US state funding in flux: universities’ strategies for survival

The latest survey of US state higher education funding from Illinois State University’s Center for the Study of Education Policy and the State Higher Education Executive Officers group reveals that, on average, support for public universities increased by 1.6 per cent between 2016-17 and 2017-18 – the lowest annual growth in five years. However, there is significant variation in how states are funding their university sectors, with some enjoying significant increases and others facing large cuts. Ellie Bothwell looks at how some institutions are coping with cuts and how others are making the most of an income boost.

North Dakota: up 4.3 per cent since 2013 (+$14.7 million)

While funding levels for universities in North Dakota have increased in the past five years, the state’s public institutions faced the largest annual drop in state income in the country last year, with appropriations falling by 14.6 per cent between 2016-17 and 2017-18. As the state has a biennial budget, there is no hope of funding levels increasing in the short term.

Tammy Dolan, chief financial officer at the North Dakota University System, which has 11 institutions, said that while the system provided guidance on how the institutions could respond to the loss in income, each campus had the flexibility to choose its own strategy to cope with the cuts.

“I think that’s key. They were able to respond as was appropriate for their operation,” she said. The system advised the campuses “to minimise the impact to essential student services” and “to not cover the budget reduction with tuition or fee increases”, she said, which meant that any tuition rises covered only inflation.

When the cuts were first announced, institutions immediately “cut out any non-essential travel…and non-essential operating expenses” but the biggest impact has been to staff, Ms Dolan continued. Between January 2016 and January 2018, the universities cut nearly 670 full-time positions, which generated savings of almost $93 million (£66 million).

The campuses also cut a small number of degree programmes that had low student enrolment numbers and departments are currently in the process of restructuring to cope with these changes, she said.

“In the short term, that’s working. The long-term effect will take some time to see,” Ms Dolan said.

Oklahoma: down 20.6 per cent since 2013 (−$215.1 million)

Oklahoma decreased public university funding by 3.9 per cent last year and by 20.6 per cent between 2012-13 and 2017-18 – more than any other state over that five-year period.

Burns Hargis, president of Oklahoma State University, which has five campuses, said that the “devastating cuts make staying competitive and affordable a serious challenge”.

“Until now, Oklahoma State University has managed to keep tuition and fees below the regional average while maintaining a quality institution by growing enrolment, implementing cost-saving measures, outsourcing and modernisation,” he said.

For instance, a university energy conservation programme has provided savings of $38 million on OSU’s main campus and $48 million across its five locations, providing “a model for other colleges in the state”. The institution also now uses mobile technology to respond quicker to issues on campus, he said.

While student enrolment on the main Stillwater campus has remained stable since 2013, it has increased by 17 per cent to 24,274 in the past 10 years. Tuition and fees increased by 5 per cent between 2016-17 and 2017-18 and grew by 3.2 per cent per year on average over the past nine years to cover a portion of the shortfall “in order to remain competitive with quality faculty and facilities”, Mr Hargis said.

However, he said that if the cuts continue “the consequence for this disinvestment will include fewer college graduates, fewer high-paying jobs and lower per capita income.

“This is not a path to a better Oklahoma. We must seize this moment as if our future depends on it – because it does,” he said.

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Mississippi: down 2.7 per cent since 2013 (−$24.8 million)

State universities in Mississippi have faced year-on-year declines in funding since 2015-16. While appropriations are down by a relatively modest 2.7 per cent over the past five years, income levels dropped by 11.2 per cent last year. Just two other states in the south-east region faced cuts between 2016-17 and 2017-18: Virginia (-1.9 per cent) and West Virginia (-2.7 per cent). Don Zant, Mississippi State University’s vice-president for finance and chief financial officer, said that the institution has addressed the shortfalls through enrolment growth and increases in tuition fees, rather than by cutting jobs or course offerings.

Some 21,883 students enrolled at the institution last autumn, an increase of 23 per cent since 2008. Meanwhile, tuition fees for in-state students rose by 23 per cent to $8,318 per year between autumn 2013 and autumn 2017, while out-of-state tuition and fees climbed by 32 per cent during this period to $22,358.

However, Mr Zant said that these strategies are “not sustainable indefinitely, as most institutions are trying to grow enrolment and there is a limit to which tuition can be increased”.

Last month, the Mississippi Institutions of Higher Learning, a body made up of the state’s eight public universities, said that it has lost more than $107 million in state-appropriated funding since July 2016.

According to reports, current budget recommendations call for universities to receive 15 per cent less funding in the upcoming 2018-19 budget than they spent in 2016, but universities are calling for an annual funding boost of 16 per cent.

West Virginia: down 14.5 per cent since 2013 (−$79.7 million)

West Virginia has faced the second-largest drop in state university funding in the past five years, behind only Oklahoma. This includes a funding decline of 2.7 per cent in the past year.

Rob Alsop, vice-president for strategic initiatives at West Virginia University, said that the institution has tried to focus on how it can make savings while “minimising the impact on the academic and educational aspects of the university” and “maintaining a great environment for students”.

After the budget announcement, the university created 13 “transformation committees”, each of which was tasked with looking at how savings could be made within a different area of the institution, he said. Mr Alsop chaired a committee on whether additional revenues could be generated from new sources, for example.

Changes include outsourcing printing and other business services, a greater focus on fundraising and the establishment of a new performance-based model for staff compensation. Mr Alsop said that the university has also “cut bureaucracies”, for instance by overhauling its travel policies to reduce paperwork and moving services at individual colleges to a shared, centralised system. It is currently considering bringing in a contract manager to provide dining services to students.

Meanwhile, tuition fees increased by 5 per cent last year for both in-state and out-of-state students, and the university has reduced the number of staff, largely by not filling vacancies rather than through lay-offs.

“Over the past five years, we’ve lost in excess of $30 million of base funding. That’s a significant amount to make up. So we do spend a lot of time thinking about how we can be more efficient and looking at other institutions,” Mr Alsop said.

Florida: up 51.3 per cent since 2013 (+$1.7 billion)

Florida was home to the largest funding increase in the past year, with state universities receiving an extra 11.3 per cent of funding. California is the only state to have received a greater boost in income between 2012-13 and 2017-18 (of 52.5 per cent). Earlier this month, Florida legislators approved further increases in higher education funding for 2018-19.

Brittany Davis, communications director at the State University System of Florida, said that university funding levels in Florida are performance-based, meaning that institutions are rewarded if they improve on metrics such as graduation and retention rates and deliver low costs to students. Across the state university system, which has 12 universities, graduation and retention rates have risen by 5.3 per cent and 3.4 per cent, respectively, in the past five years, while the average cost of earning a bachelor’s degree is less than $15,000 after financial aid is included, she said.

Ms Davis said that a benefit of the model is that it “incentivises universities to direct their resources towards improving student outcomes”.

“For example, universities have hired dozens of new advisers and career counsellors to help students graduate in an efficient manner and connect with employers that are hiring. Universities have also invested in software programs that help them keep better track of their students’ progress, enabling advisers to intervene when necessary to make sure that students have the support that they need in order to graduate,” she said.

The increase in funding has also enabled the universities to hire “hundreds of new faculty”, she said.

Meanwhile, a legislative initiative called “pre-eminence” designates funding for universities that “meet certain benchmarks in research, among other areas”, Ms Davis added.

ellie.bothwell@timeshighereducation.com