Opportunity Scholarship and Opportunity Expansion Programs

The Washington State Opportunity Scholarship complies with statute and provides scholarships to students pursuing high-demand STEM or health care degrees

The Legislature created the Washington State Opportunity Scholarship (WSOS) Program in 2011. WSOS provides scholarships to low- and middle-income students pursuing bachelor's degrees in high-demand science, technology, engineering, mathematics (STEM) and health care fields (ESHB 2088).

WSOS is not a state government agency. It is an entity governed by a board appointed by the Governor, and it is staffed by a non-profit administrator. WSOS receives both public and private funding for the scholarship program. The legislation creating WSOS also directed a review by the Joint Legislative Audit and Review Committee (JLARC).

The 2018 Legislature expanded WSOS to include scholarships for students who pursue professional technical certificates or associate degrees in high employer demand fields, or advanced degrees in the health professions. Due to this timing, these new scholarship programs were not part of JLARC's study directive and are outside the scope of this report.

Students must meet residency, income, and education criteria to qualify for scholarships

WSOS began awarding scholarships in academic year 2012-13 based on eligibility requirements set by statuteRCW 28B.145 and the WSOS Board of Directors. Opportunity Scholars must:

• Be a Washington resident who received their high school diploma or equivalency degree in Washington and have not yet earned a bachelor's degree.
• File a Free Application for Federal Student Aid (FAFSA) or Washington Application for State Financial Aid (WASFA).
• Have a family income at or below 125% of the median family income in Washington adjusted for family size.
• Have a cumulative minimum GPA of 2.75.
• Pursue an eligible education program defined by the WSOS Board at an eligible Washington college or university (link to list of eligible majors).
• Have an eligible class standingThis requirement did not apply to the first cohort of Opportunity Scholars. (e.g. high school senior at time of application).

WSOS provides students up to $22,500 in scholarship funds over a maximum of five years. The amount awarded each year depends on how many credits the student has completed. Opportunity Scholars typically receive up to:

• $2,500 in their first or second year of college.
• $5,000 in their third year if they have been accepted into an eligible major.
• $7,500 in their fourth year.
• $5,000 in their fifth year (if necessary).

WSOS also offers professional development, industry mentoring, and skill building workshops to prepare Opportunity Scholars for the workforce. In addition, WSOS has developed two student support programs that all Scholars must participate in as of academic year 2018-19: the Scholar Lead Program offers peer mentoring to newly selected students, and the Skills that Shine program connects third-year Scholars to industry mentors.

Private donations and state matching dollars have funded more than 10,000 Opportunity Scholars

WSOS is funded through a combination of private contributions and state matching dollars. As statute directs, WSOS established two accounts to operate the program. One provides scholarships, and the second is used to build an endowment for future expenditures. To date, WSOS has received a total of $175 million. This includes:

• $88 million in private donations. Four donors have contributed 93% of these private funds. Only one private donor has contributed to the endowment account, which had a balance of $28 million at the end of 2018. WSOS reports they also have approximately $12 million in pledged private donations not yet received.
• $87 million in state matching funds.

The WSOS Board and program administrator have not set annual fundraising goals, as directed by statuteRCW 28B.145.020(6) directs the WSOS Board and the program administrator to solicit funds and set annual fundraising goals.. WSOS reported they have focused on soliciting large, private donations, and have set a $1 million goal for one annual fundraising event. WSOS also indicated that they have received enough funds overall to provide scholarships and awards at the current level for Scholars beginning in academic year 2025 through their graduation.

WSOS provides scholarships to low- and middle-income Washington residents

Between academic year 2012-13 and 2018-19, WSOS spent $64 million on more than 21,000 annual scholarships to over 10,000 studentsA student may receive a scholarship more than once (e.g. in consecutive years).. Opportunity Scholars are low- and middle-income Washington residents pursuing a high-demand STEM or health care major. Nearly 70% of the Scholars have attended a public four-year college or university. Additional Scholar information is available in the Tableau dashboard below.

WSOS and partners work together to manage and administer the Opportunity Scholarship

Statute and contracts between partners outline the roles and responsibilities for the WSOS Board, the Washington Student Achievement Council (WSAC), and a nonprofit program administrator.

