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News, Views and Careers for All of Higher Education

Dec. 2

A Chancellor’s Response to Tuition Report

James H. McCormick

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A report issued Monday, “University Tuition, Consumer Choice and College Affordability,” called for a change in the public discussion about college costs — both what it costs to run public universities and for students and their families to attend them. The report was released by the National Association of State Universities and Land-Grant Colleges and focuses on public research universities.

How does the situation look elsewhere in public higher education? James H. McCormick, chancellor of the Minnesota State Colleges and Universities system, agreed to respond to questions from his perspective in a system of regional state universities and community colleges.

Q: At a state system with teaching-oriented universities and community colleges, how does the affordability issue look? Do you see a crisis in affordability, or think that the colleges are more affordable than perhaps people realize?

A: Right now, tuition at our state colleges and universities is still more affordable than many people realize. Tuition averages about $4,500 a year at our 25 two-year colleges and $6,000 a year at our seven universities. Perhaps the better question is: Affordable for whom? In our state, we are reaching out more aggressively to underrepresented groups; we have growing numbers of immigrants, many of whom are low income and the first in their families to attend college. Often, these groups are least able to afford tuition even at current levels. The state will have to draw heavily on these populations for our future workforce. Already, we have worker shortages in some important industries, such as health care.

Q: Do you believe your state views college as a consumer good or a public investment? If the former, is that a problem?

A: In Minnesota, higher education is viewed as a consumer good, a public investment and important to the common good. In recent years, however, state appropriations have dropped from covering 67 percent of the cost of educating a student to the current ratio, which is about 50 percent. We reinforce the public investment idea as often as possible. We also hired a respected economist to conduct an economic impact study that showed for every $1 in net state appropriations, our colleges and universities return $10.87 to the state’s economy. Traditionally, Minnesota has ranked high in college attainment. I believe there is support in the business community for that high ranking to continue.

Q: The Minnesota State Colleges and Universities system is talking about significantly increasing the share of instruction to be offered online. How could that relate to budget for the system — and affordability for individual students?

A: Online courses offer a lot of benefits, including savings in transportation and time, for students. Salaries and course development, on the other hand, are no less costly for online instruction, so there are no particular savings. Many students who attend our colleges and universities also take an online course or two, so there isn’t likely to be much savings in building operations, either. Thus, tuition is not likely to be affected significantly, if at all, by the growth of online learning.

Q: The report suggests that colleges have done relatively little in exploring new modes of instruction (such as online education) that would reduce costs. Do you see significant changes in the works in Minnesota?

A: Minnesota has been a leader in exploring online education, and the state colleges and universities system is committed to increasing enrollment in online programs. In the last academic year, 9.2 percent of all registered credits at the 32 state colleges and universities were through online courses. About 66,000 students, or 26 percent of the system’s students who took credit courses last year, were enrolled in at least one online course.

Q: What would be most helpful on affordability from the state and federal governments?

A: The best case scenario would be for the state to allocate the system’s full appropriation request. That would enable us to hold tuition increases to no more than 2 percent for the colleges and 3 percent for the state universities during each year of the next biennium. The state also could adjust the state grant formula that now puts working part-time students at a disadvantage. These students are less likely to receive a state grant, according to a study by the Minnesota Office of Higher Education. Often, they drop out. At the federal level, full funding of the authorized level for Pell Grants would improve affordability. At the least, students should be assured access to student loans.

— Scott Jaschik

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Comments

Tuition Costs

Invariably, public university presidents point to the decline in the funding providing by their respective states in terms of the percentage. In this case the Chancellor suggested that Minnesota’s State support had fallen from 65% to 50% of the cost of educating their students.

What is obviously omitted is the rapid increase of that cost, as defined by institutions, which have been consistently rising each year at a pace that far exceeds any inflationary measure.

I suspect that the total dollar appropriation in most states has risen consistently each year. What must be scrutinized is the obscene growth in institutional spending.

One obvious example is the “arms race” that has been underway for years as institutions compete to have the latest facilities in the form of state of the art residence halls, recreational and sports facilities and other amenities that are not directly relevant to their educational mission.

Another would be the duplication of programs at institutions within each state.

Colleges and universities need to be far more transparent about the use of their resources. This applies to private instiuttions as well, whose students use public funds in the form of financial aid and subsidized loans to attend those institutions as well.

