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    FHSU Budget Bulletin

    Dec. 16, 2008

    Amid the continuing speculation in the media about state budget cuts likely to impact Fort Hays State University, I wanted to be sure all of you were aware that your good work over the past several years has been recognized.

    Three recent news reports -- an editorial on Monday in The Topeka Capital-Journal; the lead editorial in The Kansas City Star on a recent Sunday; and a detailed story in KansasLiberty.com, an online journal -- commend FHSU for the cost-saving efficiencies that we have put into place since 2001. Your efforts put us into a strong position going into the legislative deliberations on budget cuts.

    As you read and hear about possible scenarios, please remember that final details will not be clear until the Kansas Legislature makes decisions in April or May next year.

    I will continue to give you updates in these Budget Bulletins at least monthly. Also, I urge you to monitor the link on the FHSU home page, called "Budget Watch," that includes these Budget Bulletins and other pertinent information. I invite you to use the Budget Watch site to post creative ideas and thoughtful suggestions for how the university can deal with these budget challenges. You may also post questions, and we will provide answers as quickly as possible.

    With all the negativity in the media, I'm pleased to share these positive reports with you.

    Dr. Edward H. Hammond
    FHSU President

    The Capital-Journal Editorial Board Published Tuesday, December 16, 2008

    Higher Education -- Back to books

    Universities must learn new ways -- other than increasing tuition -- to keep going

    The state's major colleges haven't been shy about asking for more funding in recent years.

    The state Board of Regents did so as recently as September, recommending that the state increase funding for higher education by 4 percent despite the slumping economy.

    Three months earlier, the board approved tuition increases for the state's six Regents universities. Nothing new there. College costs have risen sharply in recent years, so much so that a national study indicated the average family spent 28 percent of its income to send a student to a four-year school in Kansas in 2007 as opposed to 18 percent in 1999.

    Now, though, it looks as if the university system may have squeezed students, their parents and Kansas taxpayers all it can. Considering the state is facing a potential $141 million budget deficit by next June -- a hole that could grow to $1 billion by June 2010 -- the request for a 4 percent increase looks like a pipe dream. In fact, the Regents already have complied with a request by Kansas Gov. Kathleen Sebelius for state agencies to submit proposals for budget cuts.

    Meanwhile, the economic downturn is bound to leave fewer students and families able to afford current tuition and fees, much less support further increases.

    For better or worse, the financial crisis is forcing major colleges to take steps they should have being taking to a much greater extent in better times -- reducing expenses and finding other ways to keep down the costs of higher education.

    Regents statistics show significant growth in operating expenditures at the state universities. Expenditures zoomed from $454.5 million to $620.9 million at the University of Kansas from fiscal year 2002 to FY 2007, an increase of 36.6 percent. At K-State, the increase was from $432.2 million to $564.8 million -- 30.7 percent.

    Why? It certainly wasn't because of a large influx of students. Headcount at KU dropped 0.4 percent over those years, while K-State's enrollment rose 2.4 percent.

    As the universities' budgets got bigger while the size of their student bodies held steady, the proportion of the universities' operating expenses covered by the state declined.

    To a large degree, the universities made up the gap with tuition increases.

    KU increased its tuition and fees a whopping 89.5 percent from the 2003 academic year to this year. K-State cranked its tuition and fees 81.1 percent.

    Too bad those universities and others didn't follow the path of Fort Hays State University, which kept increases in student costs to a relatively modest 44.1 percent. How? By growing its enrollment and adopting several cost-cutting measures.

    Figures compiled by the Regents show that FHSU students pay slightly more than half the amount their counterparts at KU spend on tuition and fees each semester. The exact numbers are $1,678 at Fort Hays versus $3,300 at KU.

    None of this is to suggest the state's higher education system doesn't deserve support. It does for an array of reasons, from the educational and career opportunities it provides to thousands of Kansans to the money it pumps into the state economy.

    For an idea of potential economic development power of the system, look no further than the recent preliminary decision by government authorities to award the National Bio-and Agro-Defense Laboratory project to Kansas State University. K-States animal research facilities and staff were a key calling card in the state's successful bid to land the $450 million project.

    It's also worth noting that tuition and fees at KU and K-State are cheaper than the average at other major universities.

    Still, the costs are rising much faster than inflation, and they must be reined in.

    Taxpayers and those who pay tuition can only be expected to do so much.

    from The Kansas City Star, Dec. 7, 2008

    Public institutions of higher education must do a
    better job of maintaining affordability

    For colleges and universities, cost control is key

    The toughest tests confronting many college students these days isn't assigned by a professor. It's the challenge of paying for their education.

    Bad news arrives daily.

    Private universities report that shrinking endowments will mean less financial aid for students. State legislatures have put the word out to public colleges that revenue cuts are coming.

    "Measuring Up," the report card issued every two years by the National Association of State Universities and Land-Grant Colleges, notes that reasonable tuition options can still be found at community colleges and some public universities.

