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Crunch Time
Tuition soars as financially strapped states cut into higher education spending

By William Trombley and Lori Valigra

Photo by Todd Buchanan, Black Star, for CrossTalk
At the height of the worst financial crunch public colleges and universities have experienced in at least a decade, officials at Virginia Tech, a campus with more than 25,000 students in the Blue Ridge Mountains of southwestern Virginia, are doing their best to make lemonade from lemons.

Except for Missouri, Virginia suffered the deepest state appropriation cuts for higher education of any of the 46 states that responded to a late-summer survey by the State Higher Education Executive Officers (SHEEO)-13.2 percent between the 2002 and 2003 fiscal years. In the last two years, Virginia's support for higher education has declined by more than 20 percent.

At Virginia Tech, the cuts amounted to $72 million, or 28 percent, over a 16-month period that began in fall 2002.

The university has responded by persuading 130 tenured professors and researchers-about ten percent of the faculty-to take early retirement, raising undergraduate tuition almost 38 percent (to $4,190) in the last two years, eliminating some academic programs, merging others and dropping hundreds of class sections.

These austerity measures have enabled Virginia Tech to avoid a hiring freeze and to recruit new faculty in research areas the university regards as promising, such as nanoscience, bioinformatics (using computers to analyze biological information) and biomedical engineering. There was also enough money for a 2.5 percent faculty and staff pay increase, the first in three years.

Undergraduate enrollment has held steady at about 21,500, despite the hefty tuition increases.

Provost Mark McNamee is hoping the worst is over. "We're holding our breath," he said. "We don't expect (more) budget cuts but we're also not expecting much relief. Our strategy is that we accepted the fact that these will be permanent reductions in our budget."

While some higher education officials consider the fiscal crisis to be temporary-"just part of the cycle," one said-others agree with McNamee that tighter budgets are here to stay.

"The reality is sinking in that this is not short term, that it's going to be with us for a long time," said Travis Reindl, director of state policy analysis for the American Association of State Colleges and Universities.

"I think the ratcheting down of state support is going to continue," said Donald E. Heller, associate professor of higher education at Pennsylvania State University. "We're going to continue to shift the financial burden from the state to the students. I'd like to think this will stop at some point, but I'm not optimistic."

Photo by Axel Koester for CrossTalk
"Most states have created structural-not just cyclical-deficits," David W. Breneman, dean of the Curry School of Education at the University of Virginia, wrote recently in the Chronicle of Higher Education, "and higher education happens to be the easiest place to make large cuts in the increasingly small part of the state budget that is discretionary."

Belts are tightening on campuses across the country, as financially-strapped states cut into higher education spending. The SHEEO survey found that state spending on higher education declined in 22 states between the 2002 and 2003 fiscal years and that 25 states anticipate a drop in the current fiscal year. The survey also found that states will spend four percent less for higher education operations in fiscal year 2004 than in 2003-a decrease of about $2.1 billion from the $53.2 billion spent in fiscal year 2003 in the 46 states responding to the survey.

The impact has been softened by tuition and fee increases, some of them very large indeed. Arizona's public four-year campuses have increased tuition by 39 percent this fall; California's two large systems-the University of California and the California State University-hiked their charges by 30 percent. Counting a ten percent increase last winter, UC undergraduates are paying 40 percent more than a year ago. Another nine institutions, in five states, have increased tuition and fees by 20 percent or more, according to the National Association of State Universities and Land Grant Colleges, and at least an additional 37 campuses have increased their charges by ten to 20 percent.

The American Association of Community Colleges reports an average tuition increase of 11.4 percent this fall among its public members. The survey included 360 colleges, about 35 percent of the organization's public membership.

Tuition and fees at public four-year institutions jumped an average of 14.1 percent this year, the annual College Board survey found. At two-year public campuses, the average increase was 13.8 percent.

But raising tuition is not enough to offset budget reductions in most cases, so campus budgets are being pared, often painfully.

Photo by Michael Kernan, Virginia Tech, for CrossTalk

To cope with a two-year loss of $131 million in state support for its three campuses, in Urbana, Chicago and Springfield, the University of Illinois has eliminated almost 1,000 faculty and staff positions (but no tenured faculty), raised undergraduate tuition by 15 percent over a two-year period, and cancelled about 1,000 class sections, among other measures.

"Our school is an enormous bargain, but with the cuts we're compromising the quality of education," Chester Gardner, vice president for academic affairs said in an interview. "The faculty are concerned. The faculty are asking what the commitment of the University of Illinois is, and they are asking whether they want to invest their career here. We are losing people over that."

