Missouri Southern dealing with a new reality
Editor's note: This is the latest in a series of articles from interviews with new Missouri Southern President Dr. Bruce Speck delving into the financial difficulties the university faces and how he is dealing with them.
Missouri Southern and the other public colleges and universities have seen economic downturns in the past — governors have withheld appropriations to make sure the state budget is balanced, or enrollment has dropped as trends change.
In the past, the boards at Missouri Southern and the other institutions of higher learning have had the authority to make up for any cuts or shortfalls by raising the one form of income they had total control over, tuition.
As Missouri Southern President Bruce Speck and his team of administrators deal with budget shortfalls that are draining the university’s reserves, they no longer have an option that past administrations relied on heavily — tuition increases.
‘One big difference’
Senate Bill 389, the controversial 2007 law sponsored by State Sen. Gary Nodler, R-Joplin, gave universities the money to build a number of buildings, including a new $20 million health science building under construction at Southern, but it also took the unlimited authority university governing boards, including the MSSU Board of Governors, had to control tuition.
The law specified that tuition increases are subject to the review of the Missouri Commissioner of Higher Education and that unless approved by the commissioner, no institution can raise tuition by more than the rate of inflation according to the Consumer Price Index in a given school year.
The law went into effect in August 2007.
“There’s one big difference,” said Jeff Gibson, director of budgeting and operations at MSSU. “What comes to my mind is 2001. Nationally that was a big downturn. We suffered the withdrawal and withholding of appropriations and the tough times, but we countered part of that, we offset it with a tuition increase. We have a constraint there now with SB 389 and that puts us in a catch 22.”
Before: big tuition hikes
The economic recession that followed the terrorist attacks of Sept. 11, 2001 forced then-Missouri Governor Bob Holden to withhold millions of dollars in appropriations to universities and colleges.
Missouri Southern responded with what was at the time one of the largest tuition increases the university board ever approved, a jump from $90 a credit hour to $124 a credit hours for in-state tuition.
Instate tuition in the 2008-09 school year was $143 a credit hour.
Gibson said that kind of tuition increase is not an option any more, although the Department of Higher Education has approved policies to consider tuition increases that exceed the rate of inflation if the state cuts back on appropriations for higher education.
Zora AuBuchon, assistant commissioner of higher education, said the Coordinating Board for Higher Education has written a policy for enforcing the tuition limits put in place by Senate Bill 389.
“In terms of what would happen if the state legislature does not increase funding, I believe the policy indicates that is one factor we can consider if an institution raises tuition at a rate that exceeds the rate of inflation or the statutorily permitted increase,” AuBuchon said. “So it’s one factor that we would consider.”
Speck said whether or not the state would approve a tuition increase higher than the rate of inflation is not an issue in dealing with Southern’s current budget challenge.
“Senate Bill 389 put a cap on tuition,” Speck said. “That means, just in pragmatic terms, that we now have a limit on what we can do, not necessarily based on our need, but on a barrier that’s been placed there legislatively. For instance, now we’re in an economy where the CPI may help us a little bit, but the fact is when you look at universities, there are expenses here that really are very unique to us. Libraries are incredibly expensive to operate. And that’s the kind of cost that a lot of times people don’t figure when they look at tuition. When parents look at tuition, what a lot of people don’t understand is that they’re only paying a part of our costs. At a state institution in this state, the state is paying close to 50 percent of the costs to educate students.”
Speck said despite the economic pressures, Missouri Southern also faces competitive pressures that many other universities in Missouri do not face.
“We have to try to be competitive because we’ve got other states close to us,” Speck said. At Pitt State, in their advertising, they say you can go there for in-state tuition if you live in certain counties in Missouri. We have to be competitive so we have waivers and we say if you live in certain border counties we want to be competitive so we’ll do the same thing, give in-state tuition for Kansas residents. What that does to us is really it takes away the money that could have come from people who live out of state and that takes away a really good chunk of money.”
Now: strategic planning
Speck said strategic planning will help prepare the university to operate in a new world where it no longer controls the last way it had to increase revenues.
“Strategic planning absolutely comes in there,” Speck said. “That will help make sure we’re all moving ahead and moving in the same direction. The other thing that happens, especially on the financial side, I can’t in my position go in and say to Jeff, ‘Hey, I want some money for something, I don’t care what the realities are, I want this money.’ As soon as I do that, what I’ve done is injected into this whole process an arbitrariness. Jeff will give me the money, he has no choice, I’m his boss, he’ll give me the money, but Jeff has then got to do something to get that money. He can’t just go into the basement and print money.
“So Jeff is going to have to go into the budget somewhere and cut something here and cut something there. Those cuts will have to be made for me to get what I want because even though I didn’t reference that reality, he has to reference it and deal with it. If you don’t reference the reality of the situation, you create difficulties in the budgeting process. So you’ve got to be able to think about the entire process and the cause and effect.”