State leaders embracing uncapped tuitions

Critics of idea worry about pricing out poorer students, accountability

Michele Kay and Sharon Jayson
AMERICAN-STATESMAN STAFF
Thursday, February 13, 2003

Momentum is rapidly growing among lawmakers to give state universities the freedom to set their own tuition, a change that could put more burden on students instead of other taxpayers.

With Texas facing a budget shortfall of nearly $10 billion, the state's 31 four-year public universities are likely to see cuts that could run into the double digits in their state allotments for the next two years, House and Senate budget writers say.

As a trade-off, legislators would allow the institutions to charge students whatever the market will bear. Although it has the support of the governor and the House speaker, the plan is opposed by the state's public universities.

Universities now can charge a maximum of $88 per credit hour. Most charge less.

Speaker Tom Craddick, R-Midland, said earlier this month that he supported the move. In his State of the State address Tuesday, Gov. Rick Perry also backed tuition deregulation.

"If we are going to appoint boards of regents, let's give them room to do the job," Perry said.

Legislators say the issue will be controversial, but budget pressures make its passage likely.

"Deregulating tuition is likely to be the only answer to our budget constraints," said Rep. Fred Brown, R-College Station, chairman of budget and oversight for the House Higher Education Committee.

Sen. Florence Shapiro, R-Plano, chairwoman of the Senate Educate Committee, also sees deregulation as a good option.

"To put large amounts of money into higher education is not a reality," she said.

The idea of deregulating tuition gained traction when University of Texas System Chancellor Mark Yudof promised that in return for deregulation, UT campuses would provide free tuition to needy undergraduates. Legislators took it a step further. They proposed giving that freedom to all universities as a trade off for lower appropriations.

None of the state universities are behind that trade-off.

"We have no desire to pursue additional autonomy," said Howard Graves, chancellor of the Texas A&M University system.

Chancellors worry that the tuition gap between universities would expand, that the state would end up with several tiers of schools and that poorer and middle-class students would be forced to attend lower-quality institutions.

Wanting it all

Universities are universally opposed to tuition deregulation in place of higher state appropriations.

Both Graves and University of North Texas System Chancellor Lee Jackson say they don't want to exchange appropriations for autonomy.

"We don't win if we take money away from one place and provide money from another place," said Graves.

Yudof said he wants it all: fullyfunded state appropriations and tuition deregulation.

"I am going full bore on both issues," he said.

Competition and accessibility to higher education are at stake, but the debate is about money. Every state agency has been asked to scale back its expectations.

House Appropriations Committee chair Talmadge Heflin, R-Houston, said universities should plan on 12.5 percent less state money during the next two years.

"If other funds become available, we may be able to give them a little additional money," he said.

Heflin and other lawmakers want the cuts to come from operating costs and not the classroom.

Perry has proposed $900 million in cuts. Two-thirds of that amount would come from special appropriationsto universities. These help pay for a variety of projects from faculty salaries and university museums to the McDonald Observatory. Perry said the state would save another $300 million if universities did a better job of estimating the amount they expect to receive from non-state funds.

If the universities are going to keep the cuts from affecting classroom operations, legislators reason, they must be allowed to set their own tuition.

In most states, tuition is set by a university's board of regents. The Texas Legislature is one of only nine nationwide to set tuition rates, according the Education Commission of the States.

Growing enrollment

State funding of higher education in Texas has not kept up with enrollment growth. Texas spends less on higher education than the national average. But the state wants enrollment growth at its four-year universities to continue -- from the current 1 million to 1.5 million by 2015.

Legislators say deregulating tuition is not tantamount to higher prices. Increases or cuts won't be across the board, they say. The more popular, prestigious programs might cost more. Those in less demand will be cheaper.

Craddick says that's the way it should be. It makes no sense, he said, for the University of Texas at Austin and at Permian Basin to charge the same amount when their facilities and offerings are so different.

Don Brown, commissioner of the Texas Higher Education Coordinating Board, estimates that universities will have to increase tuition and fees by $2 for every dollar they lose in state appropriations. Tuition and fees at campuses statewide now range from $2,500 to slightly more than $5,000 a year.

"There are a lot of people in the Legislature who worry about letting the price of college go up too much," Brown said. "The question is what limits or constraints they will place."

Many Republican legislators believe that competition should be the key constraint. As with electricity and telephones, they believe education should respond to market forces.

"We must remember that these are public institutions, and they must be competitive. Deregulating tuition will make these institutions competitive," said Shapiro, who helped shape the Conservative Coalition's recent budget recommendations.

John Colyandro, the coalition's executive director, said removing the cap on tuition will allow universities to generate additional revenue to hire and retain faculty. "It also clears the way for free market competition among universities," he said.

But with the exception of UT, universities don't relish the idea.

"Institutions that have a high enrollment demand would be able to increase their tuition substantially without hurting their enrollment," said Lamar Urbanovsky, chancellor of the Texas State University System. "Institutions with pretty flat enrollment or decreases would not be able to do those types of increases. Therefore the funding level between institutions would get further apart."

Opponents of deregulation warn that unshackling tuition will leave poor and perhaps even middle-class students out in the cold.

Rep. Irma Rangel, D-Kingsville, vice chairwoman of the House Higher Education Committee, said university regents should not have the power to set tuition. They are not elected and are not accountable to taxpayers, she said.

But supporters say the important issue is whether universities are affordable. That was the point Yudof made last year when he triggered the deregulation debate. He suggested the threshold for virtually free tuition should be tied to the state's annual median income, now at just under $41,000. Geanie Morrison, R-Victoria, chairwoman of the House Higher Education Committee, said the number might be too low. She wants to protect middle-class as well as poor students.

Supporters of deregulation promise accountability, though.

"We are not going to give universities carte blanche to do whatever they want to do," Shapiro said. "We're going to hold them accountable."

mkay@statesman.com; 445-3635