made. 12%. it was higher then than today. someone -- one of my colleagues said well, gee, the pell grants haven't kept up. we've gone from 62% to 38%. in terms of funding. >> 72% to 36%. >> 72 to 36. but we also went from $1,400 to $5,700. in the real world, which is to

say outside of higher ed, in the rest of the world the price of bread tripled. the price of housing tripled. the price of food tripled. in real terms the way the bureau of labor of statistics one mile away from away from here, less than a mile away from here, calculated it, the pell grant has gone up 30% or 40%. well why isn't it cover this much? it's because the colleges have raised their tuition. why aren't you looking at that? why aren't you looking at the producers of these services, what they're doing? they're exploiting people. they're taking these financial aid programs and raising fees. that hurts all people. but it hurts minorities more. it hurts blacks more. i'm not saying, gee, therefore blacks shouldn't go to college. no. i'm saying they're being ripped off more, relatively speaking. and that is the thrust of what i wanted to say. >> we are going to look at that because we actually did have some testimony on that

yesterday. so that issue is going to be something we look at but that's not what i interpreted your remarks both written and oral to be. commissioner actenberg? >> i wanted to talk with miss mclean about your observations regarding the campus-based aid programs. so you -- ciog as well as college work study and there's a third program -- >> perkins. >> perkins loan, yeah. could you talk about each of those in turn and whether or not the other two as well are ripe for reform and in the case of college work study not just the allocation but whether or not increases in college work-study might be a smart investment if

our goal was to empower students in general who are already in college to achieve the baccalaureate and any observations you might have about whether or not there's anything pertinent in particular to persistence and degree attainment on the part of racial minorities. >> absolutely. i will start by saying something i didn't mention in my testimony is that many of you may know that campus-based programs are i think kind of on the chopping block as we approach this upcoming reauthorization so i want to state farmly that we find them very valuable because of the campus-based nature. i think that's an important thing for me to say. i'll go through them individually as you asked. the first one, the supplemental educational opportunity grant which is designed to supplement the pell grant program really is what it does, and that is a grant-based program and the aid administrator does have flexibility to sort of look at

their pool of students and decide who gets those additional funds within federal parameters. so most institutions will try in some way shape or form to allocate those funds to pell grant recipients. i think that's a program that works very well right now. so in terms of it being ripe for reform i think we'd like to see more money in it but i think to the extent that it supplements in its grant dollars it's doing a good thing right now. the federal perkins program i think we could always look at expanding that program. right now it's a relatively small program. it's a $1 billion program. and we think about that in terms of the pell grant program, for example, that's very small. so i think what we might look at is expanding that program to get more institutions into it so that more can participate. and a federal work-study program, it is a program with a tremendous amount of good will both on capitol hill but with financial aid administrators and most folks in our community and i would say with that i would love to see more funding in that

program and certainly that helps students as they get the paychecks throughout the semester. but you asked specifically about other benefits and there really has been research to show that it really does connect students to the institution if they can have a job they do to and they get kind of intertwined and have a supervisor there working with. so there's been research to say that. and certainly for a lot of students that's their first real job experience and they rely on that heavily when they graduate on their resumes and trying to get their first jobs. >> we heard testimony on the part of chancellor white of the california state university that in particular college work study was a very important part of not only making the student connected to the university but also enabling the student perhaps to have an opportunity to do an internship inside the university or to undertake to become a lab assistant or something like that with college work-study funds, and that makes the person more likely to

persist, to achieve to graduate. so he was also an advocate of targeted work-study and -- so that's pretty consistent with his testimony. i'm wondering, miss baylor if some of the recommendations ms. mclean is making ring true tore your organization and if you could comment on that. >> absolutely. i agree that the work-study program should be -- connect students to universities and that it helps give them work experience to take to after school. we also would like to see an expansion of anything that would -- jobs that connect the student to their academic work. in particular to make sure that students who have economic need

also have the time and the opportunity to, if they can't afford to do an unpaid internship that gives them a leg ahead, want to make sure there's an opportunity for them to do work that connects them to their academic work, related to fseog. our general recommendation is that we need to have more aid that is not paid back, right? especially for students at the low end of the income scale. we want them to understand that a college education is something they can attain. especially because the jobs in the economy require these skills. >> we heard testimony from king alexander regarding the funding formula for seog. and his observation was pretty consistent with yours when you said that one of the components is the sort of that hold harmless clause where you give

their base -- you give them the base that they had the year before. that the formula is outdated and tends to reward older institutions and give them more money. we heard in fact a statistic. all the ivy leagues combined receive $10 million in seog for 60,000 students whereas the california state university which educates 400,000 students, receives $11 million and of their 400,000 students almost half of them are pell eligible whereas the ivy leagues maybe under 15% are pell eligible.

