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Other People's Money

Government officials try to get creative with UNC tuition hikes instead of using proper fiscal restraint.

By Jenna Ashley Robinson and Jay Schalin

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March 07, 2010

Editor's note: A shorter version of this article appeared in the Raleigh News and Observer on March 4, 2010.

A controversy is brewing over University of North Carolina tuition hikes. And there’s plenty of bad behavior to go around.

Last summer, the legislature decided to raise in-state UNC tuitions for the 2010-11 school year by either $200 or eight percent, whichever amount is the least on each campus. This comes out to an average increase of approximately 7.2 percent for all sixteen universities in the UNC system. Unlike most tuition raises, the additional revenues will not go directly to the universities, but will instead become part of the state’s general appropriations fund. This year, the university system received 14.2 percent of general fund expenditures.

The legislators’ plan is “creative taxation.” They saw a pot of money that belonged to somebody else—students and their parents—and decided to take it for their own purposes because they can. This sort of behavior is usually frowned upon in proper company.

The UNC system administration is fighting to prevent the legislature from taking that money. However, the system is not exactly coming to the rescue of the students. Instead, it wants to take a slightly smaller pot of money from them for its own pet projects.

UNC’s counter-proposal includes a tuition increase that will average approximately 5.2 percent at all campuses. This money will go to the universities rather than to the general fund. But only 25 percent will be devoted to academic programs.

The rest will be used mostly for students who do not pay tuition at all—50 percent will go for need scholarships, while the remaining 25 percent will be used to expand programs to improve “graduation and retention.” These programs are used to help get students who are academically unprepared for college up to speed. The students who participate in such programs are generally on need scholarships as well.

There has been a rapid expansion of need scholarships programs in the past few years, causing traditional sources of funding to shrink at an equally fast rate. Of the $139 million the system spent on such scholarships in fiscal 2010, $116 million was provided by the state’s escheats fund. The need scholarships have been such a drain on the fund’s principal that it will be empty in 2012 at the current rate of spending. A program started by former governor Mike Easley, the EARN Scholarships, is already being phased out after a mere two years in existence to relieve some pressure on the fund. With the escheats’ rapid depletion, the system is in desperate need of money to pay the expensive need scholarship programs, with tuition increases one preferred method. 

But scholarships funded by raising tuition do not increase overall access. Rather, they make college more accessible for low-income residents while decreasing accessibility for the tuition-paying middle-class—a classic example of wealth redistribution.

Understandably, the UNC Association for Student Governments (ASG) is also battling the legislature’s tuition plan. The student organization, which purports to represent UNC students in general, has circulated a petition with over 20,000 signatures that decries the legislature’s plan as a “backdoor tax increase on students and their families to balance the state's budget.”

However, the ASG is oddly in favor of the universities’ proposal to raise tuitions nearly as much—even though it also hurts “students and their families.”  

In a recent Durham Herald-Sun article, ASG president Greg Doucette declared that “all the students are on board” with the tuition hike—obviously overstated rhetoric. In November of 2009, students at UNC-Chapel Hill protested when the trustees voted to raise tuition by 5.2 percent.

And some students are not happy about paying for others’ educations. N.C. State student Quinten Farmer emailed the Pope Center to say he was adamantly against “the plan to use 50% of the tuition increase only to benefit students on need-based grants.” He said “this policy hurts thousands of students who don't qualify for financial aid, but are still struggling to pay for college themselves.”

Indeed, there are indications that the ASG does not serve as an independent advocate for students, but instead is functioning like an arm of the administration (perhaps due to administrative pressure). In this case, the ASG appears to be “astroturfing,” in which the petition provides fake grass-roots support for the administration’s plan. The petition does not reveal what the administration’s plans are, only that “the money raised through higher tuition rates should go back to the students through higher University funding.” The omission of the administration’s intent certainly suggests the appearance of a deliberate attempt to mislead.

Also, ASG members receive considerable stipends—some as high as $4,000—from the administration for their service. This almost automatically creates a conflict of interest for the members.

Plus, there is the possibility that general administration officials have pressured Doucette for support. Doucette himself told the Carolina Review, a student publication, that “Bowles cussed me out” when there was a difference of opinions about student health care policies (referring to university system president Erskine Bowles). When Doucette took over the ASG presidency in the fall of 2008, he initially opposed tuition raises. The main newspaper on the Chapel Hill campus, The Daily Tar Heel, quoted him in October of 2008 as saying, “I hate seeing tuition increases anytime,” and “I think it [increasing tuition] runs a great risk of pushing people out of the university.” At that time, Bowles reproached the ASG for coming out against tuition increases before the chancellors made their own recommendations. “I don’t think that’s the way business should be done,” he chided the student group, according to the Daily Tar Heel.

And this year, Doucette has a completely different attitude. After the recent BOG meeting, he dismissed students who do not qualify for aid as “rich” and said they “can get loans” if they can’t afford the tuition.

Criticism of the ASG’s allegiance is neither new nor limited to one side of the political spectrum. Both of UNC-Chapel Hill’s major student publications, the liberal Daily Tar Heel and the conservative Carolina Review, have called for an end to the mandatory funding of the ASG for its failure to represent student interests. Several former UNC-Chapel Hill student body presidents have refused to attend ASG meetings and have called it “inefficient” and “unscrupulous.”

It might be that everybody involved in this affair needs to be taken to the woodshed. The legislature should not be picking the pockets of students to pay for their profligate ways. If UNC officials are “cussing out” and pressuring student government representatives to support their pet projects, they need to be taken to task. And if the ASD cannot perform as an independent voice to represent the students of the UNC system, but instead serves as a phony grass roots pressure group to further the administration’s agenda, it needs to be disbanded.

The legislature and UNC system also need to go back to the drawing board. There are countless alternatives better than either existing proposal. For instance, tuition increases could be limited to the amount needed to maintain academic quality, helping out the tuition-paying students. Or the legislature could take it easy on the people who really foot the bill, the taxpayers who provide some of the nation’s most generous higher education subsidies. In this scenario, UNC schools could raise tuitions and keep the money, but only if their state funding was cut by the amount of revenue produced. The savings could then be passed on to the public with tax cuts.

A prolonged economic downturn is no time for politicians and bureaucrats to be picking the pockets of students and taxpayers to pay for their profligate ways.

 


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