Legislators, colleges brace for fight over cost of higher education

02/07/2014 11:13 PM

02/07/2014 11:14 PM

South Carolina’s public colleges and Legislature are locked in a fight over how much the state should pay for higher education.

Legislators are frustrated the state’s 33 public colleges continue to ask for more money while also raising their tuition rates. Colleges said they have little choice but to raise tuition because the General Assembly cut their state funding during the economic downturn.

Legislators say that, collectively, the schools have asked for about two times the amount of “new” money available in next year’s budget. Universities gripe about lawmakers not having a formula to determine which schools really deserve state dollars.

Higher education funding is the “single biggest issue that we need to address in the state,” state Rep. Jim Merrill, R-Berkeley, said this week.

“Higher ed lives in a utopian world,” he said. “We are now trying to get a hold on reality and instill a little bit (of reality) into the higher ed process. ... We need to do the dirty work. Right now, nobody seems to be rolling up their sleeves.”

The sides say they are working on solutions to reward the schools that perform the best.

At the request of the General Assembly, the S.C. Commission on Higher Education submitted a report this year on how the state should fund schools, using a formula based on their needs.

The report said South Carolina used to base its college spending on a formula called Mission Resource Requirement that took into account many factors, including enrollment, salaries, academic programs and the size of buildings. But that formula was abandoned around the time of the 2001 recession, when the Legislature first cut college funding.

“The majority of subsequent funding increases were targeted in support of particular institutional projects,” the commission report said.

That happened again after the Great Recession took hold in 2008, the report said.

The shifts have led to a disparity in funding.

Some schools — including University of South Carolina and Clemson University — are getting around 50 percent of what they would have received under the old formula. Coastal Carolina University is receiving about 30 percent, and Winthrop University is getting roughly 40 percent, the commission report found.

“The piecemeal process we’re doing is not working,” Merrill said. “We’ve got USC, Clemson, Francis Marion and so on all going out and trying to expand their domains in an effort to be more relevant and bring in revenues.”

Calling a timeout

The S.C. House and state Senate are considering bills that would require the Higher Education Commission and colleges to work on a plan for accountability-based funding, which would take into account schools’ performance, financial soundness and contributions to the state economy.

“Providing a predictable, sustainable funding process is vital to the success of our public colleges and universities,” said Richard Sutton, director of the Higher Education Commission. “An accountability-based funding model could provide the platform we need.”

Both major candidates for governor this year also say they want to base higher education spending on what schools deliver.

“Funding now is determined based on which college can grab the most money,” said state Sen. Vincent Sheheen, D-Kershaw. “That’s an awful way to fund our universities.”

Gov. Nikki Haley said she stands behind accountability-based funding proposals that she has discussed with college leaders. “Universities are no longer having to compete to have the best lobbyists, but they are actually competing on merit.”

While the funding talks continue, USC, the state’s flagship college, says it wants to call timeout on the tuition hikes that have angered legislators.

But there is a catch.

USC has offered a freeze on tuition for in-state students next year in exchange for the state giving it additional money that would amount to a 3 percent tuition hike, or about $10.1 million. USC also wants the state to pay its costs for any state-mandated pay hikes and health insurance rate increases.

If the tuition timeout is rejected, USC would have to look at another tuition hike, president Harris Pastides said while visiting the State House with dozens of officials and alumni Wednesday, for his school’s annual Carolina Day. USC has raised tuition each year since 1988.

“We’re not here with an ultimatum,” Pastides said. “We’re here with a plea, a request.”

However, at least one lawmaker said USC’s offer sounds like an ultimatum.

“It almost feels as if the university wants to hold the General Assembly hostage,” said state Rep. Gilda Cobb-Hunter, D-Orangeburg. “We ought not be in the business of rewarding universities for freezing tuition. We should have the same expectation of higher ed that we have of local government — live within your budget.”

Hiring a consultant

Several lawmakers said USC should hold off on a tuition increase anyway.

“Parents and students need a break,” said House Ways and Means Committee chairman Brian White, R-Anderson. “Maybe you delay building a building so you don’t have that cost.”

USC has said it needs additional money to make improvements to its campus to attract top students and cover rising state-mandated salary and insurance costs. The school also says it must pay to accommodate its growing enrollment — needed to offset cuts in its state money.

But White said colleges should cut their budgets instead of raising tuition.

“They say, ‘We turn a lot of students away,’ ” White said. “Well, if you’re picking and choosing, then you should be OK.”

White said other public schools could follow the lead of Coastal Carolina in Conway, which has not raised tuition in the past two years.

Colleges have an expenditure problem, White said, in part because “They’re raising tuition, which other agencies can’t.”

White has made higher education funding a priority issue this year. This week, he proposed hiring a private, independent consultant to look at how universities are funded.

His budget office said similar reviews in North Carolina and California have found more than $100 million in savings. A consulting firm addressed a House higher education budget subcommittee meeting this week.

USC said it already has worked with a consultant to save money.

“What any consultant will find is that we’re underfunded and doing a great job with the lean resources that we are given,” Pastides said. “If an outside and fresh perspective would help convince South Carolina government and taxpayers that that’s the case, then I welcome the review. ... If there’s a little more we can trim, I’d be interested in that.”

White said he worries college trustees might reject cost-savings measures. However, if lawmakers do their own research, they can adjust the state’s higher education budget and take the decisions out of colleges’ hands.

“We have to make sure to have those things implemented,” White said of cost-cutting proposals. “That’s our job in the General Assembly, to do that.”

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