    But the report acknowledges that tuition at public research universities increased 2.7 times faster than the rate of inflation over the last decade.

    In many cases -- Missouri being a shameful example -- inadequate state support results in excessive tuition rates. Various rankings place Missouri from 45th to 49th in per capita spending for its public colleges and universities.

    Now states are saddled with their own financial crises. So colleges must do all they can to control their costs.

    University leaders note that salaries and building costs account for much of their budgets, and some increases there are unavoidable.

    But institutions that look to families and taxpayers for their budgets need to be diligent and creative about seeking savings.

    "Affordability is a byproduct of intentional efficiency," said Edward H. Hammond, president of Fort Hays State University in Hays, Kan.

    In the face of declining support from the Kansas Legislature, his university worked hard to hold tuition and fee increases to 44 percent in the five-year period that ended in July.

    None of the other five Kansas regents universities held the increases for students to less than 50 percent. Tuition and fees at the University of Kansas increased by 90 percent over that same period.

    Some of the steps taken at Fort Hays State:
    • It looked to economies of scale. In eight years, it doubled its enrollment to 10,000, with many of the new students enrolled in "virtual" courses. It saved money in recruiting and admissions by working harder to help students be successful and stay in school.
    • It went paperless. Conducting admissions and financial aid business online, and making grades available by computer rather than mail, save $73,000 a year.
    • It saved money by bringing tasks in-house. Software packages for admissions and registration can cost more than $1 million to purchase and more than $250,000 a year to maintain. Fort Hays State commissioned its students and faculty to build a system, and saved $800,000. "The university has saved $2.4 million over the last five years by bringing its construction crew on staff," Hammond said.
    • It used generators to shave utility use during peak periods.
    Steps like these have enabled Fort Hays State to offer students the lowest tuition and fee package among four-year colleges in Kansas, while keeping class sizes under 20 students and staffing 90 percent of them with professors, not adjunct faculty.

    Of last spring's graduating class, 98 percent had found jobs in their fields or enrolled in graduate school by September.

    Research universities will justifiably contend that their roles are more complex and expensive than what is required of a small liberal arts university like Fort Hays State.

    But legislators and the public are looking for colleges and universities to put their brainpower to use and reduce their own expenses. If they are accomplishing efficiencies, they need to get the word out.

    Soaring tuition rates have many causes and getting them under control will require multiple courses of action. But universities must demonstrate a good-faith effort to keep costs in line.
    Kansas Liberty: 09 December 2008

    Operating costs triple over 20 years, tuition jumps five times. Maybe KU should go to Fort Hays to take the course in how to hold down costs.

    Why are costs at Kansas' universities skyrocketing?

    Operating costs at the University of Kansas have more than tripled in the last 20 years despite stable enrollment figures. The rising costs are largely the result of a substantial increase in the amount of services provided at KU, combined with the decrease in state financing.

    According to the University of Kansas Office of Institutional Research and Planning, the operating costs at KU for fiscal year 1988 were $204 million, with 40 percent of the funds coming from state appropriations. KU's ballooning figures were reported in a national education journal.

    In fiscal year 2008 the school is at $677 million in operating costs, with just 22 percent of the funding coming from state appropriations.

    But the University of Kansas is not alone in its skyrocketing operating costs.

    According to the Kansas Board of Regents 2008 datebook report, out of the six state universities -- the University of Kansas, Kansas State University, Wichita State University, Emporia State University, Pittsburg State University and Fort Hays State University -- all but one have experienced substantial increases in operating costs during the last five years.

    Fort Hays State University is the sole college to experience a decrease in operating costs per credit hour between fiscal year 2002 and fiscal year 2007. Fort Hays' cost per credit hour decreased from $249 per student credit hour to $238 per credit hour, or a decrease of 4.2 percent.

    Wichita State University had the largest change, with a 37.9 percent increase in operating costs. The University of Kansas had the next-largest increase with a 28.2 percent raise, and Kansas State University followed closely behind with a 24.8 percent increase.

    Emporia State University experienced the lowest increase in expenditures with an 11 percent increase.

    The six state universities have increased their costs per credit hour by an average of 23.9 percent. KU's rising costs were the subject of a lengthy feature in the current issue of the Chronicle of Higher Education.

    According to the Chronicle, in 1988, KU "contained just under five million square feet of building space. Today, with the dozens of new and expanded buildings added since, its square footage has nearly doubled. The additions include two science buildings, a fitness center complete with climbing wall (naturally), the Dole Institute of Politics building, a multicultural resource center, and a performing-arts center with a separate recital hall for organ concerts."

