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Cuts by state lawmakers blamed for higher tuition

5:50 PM, Dec 8, 2013   |    comments
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(David Jesse/ Detroit Free Press)- Students at Michigan's universities can blame state politicians for about 60% of the tuition increases they've experienced over the last 13 years, a new report by the nonpartisan House Fiscal Agency finds.

The other 40% of the blame goes to universities for increasing their spending, according to the report authored by HFA Deputy Director Kyle Jen.

"We think this report validates the incredible work Michigan universities have done to hold down costs while ensuring Michigan has one of the top groups of public universities in the nation," said Mike Boulus, the executive director of the Presidents Council, State Universities of Michigan.

If state government funding to universities had increased at the level of consumer inflation every year since 2001, state aid in the 2014 fiscal year - the current 2013-14 academic year - would be $9,192 per student. Instead, it's $4,496. If tuition increases had been kept at consumer inflation levels over the same period, annual tuition costs would be, on average, $8,556 per student. But instead, they're $15,891.

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The report concludes that by looking at those numbers, 60% of the tuition increases could be blamed on state aid cuts. If the report used a specialized higher education inflation index instead of consumer inflation, 80% of the tuition increases could be blamed on state aid.

"I don't think there's a lot of surprise in the report," said state Rep. Sean McCann, D-Kalamazoo, who serves on the higher education appropriations subcommittee. "A huge factor in college affordability is state assistance, and that has been declining over the last 13 years of the report time.

"The report points out a broader philosophical question: How much of a public good is it to help our population access a college education?"

To those running universities, the answer is clear.

Boulus pointed to a sentence in the executive summary of the report: "Removing increases associated with growth in institutional financial aid, total university per-student operating revenues have grown at roughly the same rate as national higher education cost inflation."

"So," he said, "the cost of providing an education to a student in Michigan hasn't increased more than inflation in the last decade - while we would argue the value provided to the state has increased fairly dramatically."

What has changed, Boulus argued, is the state's willingness to invest in universities. He said tuition has increased not to add to the cost of providing an education, but to offset the state's cuts in support for higher education students.

"Michigan's universities have a lot to be proud of as they have weathered the state's long downturn. It's good for our state that they have held down costs while maintaining the high quality Michigan deserves," Boulus said. "But artificial price controls, like tuition restraints, combined with meager increases in state support threaten the ability of future students to have an opportunity to attend top-notch Michigan universities."

In the last two budget cycles, the state Legislature has tied a portion of its funding for state universities to a variety of performance measures. One looked at administrative costs. The other set a cap on tuition increases.

For this year, the cap was a 3.75% hike. All of Michigan's public universities, except Wayne State University, met that goal.

In 2011-12, Michigan cut its state aid by 15%. In 2012-13, it increased state aid by 3%. In 2013-14, it increased aid by 1.8% - $21.9 million over all the 15 public universities.

The switch from funding universities primarily by state aid to largely by tuition forces universities to raise tuition if they want to raise money, the report says. A 5% increase in tuition yields nearly a 4% increase in total operating revenue, whereas a 5% increase in state appropriations would yield not much more than a 1% increase in total operating revenues, it says.

"As compared to the situation 15 years ago, increases in tuition drive overall university operating revenue much more than changes in state appropriations do," the report says. "If the state economy continues to grow steadily and the state provides at least inflationary increases in appropriation levels, that will have some positive effect on restraining tuition increases

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