Colleges hike tuition as state reduces funding

There's a simple math lesson that supporters of Indiana's public universities want state lawmakers to learn: If they continue to reduce state funding for higher education, colleges will keep raising tuition and fees.

"It is the logical conclusion," said Senate Minority Leader Vi Simpson, a Democrat from the college town of Bloomington. "If people want to complain about the tuition increases, they should complain to the General Assembly."

But Republican fiscal leaders at the Statehouse are trying to teach college leaders another lesson — one that might have to be learned the hard way: If universities keep raising tuition past the recommended levels, state lawmakers can step in.

"I don't think the universities quite get it yet," said Sen. Luke Kenley, R-Noblesville. "We're trying to let them be in charge of their own destiny, but we need them to cooperate."

A quick look at the numbers shows why some lawmakers are so alarmed.

Students entering Indiana University at Bloomington will pay $9,500 a year in tuition and mandatory fees alone next year, a number that doesn't factor in thousands of dollars in room and board or any scholarships or financial aid. That's an increase of 5.5 percent from last year, and rates will go up more than 5 percent the following year, too.

If tuition and fees continued to grow at that pace, a child born this year would have to shell out about $25,000 in tuition 18 years from now — or $100,000 for a four-year degree. Out-of-state residents are seeing even higher increases over the next two years: A baby born in Michigan this year would face a shocking $380,000 bill to attend IU for four years if tuition keeps growing at current rates.

Some think that's out of control in a state where the median family income is about $45,000.

"People cannot afford these high-end approaches," Kenley said.

Kenley, the head budget writer in the Senate, has threatened action before. In 2009, he held university construction projects hostage because of unhappiness over tuition increases. He relented when colleges took action. IU created a program for students to receive discounts if they get good grades, and Purdue agreed to increase financial aid.

The chief budget writer in the House — Rep. Jeff Espich, R-Uniondale — has tried his own method to curb tuition hikes. He pushed for a budget this year that would prohibit colleges from exceeding the nonbinding tuition recommendations set by the state Commission for Higher Education. The provision was later changed, but lawmakers say they'll do what it takes if colleges don't heed these warnings.

Both Espich and Kenley, members of the state budget committee, said they want college leaders to explain why they raised tuition beyond the 3.5-percent increase that commission set as a recommended cap. Kenley said there's no reason for increases higher than that.

Universities say they'll be more than happy to explain. They're placing part of the blame on the General Assembly, and have numbers they say back up their arguments.

IU says it exceeded the commission's tuition recommendation of 3.5 percent for one simple reason: Lawmakers removed all repair and rehabilitation funding in the budget passed this year. The school's temporary fee of $180 per student for the upcoming school year — a fee that doubles to $360 in 2012 — put the school over the 3.5-percent limit.

"The only other source that we have for it is tuition," said IU spokesman Larry MacIntyre, adding that IU would drop the fee if lawmakers restore maintenance funding.

Purdue also exceeded the recommended limit by approving a 3.5-percent tuition hike and tacking on a $91 fee.

Ball State University says its proposed tuition increase of about 4 percent for undergraduates and 9 percent for graduate students is needed to offset cuts in state funding.

"It clearly is a driver," said Randy Howard, the school's vice president for business affairs and treasurer. "You hear a lot about the rising cost of tuition. You don't hear about the other leg of that revenue stream."

University leaders say they understand the dilemma faced by state lawmakers trying to balance Indiana's budget as the state tries to emerge from the recession. But they said they have few options left after leaving positions open, restructuring health care benefits and making other changes.

Historically, state spending on higher education has steadily grown, though higher education has been a shrinking part of the state's overall spending in recent years.

The cost of public education has always been shared between students and the state, but students are paying more as the state fails to keep up with the pace of per-pupil funding. In the 1970s, students paid about a third of the cost, the Commission for Higher Education estimates, while students shouldered about 50 percent of the burden in 2005.

The recession in the last few years forced state budget cuts for higher education. Indiana, Purdue and Ball State face state funding levels in 2012 that are about the same as they were a decade ago.

The schools say the financial setbacks are especially painful as they face rising costs and pressure to retain top faculty as they try to fulfill their missions of being among the country's top schools. Simpson said the demands put on the universities don't match up with state support, and something's got to give.

"We're asking them to be the locomotive that runs economic development in this state. We're asking them to have the very best faculty and attract the very best students," Simpson said. "And we're asking them to do it on less money."