SYSTEM ISSUES ITEM b. ATTACHMENT
The negative economic conditions existing in many states, including Montana, will likely prevail for some time. Many analysts suggest that the current economic problems are structural. On the one hand mandated spending will continue to consume more state resources. On the other, tax systems are based upon an economy that has changed significantly, especially toward services, resulting in lower revenue than necessary to carry on business as usual. Tax reductions over the past several years have also lowered revenue available to fund governmental services.
The Montana University System has had to adjust to flat general fund appropriations and to increased enrollment by becoming more efficient, by raising tuition significantly, and by increasing efforts to raise funds from external sources. The Board of Regents is now faced with the multifaceted question of how much more efficiency is possible without significant adjustments in structure and services? How much more can tuition increase before there is a serious problem of student access to institutions within the System because of cost?
The Federal Government is unlikely to increase student financial aid any time soon. Given the growing federal deficit and the growing costs of homeland security and national defense there appears to be little consensus in Congress for adding to the existing aid programs. Presently, low income students receiving the maximum grants and loans still are required to come up with about $4,000 to cover the cost of attendance. The parents could borrow that amount but many low income families simply have difficultly doing so. The average student debt now about $21,000.
The Board will be asked to increase tuition significantly in the next biennium to maintain existing programs and services. The institutions have little choice in the short term because program or structural modifications require two to three years of lead time.
In the longer term the Board must find ways to control the costs of attending the Montana University System. While this appropriately is Board directed, those serving the campuses are in the best position to evaluate where cost savings can be attained while maintaining quality, vitality and competitiveness.
It is recommended that each university initiate planning on the assumption that state support from general fund and millage will continue to be flat and that tuition increases will be within the range of the Higher Education Price Index (HEPI). This planning process should identify potential cost savings, structural changes, changes in mission, and adjustments to need-based financial aid that will control costs and maintain access for Montana students.