so a large amount of money's being invested in a very small number of needy students on the one hand and over here you have a huge number of needy students who are getting essentially nothing. now, perhaps that might be combined with some kind of outcome measurement. we heard earlier, and i'm sympathetic with commissioner cursonow's concern, that solely the measurement is not where we want to be particularly if our goal is to increase the attainment of the baccalaureate degree both in the aggregate as well as with regard to minority underachievement. but it seems to me that that

seog, i hope it's not on the chopping block but it certainly might be on the redistribution block if equity is going to be more readily achieved. is that a conclusion that you would agree with or do you take some kind of -- is there something there that i'm missing? >> i think that's correct. >> mr. vedder? >> yeah. >> did you have an observation with regard to my statement? >> no. not -- i have no specific observation. except for one thing. the base -- what do you call it? the base. >> base guarantee. >> the base guarantee. everyone i know in higher ed with any -- it's a political thing. it's not -- it has no rational basis, any basis. i'm in complete agreement with the statements with respect to that. >> ms. baylor. >> i think one of the things we

see systematically from state funding to this grant program is that institutions that are well resourced end up having more students succeed. and then you see these institutions that have prestige associated with them get more money and the institutions that are serving some of the neediest students seem to be facing the cuts first. we need to redistrict that. >> your federal matching program encouraging states to reinvest one of the primary factors for the increase in tuition at least in state-funded institutions i'm not saying it's the only factor but a primary factor has been the progressive disinvestment on the part of states on behalf of their state

university systems. at least that's been the phenomenon in california, and i know that has been true in other states as well. how would a federal matching program work in terms of your proposal and how does that yield increased investment on the part of the state? >> so the way we would envision it is we would create a pot of money at the federal level that states would be eligible to access if they spent at least as much per student on a pell grant. in their overall statement investment in the public college system is equal as much as a pell grant for student so $5,700. right now running the numbers we looked at it that 37 states are already over this bar and another ten states are are within a couple hundred dollars of this bar. so we thought it was a bar that kind of pushed people -- pushed states a little bit but wasn't,

you know outside the realm of what seemed reasonable. and what we would say is if you participated in this program you'd be eligible for this extra funding for any money that you put back into the system, the federal government would match you. and we would create -- we thought that we wanted to make sure that the matching supported students from backgrounds that we wanted to see succeed, so we thought enrollment of pell-eligible students and g.i. bill-eligible students would be good measures to sort of redistribute this equity. >> may i add to my statement? you'd asked me a question. we give -- the federal government gives $50,000 per pupil, or student, or more aid to the elite private universities. the harvards the yales, the princetons. when you take into account endowment subsidy special

privileges for people who make donations and so forth these are schools with low pell participation. these are schools that have legacy admission standards that often discriminate against minorities. i don't know why you people -- you people. that's probably a wrong term to use. the commission doesn't look into this issue and take this up as a topic. i think it's something -- and it's something that by the way people on the conservative and liberal ends of the spectrum might find some agreement on. just a thought. >> commissioner narasaki followed by commissioner heriot. >> mr. vedder said a college degree is not a guarantee of employment. so but what i want to understand is from all of you is it seems

to me thain creasingly, though it's becoming a prerequisite for many jobs. so is it correct to say that you will have many more opportunities for sufficient employment, paying a living wage or getting you into the middle class if you have a college degree versus if you don't? >> well, since you mentioned my name first i would agree with that statement. college degrees other things equal, that's an important qualification qualification, are a better ticket to success than not having a college degree. so of course we want people to get college degrees. by the way, i'm the only one here who has actually -- except for some commissioners that actually teaches students. i'm in my 51st year of teaching. i've been teaching for 51 years. so i am a great believer in

pushing college education. there is a payoff. but there is also a huge amount of risk associated with getting that degree. that was my point. my wife's a high school guidance counselor. and we're the worst offenders. we tell everyone go to college, go to college, go to college. >> not everyone. >> i think that's what -- i think that's actually what the commission is exploring, is we are concerned that there are institutions who seem to be gaming students at the expense of students and not really concerned with them graduating and being able to use education. i'm glad you clarified that. that's very helpful. the other thing i've been concerned about really the last two days, there's been a lost focus on sort of the private good, what's in it for the student to get a college

education which i think most of us agree, either college or some kind of advanced degree whether it's vocational or something else, that these days in this global economy a high school degree just really isn't going to cut it for most people i think is the case. at least that's my personal observation. and i say that as somebody who has a brother who became an actor and defied all of the asian-american culture and said he wasn't going to college. and he's one of the smartest people i know. so obviously, you can succeed without a college degree. but it just makes it easier, i believe, if you have one. so what i'd like is some observations. we have some in our written testimony. what's the public good? aside from of course the hope that you will become someone who is making enough money to pay into the tax system and help drive the economy, what are some

of the other goods that are associated with college degrees? >> so one of the first things i think of is greater participation in our society. right? you see people with more education beyond high school being better at civic engagement, and i think we'd like to see that across the board. i think that because our economy, we talk about the global economy and the 21st century economy and how close it is it makes our country more competitive with other countries. that's not just the consumer angle that i have more tax dollars or i have more income to consume. it just makes our -- because job creators with move their jobs anywhere around the world it's easier for them to move their jobs around the world if we have the type of workers that they want to employ, they'll move their jobs to our shores.

