The Rising Price of Higher Education
By William Trombley

State spending for public colleges and universities dropped sharply last year, as the state-by-state numbers contained in this special report from the National Center for Public Policy and Higher Education demonstrate. At the same time, tuition and required fee charges rose significantly in many states, and some states reduced their student financial aid programs.

The result was the worst fiscal news for public higher education institutions and their students in at least a decade, as the economic recession struck almost every state. So far this year, the picture looks even bleaker, with states continuing to cut higher education appropriations and campuses responding by raising tuition even higher, imposing new fees and reducing student financial assistance.

View bar graph version of the data.

The report's numbers come from the U.S. Bureau of Economic Analysis; the U.S. Bureau of the Census; the National Association of State Budget Officers; the National Center for Higher Education Management Systems; the Washington (state) Higher Education Coordinating Board; and the annual "Grapevine" report published by the Center for the Study of Education Policy, at Illinois State University.

They show that state support for higher education, measured in current dollars, increased only 1.2 percent, a sharp decline from last year's 3.5 percent and the smallest increase in a decade. Appropriations dropped in 14 states, with the largest decline-11 percent-in Oregon.

Tuition and mandatory fee charges at four-year public institutions rose in every state, startlingly so in some cases. In Massachusetts, for instance, tuition jumped from $3,295 to $4,075, an increase of 24 percent, largest in the nation. Iowa, Missouri and Texas increased tuition and required fees by 20 percent, North Carolina by 19 percent, Ohio by 17 percent. Sixteen states increased tuition and fees by more than 10 percent.

Tuition increased by just two percent in New York State last year, but Governor George Pataki, after cutting the State University of New York's 2003-2004 budget by $184 million, proposed a 35 percent increase in SUNY undergraduate tuition. The governor trimmed the City University of New York budget by $83 million, but left it up to the system's governing board to determine tuition charges.

Community college tuition and mandatory fees rose in all but two states (California and Maine), with 10 states registering increases of more than 10 percent. The biggest increases were in Massachusetts and South Carolina, where charges jumped 26 percent.

View bar graph version of the data.

Fourteen states increased their total investment in student grant aid by more than 10 percent between 2001 and 2002, the report notes. South Carolina had the largest percentage increase-94 percent.

But 17 states spent less on student financial aid in 2002 than they had the year before. Massachusetts had the largest decrease (24 percent), followed by Rhode Island (20 percent), Nebraska (15 percent), Utah (14 percent), and Connecticut (13 percent).

If 2002 was a bad year financially for public colleges and universities, 2003 will be worse, most experts predict. The economic forces that accounted for last year's problems are still active-recession in almost every state, the uncertainties surrounding a possible war, the need to provide adequate funding for K-12 education and Medicaid before fretting about higher education.

"Most states are still experiencing very serious problems," said Scott Pattison, executive director of the National Association of State Budget Officers.

There are a few exceptions, he said: Wyoming-where taxes on revenue from mineral extraction have helped to balance the state budget-and a few other small-population states. But even Texas, which had been able to balance its budget because of generous tax revenues from oil and gas, faces a two-year budget deficit conservatively estimated to be around $10 billion.

"The disease has struck here, too," said Don Brown, Texas higher education commissioner.

According to Pattison, at least 16 states are considering, or already have implemented, mid-year budget cuts and/or tuition increases.

An informal survey by the National Association of State Universities and Land-Grant Colleges, representing 215 public institutions, found mid-year tuition hikes ranging from 4.6 percent at the University of Connecticut to 13 percent at Virginia Tech.

Ohio Governor Bob Taft has responded to that state's average 18 percent tuition increases this year by proposing a six percent cap on future hikes at all public colleges and universities except Ohio State, where he would allow a nine percent increase.

After several years of freezing tuition rates, Virginia now has seen increases for the fall and spring semesters that average 15.6 percent on its public campuses. The higher tuitions are a response to more than $500 million in higher education budget cuts made by Governor Mark Warner as he has attempted to cope with a budget deficit of about $6 billion.

