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VOL. 40 | NO. 8 | Friday, February 19, 2016

Universities or Legislature: Who's to blame for rising higher-ed costs

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When figures are presented detailing a 456 percent increase in tuition and fees at the University of Tennessee-Knoxville over the last 20 years, the result is usually some serious sticker shock.

That’s what happened recently when state Sen. Dolores Gresham presented the Tennessee Tuition Stability Act, a measure designed to rein in tuition growth and make it easier for students and parents to pay for a four-year degree.

Of course, University of Tennessee and Tennessee Board of Regents officials are balking at her bill, saying it doesn’t tell the real financial story of their institutions.

But she caught people’s attention, including those on the Senate Education Committee she chairs, gaining passage there and setting up a showdown with UT System President Joe DiPietro, who wasn’t present at her initial presentation but was expected to defend his system this week.

It seems the University of Tennessee, the state’s flagship university, is doing a lot of defending these days, from sexual assault allegations within the athletic department to accusations the diversity department run amok.

In the case of tuition, though, the figures show in-state tuition and fees at UT-K jumped from $2,246 in 1996 to $12,436 this year. At the University of Memphis, tuition and fees rose to $9,269 and at MTSU, they increased to nearly $8,300.

Gresham, a Somerville Republican from West Tennessee, was indignant as she showed how tuition and fees have skyrocketed in comparison to stock market investments.

If someone invested $2,236 20 years ago, it would yield $7,259 today, nearly $5,200 less than university costs in that time period.

“So is it any wonder that the state treasurer was forced to end the state’s pre-paid college tuition plan last year that helped thousands of families save for college?” Gresham says. “What’s to blame here are tuition increases which outpace inflation and our ability to invest and grow our money.

“It also outpaces Tennessee families’ ability to pay, which amounts to a clear tax on the American dream. This is why student loan debt has grown to record levels and working your way through school has become a thing of the past.”

Gresham’s bill would limit tuition growth to Consumer Price Index increases and lock in rates for four years when freshmen enroll in college.

The legislation leaves a little wiggle room.

The Board of Regents and UT Board of Trustees would be prohibited from raising in-state undergraduate tuition and fees above a CPI increase without a vote by the full board. An increase greater than 2 percent would require a unanimous vote, and an increase less than the CPI increase plus 2 percent would require a supermajority vote.

The state’s HOPE Scholarship covers only about half of tuition and fees at most four-year universities and only 32 percent at UT-Knoxville, she points out.

“The statistics also show neither a large increase in enrollment nor decreases in state funding are to blame for the problem,” Gresham says.

“When higher education can’t get the money they need out of the state, instead of making tough choices to cut their budget and live within their means, they have been balancing their budgets on the backs of Tennessee’s students and working families.”

She further calls the steady rise in tuition and fees an “impediment” to the Drive to 55, an effort to have 55 percent of Tennesseans with a degree or certificate in roughly 20 years.

Adding to the irritation of people who are living paycheck to paycheck and trying to put a child through school, Gresham pointed out the University of Tennessee system has 1,465 employees making more than $100,000 a year while the Board of Regents has 945 employees topping that figure.

Even more pointedly, the state’s commissioner of Finance and Administration makes $190,260, while a TBR chief financial officer makes $229,463 and a UT system CFO gets more than $250,200 annually.

She discounts – or nearly ignores – the impact of stale state appropriations.

The state’s appropriation toward UT-K from fiscal 2001-02 to 2016 has ranged from about $160 million to a high of $200 million back to about $180 million while the total of state funding and tuition jumped to about $450 million this year.

But based on the chart Gresham offered, the state’s appropriation went backwards in 2010, increased the next year, then dipped again in 2012 before starting to climb again.

Who pays

UT Policy Analysis Director Lou Hanemann concedes Gresham’s slides are “pretty staggering, taken on the face of it.”

But he contends “closer inspection” of the numbers, taken in context with state funding for a student’s education will change the story.

“She has her sources for that information, and we certainly have ours, and I’m sure the story’s kind of somewhere in the middle,” Hanemann says.

He and other higher-education officials point out state appropriations compared to the amount students pay has flipped by a 60-30 percent split, with students now paying the greater percentage. From 2008 through 2010, “the pace quickened on that flip,” he explains.

Anthony Haynes, UT vice president of government relations and advocacy, contends nobody has worked harder than UT to keep costs down.

“What has changed is who is paying the freight,” Haynes says.

The Legislature has tried but simply hasn’t kept up with rising costs, he adds.

UT dealt with a $300 million-plus shortfall over the last decade and, instead of asking for more state funding, it “reprogrammed,” including finding $60 million in “efficiencies and savings” in 2007-08, Haynes says.

The cost of a college education “has remained relatively flat” over 20 years, including the salaries Gresham mentions, Haynes says.

He also argues public universities are not state agencies or departments, and UT, for instance, tries to recruit the top people in the world to teach and conduct research.

He notes some people whose salaries top $100,000 probably have dual or joint appointments to Oak Ridge National Laboratory.

TBR stance

The Tennessee Board of Regents, which could be set for a major restructuring, opposes the bill because it won’t help reach Tennessee’s Drive to 55 goals, in contrast to Gresham’s stance.

The system has been working on efficiency and effectiveness with “limited resources,” including initiating economies of scale and collaborative efforts between community colleges and universities.

TBR has concerns about tuition cap bills for a number of reasons, including “artificial limits” likely to pose barriers to meeting state goals such as Drive to 55.

The cost of going to college in Tennessee has “effectively not risen” over three decades, but who pays “has changed,” TBR contends.

The average cost per university student in 1987 (adjusted for inflation) was $15,500 compared to $16,500 in 2015. For community college students, the inflation-adjusted cost was $9,950 nearly three decades ago, compared to $9,100 in 2015.

The state covered 73 percent of the cost per university student in 1987, but today students pay nearly 70 percent of the cost, TBR contends. For community college students, the share was 19 percent in 1987, but today their share is nearly 58 percent, according to a TBR statement.

The Board of Regents points out it identified $15 million in savings in recent years and put that toward student support services.

The system further argues the Consumer Price Index is a poor tool for tuition and fee comparisons because it’s based on the pricing of consumer goods and services.

While those are “labor-intensive” tied to pay and benefits, higher education labor is more highly skilled and expensive.

Colleges and universities need “flexibility” on funding for a number of reasons, including large physical infrastructure costs, accreditation standards, limited funding sources and enrollment increases, TBR says.

“Stable and predictable support from the state would likely be more effective in holding price increases to manageable levels,” TBR states.

The outlook

Unfortunately for TBR, this is a tough time to make its case. Acting Chancellor David Gregory recently took the helm from John Morgan, and interim directors simply don’t hold much political power.

Likewise, no matter what UT President Joe DiPietro tells senators, they’re likely to take their own side. After all, they’re the ones responsible for the state’s sluggish appropriation for colleges and universities, and they’re certainly not going to raise taxes for higher-ed.

Never mind the fact Tennessee student debt is around $24,585 per graduate and part of more than $1.2 trillion nationally.

Regardless of whose numbers you accept, legislators and higher education officials should probably share the blame for that bubble.

Sam Stockard can be reached at sstockard44@gmail.com.

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