Trends in College Funding Shortchange State Schools

Colleen O'Dea | June 27, 2012 | Education
'No rhyme or reason' is how education secretary describes allotment of operating funds

Montclair State University
Legislators and the governor’s staff have been focused on the controversial higher education restructuring plan during this budget cycle, all but ignoring an issue that affects many more students and their families: state college funding.

This year’s state budget — having passed both houses of the Legislature and awaiting action by Gov. Chris Christie — provides no increase in aid to Rutgers University or the state colleges, save for a $5 million boost to Rowan University, a key beneficiary of the restructuring, for its new medical school.

Everyone, including the state’s higher education secretary, admits there is no rationale for the way the state allots general operating aid to the colleges, which taught about 178,000 students last year.

“It’s done with no real rhyme or reason,” Rochelle Hendricks, the higher education secretary, told a legislative committee earlier this year. “I am very anxious to develop a rationale matched to the growth patterns of the institutions. We’re looking at what other states have done.”

The result is a large aid disparity among the schools. Of the traditional schools, the proposed budget would give Montclair State University just $2,063 per pupil, using total enrollment. New Jersey Institute of Technology, considered a research institution, would get the most per student, $5,402, closely followed by Rowan, which has not yet received that designation as a research institution would get $5,336. Rutgers stands to receive $4,934 per full- and part-time student.

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Michael Klein, head of the New Jersey Association of State Colleges and Universities, said the state used to base aid on enrollment, but that changed after the colleges became more autonomous. The Higher Education Restructuring Act of 1994 abolished the Department of Higher Education and chancellor’s position and established a college presidents’ council to oversee governance issues.

“It’s very frustrating for higher education leaders because aid is not based on your needs,” Klein said.

He said the group does not support a simple enrollment-based formula because the schools have such different missions. Instead, they would support a formula that takes into account individual college’s missions and how well they fulfill their goals and objectives.

“New Jersey is not even having that conversation,” he said. “Now, if one gets a 2 percent cut, they all do.”

The result is that state colleges are funded at about the same level as 20 years ago.

This year, tuition and fees rose by an average 4.7 percent at the state colleges.
According to the NJASCU, the average tuition and fees at the nine state colleges for in-state students last year was $10,400. That did not include room and board, which can equal the tuition cost. At Rutgers, tuition and fees exceeded $12,000 and the cost of students living on campus at more than $24,000.

Hendricks said that, combined with financial aid, the colleges do a good job of ensuring they say competitive.

But according to a 2010 policy brief by the Princeton University Policy Research Institute for the Region, New Jersey “has one of the most expensive systems in the country.” In the 2008 fiscal year, the state’s four-year public institutions charged the most of any state for tuition, fees, room and board.

Paying New York Prices

According to information on their websites, colleges in the State University of New York system charged $6,600 last year for tuition and fees, while similar charges at Pennsylvania state colleges totaled $8,200.

In the decade leading up to 2008, the share of the average family income needed to pay for expenses at state colleges rose from 19 percent to 34 percent, or more than a third of income, according to the policy brief.

The Governor’s Task Force on Higher Education, headed by former Gov. Thomas H. Kean, stated in its December 2010 report that operating support for the state’s higher education institutions had dropped over the prior two decades, and “the size of the cuts has increased alarmingly over the past five years.”

Between fiscal years 2006 and 2011, state support for public higher education operations per full-time equivalent student fell by almost 22 percent, far more than the national average of 12.5 percent, according to the State Higher Education Finance FY 2011 report.

That report also shows that the amount New Jersey spends per capita and per $1,000 of personal income lags behind national averages and that the state spends the seventh smallest proportion of tax revenues and lottery proceeds on higher education.
“While fully recognizing the State’s immediate budgetary concerns, we recommend that the State must, as soon as possible, provide greater financial support for the operating budgets of New Jersey’s colleges and universities,” wrote the task force in its report.

College presidents agree.

Susan Cole, president of Montclair State University, told the Assembly Budget Committee hearing on higher education that the state’s public college system has been “underbuilt and undersupported for decades.”

She said the state investment in the average student’s education has dropped from $5,400 in the 2006 fiscal year to $3,800 this year, a decrease of $240 million in operating aid over six years. By contrast, K-12 per-pupil spending in the state averaged more than $17,000 last year, with the majority of that coming from state and local tax dollars.

Set too Low

“The operating appropriations to all institutions are too low by any standards,” Cole said. “We place far too heavy a burden on New Jersey students and their families. They are forced to pay among the highest public tuitions in the nation.”

Klein agreed: “Our focus has been on research and attracting pharmaceuticals and expanding medical education. The discussion has not been focused on accessibility and affordability.”

That led the Kean task force to recommend drastic changes in funding.

“There continue to be very substantial and unjustified differences in the levels of support provided by the State for the education of students from one institution to the next,” the report stated. “Given the facts that support for all the institutions is too low and that all the institutions have experienced over the last decades significant cuts in what was already modest support, the allocation problem cannot be solved by a redistribution of the existing and inadequate funding without causing additional damage . . . We recommend that a correction to the existing disparities be implemented immediately and that funds for that specific purpose be appropriated by the State.”

That didn’t happen in this budget.

And the flat funding for almost all schools will likely lead to more tuition increases.
To blunt tuition costs for the neediest students, Christie’s budget recommendation did include a $41 million increase in Tuition Aid Grants and a $500,000 boost in the Educational Opportunity Fund program for the disadvantaged.

“We always support increases in these needs-based aid programs which help many of our students to pay for college,” said Paul Shelley, a spokesman for the New Jersey Association of State Colleges and Universities.

Falling STARS

At the same time, it cut the NJ STARS scholarships for academically talented students by 15 percent.

The $750 million higher education bond issue that began working its way through the Legislature over the past week could provide some relief from tuition increases. With no state bond money for construction available since 1999, schools have bonded on their own and students have had to pay the debt service through higher tuition and fees.

If it gets voter approval, that bond issue would divvy funds up by sector, with Hendricks eventually determining which college projects get funded. By sector it would provide:

  • $300 million to Rutgers, New Jersey Institute of Technology and whatever other public research institutions exist once any restructuring is complete;
  • $248 million to the state colleges, currently numbering nine, including Rowan;
  • $150 million to the county colleges;
  • $53 million to independent institutions.
  • The four-year state schools would have to kick in a quarter of the funding for all projects, while the county and private schools would have to pay half.

    College officials say the bond bill (S2500) does not come close to addressing all facility needs. Their wish list, drafted last November, totals $6 billion, but they were more recently seeking $3.5 billion, with $850 million of that for Rutgers. Still, they would be grateful for any money.

    “There’s an awful lot of work that needs to be done,” Klein said. “There’s an awful lot of hope that something will pass.”