In the National Center for Public Policy and Higher Education survey, Massachusetts has some of the poorest ratings-largest tuition increase in four-year public institutions (24 percent), second largest in community colleges (26 percent), biggest cut in student financial aid (24 percent), and a three percent reduction in state appropriation for public higher education.

These numbers translate into steep cutbacks on the state's campuses. At the University of Massachusetts' flagship campus in Amherst, the size of the freshman class has been reduced by 1,000, 400 staffers, including 100 professors, have taken early retirement, and there is no money for faculty or staff pay raises. In addition, classes are crowded, the library was unable to buy any new books last year, and seven sports teams have been eliminated.

In California, where Governor Gray Davis is proposing deep cuts to help close an 18-month budget gap of between $30 and $35 billion, the University of California already has increased tuition by $135 for the spring semester and might triple that sum for the 2003-2004 academic year.

At the 23-campus, 400,000-student California State University, trustees voted to increase "fees" (which would be called tuition anywhere but California) by $76 a semester beginning in January. Davis cut the Cal State operating budget by $326 million but is proposing a $150 million increase to cover enrollment growth next year.

Cal State Chancellor Charles B. Reed said, "I don't think the nation has faced this before-heavy budget cuts combined with enrollment growth. It's a real double whammy." But Reed said Cal State plans to use the growth money to accommodate an additional 20,000 students next year, while depending on the increased fee revenue to maintain access. At the same time, Cal State will try to make sure that faculty members are available to teach courses students need in order to graduate.

In effect, Cal State will be swallowing a $200 million budget cut while still increasing enrollment by 20,000, but Reed warned that the plan will succeed only if the money Davis has allocated for enrollment growth survives a long and probably contentious budget process. "If we can manage this well, good things are going to happen for us," he said. "But if we don't get the growth money, next year is going to be a nightmare."

Even if Reed's scenario plays out, Cal State classes will be larger, some faculty will be asked to teach more, some programs are likely to be dropped, and little progress will be made toward the goal of increasing the percentage of full-time faculty in the system.

The Davis budget is especially tough on California's 108 community colleges, cutting their state appropriation by $530 million, or 10.5 percent, while asking that tuition be increased from $11 per credit hour (lowest in the nation) to $24.

"This is the most devastating reduction to community college financing that I've seen," said Kevin Ramirez, president of Sierra Community College and vice president of the Community College League of California.

Some community college officials estimate that the budget cuts and fee increases will cause an enrollment decline of about 200,000 students. The budget proposal acknowledges that the fee increase is likely to trim community college enrollment by at least 40,000 and gives that as a reason for reducing the state appropriation.

"By the same logic, if we executed more prison inmates, we could reduce state spending on prisons," one critic observed.

Said another, "Governor Davis and his top staff people either went to the University of California or elite private universities. People with that mentality don't understand the gateway role of the community colleges."

Community college lobbyists hope to persuade legislators not to go along with Davis' proposed cuts. "We're having a lot of success," said Scott Lay of the Community College League, "but in the end it's the governor who has the blue pencil."

Reformers fear that many of the gains of recent years will be lost in the budget-cutting. In Kentucky, for example, where Governor Paul Patton has led a campaign to increase the state's research capacity, its literacy rate and its participation in education beyond high school, things seem to be unraveling.

Higher education institutions have been warned to prepare for a 9.1 percent budget cut. There is no money for the trust funds that enabled the Kentucky Council on Postsecondary Education to promote promising campus reforms. Nor is there money for the "Bucks for Brains" program, which has spent $220 million in the last two years to lure top researchers to the University of Kentucky and the University of Louisville.

"This budget is just going to wreak havoc with the momentum behind reform," said Bill Swinford, the council's legislative representative.

William Trombley is senior editor at the National Center for Public Policy and Higher Education.
Lori Valigra, a Boston-based freelance writer, contributed to this article.