• WSOS is established in law and managed by an 11-member, governor-appointed Board of Directors (Board). The Board sets WSOS's overall strategic direction, determines eligible education programs, approves selection criteria, and sets the annual scholarship award amount.
• WSAC is a separate state agency that reviews certain student eligibility requirements. It also confirms the amount of private donations that WSOS receives and distributes the state matching funds equal to the private donations.
• Washington STEM is currently the private nonprofit program administrator that provides administrative support to WSOS, distributes scholarships, manages WSOS's finances, and coordinates with WSAC to receive state matching funds.

The WSOS Board hired an executive director in 2014 and authorized the director to hire 18 additional staff members in the following years. WSOS staff serve the Board and are employees of Washington STEM. The staff's roles and responsibilities are not defined in statute. Some are involved with fundraising, selecting scholars, and providing Scholar supports.

Exhibit 1.1: WSOS works with its partners to select and distribute Opportunity Scholarships

Source: JLARC staff analysis.

WSOS has spent $14 million on non-scholarship costs since fiscal year 2013

The WSOS Board approves an annual operating budget for the scholarship program. As of January 2019, WSOS had spent $14 million on non-scholarship costs. This $14 million includes spending on:

• Salaries, taxes, and benefits for WSOS staff.
• Consultants and professional services.
• Fundraising, staff development, and lobbying.
• General operating costs.
• Program administration fees.
• Providing direct Scholar supports.

These expenditures do not directly fund Opportunity Scholarships. WSOS has spent $64 million on scholarships since academic year 2012-13. The program administration fee is just one portion of the total non-scholarship costs (see Tab 4).

Exhibit 1.2: Annual non-scholarship costs have ranged from $1.2 million to $3 million

Source: Washington STEM and College Success Foundation financial data for WSOS program.

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Compared to their peers, Opportunity Scholars pay lower out of pocket costs and borrow less

The Legislature created the Washington State Opportunity Scholarship (WSOS) to help make college affordable by "mitigat[ing] the impact of tuition increases" for students pursuing a bachelor's degree in a high-demand STEM or health care field (RCW 28B.145.005). The Legislature directed JLARC to evaluate whether WSOS is meeting this policy objective (RCW 28B.145.080).

JLARC staff identified key college affordability metrics

JLARC staff reviewed academic literature, federal and state documents, and reports from policy organizations. There is no consensus on a single definition of college affordability. Whether college is affordable or unaffordable is ultimately a policy decision informed by individual values and preferences.

However, several key metrics exist for comparing whether some students pay less than others to attend college. These metrics include:

• Out of pocket costs (net price of college).
• Percentage of students borrowing money through loans.
• Annual amount of loans for borrowers.
• Unmet need (cost of college not covered by grants, scholarships, and family contributions).
• Total grant and scholarship awards.

See Appendix B for more details.

Opportunity Scholars have lower out of pocket costs, student loans, and unmet need than their peers

JLARC staff compared Opportunity Scholars to a group of their peers who met WSOS's eligibility requirements, but did not receive scholarships. JLARC staff used data from the Office of Financial Management's Education Research and Data Center (ERDC) for this analysis. ERDC combined financial aid data from WSAC for the first five years of the Opportunity Scholarship with other data and removed confidential student identifiers.

On average, the data shows that Opportunity Scholars have lower out of pocket costs, student loans, and unmet need than their peers. While our analysis identified differences between these two groups, we did not determine the causes of those differences. Our analysis did not establish that the Opportunity Scholarship caused any differences in college affordability between Scholars and their peers.

Additional information on the data and methodology used to construct the peer group is available in Appendix A.

Compared to their peers, Opportunity Scholars pay lower out of pocket costs and have lower unmet need

Both Opportunity Scholars and their peers are students with family incomes below 125% of the median family income in Washington. Opportunity Scholars, on average, used less of their family income to meet their out of pocket costs.