>> i would add to that as well. i think the engaged citizenry is a huge part of it the national competitiveness. but also these might be more generalized as kind of the softer skills. but just the general tendency of college-going folks and graduates to be more open-minded and to leave having known what it's like to work with other people and to work in groups and i think it really does a great, great thing for society as a whole. >> we actually in our hearing in new york on use of force, i asked one of the panel the question of what's the biggest link, what can we do to help law enforcement be able to make better judgments with use of force and one of the responses was the thing that correlated most with appropriate use of force was a college education, which i thought was really fascinating. the other thing -- >> mr. vedder i think wanted to answer your first question as well. >> can i finish?

i'll let him answer. >> okay. i thought you were asking a second question. >> no, no. i just wanted to finish. the other observation is there's a lot of testimony here that the most likely predictor for kids to be able to successfully go to college and graduate is having parents who went to college. right? and i get concerned about the lack of value of having educated parents. and partly because when i was going to college i went to yale and my uncle said to my dad why are you bothering spending all this money to help her go to yale? because she's only going to get married and you're wasting the investment. so i feel like there is an investment to having educated moms and dads, who can better help their kids not just have a better income but because they have bigger vocabularies and they're able to be more surntive of their kids growing up.

i just wanted to say that. mr. vedder. >> you were asking about the public good. there are a couple of studies -- i don't know why proponents of higher he higher ed don't look at more often by the national bureau of economic research that show that where you have more presence of college graduates in a work environment you get greater productivity than your non-college environment. that would be a pure public good kind of thing. there is, however some evidence that there may be as the late milton friedman wrote in an e-mail to me shortly before he died, that there are also some negative xernlts perhaps associated with college in some cases. so it's very difficult to measure the -- it's an economics term. the xernlt. another one that was often used is smoking. college graduates smoke less. that causes less secondhand

smoke problems. although people that smoke die earlier and that lowers the medicare cost. you can -- i'm sorry. true. >> i'm not sure i want to explore that one any further. i think i'll shift to the trio programs. >> segue. >> yes. i'm a little sensitive on that one because my father died of emphysema. so on this issue of trio, so some of the stakeholders have suggested that there's not enough data to show that all of the programs are working as effectively as we'd want to given the investment. some have said therefore we should just end them. should have said perhaps we should remake them, maybe into more general grant program with a lot more accountability. so i'm just wondering what your

recommendations, if you have any on that. >> very top level i would say don't get rid of them, right? because anything that we have any programs that we have that are supporting students in school, whether or not -- i think that the idea that -- the idea of accountability is incredibly attractive in higher ed. it's something people are talking about a lot. but i think you can take accountability to every tiny -- to the point where you have very few returns. and i think the trio programs are designed to support students in college. more recently i worked for the senate help committee where we did work on for-profit colleges. and one the things that we looked at was the fact that when students came in the door they weren't getting support. and so one the most important questions is what are you giving this person access to? are you giving access to going through a door and not getting any help on the other side? that's what the trio program is

there to do. so i think that measuring sort of interventions that work and saying hey, you should do this is an effective way of calling for improvement within the trio programs. but sort of measuring every trio program and then ending them you end up spending more time trying to like satisfy the accountability than you do supporting the student. >> i would agree with those remarks. i think the programs are so valuable because of the support that they provide and they're very unique in that way in terms of a federal program. so perhaps there's ways we can look at reforming them or make them better. we can always do that in public policy. but certainly eliminating the programs is not something that we would be in support of. >> okay. commissioner heriot? >> thank you, mr. chairman. >> you're welcome. >> i don't have a question so much as a request here.

perhaps i should have mentioned this to some of the earlier panelists as well because they also brought up the topic, but i forgot. so let me try it on you. especially you ms. mclean because you're the one that mentioned this. i haven't been teaching quite as long as dr. vedder, but i have been teaching 26 years and i love my university. i love my colleagues. i love my colleagues at other institutions. but i also know that they have a funny habit of arguing things that are really good for them are also good for students. and so you've got to watch out there. so i'm a little bit wary of the claim that work-study is especially great because i know that work-study benefits me because i get free labor out of it and my colleagues get free labor out of it. but on the other hand, the arguments that have been made by panelists here make a lot of sense to me, the notion that keeping students on campus, you know, helps rather than having them work at the pizza parlor, they're actually feeling like they're part of the community, they might stay around longer.

