For the second time in three years, the Board of Governors of the University of North Carolina is considering lifting its 6.5 percent cap on tuition increases—and at least three UNC campuses are ready to accept the board's proposal for “catch-up” hikes. Opinion on the board is divided, however, as it should be.
As many readers know, the North Carolina constitution says that a UNC education should “as far as practicable, be extended to the people of the State free of expense.” With UNC schools’ undergraduate tuition and fees ranging from $3,829 to $6,874, it’s not free now. But it is low in comparison to other public institutions.
Many opponents of increases argue that raising tuition beyond the 6.5 percent would violate the “as free as practicable” standard. Most of these opponents assume that the only way to keep tuition low is to increase the subsidy from the state (currently $12,868 per student, according to the Board of Governors).
But there’s another way to keep tuition “as free as practicable.” That is for the university to live within its means, just as individual North Carolinians are doing in these stringent economic times. That means applying techniques such as: Budget your expenditures. Cut them when necessary. Use your additional 6.5 percent of tuition (if that’s what you get) to make up for legislative cuts.
In other words, instead of using the state constitution to justify the extraction of more money from the taxpayer, universities should lower costs so that extra tuition is not required.
UNC officials argue that they need funds to keep quality up and that the university has already been cut to the bone. It is routine to read, as in the Raleigh News & Observer on November 11, that the system has cut something like $1.3 billion in the past three years (although President Ross has referred to a smaller amount, a billion dollars in cuts over five years).
Those numbers may be literally true, but somewhat disingenuous. The billion-dollar figure is the sum of all specific cuts to the system, but there have been almost as many additions to the UNC budget in the same period. The figure does not include additional funding from the state for enrollment, need-based scholarship aid, or specified projects. And many of the cuts are from projected increases, rather than actual spending.
For a more accurate picture, consider that the largest UNC appropriation ever passed by the legislature was $2.71 billion, enacted in 2009-10. Two years later, after making its cuts, the legislature appropriated $2.54 billion. Thus, the 2011-12 appropriation was only $170 million less than the biggest ever.
Total revenues (including sources such as tuition, fees, and private donations) have increased over the last two years, despite the lower state appropriations. And, while the cuts were indeed significant in 2011-12, figures collected by the Chronicle of Higher Education indicate that for the two previous years, North Carolina's state funding for higher education operations went up by 5.2 and 6 percent respectively (those figures include community college funding). Tuition and fees went up an average of 15.5 percent in 2009-10.
Thus, raising tuition next fall beyond the 6.5 percent cap is far from an open-and-shut case. Even former UNC presidents are divided. Speaking at a gathering of past presidents of the university on November 9, Erskine Bowles urged low tuition and more support from the General Assembly. (Bowles originally introduced the 6.5 percent cap.)
But former UNC president C. D. Spangler offered an alternative: cutting costs by taking steps that will not reduce quality. At the November 9 meeting, he presented a list of ten actions that could be taken over the next two years (the two-year time frame is based on his expectation that economic conditions will improve). Nine of them are cost-control measures.
His ideas: 1) suspending sabbaticals for faculty; 2) freezing salaries of everyone earning more than $100,000; 3) requiring all chancellors to cut 10 percent of their administrative expenses; 4) suspending all out-of-state travel except after a stringent approval process; 5) suspending scholarships to out-of-state students; 6) deferring all athletic facility expansions; 7) raising out-of state tuition to the actual cost of the education; 8) asking 1000 people to give a one-time gift to support ten student scholarships; 9) transferring all registered-nurse programs to community colleges; and 10) delaying the creation of any professional schools.
Those proposals should be considered, along with others. And I’m pleased to see that at least some Board of Governors members are questioning the increase. For example, board member Fred Mills told the Pope Center that “cutting spending is a great revenue enhancer.“ At the meeting, Mills had assured the student government representative that he would not support a tuition increase “until successful efforts at cost reduction were in place.”
As the Board of Governors deliberates over the next two months, I would like to make two recommendations. First, it’s time to insist on financial transparency. The board should require that the university administration report in detail how it has reduced expenses in response to the budget cuts. In fact, that should be part of a broader response that provides the board with actual expenses, broken down as low as the departmental level. Furthermore, the university should spell out how it has used state appropriations for enrollment, as the university’s enrollment growth has slowed and perhaps has even halted.
So far the public has seen just generalities about the cuts—statements such as “the loss of more than 270 unfilled positions” at UNC Charlotte or “about 7 percent cuts on the academic side and 10 percent on the administrative side” at NC State. The board should keep in mind that effective cuts can actually improve educational quality by shifting funds to higher-valued and more rigorous activities and programs.
Second, consider a compromise: differential tuition. Although tuition and fees differ modestly from school to school, the flagships, especially UNC–Chapel Hill, could easily charge more. Many affluent North Carolinians benefit from UNC-Chapel Hill’s bargain rates. As Jay Schalin wrote in the Raleigh News & Observer earlier this year, freedom to raise tuition might be offered in return for reduced state appropriations, which already represent only 21 percent of its budget. In contrast, some other campuses should hold the line on tuition.
In today’s economy (a “jobless recovery”), raising tuition at double-digit rates at schools with large numbers of middle- and working-class students is bad policy. Those who invoke the “as free as practicable” provision are on the right track, but they should remember that keeping costs down is the best way to reduce the price for both students and taxpayers.