    Among the Chronicle's other points:
    • "In 1988, the university employed just under 4,000 people; today the number is 25 percent higher, the result mostly of non-faculty additions but also 100 new tenure-track jobs."
    • State financing has "nearly doubled since 1988, to $150.6-million [but] the overall proportion of the university's operating expenses covered by the state has declined markedly, from 40 percent in 1988 to 22 percent in 2008. (Those figures exclude money the university spends on intercollegiate athletics, a high-profile program whose annual budget doubled over the past 20 years to about $50-million; university leaders say private donations cover those costs.)"
    • "The university has made up for some of the decline in state funds with greater support from private donations and from grants and contracts. But to a larger degree, it has relied on higher tuition and fees to fill the gap -- and to expand its spending."
    • "This fall, entering freshmen pay $7,724. That is just two-thirds the cost of the other major public research universities in the AAU, but it still reflects an increase since 1988 that is three times greater than the rate of inflation."
    • "Fifteen years ago (that's as far back as data were readily available), energy costs [at KU] were nearly $5.2-million a year, or about $1.11 per square foot, excluding residence halls and a few other buildings. By 2007, the total expense for the same set of facilities was almost double that, or nearly $9.3-million annually, with the cost per square foot having risen to $1.61."
    • "The university now pays more than $25-million a year for health-insurance premiums. Over the past 20 years, the cost of those premiums has gone up by 290 percent."
    In contrast, Fort Hays State University has found success by becoming innovative as a way of staying alive.

    Kent Steward, director of university relations at Fort Hays, said that a downturn in the state's economy roughly five years ago inspired Fort Hays officials to come up with ways to reduce costs.

    According to Steward some of the savings the university has created include:
    • $773,000 a year on average in energy costs by building gas-fired generators to utilize during peak usage times
    • $305,000 a year by consolidating various aspects of education departments
    • $2.5 million in the last 10 years by completing construction projects in-house, rather than hiring workers when possible
    • Roughly $1 million savings a year by developing online courses in-house
    Steward said he and FHSU President Ed Hammond take a media tour across Kansas each year to discuss the strategies Fort Hays has utilized to lower operating costs.

    "Part of the benefit of reducing our costs is seeing that students' cost of going to school is considerably less," Steward told Kansas Liberty. "President Hammond is always saying our university is like a business in that if you are needing more money, you can either charge more for what you do or you can serve more people, and we have tried to hold down on charging people more and have been very successful in growing."

    Bruce Shubert, associate vice president for finance and administration at K-State, said he thinks K-State has been efficient with its finances.

    "We think that historically we have done all we could and continue to do so in terms of saving money on utility bills, with energy conservation, doing away with paper processes and continuing to make the administrative process as efficient as possible," Shubert told Kansas Liberty.

    Despite the large increases in operating costs, most universities did not experience similar increases in enrollment except for Fort Hays where enrollment increased by 50 percent between the fall of 2002 and the fall of 2007. Wichita State University experienced a 7 percent decrease in student enrollment.

    The University of Kansas enrollment also declined with a .4 percent decrease. K-State had a small 2.4 percent increase in enrollment.

    Although all of the six colleges have experienced a rise in tuition costs, when comparing tuition costs and student fees approved between academic year 2003 and academic year 2008 for the six universities, the University of Kansas comes in first for largest tuition increase with an 89.5 percent raise.

    K-State's tuition also saw a significant increase with an 81.1 percent change. Fort Hays had the lowest tuition increase in the last 5 years with a 44.1 percent increase.

    Wichita State had the next lowest tuition changes with a 57.3 percent increase.

    Emporia State and Pittsburg State were close behind with increases of 60 percent and 60.2 percent respectively.

    "A deliberate decision was made at K-State in 2002 that in order to maintain and improve the quality of the degree and the value of the degree that we needed to invest some things and so there was a plan to increase tuition," he said. "So there has been a substantial increase as a percentage but we don't expect those tuition increases to continue."

    Shubert said that decreases in state aid over the years has also affected how K-State produces the adequate funding needed to pay for operation costs.

    "We are not well funded so it's a struggle for us to maintain our quality and meet our mission with the resources we have," he said.

    "State universities in Kansas have done a remarkable job of delivering excellence while remaining affordable in light of such challenging fiscal circumstances," Kip Peterson, Director of Government Relations and Communications at the Kansas Board of Regents told Kansas Liberty.

    "Tuition at our state's universities remains considerably lower than the regional and national averages, and enrollments continue to increase," Peterson said in a statement. "This is remarkable given the fact that over the past 20 years state funding has decreased by $1,372 per student, state funding has fallen from nearly half to about a quarter of the universities' total operating budgets, and overall state spending has grown at a rate of 89 percent while funding for state universities has grown by only 12 percent."

    Governor Kathleen Sebelius' spokesperson Nicole Corcoran, said Sebelius has made her own recommendations over the years for higher education.

    "Kansas is blessed to be the home of world class research universities, four year colleges, community colleges and vocational and technical training schools, still too many Kansans find the doors of opportunity barred by rising tuition costs, room and board expenses, and textbook prices," Sebelius said in her January 2008 State of the State address.

    "My budget takes significant steps to make college more affordable. I am providing an additional $3 million in scholarship money to ensure that 2,000 more students can afford the opportunity to compete in our new innovation economy. There are also significant new state resources proposed for post-secondary education, to lower the costs for parents, students and Kansas families."

    -- Holly Smith