UNC-system’s low-tuition model may not be sustainable, some warn

The N.C. General Assembly has traditionally given high levels of funding to higher education, and as a result, public university tuition has remained low. But substantial UNC-system budget cuts have led some to question the longevity of the low-tuition model.

During the past five years, the General Assembly cut more than $1 billion from the UNC system. Following years of large tuition increases, the Board of Governors this year approved an unprecedented 8.8 percent average system-wide tuition hike.

Members of the UNC-system Board of Governors have said they remain confident the state will not abandon its low-tuition model, but some observers from Virginia, who in the past have experienced even deeper cuts, say the low-tuition model is not sustainable.

During the past 10 years, Virginia’s public support for higher education has steadily eroded, and tuition at state universities has increased — in some years by as much as 21.5 percent.

Some have warned that North Carolina’s universities could be facing a similar future.

“One of the things that’s happened in Virginia over the past 10 years is that the state investment per student has been cut in half,” said Tom Kramer, executive director of Virginia21, a students’ advocacy group. “Universities are making up a lot of the difference by raising tuition.”

In-state tuition and fees at the University of Virginia were $11,576 for fall 2011, according to the College Board. In contrast, UNC’s tuition and fees totaled only $7,008.

North Carolina has a constitutional clause protecting affordable education, but Virginia does not.

And in 2005, in the face of sinking state support, Virginia’s universities demanded greater autonomy. The result was the Restructuring Act, a new law that gave them unprecedented independence.

“The state was cutting back on its support year after year, to the point where the universities basically gave up on the state,” said David Breneman, professor in economics of education at UVa.

“The big winner in all of this was really the administrative offices that deal with contracting for new buildings, issuing bonds. It was the stuff that the CFO worries about.”

The Restructuring Act made Virginia’s universities more efficient by eliminating bureaucratic hurdles, Breneman said.

“We have more flexibility, we can act more quickly, we don’t have to keep asking permission to do things.”

But these efficiencies have come at the cost of higher tuition.

“North Carolina spends double the money at Chapel Hill per student than Virginia spends on our flagship university,” Kramer said.

While state appropriations for higher education in North Carolina remained much higher in fiscal year 2012 – at $2.5 billion – than Virginia’s $1.4 billion, the N.C. General Assembly has made significant cuts in the last few years. It has also worked to give the UNC system more independence.

“We knew we had to make significant reductions throughout state government,” said Sen. Richard Stevens, R-Wake.

“It would be a logical argument that in those times, when there’s less funding available, you want to give the system as much flexibility as possible,” he said.

Stevens co-authored a bill last year that gave the UNC system more freedom from the state in planning construction projects, taking energy-saving measures and selling property. Stevens said the bill stemmed from a request by UNC-system President Thomas Ross and other board members who said they needed more autonomy from the state.

“We hope that once the economy turns around and the state budget improves there will be more public funds available to the General Assembly to allocate to higher education,” said Wade Hargrove, chairman of UNC-CH’s Board of Trustees.

Hargrove said the drop in state funding is a direct result of the 2008 recession, but Maryland managed to prevent steep cuts to higher education.

An efficiency study completed in 2005 by the University System of Maryland cemented trust between the state and higher education leaders, system Chancellor William Kirwan said.

“The state saw we were serious,” Kirwan said. “Because of that, we’ve been relatively unscathed during this economic downturn.”

Kirwan said Maryland’s average public university tuition has fallen significantly relative to other states.

“It’s unreasonable for people to expect universities to keep tuition increases moderate if the state is making steep cuts to the budget,” he said. “There’s got to be a partnership between state government and higher education.”

And in North Carolina, higher education leaders remain confident that state funding cuts are a temporary blip, not a long-term trend.

“There has and always will be a significant state investment in higher education in North Carolina,” Stevens said.

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