TEMPE - The three state university presidents voiced their support for more tuition hikes Friday, but said predictable tuition increases over time could be a risk due to uncertainty in the external market.
At the Arizona Board of Regents meeting at Arizona State University, regents discussed a proposal to make tuition increases predictable every four years so families could budget their finances. However, the university presidents said the instability of factors such as financial aid and state appropriations would make the proposal challenging.
"My own belief is the chaotic environment in which we're working makes it very difficult to predetermine tuition rates," said UA President Peter Likins.
However, student regent Wes McCalley said having a zero percent tuition increase one year, then having a 39 percent increase the next is a disservice to students.
"We've got to find a way to build in some sort of plan for students," McCalley said. "They might not have an exact number of what they will be paying, but they'll have some sort of idea."
Despite their opposition to predictable tuition increases, university presidents said tuition increases are necessary in a time of shrinking state appropriations coupled with rising operational costs.
ASU president Michael Crow said the universities' financial crises will continue since they are funded by the state and tuition revenue, which are well below their operational costs, resulting in low graduation rates.
"You can't build a great university on Wal-Mart prices," Crow said.
Although some believe low retention rates at the universities are caused by the monetary burden on the students, Crow said access is not the problem. Instead, Crow said a study showed large class sizes, poor student-to-teacher ratios and inadequate "living and learning" environments drive students away from the universities.
"The one single dominant factor was quality of the university," Crow said.
In addition to improving the quality of education, the universities must also increase graduation rates and diversity in the future, Likins said.
"That's a tough set of constraints and we're determined to do all of them," Likins said. "But that's very difficult to do without money."
NAU president John Haegar said the cost of operating a university would rise due to factors such as technology, building upkeep and faculty salary.
However, Haegar said while the state may increase their actual dollar contributions to higher education, their overall percent contribution to the university budget will decline.
Last year, the state contributed 29.7 percent of the UA's budget, while it made up 36.7 percent of ASU's budget and 41.6 percent of NAU's, according to regent's reports.
The universities also aim to put Arizona tuition rates at the top of the bottom one-third in comparison to peer institutions across the nation, a goal that originated in 2003 from the Changing Directions initiative. The UA is 41 out of 50 peer institutions, but to keep in pace with other universities, Likins said UA would have to increase tuition by 11 percent from last year and 19 percent this year.
"It's a moving target - I dread losing ground," Likins said, adding the increases were too high.
The complexity of the economic market should also be a consideration when setting tuition, Likins said. As the UA improves in quality, retention rates and tuition waivers will increase as will the UA's ability to attract top students.
At the same time, top students receive merit-based aid and tuition waivers, further decreasing the UA's tuition revenue, Likins said.
In addition, as this year's senior class graduates, out-of-state student numbers may decline, diminishing the tuition revenue as non-residents pay $13,067 while residents pay $4,087.
The legislature placed an arbitrary cap on non-resident students at 25 percent a few years ago (which has since been lifted) in order to focus on serving Arizona students, said Juan Garcia, vice provost of academic affairs.
Crow said tuition is a small percent of the overall cost of a higher education, citing Arizona tuition figures on par with 1990. Crow said students should look at tuition as an investment with a solid return - a degree - rather than a cost.
However, Regent Ernest Calderon said many families would "love to make that investment, but they don't have the money to invest."
Regents and presidents also supported the idea of differentiated tuition by college, where majors bringing in more money after graduation will have a higher tuition, although regents said the proposal would need further examination.
Haegar pointed out differentiated tuition does not work across the board, because nurses have a substantial income, but it would not make sense to increase the pre-nursing tuition as there is already a nursing shortage.
The university presidents remained mum on their own tuition increases and mandatory fees, which are still in the works, but will announce their proposals Feb. 14.