you mentioned there's some empirical evidence on this. could you cite that to me send it to me when you get a chance? >> absolutely. i'd be happy to. >> great. >> any other questions? commissioners? commissioner kirsanow. >> thanks, mr. chairman. thanks to the panelists. dr. vedder you had mentioned that because of griggs versus duke power the value of a college diploma has been for lack of a better term a credential that's almost a must-have credential because of the fact that in griggs versus due power a high school diploma was ostensibly used to bar certain people from employment even though it didn't have any job-relatedness. is there -- the title of this hearing is the effect of access to persistent attainment of college degrees on socioeconomic movement of minorities. do you see the credentialism that seems to be pervasive among

colleges, grade inflation the explosion of remediation courses as something that -- first of all, not all college degrees are the same. not all disciplines are the same. not all colleges are the same. do you see there being a dilution of the college degree and/or a reduction in social -- or socioeconomic mobility as the result of this kind of devaluing of the college degree? >> i do. i think it's -- the college degree at one time was an important screening device. it still is an important screening device for employers that provides a relatively low-cost way of differentiating what is on average a bright disciplined potential workforce, those are degrees as opposed to those without -- who on average are less bright less motivated, less knowledgeable less

skillful and so forth, maybe less cognitive skills. i don't know about that. and as more and more people go to college and many of them are getting degrees to pick up on an earlier panel discussion, where the amount of actual learning outcomes that have occurred are pretty dubious, that no longer is the bachelor's degree -- it's starting to lose its cachet. except, except at the elite schools. because the elite schools are still thought of as being the best and the brightest. so if you look at the earnings in my testimony i took the earnings of 22 elite schools. i don't know if michigan made the list. northwestern did, commissioner. but the yuppie schools. 22 -- actually, i took all private ones i think. 122 private schools-- 22 private schools

at the top using pay scales and 22 from the "forbes" ranking of colleges sxufrts, which i by the way do, in the bottom. randomly selected. i added a couple hbcus in the list to make sure there was a minority representation among the schools. the earnings were right out of the box 35% higher. in the elite schools. then the non-elite schools. so we can send you to a college or we can send you to a real college. and at mid-career the differential had widened to well over 50%. the kids that go to the elite schools not only make more to begin with. they get larger percentage advances. and you know i think that's part partly a consequence of this huge expansion of the system that has devalued the degree it's led to credential

inflation. now we have 115,000 janitors with batch loor'schelorbachelor's degrees. i'm waiting for my university to put a masters in janitorial science degree program in any day now. we've got to have more and more credentials. for what purpose? what's it serving? have we got greater income equality in the united states? what have we achieved from this? and i'd love to talk to you privately because i thought the questions you asked at the last panel were particularly poignant with regards to what are the outcomes? you know what is it we're trying to achieve? and we don't have good information. do we know -- the united states government does not publish data on the graduation rates of pell grant recipients. now, we spend $35 billion a year on pell grants. we don't publish the data. if you call up arne duncan tomorrow and say we want the data, he won't give it to you.

now, maybe you're the civil rights commissioner, maybe you've got more power. i don't know. but you don't have it. that is a crime. that is an absolute -- >> is it collected or do they just not publish it? >> the collect data on pell grants -- they do publish data by colleges. pell grant percent. but they don't publish it -- they publish what percentage at uva or college pell grant. we know that. but we don't know it by -- as a general statistic. >> any other questions? commissioner narasaki? >> i had hoped there would be someone from an hbcu testifying and apparently they weren't able to come. so my understanding, i was talking to someone who had an hbcu down i think it was in alabama or mississippi.

they were telling me that actually hbcus have a large percentage of non-african-american students attending. and the hbcus end up doing a lot of remediation support. so i'm just wondering if any of you have expertise to comment on the hbcu system. >> there is a general truth to what you say. there has been an expansion in the non-african-american component in hbcu enrollments. there's a broader problem with hbcus which is there has been a very significant decline in enrollments at a large number of schools in recent years. and this is -- it's getting to the very serious point. i could name specific examples. but it probably wouldn't be appropriate. >> i don't really have a lot of information. what is your exact question?

i'm sorry. could you repeat it? >> i'm interested in the percentage of non-african-americans. >> i don't have that number off the top of my head. but i would imagine that it has grown, you know from a really really tiny percent to like a small percent. right? so i don't think we're seeing a sea change but perhaps megan can -- >> i don't have that information now either but that's something we can look up for you and get. >> thank you. >> well, that brings us to the end of the panel. i see no other questions from our commissioners. i want to thank you all for participating today. and i remind folks that the record remains open for the next 30 days. so any of you can supplement and members of the public can also do that. and i'll remind you how you can do it. you can either mail it by regular mail to the u.s. commission on civil rights office of civil rights evaluation, 1331 pennsylvania avenue northwest, washington, d.c., 20425.

