RD59 - 2004 – 2005 Tuition and Fees at Virginia’s State-Supported Colleges & Universities


Executive Summary:
INTRODUCTION AND OVERVIEW

The 2004 legislative session began in January and ended 60 days later with a budget impasse. The Governor then called a special session that lasted 55 days and ultimately resulted in a bipartisan compromise that will restore stability to the state's finances. The 2004 tax reform and budget package passed by the General Assembly provides approximately $1.3 billion in additional tax revenue for the 2004-06 biennium. State funding to higher education will increase by $278 million over the next two years to help address the chronic under funding of Virginia's world-class system of higher education, support growing enrollments, and offset rising tuition costs.

By statute, each institution's governing board of visitors has the authority to set tuition and fee rates. However, the Governor and the General Assembly have typically set either explicit or implicit tuition policies and goals for the state. Prior to 2002-03, tuition and mandatory educational and general fees for in-state undergraduate students had not only been frozen (no increases) by the legislature since 1996, but also reduced by 20 percent in 1999-00. For 2004-05, the General Assembly returned the authority of tuition increases to the boards of visitors to set tuition charges at levels they deem to be appropriate for all in-state student groups based on, but not limited to, competitive market rates, provided that the total revenue generated by the collection of tuition and fees from all students is within the nongeneral fund appropriation for educational and general programs. Tuition and all mandatory fees for in-state undergraduate students increased by 15% in each of the last two years. The average increase next year will be 9%.

This report, focusing on tuition and fees for in-state undergraduates, provides a summary of: 1) board-approved tuition and fee increases for the 2004-05 academic year; 2) changes in tuition and fees in Virginia over 25 years; 3) the cost sharing relationship between the state and students; 4) trends in tuition increases nationally and peer comparisons. Comparisons of changes in tuition and fees for other student groups, including in-state graduate, out-of-state undergraduate, out-of-state graduate, in-state first-professional, and out-of-state first professional, are provided in the appendices.

In order to assess trends in tuition and fees, it is important to understand higher education pricing. A student planning to attend a public college or university in Virginia can expect to pay the charges defined below:

1. Tuition and Mandatory E&G Fees: Mandatory student charges used to support instruction and related education activities included in the Educational and General (E&G) program. E&G subprograms include instruction, research and public service, academic support, student services, institutional support, and operation and maintenance of physical plant.

2. Mandatory Non-E&G Fees: Mandatory student charges used to support non-instructional activities such as student health services, athletics, recreational activities, campus transportation, and capital debt service.

3. Tuition and All Fees: Sum of tuition, mandatory E&G fees, and mandatory non-E&G fees.

4. Room and Board. Optional charges used to support the dormitory and dining functions for students choosing to live on-campus. Students living off-campus are exempted from these charges.

5. Total Cost: The total cost to students and parents - absent student financial aid. It includes the sum of tuition, all mandatory fees, and room and board.

KEY FINDINGS

• The 2004 General Assembly provided additional funding of $278 million to higher education in the 2004-06 biennium. As a result, institutions are able to control and even offset tuition increases in 2004-05. The average increase for in-state undergraduate tuition and mandatory educational and general (E&G) fees will be 10.8% at four-year institutions, 6.3% at two-year institutions, and 10.5% at all institution levels from 2003-04 to 2004-05.

• The impact of the Commonwealth's eight-year policy to limit tuition increases for in-state undergraduate students becomes clear when one considers trends in tuition and fee increases since 1995-96. Between FY96 and FY02, the period of tuition freezes and a rollback, tuition and mandatory E&G fees for in-state undergraduate students decreased by 21% at both four-year institutions and two-year institutions. From FY02 to FY05, the same charges will increase by 60.7% at four-year institutions and 51.7% at two-year institutions.

• This fall, average tuition and mandatory E&G charges will be higher than they would have been had they increased by the rate of inflation between 1995-96 (the year before the tuition freeze began) and 2004-05 at four-year institutions, and are around the same level at two-year institutions.

• In addition to tuition and mandatory E&G fees, institutions establish required fees to support non-instructional or related activities, such as student health services, athletics, campus transportation, or debt service. These charges (often referred to as mandatory non-E&G fees) will increase, on average, 6.8% for in-state undergraduate students next year. Although these increases exceed the five percent limit stipulated in the 2004 Appropriation Act, the primary uses of the increased charges are for institutions' share of salary increases and debt service. These increases are permitted under the tuition policy set forth by the General Assembly.

• Looking at tuition and all fees, including mandatory E&G and mandatory non-E&G fees, Virginia undergraduate students can expect to pay on average 9.1% more in 2004-05 than they did the prior year. Students at four-year institutions will pay about $477 more in 2004-05. Community college students will pay about $123 more this fall.

• In 2003-04, in-state Undergraduate tuition and fees at Virginia's flagship institution ranked 15th nationally. Tuition and fees at other public colleges and the universities ranked 12th. Charges at the community colleges remained below the national average, ranking 31st. Based on preliminary reports, Virginia's tuition and fee increases appear to be comparable to increases reported around the country. Therefore, the national rankings of charges at Virginia's institutions are expected to remain stable for 2004-05.

• The average total cost for an in-state undergraduate student living on campus next year is estimated to be about 37% of per capita disposable income. While this percentage has increased since the tuition freeze was lifted in 2002-03, it remains well below the 40% level experienced between 1993-94 and 1995-96. Further, the gap between Virginia and the national average in the percentage of personal income consumed by the cost of higher education has narrowed significantly over the last decade.

• Over the past ten years, tuition charges to in-state undergraduate students in Virginia have been largely influenced by the state's economic condition. The Commonwealth restricted tuition increases during a period of strong economic growth and allowed institutions to assess double-digit tuition increases to offset general fund reductions when the economy was in retreat. Although a college education is more affordable today than it was ten years ago (as measured by per capita disposable income), this affordability was achieved through dramatic shifts in the state's cost-sharing policy with varying degrees of equity depending on when a student entered the system. The lack of continuity and predictability limited students and their families' ability to save effectively for college and did not provide equity for taxpayers in terms of meeting the cost of education.