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Raise tuition, reduce enrollment

Yesterday, I wrote about Hawkeye Community College and an administrative presentation to the HCC Board of Trustees. The presentation was supposed to explain why enrollment has declined by 3.8%, and what the administration intends to do about it. (Their solution involves more administrators.) But their finance VP also had an interesting explanation for why HCC will raise tuition by 3.6% next year.

To lay out a few numbers, in 2020-21, HCC delivered about 93,600 credit hours of instruction. The school’s current combined tuition-and-fees rate is $210 per credit hour. HCC’s new combined per-credit-hour rate for the fall will be $217.50. Based on the most recent reporting of credit hours, this tuition-and-fees increase has the potential to raise about $700,000 per year. HCC’s current budget is $71.27M.

In other words, the $7.50 per credit hour tuition increase, which means an extra $225 per year for a full-time student, will raise less than 1% of the institution’s current budget. (That assumes HCC’s credit hours remain constant, despite the increase in costs.) And as one trustee helpfully pointed out, the new raise in tuition won’t even cover the cost of inflation.

The State of Iowa made an error regarding the taxable value of property for the coming year, and that error will subtract about $200,000 from HCC’s proposed 2023-24 budget. (Also known as three-tenths of one percent of the HCC budget.) Because of the error, the school’s VP of Finance thinks they “may have to tighten [their] belt a bit.”

For some reason, the school can’t find a way to cut the budget by less than 1% so they don’t need to increase tuition, but it might need to tighten up the budget to cover what amounts to a rounding error by the state legislature.

“Raise Tuition” can’t be the go-to budget plan

And there’s no acknowledgment that the plan to increase tuition by that much will likely further erode the enrollment. That will reduce revenue even further and place added financial pressure on the remaining students. It will create exactly the death spiral community colleges want to avoid.

I’m not faulting HCC as much as I am using it as an example. This happens all the time. Need to balance the budget? Just raise tuition. Need to cover inflation? Raise tuition. Enrollment dropped? State made a mistake in the appropriation basis? Raise tuition.

If you prefer to raise tuition rather than carefully examine the budget for nominal reductions, it’s no wonder your enrollment is declining. Student tuition can’t be the standard fix for a community college’s budget program without matching improvements in academic programs. And if you don’t intend to improve your product, don’t raise its cost when demand is already soft.

Photo Credit: Shai Barzilay, via Flickr