Allow me to apologize in advance, because most of what you’re about to read will not be good news.
There will be a tuition increase this year – likely around six percent for in-state and an equal dollar amount for out-of-state.
As with most of you and your families, this institution is suffering financially. Our Foundation is not able to give nearly as much money to the school as it has in the past, and our costs are rising.
How are our costs rising when inflation is so low and we’re doing so many things to cut cost? Three ways: first, cost cuts can only cover so much, as we cannot sacrifice the quality of our program for the sake of budget.
If we did that, we would become just another Salisbury or Frostburg. Second, despite low inflation, some specific expenses continue to rise rapidly. One example is retiree benefits.
Under state law, we are required to provide our employees with a certain level of retiree benefits.
When these premiums rise by ten percent, it hits us hard, costing the institution an additional half million or so dollars, without us seeing any additional benefits.
That hurts. While that is an extreme example, there are other instances of it littered throughout our budget and the budget of every institution in the country.
The third way is perhaps the most difficult one to accept. Our revenue stream is declining.
One of the biggest ways in which this is happening, though there are plenty of others, is through the change in percentage of out-of-state students.
Based on our best estimates, the incoming class of 2015 will likely have forty fewer out-of-state students than the outgoing class of 2011.
That means next year, the whole school will have forty fewer out-of-staters than it does this year.
With an average difference of $10,000 in tuition for in-state versus out-of-state, we’ll have approximately $400,000 less in next years budget.
But shouldn’t the state give us more money for the additional in-state students we have? Well, that’s how it works at most state schools, but we have what’s called a block grant.
That is, we have a certain chunk of money that we get every year, regardless of how many in-state and out-of-state students we have.
That amount normally goes up by the standard rate of inflation each year, and it will go up by that again this year.
The problem is, over the last two decades, the portion of our budget that we get from the government has declined by around twenty percent.
It used to be nearly half of our budget, and now it’s just over a quarter. Again, this raises the question of, “Why?”
In the 1990s, the state government asked us to increase our student population from 1450 to 1850. We said yes, despite not getting a bump to our block grant to coincide with the bump in students.
Earlier this decade, students were seeing annual tuition increases of more than ten percent at times.
This inequity, corrected by charging the students more, is one of the primary reasons our in-state tuition and fees are more than $5,000 higher than University of Maryland College Park.
Not coincidentally, our out-of-state costs are nearly identical with College Park.
These two numbers will go up by the same dollar amount, and not the same percentage, for the foreseeable future, as the college doesn’t want to unfairly distribute financial burdens.
So what’s going to happen with financial aid? The College has made a commitment to increase our financial aid budget by the same percentage as we increase tuition.
While this is necessary, it’s sort of like stealing from the left hand to feed the right.
With our financial aid budget at over six million dollars, a proportionate increase to that detracts from our added revenue due to tuition increase.
Let’s recap: tuition will go up for three reasons. We can only cut costs so much, some expenses continue to rise, and our out-of-state enrollment is shifting significantly.
The proportion of the state government’s contribution to our budget has decreased drastically over the last two decades.
Tuition increases back in the day were insane. Financial aid will still go up by the same percentage. Our budget is suffering big time, even with small tuition increases.
Where do we go from here? We keep looking for ways to cut costs without hurting our program, we keep pressuring the state government to continue with their support and, when possible, to increase it, and we look for more ways to increase financial aid.
As the state balances its books and the economy slowly recovers, things will get better.
Until that time, I promise to do everything in my power to keep tuition increases as low as feasible, and keep looking for new ways to raise money.
When this comes to a vote at the next Board meeting, I will be voting “no” on the issue. It will still pass despite this. Good luck to everyone in making next year’s payment, and I’m sorry I can’t do more.