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Virginia is $660 million short on higher education funding, SCHEV …

RICHMOND — Tuition and other fees now account for 53 percent of the cost of higher education for families, compared to the 33-percent target set by the state in 2004. The state’s share of the bill has fallen to 47 percent, compared to the 67-percent target.

Virginia would have to find an additional $660 million to restore the balance in paying for a student’s education at a state college or university, according to a new report that said erratic state funding has shifted most of the burden onto families through rising tuition and fees.

The State Council of Higher Education for Virginia issued a report to state lawmakers Wednesday that calls for a fresh look at new ways of funding public institutions of higher learning in the face of state spending cuts in eight of the past 10 years.

The bottom line for students and their families is increased tuition fees, which now account for 53 percent of the cost of higher education, compared to the 33-percent target set by the state more than a dozen years ago. In contrast, the state’s share of the bill has fallen to 47 percent, compared to the 67-percent target established in 2004.

“If the next 10 years are similar to the last 10 years for Virginia public higher education, our system is indeed in peril and all options to improve its future should be considered,” SCHEV said in its annual report on tuition and fees.

The report was delivered to Gov. Terry McAuliffe and the General Assembly’s budget committees less than three weeks before they are to meet to evaluate the state’s revenue outlook. The state ended the fiscal year on June 30 with a projected revenue surplus of $132 million, but not in time to avoid an average 2.5-percent cut in spending on higher education in the current fiscal year.

For SCHEV, the volatility in state spending put a quick end to the optimism it expressed a year ago, after the state budgeted an additional $223 million for public colleges and universities in exchange for restraint on tuition increases that averaged just under 3 percent.

“Since the beginning of this century, it’s been an up and down ride,” said Dan Hix, director of finance policy at SCHEV.

For the state to restore the balance, it would cost $660 million, which would reduce the average tuition burden by $2,700 a student, or one-third of the expense now, the report states.

But cuts in state spending only tell part of the story, contend state lawmakers, who say public colleges and universities also have to take a hard look at costs that have played a big factor in runaway tuition for in-state undergraduate students.

“Expenses certainly have to be part of the equation,” House Appropriations Chairman Chris Jones, R-Suffolk, said Wednesday.

The appropriations committee heard a report from its staff in November that estimated that only half of the cost of tuition increases over the past 20 years were the result of reduced state spending on higher education and called for more transparency on how institutions spend tuition dollars.

The SCHEV report paints a different history, charting the ups and downs of state support for higher education through two economic recessions since the turn of this century.

“Since entering the 21st century, tuition charges to in-state undergraduate students in Virginia have been greatly influenced by the state’s economic conditions,” the report states.

“During a period of strong economic growth, the commonwealth provided substantial operating support,” it says. “In later years, the commonwealth allowed institutions to assess double-digit tuition increases to offset general fund reductions when growth in the economy slowed or declined.”

“The lack of continuity and predictability has limited the ability of students and their families to plan for the cost of college education.”

The effects are measurable, SCHEV’s staff says in the report, which shows in-state undergraduate charges — including tuition, mandatory fees, and room and board — accounting for 47.7 percent of a family’s per-capita disposable income in Virginia, compared to 43 percent nationally. In 2001-02, those charges accounted for just 31.4 percent of per-capita disposable income in Virginia.

This school year, in-state undergraduate students will pay an average of $546 more on tuition and fees, an increase of 4.8 percent. The increase is higher for four-year institutions, an average of $565, than two-year colleges, an average of $120.

William and Mary has the highest level of tuition and mandatory fees, at $22,044, an increase of $810, or just under 4 percent for incoming freshmen under the school’s four-year promise of set tuition. Virginia Military Institute follows at $18,214, an increase of $722 or 4.1 percent, and the University of Virginia is third at $16,068, an increase of $354, or 2.3 percent.

The solution to the funding dilemma is unclear, but SCHEV staff are exploring a range of options, such as tying both state general fund support and tuition increases for in-state undergraduates to the rate of inflation.

Other options being considered include reducing state support for graduate education and reallocating the savings to institutions for in-state undergraduate education, or allowing some institutions to increase enrollment of higher-paying out-of-state students while maintaining their current level of in-state enrollment.

In the latter case, the institutions would keep most of the additional revenue, while allowing the state to shift its share of the savings to other institutions that have less ability to generate additional tuition revenue.

Under a fourth option, the state could reduce its share of funding to some institutions — UVa, Virginia Tech, and William and Mary — to shift savings to other, less competitive schools.

The downside of this approach is the “admission that Virginia does not have sufficient public review or public will to support its institutions adequately and equitably,” the staff said in a report to the council in July. “It also would result in otherwise-higher tuition at those institutions.”

None of those options is a recommendation to the council, Hix said in an interview. “They’re options for the council to consider.”

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