that's suite 1150. or you can send it via e-mail to public comments@usccr.gov. i want to thank my commissioners for participating so well today and engaging this topic. and again for organizing today, and thanks to c-span for being here all day. thank you very much. the meeting is now adjourned at 3:45 eastern time. >> tomorrow the funeral service for vice president joe biden's son beau who died last week at the age of 46 following a fight with brain cancer. mr. biden served as delaware's attorney general and was also a member of his state's army national guard for more than a decade, serving a tour in iraq as well. beau biden leaves behind a wife two children, two siblings his stepmother jill, and his father the vice president. president obama along with the first lady plan to deliver

tomorrow's funeral with the president delivering the eulogy. see it live saturday at 10:30 a.m. eastern on c-span. >> here are some featured programs on the c-span networks. on c-span 2 book tv live at the chicago tribune printers row lit fest. coverage begins saturday at 11:00 a.m. eastern and sunday starting at noon. saturday speakers include senior adviser to president obama david axelrod, eric larsen on the lusitania, and margaret lazarus dean on the last days of american space flight. our coverage is followed by a tour of the "new york times" book review at 7:30. on sunday at noon we continue with live coverage of our in depth program with pulitzer prize-winning author lawrence wright live from the lit fest stage. he'll be taking your programs and questions from the audience. following in depth festival speakers include scott simon on his book "unforgettable."

kevin schultz on william f. buckley jr. and norman mailer. and alice goffman on the results of the war on drugs in disadvantaged neighborhoods. and on american history tv on c-span 3 join us for several featured programs on sunday. beginning at 4:00 p.m. eastern on "real america." the nasa film "the four days of gemini 4." the 1965 manned space flight. and the first american to walk in space. at 4:30 world war ii photographer tony vaccaro on his thousands of pictures capturing the war experience and the stories behind some of those images. then at 6:00 on "american artifacts," we visit with senator lamar alexander as he shares stories behind political mementos in his washington, d.c. senate office. and at 6:30 veteran journalist bob schieffer peter arnett and david hume kennerly discuss their vietnam war experiences at the opening of the museum's reporting vietnam exhibit. get our complete schedule at

c-span.org. >> both chambers of commerce are in recess today. the senate returns monday at 3:00 p.m. eastern to continue work on 2016 defense programs and policy. senators have been working on amendments but we don't expect any votes on those until tuesday. armed services committee chair john mccain has expressed hope the bill will be finished by the end of next week. follow the senate live on c-span 2. and the house returns tuesday to continue work on 2016 spending for the transportation and housing departments. they still have a number of amendments to work through with final passage explored early in the week. also expected a measure that would reauthorize the commodity futures trading commission. see the house live on c-span.

next a discussion on saudi arabia's recent leadership changes. in an april announcement the saudi interior minister became next in line for the kingdom's throne while the sing's son the defense minister was pushed to second in line. from the atlantic council, this is an hour and a half. >> if i can have your attention i think we'll begin. there will be a few more drifting in i'm sure as we're talking. good morning everybody. and welcome to the atlantic council. we're pleased to have you here this morning to discuss this very timely and important issue on the world of energy geopolitics. and i think the importance of this issue is emphasized by the large crowd that we have this morning and i think it's also a credit to the really incredible panel that we have.

today's event will focus on the recent leadership changes in saudi arabia and what these changes mean for global energy markets as well as regional stability and security. and i'd also like to mention that today's event is a cross-center collaboration between three of the centers here at the council. i guess i should have introduced myself. i'm dick morningstar. i'm the founding director of our global energy center. and we're obviously involved in it program. but also the rafiq hariri center for the middle east. and richard doan, former ambassador to turkey and egypt is the director and will be part of the panel. and the brent scowcroft center on international security. i want to thank all of the centers here for their cooperation and organizing this event. i want to give a special welcome to the only two-time ambassador

to saudi arabia. i'm sure you know and remember ambassador walter cutler, who is here and as well as our esteemed board member ode ode aberdeen, who's also a true expert on the middle east. we have really an outstanding panel of experts to discuss these important issues today. the discussion will be moderated by david goal winn who i'm sure most of you know who's the chairman of the atlantic council's energy advisory board and the president of goldwyn global strategies which is an international energy advisory consultancy consultancy. david has -- i've known him for 20 years basically. and has had a long and distinguished career in both the public and private sectors. we were colleagues in the state department. while david was the special

envoy and coordinator for international energy affairs while was doing eurasian affairs. we cooperated and worked together back to the '90s on the things like the baku tbilisi jehan pipeline and many other things. today's panelists include dr. anthony cordesman who is the burke chair in strategy at csis. dr. cordesman is, as you all know, is an expert on u.s. security energy and middle east policies and the author of 50 books. he's also a consultant to both the state department and the defense department during the afghan and iraq wars and has worked extensively in saudi arabia and throughout the gulf. i mentioned ambassador richard downey is the vice president here at the council and the director of the rafiq hariri

