From:
Richard A. Crofts
Commissioner Date:
April 17, 2002 Subject:
Tuition Policy Over the last several months I have discussed with senior
managers several possible changes in our tuition policy. The purpose of
this memo is to offer some recommendations for consideration by the Board of
Regents and to solicit decisions or direction from the Regents on whether
these recommendations should be developed into final proposals either for next
year or the next biennium. In 1999 based upon our study of our Colleges of Technology
compared to two-year institutions in other states, we discovered that our
tuition was extremely high for the COTs when compared to the region and even
nationally. The Regents approved my recommendation for a tuition freeze
at the Colleges of Technology. We expressed as a general goal that
students at the COTs should pay 15-20% of the cost of their education to make
their tuition reasonably comparable to other states. Tuition was frozen
for FY 2000 and 2001 and the COTs received general fund backfill to replace
the foregone increase in tuition revenue. We thus held the campuses
harmless, but provided a small financial incentive for students to begin their
college careers at a two-year institution. Due to rapidly rising expenditures and fiscal difficulties, I
concluded that we could not freeze tuition again at the COTs. However, I
recommended and the Regents approved a 5% tuition increase for the COTs
instead of the 13% tuition increase approved for the four-year campuses.
Again, the COTs received general fund backfill. Senior leadership in the university system has agreed that we
should expand the concept of tuition differential from two tiers to
three. Students at the COTs would pay the lowest percentage of the
actual cost of education, students at our comprehensive university campuses
(the four smaller four-year units) would pay a somewhat higher percentage of
the cost of education, and students at Missoula and Bozeman would pay the
highest percentage of the cost of education. Such a pattern is quite
consistent with what occurs in other states where students at so-called �flagship
campuses� pay a tuition premium for attending those campuses. We
believe that equity considerations should drive us to this approach, but the
approach when fully implemented will also contribute to goal of increasing
enrollment at our smaller institutions. I am recommending that you endorse this approach and direct
us to begin developing a specific methodology that we would use in setting
tuition beginning in FY 2004. We would have to run a variety of models,
but one we have already looked at would have students at COTs paying about 18%
of the cost of education, students at the comprehensives paying about 25%, and
students at the research campuses paying about 38%. General fund
allocations would have to be adjusted to account for lost tuition
revenue. It may be necessary to implement this recommendation over the
course of several years to mitigate against too rapid tuition increases at
Bozeman and Missoula. We also anticipate that tuition increases at institutions
with higher cost programs will have to increase faster than at other
institutions. This mainly effects Montana Tech of The University of
Montana. Part of the fiscal difficulties that campus has faced is that
we adjusted general fund revenue to account for their high cost programs but
we did not adjust tuition revenue for the same reason. Offer students from Alberta the WICHE Western Undergraduate
Exchange tuition rate. For some time I have been involved in discussions with
provincial managers of higher education in the Province of Alberta. I
have repeatedly proposed to them that we enter into an agreement to offer the
WICHE undergraduate exchange tuition rate across the border between Montana
and Alberta. Albertans coming to units of the Montana University System
would pay 150% of our resident tuition. Montanans attending Alberta
universities would pay 150% of the resident tuition paid by Albertans. A few weeks ago I was told that the provincial government had
no authority to make this decision and that it would be up to the
universities. I have now been informed that the universities in Alberta
do not want to participate in such a reciprocal program. They do not
believe that it would be in their economic interests to do so. I find
this to be an unfortunate response because I believe the proposal could have
benefited citizens in both Montana and Alberta and should have been considered
from that perspective - - not from the perspective of whether institutions
would gain or lose money from the arrangement. Despite this reaction from Alberta, it is my recommendation
that the Board of Regents authorize any of our campuses to offer tuition to
residents from Alberta at 150% of existing resident tuition as a way to
provide higher education opportunities to our neighbors to the North. I
believe that Montana State University � Northern would be quite likely to
move in this direction. If approved immediately, this recommendation could be
implemented effective in the Fall of 2002. We now charge all non-residents at least 100% of the full
cost of education. In some selected situations in programs where there
is excess capacity, non-resident students could be added at a cost to the
institution of less than the current non-resident tuition. If adopted,
this recommendation would permit campuses to request approval to offer access
to non-residents to programs with excess capacity at a somewhat reduced
tuition rate. The campus would have to document to OCHE the tuition rate
that would be required to cover all of the additional expenses added to the
institution both within the selected program area and costs outside of that
program area. The success of the program and the cost/benefit analysis