California's majestic budget deficit (an estimated $38 billion over 18 months), has led to sharp spending cuts in the current academic year for both the California State University ($345 million, or 13 percent) and the University of California ($248 million, or eight percent).

In addition, the legislature has told UC and Cal State not to expect any money for enrollment growth in 2004-05, an action that might place the state's Master Plan for Higher Education in jeopardy. The 43-year-old plan calls for the University of California to accept the top one-eighth of the state's high school graduates, while the California State University is supposed to admit the top one-third. Officials of both systems say they might not be able to fulfill those commitments if no money is provided for enrollment growth. As a first step, both UC and Cal State are limiting new admissions for the winter quarter or semester.

"We'll make it through this year, sort of like the walking wounded, but next year is a very big question," said Charles B. Reed, chancellor of the 23-campus, 414,000-student California State University.

Budget cuts led to elimination of at least 5,800 class sections throughout the 108 California community colleges last spring, contributing to an enrollment decline of more than 50,000 students, Thomas J. Nussbaum, the system chancellor, has reported. Additional budget cuts this year, and a tuition increase from $11 to $18 per credit unit (still one of the lowest in the nation), are expected to cause a further drop.

In the nine colleges of the Los Angeles Community College District, the state's largest, fall enrollment is 121,000, a decline of 6,000 from a year ago. Officials blame an operating budget cut of $19 million and the subsequent cancellation of at least 500 class sections. In addition, there are freezes on hiring, travel and new equipment purchases, and some staff members have been laid off.

Missouri has been one of the hardest hit states, with a decline of 10.2 percent in state appropriations (excluding lottery funds) for higher education between the 2002 and 2003 fiscal years, according to the annual "Grapevine" report published by Illinois State University. Another 4.2 percent drop is expected in fiscal year 2004, and this does not include additional monthly "withholdings" the governor is required to make if state revenues fall short of expectations.

The University of Missouri's flagship campus at Columbia lost $68.3 million in fiscal year 2002, another $14.2 million so far this year. In response, the campus raised tuition almost 20 percent and has introduced an early retirement program that so far has resulted in the loss of 96 faculty and 331 staff members.

At Southeast Missouri State University, an attractive campus of 9,570 students on the Mississippi River, 95 miles south of St. Louis, a 17 percent cut in state support in the last two years has led to a flurry of changes.

Last year, two deanships and five department chairs were eliminated, and the philosophy, political science and religion departments were combined into what campus wags are calling the "Department of Church and State." This saved about $100,000, according to Provost Jane Stephens. "That was hard to do but, compared with what we're doing this year, it seems easy," Stephens said.

All campus offerings are being reviewed, "with an eye to reducing or eliminating academic programs," she said. Class size will be increased ten percent, and the percentage of tenured faculty will be lowered from 88 to 80 percent, over time. "We are determined not to lose the quality of what we do," Stephens added, "but we will have to eliminate some things in order to maintain our highest-quality programs."

Florida's 11 state universities suffered a $53 million cut in state appropriations, but an 8.5 percent tuition increase more than made up for the loss. Enrollment on the first day of fall classes was 265,848-3.1 percent higher than a year ago.

Photo by Dennis Brack,
Black Star, for CrossTalk

This is in line with early reports from around the country, which indicate that budget cuts and tuition increases have done little to dampen enrollment demand, at least not in four-year institutions.

Community colleges have not fared as well in some states. In addition to the California losses, Florida newspaper stories suggest that as many as 35,000 students have been turned away from two-year schools in that state because not enough classes were available.

The University of Colorado system, facing a $44.8 million reduction in state support, has eliminated 500 faculty and staff positions, frozen salaries and dropped some degree programs.

West Virginia's higher education spending was slashed ten percent this year, and Governor Mike Wise has called for another nine percent cut next year, despite record enrollments at some of the state's public institutions.

So it goes in state after state.

These spending cuts are coming just as "tidal wave II"-the children of the baby boomers-reaches campus shores. The national pool of high school graduates is larger than ever. More than 80 percent of colleges and universities report an increase in applications, as students and their families increasingly come to believe that a college degree is necessary to make a middle class life possible.

"Because of enrollment growth and these large tuition increases, this is worse than the recession ten years ago," said the University of Virginia's David Breneman. "I think this is a watershed point."