For example, in academic year 2016-17, an Opportunity Scholar with a family income of approximately $38,000 would have out of pocket costs equal to almost 18% of their family income. Comparable students not receiving the Opportunity Scholarship would have costs equal to 28% of their family income. This means that Scholars, on average, used less of their family income to pay for college than their peers.

Exhibit 2.1: Opportunity Scholars use less of their family income to pay out of pocket costs

Source: JLARC staff analysis of data from the Office of Financial Management's (OFM) Education Research and Data Center (ERDC) for academic year 2016-17.

Overall, the average out of pocket costs (net price of college) for students receiving Opportunity Scholarships were lower than their peers in each of the first five years of the program (Exhibit 2.2).

When compared to their peers, Opportunity Scholars, on average, have lower unmet need when it comes to college costs that are not covered by grants, scholarships, and family contributions (Exhibit 2.2). Students with higher need may need to use savings, work income, loans, or other sources to pay the cost of attendance.

Exhibit 2.2: Opportunity Scholars have lower out of pocket costs and unmet need

Source: JLARC staff analysis of data from the Office of Financial Management’s (OFM) Education Research and Data Center (ERDC) for academic years 2012-13 through 2016-17.

Compared to their peers, Opportunity Scholars take out fewer loans and borrow less each year

As Exhibit 2.3 shows, on average, Opportunity Scholars took out fewer loans and borrowed less than their peers for each of the first five years of the program.

Opportunity Scholars also reported via interviews and surveys that the Scholarship helped to minimize the amount of money they borrowed for college.

Exhibit 2.3: Opportunity Scholars took out student loans at a lower rate and have a lower annual loan amount

 

Source: JLARC staff analysis of data from the Office of Financial Management’s (OFM) Education Research and Data Center (ERDC) for academic years 2012-13 through 2016-17.

WSOS is only one piece of a student's overall funding package

Opportunity Scholars also receive state, federal, and institutional grants and scholarships (Exhibit 2.4). These are packaged by the students' individual colleges and universities. WSOS does not have access to information about additional financial aid that Scholars may receive (see Tab 4 for more information).

Since WSOS is only one piece of a Scholar's overall funding package, it is difficult to make definitive statements about its affect on college affordability. When Scholars receive more funds from one source, it is possible that they will receive less from another. In addition to receiving grants, scholarships, and loans, approximately 52% of the Scholars worked while in school during the first five years of the program.

 

 

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Opportunity scholars are more likely to continue their education than their peers. Early recipients have graduated with degrees in high-demand fields.

One purpose of the Washington State Opportunity Scholarship (WSOS) is to increase the number of high-demand degrees earned in STEM and health care (RCW 28B.145.005).

While over 1,900 Opportunity Scholars have graduated from the first five cohorts, most Opportunity Scholars are still pursuing their degrees. It is therefore too early to analyze graduation rates for most of the program's scholars. JLARC staff analyzed education records for scholarship awards for academic years 2012-13 through 2016-17. This analysis includes the graduation rates of early scholarship recipients and the rate that first year students returned for their second year of school. Data is not yet available for students who received scholarships between 2017 and 2019.

Opportunity Scholars return to school in their second year at higher rates than their peers

For the first four years that the Opportunity Scholarship was offered, 96% of award recipients returned to school between their first and second academic years. This compares to 89% of their peers (see Appendix A).

Federal and state agencies use the rate in which first year students return for a second year as an early indicator of whether a student will graduate. Although many Opportunity Scholars have not yet graduated, a first year student who returns for their second year of college is more likely to graduate than a student who does not return.

The first group of Scholars graduated at higher rates than their peers. Most graduates earned degrees in STEM or health care.

WSOS's annual legislative reports contain reliable, required information. WSOS could improve the information it reports to the Legislature with additional data collected by state agencies.

The Washington State Opportunity Scholarship (WSOS) Board and program administrator are required to submit an annual report to the Legislature. The report must include the following information identified in statute (RCW 28B.145.070):

• Number of applicants and award recipients disaggregated by race/ethnicity, gender, family income, and county.
• Number and amount of scholarships awarded.
• Institution name and graduation rates of the schools where Opportunity Scholars are enrolled.
• Amount of funds raised through private sources and the state match.
• Amount spent on program administration fees.