would have to be reviewed at least every other year. If approved quickly, this recommendation could be implemented
in some cases by the Fall of 2002. The same line of argument can be taken from the previous
point and applied to certain summer school programs. Summer School
programs are separately budgeted from the regular academic year instructional
programs and must generate sufficient revenue to cover expenses, lest dollars
have to be moved from the academic year budget to cover losses. Some
institutions may see their summer offerings for Montana residents become more
extensive and more financially stable if they could offer non-resident
students a somewhat lower tuition rate during the summer. Campuses would
have to document to OCHE that they have excess capacity during the summer and
that a lower non-resident tuition would actually benefit Montanans. If
approved, this recommendation could be implemented for the Summer of 2003. Current policy is to charge non-resident students the full
cost of their education. In fact, this year non-resident students are
paying between 105-109% of the total cost of their education. The campuses have requested additional flexibility in
establishing non-resident tuition. This is especially important for our
smaller campuses that have a difficult time in competing for non-resident
students with Montana State University � Bozeman and The University of
Montana � Missoula. Analysis of total expenditures on a campus by
campus basis suggests that the ability to recruit non-resident students has
been a significant factor in the relative fiscal health of those two campuses
compared to the smaller units. I am asking the Regents to confirm or reconfirm that campuses
have the flexibility to charge no more than the full cost - - i.e., there is
no requirement, at least for the smaller campuses to charge more than the full
cost (see below for next recommendation). Second, I am recommending a broadening of the approach
suggested above for non-resident students enrolling in programs with excess
capacity. Under this broadened approach, campuses would be able to
submit business plans that would document their ability to receive
non-resident students at a lower tuition rate and still provide benefit to the
university system as a whole and to the State of Montana. These business
plans might be based upon cohort groups, excess capacity that goes beyond
single programs, and improvements in all funds budgets. Guidelines and
criteria for the approval of these business plans would be developed by
Associate Commissioner Sundsted. Upon the approval of the Commissioner,
the lower tuition rates would be submitted to the Regents for approval in the
regular process of establishing tuition rates. This recommendation could be implemented effective with the
2003-2004 academic year. Thirdly, I am asking the Regents to approve a recommendation
that Montana State University � Bozeman and The University of Montana �
Missoula will charge non-residents at least 105% of the full cost of
education. The smaller campuses could recommend non-resident tuition
rates less than the full cost of education. OCHE would ensure that
system wide non-resident students in total are paying the full cost of their
collective education. This recommendation could be implemented by the
Fall semester of 2002. One additional area of tuition policy remains under
consideration and we are not yet ready to make a recommendation. The
question has to do with what tuition rate should be charged non-residents who
take courses over the Internet and do not come to one of our campuses.
We are caught in a dilemma: (1) we have said that we will charge
non-residents the full cost of their education; and (2) evidence that we have
seen suggests that our non-resident tuition level may not be competitive when
compared to what other institutions are charging for Internet
courses. In some of these cases, there may not be sufficient
resident student enrollment to make these courses economically feasible.
Hence, using the �business plan� argument referenced above it may be
possible to argue that offering these courses to non-residents at a tuition
rate below normal may provide the number of enrollments necessary to keep the
Internet course/program economically viable and thus available to Montana
residents. Montana State University � Bozeman had submitted a �white
paper� on this issue some months ago. We met with them and raised some
questions about their approach and requested additional data. We now
have a revised version of that paper and will be reviewing it over the next
several days. We hope to have definitive information about competitive
tuition levels for Internet-delivered courses. We also hope to have a
clear and specific process as to how we would determine the full cost of an
Internet course that should be charged to a non-resident. We are also
exploring whether there is some rationale for excluding consideration of
residency from the assessment of tuition for all students who take courses
over the Internet. There is also the complicated issue of how should
tuition be assessed for non-residents who are taking only Internet courses and
for non-residents who are taking an Internet course, but also registered for
on campus courses. Lurking behind all of these considerations is the
concern about the raising of �equal protection� legal challenges to a
different tuition policy for Internet courses while our residency policy is
again being challenged in the courts. I look forward to our discussion of these important issues
and hope that the Regents will be able to approve some or all of these
recommendations at their meetings in April or May.
Expansion
of tuition differential
Marginal
cost for non-residents in programs with excess capacity
Marginal
cost for non-residents in summer programs with excess capacity
Addition
flexibility on non-resident tuition
Internet
education