Paul Watson, at 9:30 am EST on December 2, 2008

In a post yesterday I suggested that a 50/50 split of the private/public benefits of higher ed makes a similar split of cost reasonable and that about $5,000 in tuition would be fair for a uniformly-available inexpensive public education.

Remarkably, Minnesota seems to have already reached that target!

“Tuition averages about $4,500 a year at our 25 two-year colleges and $6,000 a year at our seven universities.""In Minnesota, higher education is viewed as a consumer good, a public investment and important to the common good. In recent years, however, state appropriations have dropped from covering 67 percent of the cost of educating a student to the current ratio, which is about 50 percent”

Well done Gopher State....

Who Pays and Why, at 12:00 pm EST on December 2, 2008

Paul is correct in that total overall investment, at most state institutions, has increased. And he is correct in that spending as increased at a faster rate. In our case, for example, 80% of our costs are salaries (for staff and faculty). Given our current CBA’s, 90% of these positions will receive an increase of 4.5% to 5.5% regardless of performance and economic conditions. Our state appropriate increased by 3%. It doesn’t take a financial whiz to see the imbalance coming.

As for Paul’s comment on the “arms race", most of the “state of the art” residence halls are privately financed and are not at the expense of state funds. The operations of these facilities are also based on its own financial performance so again, the impact on state appropriations is zero.

Duplication of programs is a double edged sword in my mind. Having a program offered at two, or more, different universities in the same state isn’t necessarily an evil to be eliminated as distance away from home is just as important issue of accessibility as the level of tuition. Having only one nursing school, for example, may eliminate many potential students just based on location.

There is no question that the total cost of education is increasing—it is in the service industry and all service businesses typically have costs that exceed the normal CPI. What needs to be determined is what type of education is needed (or desired) and who will pay for it—the state, the student, or the local business leaders via philanthropic support.

Paul is absolutely correct in saying that transparency is surely a key in this as is accountability. Higher education must continue to strive in reporting how funds are used and given the multiple sources and desired outcomes/uses presents many challenges to objectively analyzing this information.

Bob, at 12:00 pm EST on December 2, 2008

Chancellor’s Response to Tuition Report

State university presidents, of course, bemoan the declining percentage of state government funding for their institutional annual operating budgets. But would you really want to return to the character and conditions of, e.g., the University of Iowa in the early 1900s when the state legislature provided almost 100% of such funding? Teaching loads were much higher than today — and the range of offices, services, programs were certainly more constrained than now. The alleged decline in state support usually is stated as a percentage of the whole (rather than in actual or even indexed dolalrs). That’s because new sources of revenues (private fund raising, incorporated athletic associations, research parks, and federal grants) by definition increase the size of the budget and, hence, decrease the percentage of state appropriation. Besides, even if the state contribution in actual dollars has not increased as much as state university presidents wish, perhaps that is because public higher education has become a “mature industry” — and state tax revenues now must also provide (some) support for other worthy state services and programs. Don’t forget — a recent article stated that state university presidents’s salaries increased 7.6% last year — but, of course, the presidents deserve this, right?

John Thelin, Professor at University of Kentucky, at 12:45 pm EST on December 2, 2008

Not every institution is that fortunate

Sorry, but before we claim “that total overall investment, at most state institutions, has increased", let’s look at some numbers instead of making these simple statements! At my institution, the University of Missouri System with its 4 campuses received $428 Million from the state in 2001, then the next year the appropriations decreased to $377 Million, a 12% decrease and the institution has NOT recovered from it yet, as the current (2008/09) allocation is $418 Million, still $10 Million below the 2001 appropriations. Not hiring, belt tightening, lay-offs, and yes, considerable tution increases — whatever can be thought of, was done. Employees on average received only 2% annual salary increases (well below inflation), but there was also one year without any increase and another year with a flat $200 (per year, not per month!) increase across the board, while at the same time each year health insurance and cost of living increased between 4 and 10%, or course. In addition to that, the state just passed a law restricting the university to tuition raises at or below the CPI, so we are sitting ducks, totally at the mercy of our legislators! And yes, we can show the same data as Minnesota, i.e. the conversion of funds invested in the university turning into revenue for the state. I have some ideas why we don’t get anywhere with it, but I am not going to utter it publicly, despite being tenured!

Ingolf Gruen, at 1:15 pm EST on December 2, 2008

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