The Legislature also directed WSOS to help make college more affordable and to help its Scholars enter middle-income jobsMiddle-income is defined as 200-500% of the federal poverty level for a family of four. In 2017, this was $49,200 to $123,000. to meet market demands (RCW 28B.145.005). WSOS has not included information in its annual reports on whether it is meeting these goals.

WSOS's annual reports contain reliable information for statutorily required elements

WSOS collects demographic and financial information from its applicants. It supplements its own data with information it purchases from a national non-profit education organization. This supplemental data comes from the specific institutions where Opportunity Scholars are enrolled. It includes Scholars' majors and graduation status. Collectively, WSOS uses this information to confirm scholarship eligibility, distribute awards, and prepare its annual reports.

Program administration fee reported to Legislature is just one portion of the total non-scholarship costs

Per statute, WSOS also collects program financial information and reports the amount it pays to its nonprofit program administrator each year. This reported amount only reflects a portion of the total non-scholarship costs (see Tab 1 for total non-scholarship costs). For example, in fiscal year 2018, the amount paid to the program administrator was 12.5% of the total non-scholarship costs.

JLARC staff was able to replicate the data that WSOS includes in its annual reports. The reports accurately reflect the characteristics of Opportunity Scholars and program finances.

Exhibit 4.1: WSOS complies with statutory requirement to issue annual legislative reports

Source: WSOS legislative reports.

WSOS could improve its annual legislative reporting with state financial aid and employment data

Multiple state agencies currently collect financial aid and employment information on students and recent graduates. JLARC staff utilized this data to display specific aggregate information about Opportunity Scholars for this report. This report demonstrates that this data can be informative for exploring whether the Opportunity Scholarship helps make college more affordable and improves the employment and earning outcomes of its graduates.

The Office of Financial Management's Education Research and Data Center (ERDC) combined data and information from multiple sources to assist JLARC staff in its analysis for this report. The data includes:

• Financial aid data from the Washington Student Achievement Council (WSAC), which describes a student's finances, grants, scholarships, and loans.
• Public higher education information from the Public Centralized Higher Education Enrollment System (PCHEES) and the State Board for Community and Technical Colleges (SBCTC), which identifies information on courses and degrees completed.
• Employment and earnings data for Washington workers from the Employment Security Department (ESD).
• Enrollment information from private colleges and universities such as major and degree information.

WSOS does not have direct access to the data collected by these state agencies, which is confidential under state and federal laws. WSOS has attempted to collaborate with certain state agencies for specific student-level demographic and outcome information. However, WSOS could further engage with state agencies to discuss whether there are methods to collaborate on data analysis and data sharing in order to provide non-confidential aggregate information in their future legislative reports.

• Financial aid data would allow WSOS to update the Legislature on key affordability metrics for Opportunity Scholars and whether the program continues to help make college more affordable.
• State employment and earnings data would allow WSOS to update the Legislature on the employment and earnings of Opportunity Scholars who graduate. WSOS has collected limited information on Scholars' employment and earnings through surveys. Its last follow-up survey in 2018 included a random sample of 431 graduates and had a response rate of 51%. This reflects about 6.5% of the nearly 3,400 Scholars who have graduated since the program began.
• Any efforts to obtain aggregate results for the Legislature would need to be designed to ensure the ongoing protection of personally identifiable information that is currently managed by multiple state agencies.

WSOS could also improve the understanding of its program costs by including the overall non-scholarship costs and the total amount it spends to administer the Scholarship in its annual legislative reports.

The Legislative Auditor makes two recommendations to improve information reported to the Legislature

1. WSOS should develop and implement a plan to coordinate with state agencies such as ERDC, WSAC, and ESD to provide additional information in its annual legislative reports. Planning efforts should focus on how to compile, protect confidentiality, and include the following types of data on Opportunity Scholars:
   • Financial aid and key affordability metrics such as out of pocket costs (net price of college), unmet need, and student loans.
   • Employment rates and earnings.
   • Whether they are employed in market demand fields or industries.
   WSOS should include updates on its plan implementation and any additional metrics in its annual legislative reports.
2. WSOS should include its overall non-scholarship costs, including the total cost to administer the Opportunity Scholarship program, in its annual legislative report. As required by statute, WSOS currently includes the amount it pays to its nonprofit administrator in its annual legislative reports. This amount only reflects a portion of the total costs to administer the program.

