Last week, I wrote about budget issues that the California State University system is experiencing. California has two different state university systems, and they’re both struggling to make ends meet. The CSU system has an apparent budget shortfall of about $1.5B. It also has a system-wide maintenance backlog of about $6B that has the Board of Trustees looking longingly at tuition increases.
CSU isn’t doing a very good job of containing operational expenses, and it cannot hold the line on its neglected maintenance. The backlog there grows by nearly $300M every year. CSU, which is the largest public university system in the country, is not immune to inflation. It must also compete with other employers for workers in a really tight labor market in one of the highest-cost states in the nation. And it has to deal with shifting state budget priorities.
As I said last week, the go-to solution for higher ed budget problems is to raid student wallets. This tracks with a CSU working group report on potential solutions to the system’s budget crisis. The report offered a number of options that shed light on just how much these raids might cost.
According to the report, programmed tuition increases are unavoidable through at least 2030. The baseline suggestion is to raise tuition by 6% per year every year until money going out equals money coming in. Other suggestions included raising tuition for incoming freshmen by 5%, then freezing it for them for the next three years. Another possibility is to raise tuition by 5% for incoming freshmen, then raise tuition annually for them by 3% each subsequent year.
Tuition increases can’t be the only strategy for balancing the books
While the CSU system remains in search of a sustainable revenue model, none of the suggestions involved cutting expenses. While I acknowledge that reducing and reprioritizing expenditures is a rather old-fashioned approach, it remains one way in which institutions can close the gap between revenues and expenses. It also seems to be the path of most resistance.
The working group did point out that they believed (somehow) that students would not be seriously impacted by 6% tuition increases because students could get scholarships, student loans, and grants.
(I’m not kidding.)
To illustrate the impact of a 6% price increase, the current average price of a gallon of gasoline in Michigan today is $3.49. A 6% increase would take that up to $3.70 per gallon. The average rent for a two-bedroom apartment in Ypsilanti was $1,250 as of July 8. A 6% increase would raise the rent to $1,325. The US Post Office just raised the price of a first-class stamp last week from $0.63 to $0.66, which is almost 6%.
My point is that 6% is noticeable. And what is a sustainable revenue model for CSU is not a sustainable cost model for its students. The 6% per year tuition increases will raise the students’ attendance costs by more than 26% over four years, and by more than 50% between now and 2030. Scholarships, loans, and grants – which the working group fervently believes will mostly cover the rising cost of attendance – won’t cover programmed tuition increases forever.
Institutions must show how they’re cutting costs
Any discussion of a sustainable revenue model must also include frank discussions about a sustainable expense model. But higher education administrators don’t want to talk about sustainable expenses because that discussion might lead to the inescapable conclusion that the cost of their beloved, bloated administration is too damned high.
In WCC’s case, having twelve vice presidents on the payroll isn’t sustainable. Spending more on energy than any other community college in Michigan isn’t sustainable. A $300,000 maintenance budget is not sustainable. Waiting to act until the sanitary sewer system on campus gives out is not sustainable.
Shoveling money at the Health and Fitness Center while simultaneously cutting on-campus services like the daycare center (during a critical national daycare shortage, no less) is not sustainable. Scrounging up cash to construct a new building on campus that has literally no discernible academic value while the other buildings fall apart from lack of maintenance is not sustainable.
Offering deep discounts to out-of-district and out-of-state online students while charging in-district students a premium for enrolling in online classes is not sustainable.
The list goes on and on. Rather than looking at raising tuition yet again, why not first look at cutting expenses? Then maybe – just maybe – the institution may not have to raise tuition at all.
Photo Credit: Pictures of Money , via Flickr