Some of the new tuition charges have been eye-popping-28 percent in the State University of New York system and at the University of Oklahoma; 25 percent at the four-year schools in the City University of New York system (which was tuition-free until 1976); 23 percent at Texas Tech; 22 percent at Iowa State University. Penn State undergraduates now pay $9,706 in tuition and fees, a 15.8 percent increase over last year. University of Michigan undergraduates are paying $7,975. Not so long ago, that kind of money would have paid the annual tuition at a selective private college.

Higher tuition and fees will make up for some, but not all, of the state appropriation cuts. For example, public colleges and universities in the State of Washington expect to recoup 82 percent of a $131 million reduction in state funding by raising undergraduate tuition seven percent, according to the Washington Higher Education Coordinating Board.

In California, the non-partisan Legislative Analyst's office estimates that this fall's 30 percent tuition increase will generate $216 million in additional revenue for the University of California, $160 million for the California State University, even after one third has been set aside for financial aid. Thus, the Legislative Analyst concludes, Cal State lost only two percent of its state support this year, UC only one percent.

However, both systems dispute these calculations. "Our net loss is $304 million, or 11 percent of what we had before, period," said Cal State Chancellor Reed. State General Fund support per student has fallen from $8,798 in 2001-02 to $7,441 in 2003-04. The University of California contends that its budget has been trimmed by $410 million, not the $248 million cited by the Legislative Analyst. However, UC does not include revenues from the 30 percent tuition increase in arriving at the $410 million figure. "The important point to make is that the state is dis-investing in the university," a UC spokesman said.

Tuition also has been rising rapidly for out-of-state students, who supply a significant revenue source for some institutions. Last year, 8,540 out-of-staters, one third of all undergraduates, contributed more than $200 million dollars to the University of Michigan's coffers. At the University of Virginia, out-of-state students-31 percent of all undergraduates in fall 2002-will pay $21,894 in tuition and fees, while resident Virginians pay $5,964.

At his final Board of Regents meeting, in September, retiring University of California President Richard Atkinson suggested that UC might improve its financial condition by admitting more non-resident students, a move that would make it even less likely that the university could fulfill its obligations under the state's higher education master plan.

Some campuses charge relatively low tuition, then add hundreds of dollars in mandatory fees. At Texas A&M, for instance, tuition increased only $4 per unit, to $92, this fall, but 20-odd required fees-for everything from health services to computer access and permission to use the library-could add another $1,000 to the bill.

Several states are experimenting with efforts to lighten the tuition burden for students and those who pay their bills.

A new "truth in tuition" law in Illinois assures students at the state's nine public universities that, beginning in fall 2004, they will pay the same rate for four continuous academic years that they paid as freshmen. Such a plan has been in effect for five years at Western Illinois University, in Macomb.

Ohio State University has adopted a three-tiered approach, charging new students $6,474, second-year students $6,172, and other returning students $5,658.

The University of Oregon offers a 15 percent discount on classes taken before 9 am or after 3 pm. The Dallas community colleges charge half the regular tuition rate of $26 per credit hour for classes taken at off-hours or on weekends.

But many analysts regard these steps as gimmicks that "will do little to slow the troubling long-term trend of unpredictable and seemingly uncontrollable hikes in public tuition," as Jamie P. Merisotis, president of the Washington-based Institute for Higher Education Policy, wrote recently in the Chronicle of Higher Education.

Photo by Michael Kernan,
Virginia Tech, for CrossTalk

Representative Howard P. (Buck) McKeon, a California Republican who chairs a key higher education subcommittee in the U.S. House of Representatives, thinks the way to control tuition charges is by penalizing institutions that raise their rates beyond a certain point, by removing some of their federal funds. Not surprisingly, colleges and universities are strongly opposed to that approach.

As tuitions soar, financial aid for needy students is not keeping pace, and that worries many higher education observers.

The maximum federal Pell Grant remains at $4,050, after an effort by congressional Democrats to increase the amount to $4,500 was defeated. Some states have reduced spending on need-based aid while maintaining or even increasing support for merit-based programs like Georgia's HOPE scholarships.

"If tuition goes up by $400 or $600, it's a problem, but unless you're a low-income student it's not going to keep you from going to college," said Sandra Baum, a professor of economics at Skidmore College. "I'm concerned about states that are cutting need-based aid, because low-income students are the ones who will fall out entirely."

William Trombley is senior editor of National CrossTalk. Lori Valigra is a freelance writer in Boston.

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