Deal to hold college costs steady in Mo. naturally fulfilled

Monday, May 11, 2009

JEFFERSON CITY, Mo. -- Gov. Jay Nixon has made much ado about brokering a deal in which colleges and universities agreed to hold tuition flat in exchange for avoiding state budget cuts.

As it turns out, the same outcome may have occurred regardless of the agreement, thanks to a combination of state and federal laws and the sluggish economy.

Keep in mind these facts:

* A Missouri law limits university tuition increases to the rate of inflation, which was 0.1 percent, unless schools get a state waiver for larger increases.

* The federal economic stimulus package provided billions of dollars so that states could keep next year's higher education funding at its 2009 levels.

The result of federal law is that Missouri's universities were unlikely to receive a funding cut for the 2009-2010 school year, even if Nixon hadn't struck a deal to that effect.

The result of the Missouri law is that universities were unlikely to raise tuition beyond the essentially flat rate of inflation without special permission, regardless of whether the schools agreed to the no-tuition-increase deal.

But that hasn't stopped Nixon, lawmakers and higher education officials from trumpeting the steady tuition funding agreement.

Last week, Missouri lawmakers passed a budget that spares colleges and universities from cuts to their core operating budgets for the 2009-2010 school year. They did so by tapping into millions of dollars of what's known as the "budget stabilization" portion of the federal stimulus package.

Steady tuition certainly is a break from the norm.

Over the past decade, tuition at Missouri's public universities has increased an average of 7.5 percent annually. The last time the economy turned downward, in 2001, then-governor Bob Holden and lawmakers cut funding to higher education to help balance the budget. That resulted in some sharp tuition increases -- an average of more than 16 percent in the 2002 fall semester and more than 14 percent in fall 2003.

Tired of large tuition increases, lawmakers and then-governor Matt Blunt adopted a law in 2007 that generally limits university tuition increases to the rate of inflation, with a little extra for institutions where tuition already is below average.

Last fall was the first year the law was in effect. The inflation rate was 4.1 percent, and the average tuition increase was around 4 percent. No institutions asked the commissioner of higher education for an exemption to go higher.

But when lawmakers last December asked state agencies to prepare funding cut scenarios ranging from 15 percent to 25 percent, university leaders began to get nervous.

It was in that context that Nixon began discussions with university leaders that eventually led to the no-cuts, no-tuition-increase agreement, said Nixon spokesman Jack Cardetti.

At the time of the agreement, the participants already should have known the inflation rate would hold tuition increases to near zero, barring a state waiver. It was less clear whether the still-under-development federal stimulus package would provide an influx of education money.

Absent the agreement with the state, some university officials have indicated they would have considered seeking state approval to raise tuition above the inflationary limit.

"Clearly the universities could have and would have asked for a waiver on this tuition," Cardetti said.

If they had, state law would have required the higher education commissioner to consider the relationship between the state's per-pupil appropriation to universities and the consumer price index as part of the decision-making process.

But Steve Knorr, vice president of government relations for the University of Missouri system, said it's wrong to assume the state's largest university system would have sought to charge more to students during a recession were it not for the state agreement.

"I don't think it's a given -- even without any of this -- that they would have raised tuition," Knorr said. "Our president and Board of Curators are very much in tune with the people of Missouri."

For university officials, the state deal eliminated a budget uncertainty. For state officials, the tuition freeze provided an extra incentive to keep funding steady.

House Budget Committee Chairman Allen Icet, R-Wildwood, said he never realized while preparing the budget that the inflation rate was so low that universities had a natural tuition freeze. Nor did he know until part way through the legislative session that the federal money essentially would eliminate the potential for university budget cuts.

"I think higher education got a good deal," Icet said. "Hindsight is always 20/20."

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