center for the middle east. and prior to joining the council frank was a long-time career foreign service officer has been the ambassador to turkey, egypt, philippines. three times. so obviously a very distinguished career. finally dr. jean-francois seznec, who is teaching at the mcdonagh school of business at georgetown. also at johns hopkins at the sise school at johns hopkins. dr. seznec is an expert on energy-based industries in the gulf. he has over 25 years experience in international banking and finance and i'm also happy to announce, very happy to announce that as of officially last night dr. seznec has joined the global energy center as a senior fellow. so we couldn't be happier than

to have such an esteemed expert working with us. let me just finally say that for the audience and for the audience here and for those watching the live webcast you can contribute to the conversation on twitter by utilizing the hashtag @acenergy and acmideast. so i extend a warm welcome to the panel. the panel will come up on stage. and i will turn it over to our moderator david. >> thank you. [ applause ] >> we have quite the distinguished crowd in the audience today. we'll make sure we leave for questions. we're here this morning talking about the leadership changes in saudi arabia. obviously it's of great interest judging by this crowd and the folks watching at home. and that's because saudi arabia

is clearly central to the oil market. their decision in 2014 not to pursue market share and seek a production cut has rippled across oil markets and across the world. they're central to regional stability and regional security, and certainly the air attacks in yemen have had consequences across the gulf. they're central to diplomacy too, the role they play plus in the p-5 plus one deal with iran and for the containment of isil as well. so that's why we have this panel here today. i guess i want to start with the leadership changes because people are used to very slow steady changes in saudi leadership. and when king salman came to power and three months later removed the krouns prince it started vibrations across the diplomatic community about whether or not this was pretty fast, whether it signaled something. he i wonder if you can take us through the leadership changes and what they mean and what this

says about the stability of leadership in saudi arabia. >> well, first in terms of disclosure you have to admit you've gone from never trusting anybody over 30 to no longer trusting anybody under 70. so i may bring a bias to this issue. i think one needs to be really careful. the king is probably not in perfect health. he's old. he faces a time period in which consolidating power, achieving something as a leader pushes him toward taking decisive action. i remember more than a year before he became king everybody was talking about the pressure and changes that would occur

when -- and there was a risk he would die. and i think having been through this again and again and again, watching this focus on the royals we need to be extremely careful because these changes do matter. but often we don't really pay attention to changes because they involve a minister of defense. or a significant shake-up of the ministry of the interior. or you abolish the national security council and you create a whole new top security structure and it produces absolute indifference on the part of the media except for a few experts who write commentary that doesn't get much pickup. the most dramatic thing is you

have a very young minister of defense. but looking back at this over the years we have done about as well in understanding these shifts as people do in picking a fantasy football team. there are all kinds of theories about what this leader will be. there are all kinds of extrapolations based on what they did in the past. people turn to one expert or another. and anybody who has been in saudi arabia realizes that characterizing the royals is almost an ongoing sport. as long as you only talk to one saudi, you'll get a very clear explanation. my background is in areas like planning, dealing with the national security, the intelligence the defense

structure structure, and i have not focused on things like education or the many other areas that really matter in the kingdom. but what i have seen is an awful lot of structural consistency. and you do have very powerful institutions institutions. you have budgets. you have plans that have a driving impact on a lot of what the kingdom does. and i think that the shift here frankly, it was time, really time that you had a younger prince, and it's not really that young, made crown prince. you needed a figure that could handle a transition handle the security issues that was strong enough to lead and provide some degree of bridging. so i think in the case of

mohammed you have somebody who had proven his capability in what today in the kingdom may be the most critical focus which is its immediate concern with security rather than internal development or the structural problems i think that frank will get into. the most serious shift had already taken place. he'd become minister of defense. he had displaced bandar. you had gotten rid of a much more risk-oriented approach to dealing with syria than was the case under mohammed. you had less focus on taking a kind of independent and somewhat risk-orientedf:vrs security structure. all of that happened long before the sudden shift. putting a relatively young man in as minister of defense, well,

the problem is when you look back at this this has always been a very odd job in saudi arabia. because the ministers of defense have always had something else to do by way of appointments or they have been somewhat transitional. and the decision-making structure has in many ways been technocratic and professional between the services or it has moved up into a more consensus-oriented structure. remember if you go back to prince sultan, who certainly did review all major decisions, procurement activity and so on. he was not at the same time by any means a micromanager. his son did not become the

minister of defense. he was followed by someone who again did not emerge as a strong central controlling figure. and that has been a pattern which may or may not continue. we'll find out in several ways. one of them is going to be what happens in the areas where the kingdom faces immediate security challenges. iraq, syria. dealing with lebanon. dealing with yemen. the whole problem of relationships with jordan egypt. these are issues where at any given time a relatively young man may be confronted with some serious defense-oriented decisions. but my guess would be that these will almost immediately move

upwards and into a kind of role court senior leadership position. now, one thing that will be a major change is the shift to a foreign minister. i don't think there's anyone who would challenge the personal competence of him but he is not a member of the royal family. one of the key questions will be when the first real crisis arises what will the role of the foreign minister actually prove to be? and that may be a matter of influence as much as a matter of competence. and we'll find out because in the real world when you have these shifts in leadership. now, there are a whole host of other shifts in leadership. when i looked at the actual announcement that came out of the palace and then the next

