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State funding cuts not the only reason for rising college tuition

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Protesting tuition
About 75 students, faculty and staff at the University of Minnesota held a rally on Thursday protesting the rising cost of tuition. The group also spoke out about a decline in state funding that's led to staff layoffs at the university in recent years.
MPR Photo/Tim Post

In recent weeks, students from both the University of Minnesota and the Minnesota State Colleges and Universities system have descended on the state Capitol, where lawmakers are struggling to balance the state budget.

The students' message to lawmakers: don't cut funding for higher education.  It's a rallying cry college officials have thrown their support behind. They've added their own message: cut our funding and we'll raise the price of tuition, again.

But there are a number of other factors behind tuition increases that don't fit easily on a protest sign. 

Since 2001, state higher education funding has been on an up-and-down ride. Today it's about where it was 10 years ago. Take inflation into consideration, and state funding has decreased by 25 percent. The cost of tuition, meanwhile, has doubled.  

Here's an example: an average year of tuition and fees at a Minnesota State Colleges and Universities school 10 years ago was $3,200. Today, students pay more than $6,800.  During that same period, tuition and fees at the University of Minnesota increased from $4,800 to more than $12,000. 

The story on tuition is much the same across the country. Over the last 30 years the average sticker price of tuition, which doesn't take into consideration grants and scholarships provided by colleges, has increased sixfold. The cost of living, meanwhile, has only gone up about two and a half times.

Those increases in tuition primarily make up for the loss of state funding, said Laura King, MnSCU's chief financial officer.

"Our general view on that is higher education was not taking costs seriously enough."

"We have not raised tuition dollars in order to grow spending," King said. "We've controlled our spending very aggressively.  We've raised tuition to replace state funds and maintain access."

State funding is critical for MnSCU, as it makes up one-third of the 32-school system's budget.  But declining state funding doesn't account for the entire tuition increase.

King also cites the growing cost of doing business at MnSCU campuses, which enroll 40,000 more students than 10 years ago. 

Then there's the rising cost of employee wages, health care and benefits.  Last year MnSCU spent 70 percent of its $1.8 billion budget on compensation.

The University of Minnesota has struggled with the same costs, chief financial officer Richard Pfutzenreuter said. Since 1997, the university's  spending on fringe benefits, a large portion of which is health care costs, have risen nearly 13 percent a year, from about $152 million to more than $400 million, he said.

Pfutzenreuter said 18 percent of the university's budget is covered by the state, and its decline in part drives increases in tuition. But he said providing better student services -- from recreation centers, computer systems, housing and food -- also drives tuition prices up.

  "All of that is a package that we need to deliver to students, and it's got to be a quality package or they won't have a good experience," Pfutzenreuter said.

  One higher education researcher blames rapid increases in tuition on colleges themselves. 

"Our general view on that is higher education was not taking costs seriously enough," said Dewayne Matthews, vice president for policy and strategy at the Lumina Foundation.  

Matthews said college officials have passed on those costs in tuition increases. Even though families have complained, for the most part they've been able and willing to pay the increases, he said.  

"Now however, we've pretty much reached the end of the road," Matthews said. "Students and families in a recession are very hard pressed to pay these tuition increases."

Matthews said colleges must deal with their fiscal problems -- not by increasing tuition, but by finding more efficient ways to educate students. 

Over the past year, Minnesota colleges have cut their budgets to deal with stagnating funding.  Both the U of M and MnSCU have come up with plans to slim down by laying off workers and ending some academic programs. 

Both systems say they'll try to keep tuition increases low, but say they won't have any solid numbers until they find out how much money they will receive from the state in the next two-year budget cycle.