College faces implementing tuition increases to resolve financial problems
With Gov. Mike Leavitt calling a special session of the Utah Legislature to deal with budget shortfalls later in the month, educational institutions across the state are nervous.
Public schools and higher education institutions depend on the state for funding. Utah"s public and higher education systems receive money in different ways.
The state directly supports public education through allocating money per pupil. School districts also fund operations through property taxes and some other means.
Higher education has fewer financial resources. Utah appropriates revenues to the system and the office of higher education disburses the money to nine of the 10 public institutions for operating budgets. The Utah College of Applied Technology gets money directly from the Legislature by request.
Other than grants, private contributions and research funds, higher education institutions are left with one way to come up with additional money: tuition hikes.
The best way for an organization to reduce expenditures during tough times is to cut costs. Most of Utah"s public higher educational institutions have trimmed expenditures several times in the last year by not replacing retiring workers or faculty members and by implementing hiring freezes. Some colleges and university have eliminated entire departments, let employees go and contracted out certain services.
But at some point, the reduction of labor force issue tends to become self-defeating. Eliminating departments means fewer students attending a college or university. Lower enrollments, in turn, mean less tuition paid as well as reduced state allocations for the next year.
In a Nov. 20 memo to College of Eastern Utah employees, president Ryan Thomas discussed what may be facing CEU during the next year.
"The state budget has vacillated significantly during the last several months, suggesting that some near term improvement is possible," stated Thomas in the memo. "To a large extent, we are in a watch and wait posture until we receive further information from the state fiscal analysts."
When Grace Jones left in 2000 to become president of Three Rivers Community College in Norwich, Conn., officials discovered that CEU was deeply in debt. The school had to make up the deficit. Then came the economic downturn of the last 15 months and, consequently, the cuts by the Utah Legislature in state monies earmarked for higher education.
The Utah Office of Higher Education along with several colleges in the state helped to mitigate CEU"s debt in various ways, but the matter posed a significant problem for the new administration.
Last year, the college eliminated the debate program when the director left and CEU officials laid off nearly all of the employees in the maintenance department. A number of additional budget cuts were made and other employees who left the college were not replaced.
According to Thomas" memo, CEU remains in a "watch and wait posture" regarding tuition increases until the school receives more information from the state.
While the first tier of hikes averaged 4.5 percent, just as the state board of regents had suggested, a second phase of increases in tuition at public colleges across the state could range anywhere from 1.5 percent to 9 percent.
According to information from Thomas" office, each 1 percent increase in tuition at the school generates $26,000. Funding one step with grade increases on the salary schedule for CEU employees costs $106,000. Employees have received little or no increases since the deficit was discovered.
But the matter of increasing tuition poses a dilemma for the college.
"Our tuition is currently in the upper third for similar institutions in our region," pointed out the memo from Thomas. "We are also marginally higher that the tuitions at Snow and Dixie (colleges)."
One of the primary concerns is pricing higher education beyond the students" ability to pay. That could result in fewer students and less money overall for operating the school, even with higher tuition.
"My recommendation, after considering past experience with tuition increases at CEU, is that we hold the second tier tuition at as low a rate as possible, with a range of 1.5 percent to 4 percent in order that we remain competitive in the state," stated Thomas" memo.
If the economy and tax revenues do not improve, the Utah Legislature will face making tough decisions. The governor is asking for cutting back property tax subsidies for water districts and projects. But the natural resources committee has recommended against the proposal. Another possibility is reducing highway funds and using the money to shore up the state"s budget.