three days there was something like more than 30 people who were affected one way or the other by these shifts. and a lot of them really matter in areas like education health. we'll hear about energy later. what i didn't see was anything that would address the fundamental structure of how the department or rather the kingdom deals with defense. i didn't see a major shift that would affect the national guard although that may come. i didn't see a solution to creating a meaningful national security council equivalent because there's been this building and there's been this title, but then you try to figure out what the hell actually happens at these buildings and it seems to be somewhat personal and not where the decision-making is

structured. saudi intelligence is going to be i think an open question. we'll see whether that emerges as better organized more advanced. we have problems of our own in dealing with this region. it certainly isn't simple. so i'm not in any sense particular ly particularly in any place where i would say okay we had one very dramatic midnight event and it's fundamentally going to affect the security of the kingdom in predictable ways because of personalities. i don't think the midnight event was anywhere near as important as the changes that took place in the intelligence and national security structure before this. i have no way to know whether a young man is going to emerge as a more proactive, successful or

failed minister of defense in a system where the minister of defense's role was always a little anomalous in terms of actual exercise of power by the standards of other governments. the one thing i am sure of is when it comes down to actually allocating money. that's going to be a critical issue. we'll hear about that in terms of oil revenues. we'll hear about it in terms of how the kingdom has to deal with the other security issues we're going to discuss. but you spent about $81 billion a year of the kingdom's budget directly about the defense. you expanded security to the point where it now in many ways is a counterpart to the ministry of defense. the ministry of the interior is

as important to saudi security in a lot of ways as the ministry of defense is. how that will play out in an era of declining oil revenues i don't know. the other issue is when you look at this you're also having to absorb something on the order of $90 billion worth of new arms orders from the united states alone over the next three to five years. and that is an immense challenge, and it is only the beginning. since you're talking about 12 to 18 billion dollars of arms orders a year. if you would like me to bet on which royal wins or which royal succeeds, the last royal david,

i'm going to have to give up because quite frankly you can write all the op-eds and one-page summaries of this you want but let's go back to the fantasy football image. those of you who are lucky enough to get it right if you ever bothered to play that game congratulations. >> i won't ask you to predict the future but let me just come back with this decision on crown prince mukrin because it did seem that some of these questions were foreseeable, the leadership decisions were foreseeable. so did something happen between january and april, something in the external environment, some greater sense of urgency, or was it just a greater sense of mortality on the part of the king that led to that shift? it does seem anomalous even taking what you say into consideration about the raeblt of the rest of the leadership changes. >> first there hadn't been a deputy crown prince before. second, for all the talk of this

group they were supposed to review the selection of king, that was king abdullah. guess what there's a different king. i think many people were very surprised by mukrin's appointment in the first place. given the pressures on the kingdom again, the need for stability and change, to go from an old king that does have some health problems to a stable succession at a time you face serious security challenges on all of your borders. i think if i have been shifted from crown prince to king i would have done something very similar and done it very quickly. >> jean-francois, let's turn to

you and talk about some of the changes in leadership in the oil sector and if you can take us through the changes at aramco and at the ministry. and i think what underlies that is what's the connection between these changes in leadership and any likely change in saudi oil policy? or are we also looking at steady as she goes? >> well thank you. i totally agree with dr. cordesman that there's much too much emphasis on what the royals do or who they are and so on. in the case of the oil policy i think we're still seeing a very very strong technocratic structure being in place and in my view reinforced unlike what we've seen in the press at times, whereby some people were saying, well, it's just king salman trying to put his sons on each side of saudi aramco putting in mohammed al salman and abdulaziz bin salman as the minister who could become

minister and then chairman of saudi aramco where it's not really what happened. in fact the changes was that the minister of oil, and that's really the big change, mr. naimi, who's really been controlling saudi oil policy the past 20 years or so, he has been replaced. he's been trying to resign for a long time because he wants to retire. he's 79 years old. but he has been removed from the board of directors of saudi aramco. he's still minister of oil but it has been announced oil will not be handled by the ministry of pet role sxwrum minerals. the ministry of petroleum and minerals is really becoming the ministry of minerals and energy in general, i suppose. but khaled al faliya, who is a brilliant man, was ceo of saudi aramco has been named minister

of health, which is a very difficult position in saudi arabia. huge budget. somewhat dysfunctional ministry. and his responsibility is to make it work. at the same time they named the board of directors to this day and so, the minister no longer. the chairman, but is. now, in terms of the change, the big change supposedly, was that these now supreme counsel which was supposed to be the sort of the committee that sort of handles major decisions and that's been presented as being something very new well, it was not new. in fact there was such a question last year already and before that, there was a supreme petroleum counsel, which was

