Guest Column: Does tuition deregulation really help medical schools?
By: M. Roy Wilson, M.D., M.S.
Amarillo Globe News
Publication Date: 01/23/05
LUBBOCK - While the intent of House Bill 3015 was to give institutions of higher education the opportunity to recoup revenue lost in reduced state funding, the 2003 Legislature's answer of tuition deregulation is not a formula that benefits health sciences centers.
Health science centers have far fewer students compared to general academic institutions. For example, Texas Tech University's enrollment is more than 10 times that of Texas Tech University Health Sciences Center. Fewer students means less opportunity for revenue enhancement.
TTUHSC increased tuition $10 per semester credit hour in the spring 2004 semester for students in all schools except medicine. For the 534 medical students, who pay an annual flat rate instead of by semester hour, tuition increased $896 per year beginning with the fall 2004 semester.
With the Health Sciences Center's 2,272 students, tuition increases generated just more than $900,000. However, HB 3015 stipulated that a percentage of the tuition increase be set aside for student financial aid. This resulted in a set-aside of $200,000, leaving just more than $700,000.
While any increase is much appreciated, and while $700,000 seems like a lot, let's put this amount into proper perspective. It comprises .16 percent of our budget; it is about 50 percent of what is typically needed to recruit a single basic science faculty member; it would provide a .3 percent salary increase for our faculty and staff. The reality is that tuition increases only can provide a small fraction of the funds needed by health sciences centers to maintain and improve educational programs.
Comparatively, at general academic institutions, even small hikes in tuition fees can positively affect revenue simply because of the number of students. As is the case with Texas Tech, the general academic campuses at the University of Texas, Texas A&M and the University of North Texas have enrollments that dwarf the enrollments of the affiliated health sciences centers. For these general academic institutions, the state's formula funding using the "more students equal more money" scenario is of great benefit.
From a health sciences center's perspective, the monies generated by tuition deregulation provide extra revenue, but that is not the answer to the funding concerns we face. Of TTUHSC's $421 million budget for fiscal year 2005, tuition revenue accounts for a very small portion - about 2 percent. In turn, instructional expenses - including faculty salaries, laboratories and classroom facilities - account for more than 60 percent of the operating budget.
During the past four years, enrollment at the Health Sciences Center has increased by about 30 percent, yet formula funding to support our students has not kept up with the growth. Our Legislative Appropriations Request for the next biennium is 4 percent below the 2002-2003 formula funding levels.
If funding is not available to support enrollment, health sciences centers will at the very least remain static. A worst-case scenario would mean having to reduce enrollment to maintain a balance with the available resources. Not only does that go against the state's "Closing the Gap" initiative, but from a community standpoint, the number of health-care providers available to provide care also would decrease over time.
In the past, state appropriations comprised the majority of the budget; now state funding accounts for only about 25 percent. Health sciences centers are relying increasingly on revenues generated from practice plans, private donations, grants and other contracts. Yet, there are significant pressures on each and relying on any of these four revenue enhancements is precarious. Somehow, health sciences centers must find other ways to make up for the funding shortfalls.
Differing opinions have been expressed on whether the Legislature took the right steps in helping higher educational institutions meet their budgets by allowing them to set their own tuition rates. An incontrovertible fact is that most general academic institutions have benefited from this legislation.
However, health sciences centers have not. The challenge now is to find new revenue streams that will similarly assist health sciences centers in fulfilling their missions.
M. Roy Wilson, M.D., M.S., is president of Texas Tech University's Health Sciences Center.