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The Legislature Must Adequately Fund the University System

If you keep up with the higher education financial scene at all, you will know that the past decade or so has seen explosive growth in outstanding student loan debt. No other borrowers – the Federal government, corporations, home buyers, households with credit cards – have increased their borrowing at anywhere near the torrid pace that college students have. Why that’s happening is hotly disputed, but one cause seems to be pretty obvious: state legislatures have reduced public funding for higher education, state universities and colleges have turned increasingly to tuition to fund their operations, and students have had to borrow money to pay those higher tuition bills.

In its candidate Q&A this year, the Missoulian has raised this issue, noting that in 1992, the state provided 76 percent of the funding for Montana’s public universities and colleges but that by 2018, that percentage had fallen to 38. The question the paper asks is whether or not that level of support is appropriate, or whether, rather, the state should pick up more of the tab.

Republican candidates have responded to this question in a variety of ways (some of which are plumb incomprehensible) but a common theme is that the problem isn’t that the state hasn’t paid enough, but that the growth of higher education spending has gotten out of control. Perhaps the clearest statement of this position comes from Adam Hertz, who says it’s the Regents to blame:

“From 1992 to 2018, state support for the MUS increased by 3 percent per year, outpacing the average inflation rate of 2.2 percent during that timeframe. Meanwhile, the MUS increased spending by 5.8 percent per year. The Legislature has given the MUS the funds to make higher education affordable, but unfortunately the Board of Regents have not chosen to prioritize affordability.”

Rep. Hertz has these numbers about right, but there’s a fundamental flaw in his argument, namely, that he ignores the growth of enrollment. Surely if the Legislature is trying to provide enough funds to make education affordable, the number of students trying to afford it has to be taken into account. The relevant measure is not the growth of total state funding (corrected for inflation), but of state funding per resident student (again, corrected for inflation). The focus is on resident students because those are the folks who we want to help afford college; sorry, non-residents, but you are on your own.

In 1992, state support per resident FTE student was $4,971. At today’s prices, that’s the equivalent of $8,925. But this year state support per resident FTE student is $7,382, so in real dollars, state support has declined since 1992 at a rate of about 0.7% per year; the state has thus reduced, rather than enhanced, its contribution to the affordability of higher education for young Montanans. And unless for some inconceivable reason you believe the real cost of an education went down over this same period, you have to conclude that the Regents had no other choice than to raise tuition to make up for the declining state contribution.

While lagging state appropriations are clearly implicated in the run-up of tuition, the Regents are not necessarily off the hook. Obviously, the real cost of educating a student didn’t decline, but did it have to rise as fast as it did? Between 1992 and this year, total real MUS revenue per FTE student increased by about 1.4 percent per year. Is that a lot or a little? Is it too much? Did it drive up tuition more than necessary? Did the Regents incur unnecessary costs? Did they buy a bunch of educational bells and whistles nobody needs?

It’s hard to say. But looking around at the campuses and poring over the numbers for Montana’s institutions, it’s hard to believe that the Regent’s have been lavish. On the contrary, Montana schools appear to run on very lean, not to say impossibly limited, budgets. Faculty in Montana are paid significantly less than their counterparts elsewhere. Total revenue per student and resident tuition at Montana schools are well below the averages for their peers.

No, when it comes to explaining their role in increasing tuition, it’s not enough for legislators to shrug their shoulders, claim they did their part, and blame it all on the Board of Regents. It’s a damn sight more complicated than that.

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Dick Barrett

Dick Barrett is a retired University of Montana economics professor who has served in the Montana legislature since 2009. He currently represents Senate District 45 in Missoula. Due to term limits, the 2019 session will be his last.

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