chaired by the king, co-chaired by the crown prince with the minister of foreign affairs as one of the major princes affair and that committee never did anything because everybody's too busy and saw that and never had the time to do anything so in fact -- was controlling the counsel. today, the counsel is isnow controlled chaired but mamds mohammed and that is viewed as a very important position, which t but the fact is is is mohammed has very little time on his hand to really manage policy, especially since it is so dift difficult to handle. however, the man in charge is really the secretary general of the counsel is a commoner who is

going to in my view, handle policy on behalf of the prince. the committee is supposed to be composed of ten people. five on the board of saudi, i don't know who else will be there yet. at least i haven't read it. but in fact, what i'm saying really is that nothing much has changed and therefore, i don't think expect policy to change very much either. so, yes, indeed, no lopger directly involved in policy. this may be a good thing in the long-term. hadid, who is much more of a techno technocat will be handling basic policies and the newer ceo is temporary and on the board and

he will handling the day-to-day relations. what's interesting to me is that -- is known for puttinging saudi aramco into chemicals. he has negotiated with the sunni -- which is today, a $20 billion company. it was 10 billion just double ed the size. 20 billion company and mostly the big sadara joint venture with dow chemical also a $20 billion project. those are very advanced chemical chemicals. putting saudi arabia in a totally different pattern of production. in fact, it's making saudi aramco look a lot like exxon mobil and i'm not sure the saudis would like to hear that, but i think that's what's

happening. it's a very good thing. now, that may bring a lot of changes in the kingdom in terms of running the economy. because salvic, which is now the second largest chemical company in the world after dsf, they have lost their chair. i'm not sure, perhaps dr. portsman would know better but perhaps he's working on proep. it's part of part of the problem ministries have with the minister of defense. so, i would not be surprised if there was some reorganization in saudi arabia of maybe saudi aram aramco becoming much more of a chemical company or maybe take

the chemicals away and put them into savoc. in terms of the ministry itself, now that it's not supposed to be supervising saudi aramco, they still have to supervise the rest of their purview, which is minimals minimals. still relatively small, but it's one of the largest fertilizer manufacturers in the world and it's doubling production so, that is also in joint venture today and with moezsaic of the united states, i think there will be another reorganization of that level as well making it much more professional and we'll see how it develops. the purpose of this is to end up having these large stake companies provide facilities for smaller companies and someone to create jobs.

one of the key issue of course is is is the security as has been mentioned, but the second biggest issue if not the biggest is creating jobs further down south and i would not be surprised if mohammed is is now in place because the need to create jobs for 60% of the population, which is the age of 30. it's just like, somebody provided one job already. but they need to i think make it happen. >> let me come back to you because i could read the moving of the deck chairs in two ways. one is saudi aramco will be more technocratic. the other way to read it is that there isn't a ceo yet. the chairman has never been traditionally the leader of the organization and he has two jobs. the world of ministry is undefined and mohammed is at the

top of the chain. with undetermined leadership, so you wrap that together who really is in charge then of oil policy and deciding you know, who you low can you go? >> well i think the policy which was in my view any way defined by the past few year -- i don't think they have to make much of a decision at this point. i think the saudis decided we were going to keep producing to impose its will on the markets and the producers. they may not concede any way, but that's the policy i think. who is going to make future policy? i think very much a combination.

frankly, that's not much of a change. >> not really a player? >> in my view, if the minister of oil is resign, mr. ali, leaves the ministry because of age and so on, maybe he could be replaced by a prince who is now a, has rank of minister as deputy. doesn't have oil. so by removing the ministry, they remove just as much. so i think it will be almost no change. i would agree though that maybe abdul maybe named to the counsel. it is not a huge position. yes, i would agree that the ministry may go do other things like solar because it's very big and they're trying to do more. maybe increase prices on natural

gas. few things like this which would create a lot of issues in the kingdom, but it's still a bit unsettled and we'll see more changes as i started hinting in terms of changes at least in the industrial side of things. warned by tony not just to focus on the royals and we've seen a bit of a generational change. you're just back from saudi arabia and i think you've seen a little bit of this change up close. can you tell us what you saw? >> i can. i'd like to start by confessing to people in this room, particularly, not only this panel, but in the front row here, others who have forgotten more about saudi arabia than i'll ever hope to learn and making public about my sixth trip to the kingdom over span of a career doesn't make me an expert. maybe more typical of what i

was, a fortune service officer who can sometimes be a mile wide and inch deep. sometimes, we flip and go the other way and get very deep on a particular subject, so i'm not deep on saudi arabia, but i had so many impressions. what i saw there was so counter my prenlgjudices going in. i had followed the kingdom mostly from ring side seats and egypt or iraq or the elsewhere in the region over a number of years and all of us tend to think saudi arabia sa the most change resistant, the most conservative of all the gulf states and arab players. we've watched the center of gravity of the arab world in so many fields. business, education, art, science, medicine, ideas. communications media, shift from the my