And institutions throughout the state face challenges because of falling enrollment, faulty projections over how many students will show up and the high rate of poverty, the report said.
It’s “pretty alarming stuff,” said Rep. George Dodge Jr., D-Santa Rosa.
The 72-page report was shared with lawmakers Tuesday during a meeting of the Legislative Finance Committee.
The report outlined a series of incredible challenges facing higher education in New Mexico, including:
— The danger of continuing to raise tuition. “With the highest poverty rate in the nation, even small tuition increases will threaten many New Mexicans’ ability to afford a college education,” the report said.
— Falling enrollment. Demographic changes suggest the number of high school graduates in New Mexico will start to fall within a decade. The state’s higher-education institutions, however, have a record of over-projecting enrollment and planning for “significantly more students” than actually show up.
— The highest default rate on federal student loans in the nation. The federal government could impose sanctions on institutions with default rates above 30 percent. The Central New Mexico Community College’s default rate is about 28 percent.
— Decreasing state money for colleges and universities. In fact, higher-education institutions in the state may already be receiving a disproportionate share of the budget, at least compared to other states.
“New Mexico spends the highest proportion of taxpayer dollars on higher education in the nation, yet is the poorest state in the nation,” the analysts said in their report.
Funding, in any case, is on the decline. The state operating budget for higher education has fallen about 11 percent over the last two years, once inflation is factored in, according to a Journal analysis.
Add it all up, and state colleges and universities must improve their efficiency and better coordinate with each other to reduce duplication, legislative analysts said.
They recommended a variety of changes to the budgeting process for colleges and universities, in addition to extra funding and staff for the Higher Education Department to help it oversee the institutions.
Barbara Damron, secretary of higher education, said she generally agreed with the report. She said she has seen some signs of improved efficiency at New Mexico colleges and universities, but they must work to diversify their funding sources by seeking federal and philanthropic support.
“We also see the need for higher-education institutions to be more efficient,” she said.
Rep. Bill McCamley, D-Las Cruces, said falling enrollment may force the state to make difficult choices, especially given its decentralized system of universities, each run by its own board of regents. Some institutions used to specialize in just a few academic areas, he noted.
When “do we get to a breaking point where we can’t have everything everywhere?” McCamley asked.
The analysts noted that more than half of the state’s higher-education institutions have a “Composite Financial Index” — a score that factors in operating budgets, reserves and other financial indicators — below 3.0, the threshold for institutional financial health.
The University of New Mexico, New Mexico State University and CNM are among the institutions with a score that’s averaged below 3.0 over the last six years, according to the report.
Analysts also said at least two institutions — Western New Mexico University and Northern New Mexico College — are spending nearly twice the national benchmark on administration and apparently “not enough on providing instruction for their students.”
Joe Shepard, president of Western New Mexico University, said the report’s characterization isn’t correct. His school’s spending on administration is inflated because it includes information-technology expenses that aren’t always included in other schools’ totals for administration, he said.