Trustees approve tuition proposal
University
trustees, before voting, said they understood that raising tuition
is never easy or popular. But raising out-of-state tuition closer
to true market value is the only way they can raise badly needed
revenue while, at the same time, remaining faithful to the state
constitution's mandate to provide a university education to
North Carolinians at a low cost.
On Jan. 21, before an
overflowing audience of students and University employees at
the Carolina Inn, the board voted in separate motions to raise
next year's tuition by $1,500 for nonresident students and by
$300 for resident students.
The campus-initiated increases,
before taking effect, must be approved by the UNC Board of Governors
and the state legislature, which could enact their own hikes
as well. The Board of Governors is expected to consider the
Carolina proposal this month.
Both recommendations,
trustees said, were informed by differing guiding principles
for in-state and out-of-state students that trustees and University
administrators developed since November when the board delayed
action on a Tuition Task Force recommendation that would have
raised tuition for all students by $300 a year for the next
three years.
The guide for in-state
tuition is to keep resident tuition and fees in the bottom quartile
among Carolina's public peers as defined by the Office of the
President. For out-of-state tuition and fees for undergraduates,
it's to bring the amount up to -- but not over -- the 75th quartile.
A fee increase of $121
that was also approved will apply to all students next year.
Trustee Chair Richard
"Stick" Williams said it is important to remember that the tuition
increases are a means to an end -- and that the end being pursued
is one that people who care about Carolina widely embrace.
Carolina continues to
aspire to become the nation's leading public university, Williams
said.
Trustee Timothy Burnett
said he was "fully on board" with seeking that goal and generating
more revenue in support of those efforts. Raising out-of-state
tuition "is the only place we have room to move."
Shifting to a market-driven,
value-driven approach to setting out-of-state tuition, Burnett
said, may dissuade some quality students from applying here.
But he added, "That's the price you pay if you want to be number
one."
Chancellor James Moeser
emphasized that preserving and enhancing quality is synonymous
with offering compensation at levels that will retain and attract
key faculty.
"We are dangerously
close to a culture where a faculty member thinks the only way
to get a pay raise is to get an (outside) offer," Moeser said.
"We've got to stop that culture from setting in."
The proposed dispersal
of tuition revenues would follow a familiar pattern: Up to 40
percent will be reserved to hold harmless all students who qualify
for need-based aid.
The lion's share of remaining
revenues would be used for selective, strategic merit pay increases
for worthy faculty. A nominal amount would be provided for staff
increases in what administrators describe as an important symbolic
gesture to staff members who have not received any substantial
pay raises for the past three years.
The proposal drops an
earlier call to use the revenue for merit-based scholarships,
including those for athletes, a move that had been opposed by
the Faculty Council.
Faculty Chair Judith Wegner,
in her remarks before the vote, urged trustees to be careful
about unintended consequences.
The University has earned
a hard-won reputation as both "excellent and affordable," and
the trustees should be careful about tuition hikes that could
put that reputation at risk, she said.
Another major concern
for Wegner was fairness. "I really believe it is at the heart
of the institution," Wegner said.
Wegner said she understood
the trustees meant well and that they were trying to address
the growing problem of faculty retention. But she cautioned,
"Remember, we need medicine. But remember first: Do no harm."
And as with any medicine,
finding the proper dose is required to avoid undesired side
effects, she said.
Wegner and the Faculty
Council's Executive Committee also crafted a resolution, passed
Jan. 12 by the Faculty Council, that spelled out in detail these
and other concerns.
But Vice Chairman Nelson
Schwab said after hours of study and debate, it comes down to
a difference of opinion whether the benefits of increasing tuition
outweigh the concerns that had been expressed about possible
consequences. But, he added, for trustees "the guiding principle
is love of this institution."
Schwab said trustees understand
the importance of maintaining affordability, which is why trustees
outlined a policy that would allow out-of-state tuition to reach
the 75th quartile but move no higher.
Trustee Karol V. Mason
talked about the flood of e-mail that trustees received and
how she had spent time reading each one of them. Just because
we do something you may not want us to do, she said, does not
mean that we did not hear you.
Before the votes, Student
Body President Matt Tepper presented a differentiated alternative
plan that would have raised tuition for all undergraduates currently
enrolled by 5 percent next year, while charging a $1,500 hike
for non-resident students in the incoming fall class.
Trustee John G.B. Ellison
Jr., speaking directly to Tepper, said he was "not unsympathetic"
to the argument about how steep increases would affect out-of-state
students who are already here. But Ellison said he had to weigh
the added cost of a few thousand dollars for each student over
the course of their college career with millions of added dollars
the increase would generate to keep the University strong. It
was not an easy decision, Ellison said, but he came down on
the side of generating the money for the University.
On Jan. 22, the board
approved a host of tuition increases sponsored by professional
schools in addition to the campuswide increases. Those are the
schools of government, journalism and mass communication, law,
social work, dentistry, medicine and pharmacy, as well as the
Kenan-Flagler Business School.
The increase varied widely
among schools, based on underlying philosophy and need, with
the School of Law seeking an increase of only $300 for in-state
students, compared to the $2,000 increase for in-state students
at Kenan-Flagler. Most school proposals included provisions
for need-based student aid.
Also at the meeting, the
Finance Committee heard a report on the 2003 performance of
the University's investment fund.
"There are lots
of investment strategies that will work, but if you try to do
them all you will fail," said Max Chapman, chair of the fund.
"We have to stick to our strategy."
Some argue that accepting
financial risk is an inherent part of seeking financial reward,
but Chapman said the the safest, surest way to grow money is
by spreading it around.
This approach -- otherwise
known as diversification -- has been the underlying philosophy
of the investment board since the late 1990s, Chapman said.
This cautious approach
worked well in the withering bear market of recent years and
not as well when the market gets hot and prices lurch ahead
in leaps rather than small steps.
But, Chapman said, the
approach is consistent with the responsibility the board has
to protect the principal of the fund and generate enough returns
to generate about 5 percent returns and cover the current rate
of inflation.
Schwab, the chair of the
Finance Committee, told the full board that the investment strategy
has served the University well.
For the 2003 calendar
year, it has generated close to a 17 percent return, and a steady
return of 8.6 percent over the past five years, Schwab said.
And in 2003, the fund
contributed $55 million to the general fund, Schwab said.
The Finance Committee
also heard a detailed report about the changing configuration
of the workforce over the past decade and the factors driving
those changes.
Laurie Charest, associate
vice chancellor for Human Resources, said the University workforce
has grown by 18 percent over the past decade and much of that
growth is directly attributable to the University's burgeoning
research enterprise.
This growth in research
has also translated into an increase of staff members who are
"knowledge workers" who are paid with proceeds of research grants
and contracts, which include facilities and administrative,
or overhead, funds.
At the same time, state
budget cuts have had a disproportionately large effect on operations
such as facilities and maintenance that are largely supported
by state appropriations and tuition.
