Flagstaff- Regents discussed the effects inadequate state funding has on tuition at Friday's board meeting at Northern Arizona University.
The Arizona Board of Regents listened to a report from the Tuition Study Workgroup, which had been examining tuition possibilities for the past six months.
While no official decisions were made, the regents discussed two areas addressed by the workgroup: complying with Senate Bill 1517 and the timing of tuition setting. Both of these categories have an impact on how tuition changes are made.
Senate Bill 1517 and inflation
The regents must report to the Joint Legislative Budget Committee and the Office of State Planning and Budgeting for tuition options. Increases in tuition for continuing students are limited to the rate of inflation, according to the bill.
Inflation with regard to tuition is monitored in two ways: through the consumer price index (CPI) and the higher education price index (HEPI).
The CPI is measured by taking a market basket of goods purchases by the typical consumer, ranging anywhere from cars to hamburgers to video games, and measures how much the price has increased over an amount of time.
Because the purchase of video games is not typically required to run a university, the HEPI measures the average price a market basket of goods with relation to higher education, like faculty salaries, computers and utilities.
From 1990 to 2004, the CPI has grown 52.2 percent and the HEPI has increased by 64.4 percent, said Dan Anderson, assistant executive director for institutional analysis for the board of regents.
In order to keep tuition affordable, the regents aim to set tuition at the top of the bottom one-third for the senior public universities in the other 49 states.
The top of the bottom one-third for fall 2005 is $5,007. Tuition at the UA for fall 2005 was $4,487, which includes mandatory fees. The UA tuition level currently ranks 40th out of the senior public universities in the 50 states, according to the workgroup presentation.
Tuition setting timelines
All universities must set their tuition levels before the start of the fall semester.
Arizona, along with 31 other states, approves tuition during the spring semester. Another 16 states approve tuition during the summer months. Only two states approve tuition during the prior fall semester, Anderson said.
The time when the tuition is set has both strengths and weaknesses.
"If we set tuition in the fall semester we can give notice to parents," Anderson said.
But if tuition is set in the fall, the universities and student government would not have a lot of time to plan, Anderson said.
Setting the rates in the summer before school starts is also risky.
"It makes it easier for the universities to plan, but impossible for families to plan," Anderson said.
President Peter Likins said before determining when to set tuition, both the university and students' families need to be taken into consideration.
"It creates a real dilemma for not only us, but them," he said.
The university must also keep in mind how much funding the state will provide to avoid ignorantly setting the price of tuition, Likins said.
Possible tuition rates
|Tuition*||Dollar Increase||Percent Increase||Rank|
|*includes mandatory fees|
'We're headed for a train wreck'
The level of tuition is dependent on the level of state funding the Arizona universities receive from the general fund.
"In the '70s, $1 of every $5 went to the universities," Anderson said. "Now it is only $1 of every $10. Higher education has seen their percent of the general fund decline."
In the fiscal year 1979, funding for universities was 19.4 percent of the general state fund. By the fiscal year 2006, funding from the general fund will have declined to 10 percent, according to a presentation from the Tuition Study Workgroup.
If the state does not provide adequate funding to cover operating costs, major problems could occur.
"I really think we're headed for a train wreck," said Regent Ernest Calderón.
In order to maintain an affordable level of tuition, the regents are considering a tuition cap for returning students. The cap does not mean a fixed tuition rate, but one that remains consistent with the inflation rate, Anderson said.
While a cap may seem like a solution to skyrocketing tuition, problems occur if the legislature does not grant enough money from the general fund.
"Imagine a situation where tuition is capped and there is no new money from the state," Likins said. "Financial aid will go down and needy students will get punished."
While tuition payments are a major part of students' education expenses, they only account for a small part of the university operation budget.
"For UA, the net tuition revenue generated is only 5 percent of the money we need every year to run the institution," Likins said. "The money received from the Legislature last year accounts for another 28 percent."
A capped tuition rate also carries with it unintended consequences.
"The unintended consequences are the public universities would have to raise money from private funding," said John Hager, NAU president. "Some can be very good at it, like the UA, but the NAUs of the world may not be able to raise much private funds."
The next step
The regents' discussion section and the report from the tuition workgroup provided information and data needed to appeal to the legislature for a decision about the amount of funding.
"The legislature needs to understand that what happens at this (regent) table in the past three years is the result of neglect from the legislature," said Regent Jack Jewett.
The Arizona Board of Regents will meet again Dec. 1 and 2 at the UA to discuss tuition options again.
The regents' tuition advisability and option report is due to the Joint Legislative Budget Committee and the Office of State Planning and Budgeting by Dec. 31.