What role does tuition play in bridging the projected budget gap next fiscal year? That was the topic that University of Alaska President Jim Johnsen brought to the Coalition of Student Leaders during their meeting Thursday Oct. 15.

The discussion starts with the assumption that there will be a budget gap. Even if the Board of Regents approve the proposed FY17 budget this November, with the requested $25 million dollar increase to cover new and increasing costs, the governor’s office will likely reduce it. According to guidance from the State Office of Management and Budget, they� plan to reduce the university’s base funding by $15 million, it is unclear what will happen with the incremental request. Once the budget is passed on to the legislature, the house and senate finance committees are likely to cut even more.

Worst case scenario for the university, the base gets cut by $15 million, none of the $25 million in increased costs are covered, and the university ends up facing a $40 million budget gap. Most likely, Johnsen told the students, it will be somewhere in between, and UA will be facing between a $15 and $40 million budget gap.

Compared with tuition at other 4-year colleges in western states, University of Alaska tuition is relatively low. That, combined with the very real need to bridge the budget gap, is good argument for a tuition increase. But how much should it be?

A 5 percent tuition increase would bring in $6 million in new revenue. From a purely financial standpoint – not an increase that has any support – an increase of 20 percent would match UA to the market average in tuition and meet the budget gap. Johnsen told the students he is sensitive to any double-digit increase in tuition and is leaning toward a high single digit increase, 5-9 percent, approximately 25 percent of the projected budget gap.

The other 75 percent will be handled through a combination of increased revenues, efficiency improvements and decreased costs. Outsourcing of non-academic services such as parking and payroll, LEAN process improvements, reductions in statewide administration, program cuts and consolidation, federal funding and increased fundraising are all part of the mix to meet the budget reduction. Particular emphasis is being placed on four areas targeted by the Board of Regents: teacher education, developmental education, general education requirements and eLearning. Those four areas have potential for consolidation and coordination across the three universities.

(UPDATE: In a memo to Regents, Coalition members and System Governance Council on Oct. 23, Johnsen announced that the Regents would be considering a 9 percent increase. He also pledged to students that he will engage campus leaders in open, candid discussion on the future direction of tuition at the earliest possible time.)

Athletics cost
Arina Filipenko, representative of the Union of Students at UAA, wanted to know how much is spent on athletics, how many of the approximately $12 million dollars in discretionary tuition waivers go to student athletes – and if that is being reviewed. Johnsen replied that the Regents had asked for that information as well, and the net costs of athletics in the system is $12 million.

Tuition waivers
Matthew Carrick, Coalition Chair and representative of Associated Students of UAF, wanted to know if the $12 million dollars in tuition waivers themselves was under review. Since the vast majority of those are used for needs-based scholarships, Johnsen said they are not looking to reduce that amount.

Cost reduction and revenue generation strategies
Jayce Robertson, representative from the Kenai River Campus Student Union asked Johnsen to explain his preferred cost reduction and revenue generation strategies. On the revenue side Johnsen referred to development campaigns to increase our low rate of alumni giving and to expand corporate giving through promotion of the Education Tax Credit. He also keyed in on importance of federal funding including increased research grants, continuation of Title III funding critical to rural and community campuses, and the important role that Sen. Murkowski plays on the Senate Appropriations Committee. Under reductions, Johnsen said he is looking at opportunities for outsourcing, public-private partnerships and program consolidation in the four key areas he had mentioned: teacher education, developmental education, general education requirements and eLearning.

Criteria for program consolidation
The criteria being used for program consolidation was also a concern of Matthew Carrick. He asked if decisions were being based solely on numbers or if the process was more qualitative. He also wanted to know what role students play in those decisions. Johnsen replied that the campuses have their own prioritization processes, which incorporated both enrollment numbers and the link of programs to the mission of the university. The cost of the program to deliver, student demand and market data on recent graduates is all part of the program review process. Data on program reviews is going to the Regents in November. Students were encouraged to review the information going to the Regents, to participate on committees and in discussion on the process and to keep an eye on the reports being generated on the four initial focus areas. There will be lots of opportunity for student involvement as these discussions continue over the coming years. The key drivers of any program change decisions are student access to programs, cost and quality.

Diminishing return on tuition increases
Jayce Robertson expressed student concerns of the diminishing return on tuition increases. At some point if tuition keeps going up we will loose the competitive advantage of attending UA and students will go elsewhere. Johnsen deferred the question, promising to contact Siachi Oba, vice president of student and enrollment services, to discuss any sensitivity analysis and data on that issue. He pointed out the correlation between high school graduation rates- which are down- and enrollment data, and the need to factor those influences into any analysis.

Community campus tution dilemna
Lastly, Jeff Woods, representative of Kodiak College Student Association, pointed out that students he knew we already leaving due to last years’ tuition increase. That brought Johnsen to discuss one of his most troubling concerns. Because of the structure of the university, tuition rates are the same at both community campuses and urban universities. While our tuition is relatively low compared to other four year institutions, tuition is much higher than average for community colleges. In fact it’s almost double the national average. The difference is, most community colleges get funding support from local government, but in Alaska, local communities do not contribute. If UA was to reduce community college tuition, those campuses would not have enough revenue to continue operation. With state funding affecting local budgets as well as the university, there is no way to turn to local funding as an option either. There is no good solution to this dilemma. The best option now is to keep as many needs based tuition waivers available as possible and to continue providing access to affordable, quality education across Alaska.