No reason not to raise tuition to salvage LA budget

As policy-makers cast about for ideas to stave off cuts into the hundreds of millions of dollars to Louisiana’s higher education system, leaders in that sector are coalescing around the entire sensible option of allowing schools to raise tuition beyond the 10 percent allowable increase for this upcoming fiscal year. That option needs to be taken.

Yes, with the state ranked 18^th among all states and the District of Columbia in per capita spending it’s clear that higher education spends money inefficiently, primarily because of its overbuilt nature. And it’s not like spending generally has not been increasing for higher education in Louisiana: going back to former Gov. Mike Foster's first year, total spending on higher education to this past year has increased 95 percent. During this same period, the inflation rate increased only 51 percent. Adjusted for student credit hours delivered, which gives an indication of output, the increase still is 63 percent. In other words, in the past 18 years, changes in spending on higher education outpaced inflation.

Yet as previously noted, any plan to rectify revenue shortfalls cannot be done hastily in the breech, as this year’s budgeting task would dictate, so offered as a solution was the temporary suspension of unproductive tax exceptions. However, the tuition-raising option also makes sense. Under current law, because the Legislature oddly has a veto power over tuition hikes, that was modified to allow up to 10 percent increase unilaterally by institutions if they met certain performance benchmarks. So, the Legislature could amend it to allow for something like a one-time hike beyond 10 percent to help bail out higher education this year.

And that would assist the state in making the financing of college education fairer between taxpayers and users, continuing the longer-term rebalancing. For some time commonly in the media, among mandarins representing higher education, and from ideological crusaders, breathless proclamations have come from them about how Louisiana higher education has been cut by “$X million” (the number most currently in vogue is $700 million) over the past few years, usually using as a baseline the first fiscal year, 2009, of Gov. Bobby Jindal’s budgeting, and that this looming catastrophe, given the possibility of more to come, must be stemmed.

Reality is quite different. While the taxpayer-paid portion of resources used by higher education is down hundreds of millions of dollars in this time span, total spending by higher education in Louisiana since FY 2009 is down just 7.8 percent, or $224 million. A better measure, adjusting by SCH, since those are up slightly in this period, is a decline of 9 percent, in large part because tuition has gone up substantially since.

This has led some to complain that, as the taxpayer portion has decreased and the student portion has climbed, budget balancing is being done too dependently on the back of families sending members to college, and this is pricing students out. Besides the small enrollment and SCH increases over the time span, other statistics negate this view.

As of the latest data (from 2011 and 2012), Louisiana average tuition and fees were among the lowest both in the region (as measured by the 16-state Southern Regional Education Board accrediting agency) and the country. In per student terms, it ranked for baccalaureate-and-higher schools 15^th of 16 SREB schools and 47^th nationally, while for community colleges it ranked 11^th in the region and 39^th in the country. Even a couple of years later, with other states also hiking tuition, it is unlikely that Louisiana has moved much if at all in these relative rankings.

Also comparatively, and predictably given the populist history of the state, taxpayers traditionally have been paying a disproportionately large amount for college educations. In terms of proportion of tuition and fees that pay for higher education LA ranks only 14^th in the south and 41^st nationally, while in terms of proportion of appropriations, it ranks 8^th and 17^th, respectively. Relatively speaking, LA relies more heavily on taxpayer funding than on tuition and fees for funding higher education than they typical state.

True, but perhaps it’s necessary to saddle taxpayers with a higher burden, some argue, because of the relatively poorer nature of the state, in that families have reduced ability to pay. But again, the data contradict this kind of assertion. In the SREB, when all forms of student aid are included, LA families pay the lowest proportion of their incomes for college, well below the other regional averages so it is one of the lowest, if not the lowest in the country (SREB does not break out state-by-state data outside of the region here).

This gets reflected from other indicators of relative family ability-to-pay. In the SREB, Louisiana ranks 6^th in per capita income, and nationally 29^th. Further, when looking at the lowest quintile of median family income earners – the ones perhaps most affected by tuition policy – the proportion of college expenditures for Louisiana families rank them 15^th in the region and 38^th in the country for four-year schools, and, respectively, 11^th and 32^nd for two-year schools. It is a myth that tuition must be kept low in LA because of ability to pay; tuition levels are well below the capacity to pay by PCI data and MFI data and show us that relatively speaking even lowest income families are treated better on this account than in most states.

Thus, besides targeted suspensions of tax breaks, the Legislature should make the one-time no-strings tuition offer – although in return being presented with a plan to right-size Louisiana higher education from its administrators. As part of this, because about a fifth of all students utilize the state-paid Taylor Opportunity Program for Students tuition waiver, TOPS reform plans that raise standards to make it a true scholarship program also should be put into place. Taxpayers have subsidized for too long the prime beneficiaries of higher education, the students. Families with members pursuing higher education should pay their fair share to help out the state in this time of budgetary need.