The University of Maine System is staring down another year of red ink as it attempts to plug a long-term budget hole. This coming year, five of the university network’s seven universities expect to dip into reserves to the tune of $8.6 million to balance the books.
The reserve-dipping is expected even though state funding for the next academic year ticks up by about $5 million under Gov. Paul LePage’s proposed state budget.
As for the system’s other major revenue source? System trustees have voted to keep that one frozen at current levels for a fourth straight year.
That revenue source, of course, is tuition from the university system’s 30,000 students. As a result of the freeze, Maine students enrolled at any of the state’s public universities during the 2015-16 academic year can expect to pay the same tuition they would have paid in 2011-12.
The freeze is meant to keep college affordable and control, to the extent possible, the debt load students take on while in school, said Sam Collins, chairman of the University of Maine System Board of Trustees.
“As it is now, how can we continue to ask for more from Maine families?” he said. “We need to right-size our shop before we can even think of asking for more from Maine families.”
The tuition freeze has set Maine apart as the only state where in-state public university tuition hasn’t budged at all in the past five years. At the same time, the tuition freeze is contributing to the university system’s financial troubles — potentially in a big way.
Dependent on tuition
Full-time Maine university students pay, on average, $7,622 for a year of classes. By the time room and board, books and fees are figured in, a student paying in-state tuition pays $22,189 a year. The flagship University of Maine — the only institution that won’t require reserves to stay afloat — is most expensive ($23,123); the cheapest is the University of Maine at Augusta, which has no residence halls and therefore no room and board charges ($12,248).
In 1991, Maine government funding accounted for 44 percent of university revenues while student charges made up 18.4 percent, according to an analysis of the university system’s financial reports. Today, however, that picture has flipped. Tuition is the largest single revenue source — in 2013, student fees accounted for 36 percent of revenues while state funds made up 29 percent.
That means it’s not a simple matter to freeze tuition — and basically prevent meaningful revenue growth — at a university system with about 30,000 students; a far-flung physical infrastructure with more than 550 maintenance-intensive buildings; nearly 5,400 employees, including many who, by contract, are owed salary increases each year; pension obligations and other expenses.
But it’s the right choice at this time, said Collins.
A slow economy that has kept state funding increases at bay “has forced discipline on how we do business,” he said. Before raising tuition to make up the difference, “I think you have to have discipline first and look at how you spend your money.”
The same economic sluggishness has kept Maine families’ incomes from rising, too, meaning there’s limited capacity to pay more for college. Plus, Maine students already graduate from college with the seventh-highest debt loads in the country — $29,934 on average, according to an analysis by the finance website Debt.com.
Willing to pay more?
The University of Maine System is attempting a major turnaround effort — to stem a decline in enrollment and to reduce duplication and trim unnecessary costs. University officials say keeping tuition frozen is a competitive advantage.
“When you’re looking to compete, certainly for the University of Maine with other New England land grants, cost is a big piece of that,” said Ryan Low, interim vice president for administration and finance at the University of Maine in Orono. “We have the outstanding quality within the system. We also think we bring value to the table.”
But keeping tuition frozen could be part of the problem, limiting the University of Maine System’s ability to invest in areas that can help it compete and serve a civic and economic mission for the state, said Stephen Weber, who served as president of San Diego State University in California for 15 years and now lives in Hancock.
“The focus of the university ought to be on its students and providing the best possible education for them,” he said. “I think, particularly on the issue of tuition pricing, that you end up instead pandering to the Legislature or to other forces of that sort and very much punishing the students for your lack of courage.”
That punishment comes in the form of reduced quality, Weber said. “The university is not renewing its faculty the way it ought to,” he said. Faculties are “renewed by having the newest people coming out of graduate schools with the latest knowledge and techniques. When you stop bringing those people in or you can’t attract the best of those people, you pay a lot of prices.”
Plus, a low price sends another message that could turn off potential students: that Maine’s universities aren’t of superior quality. That’s because, with higher education, price often stands for quality in a marketplace where consumers can’t easily judge it. And Maine’s public universities charge in-state students, on average, less than 80 percent what their New England counterparts do, according to an analysis of College Board data. Adjusted to 2014 dollars, in-state tuition and fees in New Hampshire average $14,712 and $14,419 in Vermont, compared with $9,422 in Maine — the lowest level in the region.
“When the trustees don’t value the product for which they’re responsible, one of the best ways to see that is, they don’t charge for it,” Weber said. “At some point, that message begins to permeate the population, and I think that’s what’s beginning to happen in Maine.”
In 2011, an enrollment management consultant for the university system, the firm Noel-Levitz, found that four of Maine’s universities — Augusta, Fort Kent, Machias and Presque Isle — suffered from weak quality perceptions among Maine students. Noel-Levitz also found the system’s larger campuses (Orono, Portland and Farmington) could stand to raise tuition 7 percent without affecting affordability in a big way with financial aid factored in.
And given a low level of state support for higher education — Maine spends $204.68 per capita compared with a national average of $254.48, according to data compiled by the Center for State Education Policy at Illinois State University — freezing tuition doesn’t help with long-term fiscal sustainability, said Daniel Hurley, associate vice president for government relations and state policy at the American Association of State Colleges and Universities.
“The tuition freeze, I would say it’s a populist maneuver on the part of policymakers because every survey and anecdotal evidence I’ve seen is that students and families would happily pay 1 to 2 percent more per year to ensure continued levels of quality and access,” Hurley said.
How tuition freezes have worked
Tuition freezes are a reaction to decades of rampant increases to the cost of college. In its 45-year history, the University of Maine System sometimes raised tuition more than 20 percent in a year. In the years before the tuition freeze, it raised tuition by 10 percent in 2007-08, 10.3 percent in 2008-09 and then by smaller amounts until the 2012-13 freeze.
Without careful planning or a negotiated deal with state lawmakers, public university tuition freezes in other states have ended and led to tuition spikes.
In California, for example, the state’s legislative analyst warned policymakers in 2013 not to freeze tuition because it “likely would increase volatility for future students.”
Maryland froze tuition between 2005 and 2010. In return, lawmakers made up for the lost revenue with more state funding and university administrators undertook major cost-saving measures and fundraising campaigns.
Collins and Low said Maine students shouldn’t expect a tuition spike following five years of unchanged tuition. Trustees would more likely endorse tying tuition increases to the growth of Maine’s median household income, Collins said.
“We want to be delivering a quality education more efficiently,” he said.