WSOS, the Office of Financial Management, and the Washington Student Achievement Council concur with these recommendations. You can find additional information on the Recommendations tab.

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Three universities received WSOS grants to support STEM programs and each has secured ongoing funding

The Opportunity Scholarship Act (ESHB 2088) that created the Opportunity Scholarship also included the Opportunity Expansion Program (OEP). Through the Expansion Program, WSOS provides funds to college and university programs that are focused on increasing the number of students pursuing bachelor's degrees in STEM and health care fields. The WSOS Board is authorized to select and award opportunity expansion grants to institutions of higher education.

Initial awards went to three public university programs focused on STEM education

In 2016, the Board awarded $6 million in expansion grants to three state universities. The Board formed a working group to develop a process for seeking and evaluating OEP grant proposals from colleges and universities. In the initial round of applications, 20 institutions submitted proposals and five of these schools were asked to provide additional information.

The Board awarded grants to Central Washington University (CWU), Western Washington University (WWU), and the University of Washington (UW).

The working group and Board chose to focus the awards on capacity building and expansion in STEM-related teacher education, computer science, and engineering. The Board's emphasis was to provide one-time initial grant funding for initial development and implementation of programs, but not funding for ongoing program delivery.

The original fund source for the Expansion Program has expired

The Opportunity Expansion Program was designed to be funded by private Washington companies that agreed to donate all or a portion of a research and development business and occupation tax credit. Microsoft was the only company that donated its credits, which totaled $6 million. The tax credit expired in 2015 and the state has not identified a new source of funding for the Expansion Program.

Statute permits the Board to make recommendations to the Legislature for sources of funding (RCW 28B.145.020). The Board and program administrator have not raised funds or promoted the tax credit option to businesses since the program began, and the Board has not made any recommendations to the Legislature on new funding sources for the Expansion Program.

CWU, WWU, and UW have all secured funding for future years

The following three universities received Opportunity Expansion grants in 2016 and have secured future funding for their programs:

• Central Washington University (CWU) received $2.2 million to adopt the UTeach curriculum developed by the University of Texas to address the shortage of STEM teachers in Washington. CWU's Teach STEM program allows students to earn both their STEM degree and teaching certification in four years. The OEP grant covered the initial start-up costs of the program and funded advisers, faculty, and interns through academic year 2018-19. Deans from the University's College of Education and Professional Studies and College of Sciences have committed to fund 3.5 Teach STEM full-time employees to continue the program after the OEP grant ends. Program staff are also working with the CWU Foundation to create an endowment that will help fund the program in the future.
• Western Washington University (WWU) received $1.6 million to expand capacity for students seeking computer science degrees as well as develop a new program offering computer science teaching certifications. The grant allowed WWU to hire four computer science faculty to serve more computer science students each year. The University's Provost has committed to permanently fund the faculty positions after the OEP grant expires.
• The University of Washington (UW) received $2.2 million to expand capacity of the Washington State Academic RedShirt program (STARS). The program enrolls engineering students from low-income families and gives them an additional year of academic prep work to help them succeed in the College of Engineering. The OEP grant covered funding for the STARS program for three years, ending in academic year 2019. The grant allowed the program to hire new advisers and offer more workshops in math and science. During the 2019 legislative session, the Legislature appropriated $500,000 in fiscal year 2020 and another $500,000 in fiscal year 2021 to support the program (ESSHB 2158).

Too soon to determine grant program impact on student outcomes

The three university programs created pathways to high-demand STEM degrees. Initial data suggests that more students will graduate with STEM degrees with the help of these programs. However, it is too soon to determine the total impact the grants have on student outcomes (e.g. graduation, employment, earnings) because many of the students have been enrolled for three years or less. WSOS has required periodic updates from the three grant recipients, but it is not tracking individual students benefiting from these programs.

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