Unnecessary tuition cap misses the point

Friday, January 27th, 2017

Efforts are brewing at the state capitol to cap tuition at Arizona's public universities. On the surface, this may sound like a great idea. Tuition nationwide has been steadily rising for years, and students and families are rightly concerned that higher education must remain affordable and accessible.

We are, too. But, we should recall why tuition rates have gone up. University funding in Arizona has undergone a radical shift in the past decade. In 2007, the state paid 72 percent of the costs to educate an Arizona-resident student. Today, the state covers just 34 percent of those expenses.

This isn't about laying blame. The bulk of the tuition increases occurred from 2009-2012 in response to severe budget cuts enacted during the Great Recession. Arizona was among the hardest hit of all states, and our public university system lost nearly half of its state funding allocation - approximately $500 million - in the course of just eight years, even as enrollment numbers continued to grow.

Universities cut costs wherever possible - through layoffs, eliminating programs, closing campuses and more. Despite these measures, students and families picked up more than their fair share to account for state reductions.

In the wake of this disruption, we've undertaken a major reform effort to improve affordability at Arizona's public universities, such as:

  • Creating new pathways so students can take courses in a lower-cost setting;
  • Enhanced transferability of courses between community colleges and universities to facilitate quicker degree completion;
  • Diversifying the revenue stream by making universities more entrepreneurial and more attractive to students from other locales; and
  • Implementation of a new funding model that prioritizes additional state dollars for the education of Arizona-resident students.

Coupled with that have been considerable efforts to increase the transparency and predictability of tuition rates for students and taxpayers alike:

  • Tying tuition to specific funding needs at the universities;
  • Implementation of tuition-guarantee programs;   
  • Increased transparency in the tuition-setting process, including public tuition workshops, more detailed accounting and billing reforms;
  • Additional input from our "customers," the students;
  • Development of a cost study to analyze university expenditures; and
  • Identifying efficiencies to mitigate tuition increases.

The Legislature has helped, too, by providing some new dollars directly aimed at resident students and extreme capital needs, while cleaning up their own balance sheet. They also helped by eliminating the state tuition remittance process, an ineffective practice that led to administrative costs, loss of university investment interest and cash flow flexibility as well as affecting credit ratings.

The good news is, Arizona tuition increases have slowed substantially in the past five years and Arizona's students and families have greater predictability through the popular tuition-guarantee programs at the universities. We've moved from a low-tuition, low student-aid model to a moderate-tuition, high-aid model. Today, 82 percent of Arizona university students receive some form of financial aid. Our university tuition rates remain competitive and are often lower than peer institutions, and financial aid has helped keep our student-debt rates below the national average.

We are proud that we have slowed tuition increases while continuing to grow enrollment and keep our commitment to open access. In fact, enrollment growth since the recession is more than 50,000 students.

So, why oppose a tuition cap?

A blanket, one-size-fits-all approach to tuition setting would upend the entrepreneurial financial model for universities - the very model that allowed universities and resident students to withstand the turbulent times of the Great Recession. It could also result in the unintended consequence of universities seeking maximum tuition increases each year, rather than having to make a business case to students for tuition.

University finances are more complex and sensitive to market pressures than ever before. Some programs can and should charge more. User fees should be deployed where they make sense. Treating universities like state agencies is outmoded.

Arizona universities are graduating more students in a more timely fashion and with better preparation for career success than ever before. Our economy demands continued progress in these areas if Arizona is going to have the educated, trained workforce that employers need to stimulate the economy and grow revenue while creating and filling jobs that will be left vacant by thousands of retiring baby boomers in Arizona.

It will take more work to turn the tuition tide and get the right balance between state support and tuition levels. The board continues to work toward even greater transparency, predictability and stability, all of which leads to greater public accountability. Let's not set back the solid progress we've made to make our public universities more entrepreneurial, more productive and more accountable.

Legislators should say "no" to hamstringing our universities with an arbitrary tuition cap - little more than a feel-good measure that does nothing to further our larger mission - educating Arizona's students for their futures and the future of our state.