Regional public universities and small private colleges, especially in the Northeast and Midwest, will find themselves less able to raise tuition above the rate of inflation, Moody’s Investors Service said in its annual tuition survey of schools this week.
Sluggish tuition revenue growth “is fueled by lingering price sensitivity, a public focus on affordability, and flat enrollment,” said senior analyst Eva Bogaty in a prepared statement. “Smaller entering classes in much of the country over the next few years foreshadows continued revenue pressure, despite overall stable enrollment.”
Such problems are all too real at the University of New Mexico, where officials are looking for ways to increase income in the face of declining enrollment and a projected budget shortfall of $2.8 million.
“This is where we’d be if we didn’t do anything, if we operate on the budget where it is right now,” President Bob Frank said last week. “So obviously we must be thinking differently right from the start.”
Public universities are expected to show a meager 1.9 percent growth, Moody’s estimated. The forecast for private schools is a little rosier, a net revenue growth of 2.7 percent from tuition.
Accounting for this year’s smaller freshman class and built-in cost increases, such as insurance and utilities, UNM begins its budget planning by seeking to make up the nearly $3 million deficit. Led by the regents, university officials last year resisted the temptation to raise tuition. This year remains a big unknown.
Frank pointed to three potential sources of additional income:
• An increase in enrollment that would mean more dollars from tuition and fees.
• Money from the state through targets met in its funding formula.
• Reductions in costs.
Cost reductions should focus on duplication of services and inefficient administrative practices, Frank said. Some savings plans are already in the works. One is a review of the information technology structure for the campus. Another includes scrutinizing ways the university handles health care benefits.
Frank said that Scholes Hall, where his and many administrative offices are located, should provide a model in efficiency for the university as a whole.
UNM also is seeking to improve its graduation rate and increase the number of degrees awarded. That would likely mean higher funding levels through the state’s funding formula. The university also is taking steps to lure more out-of-state and international students, as well as attracting more community college transfers and master’s degree graduate students.
A school’s credit rating is tied to its ability to maintain or increase net tuition per student. Less than 20 percent of top-rated universities projected declining tuition per student next year, whereas almost 40 percent of lower-rated universities fell into that category, Moody’s said.