University President Teresa Sullivan and her staff unveiled a four-year financial plan earlier this month. The proposal is still a draft, subject to review by the Board of Visitors in its May meeting. The plan calls for tuition increases to compensate for declining state funding.
The University’s state appropriation per in-state student in fiscal year 2012 was $8,346. This figure lags far behind the amount of state support the University’s peer institutions receive. The University of North Carolina receives $22,105 per in-state student, and the University of Maryland receives $17,494.
Sullivan’s plan makes the assumption that funding from the Commonwealth will increase, but only marginally. The plan anticipates an additional $12.6 million in cumulative incremental funds from the state by fiscal year 2017. This figure does not suggest a widespread or sustained uptick in state support for public higher education. It is merely based on what the state would owe to help the University fund the in-state undergraduate enrollment growth that the 2011 Higher Education Opportunity Act mandated.
We have often argued in these pages for the state to make higher-education funding more of a budget priority. Now — with less than two months before the Board finalizes the University’s four-year financial plan — is as good a time as any to remind readers of what happens when a university must serve the public but is forced to make do without sufficient public support. The results are tuition hikes and an increased reliance on philanthropy. Neither outcome is desirable. Steady tuition increases stretch middle-class families, who may not qualify for financial aid, and leave students in debt. Rising costs threaten the integrity of the University’s mission of furthering knowledge and cultivating thinkers, leaders and citizens, because students and families overwhelmed by the financial obligations higher education imposes may lack, or feel they lack, the flexibility to pursue a major and career of their choice. Let’s look at the numbers.
In the absence of sufficient state support, the University since the early 1990s has relied more heavily on tuition increases to remain afloat. Twenty years ago, tuition funded 24 percent of the University’s operating budget. Now it funds nearly a third.
Sullivan’s latest financial plan continues the trend of tuition increases. The plan projects that base undergraduate tuition will rise between 2.5 percent and 3.5 percent per year for the next four years. These increases are, as percentages, modest: by comparison, in-state tuition rose 10.4 percent between fiscal year 2004 and 2005 and 9.7 percent between fiscal year 2010 and 2011. When considering percentages, however, one must remember that a smaller percentage does not equal a smaller sum because tuition rises each year. The 10.4 percent tuition increase between fiscal year 2004 and 2005 was $641 per student (rates rose from $6,149 to $6,790). The in-state undergraduate tuition and fees rate for fiscal year 2013 is $12,216, according to the financial report. A 3.5 percent increase from 2013 levels would be $428.
The draft also introduces an expanded differential-tuition plan. Differential tuition is currently in effect at the University in a limited capacity: the Commerce School charges third- and fourth-year students $4,000 more in tuition than the base rate, and Nursing and Engineering students pay lab fees. Beginning with the class entering this fall, however, the University will inform students that the Commerce School will charge $5,000 a year more than the base undergraduate tuition rate. The Engineering School will charge $2,000 a year more. All other undergraduate schools will charge $2,000 a year more for the students’ third and fourth years, beginning fall 2015, if the plan goes into effect.
Differential tuition is justified insofar as some degrees — engineering, for instance — demand more resources. A better system would track the resources each student’s program of study demands and charge tuition accordingly. Such a system, however, would be dizzyingly complex, so the school-based blanket tuition differentials are understandable.
Because of tuition increases, financial aid will become more crucial for many students. It is disappointing that Sullivan’s financial plan does not include a more robust defense of AccessUVa. A strong financial-aid program is crucial for the University’s success. Such a program preserves the school’s public obligation to educate all worthy students, and it attracts bright thinkers from a range of communities who might not otherwise be able to afford attending college.
AccessUVa’s cost, however, has ballooned since the program began. It currently demands more than $40 million in annual funds, up from $11.5 million when it launched in 2005.
Though the federal government could be doing more to support need-based aid for college students, federal measures increasing financial-aid programs would have a hard time passing in this post-sequester political climate. The onus is therefore on the University to preserve AccessUVa’s viability. But the financial plan, which devotes ample space to detailing why AccessUVa has “proved increasingly hard to sustain,” proffers only two short paragraphs explaining how the school will continue to support financial aid. The University projects its contributions to AccessUVa will rise by $8.5 million in the next four years. The plan says the school will establish a regular review process of the program but it says nothing about what metrics it will use to evaluate AccessUVa. The financial plan is a draft, and its financial-aid section is a prime candidate for editing. If tuition-payers are going to shoulder the school’s increasing costs, lower- and middle-income students deserve a more thought-out approach to how the University will maintain its commitment to AccessUVa.
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