Vargas: Southeast faces $6.73M shortfall, looks at possible tuition increases

Southeast Missouri State University faces a $6.73 million shortfall for fiscal 2018 that must be addressed through increased revenue and spending cuts, school president Carlos Vargas-Aburto said Friday.

In a lengthy discussion with the board of regents, Vargas said Missouri Gov. Eric Greitens' proposed budget would cut $4.3 million in state funding for Southeast,

On top of that, the university's contribution to the state retirement system will increase by 2.5 percent, amounting to an added $1 million expense, Vargas said.

"There is an additional $790,000 in known costs that includes increases to health-insurance premiums, faculty promotions and increased scholarship costs," Vargas outlined in a written report to the board.

Southeast also needs to increase its need-based scholarship program by about $364,0000 and invest another $250,000 in new academic programs or initiatives to help meet student enrollment and retention goals.

Vargas outlined four possible tuition options to help address the school's financial situation for the coming fiscal year, which begins July 1.

The first option would allow tuition to remain flat. But in that case, the university would need to increase revenue by enrolling and retaining more students and reducing expenses, Vargas said.

The other three options all would raise tuition for the next school year, although none would provide all the revenue needed, according to Vargas.

A 2007 Missouri law prohibits state universities from raising tuition and general fees more than the increase in the consumer price index each year. But Vargas said Southeast has not been raising tuition as high as allowed under the law.

For the coming fiscal year, the formula would allow Southeast to raise tuition by 2.1 percent or $4.75 per credit hour, according to Vargas. This second scenario would generate just over $1 million, which would barely cover the cost of the retirement contribution, he told the regents.

The third scenario calls for the university to enact the full tuition increase it could have charged for fiscal 2017 and what would be allowable for fiscal 2018. Combined, the tuition increase would amount to $6.50 per credit hour for in-state, undergraduate students, Vargas said.

This option would generate an estimated $1.4 million toward meeting the revenue shortfall, he said.

The fourth option would raise tuition by the total amount Southeast legally could have charged if it had raised tuition to the maximum level the law allowed over the past several years in addition to the allowable tuition hike connected to the current increase in the consumer price index.

Vargas said this scenario would raise tuition by $15.50 per credit hour. Of that amount, $10.66 per credit hour is the amount being waived by the university for in-state, undergraduate students, he said.

Even with such a move, the tuition increase would generate an estimated $3.3 million, or about 50 percent of the revenue needed to balance the budget, Vargas told the regents.

The governor's recommended state appropriation for Southeast would amount to less state funding than what the school received in 1999, the school president said.

Southeast could ask the state to grant a waiver to raise tuition above the legal limit, but none of the options outlined by Vargas envision such a move.

Board president Jay Knudtson of Cape Girardeau said the governor "has a lot of hard decisions to make" to balance the state budget.

He said university officials need to work to keep the cost of education affordable for students.

"We have always maintained we need to be protective of students and we need to be affordable," Knudtson said.

Regent Tom Meyer of Cape Girardeau said the university needs to push back against Greitens' budget recommendation.

"I am not going to accept this," he said. "The governor is not going to dictate to us."

Regent Kendra Neely-Martin of St. Louis said Southeast needs to lobby against the governor's spending cuts for Southeast. She argued the school has been "fiscally responsible" over the years.

Knudtson said the university should not "moan" about the financial situation but demonstrate "we are looking for ways to be more efficient."

Regent Donald LaFerla of Carthage, Missouri, suggested Southeast must cut spending.

"There is a lot of waste built into the system," he said.

LaFerla said the university might need to "cut back some of our medical coverage" for employees. Some programs may have to be cut, too, he said.

Southeast also may need to eliminate some faculty and staff positions to cut spending, he added.

LaFerla said the university also will have to raise tuition.

"There will be a tuition increase. It is just a matter of how much," he said.

But he said the financial pain should be felt by more than the students.

"The university needs to bear a reasonable share of the pain," he said.

Regent Phillip Britt of Kennett, Missouri, said the Legislature may adopt a budget that differs from the governor's budget proposal. Ultimately, the cuts could be less severe, he said.

mbliss@semissourian.com

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