“USM, seeking students, reduces out-of-state tuition,” read the recent newspaper headline.
“The idea is to reverse a 2,000-student enrollment dip by pricing a USM education below some public universities in nearby states, and attract enough high-schoolers from Houston, Dallas and San Antonio to raise overall revenue,” explained the Clarion-Ledger story. USM cut annual tuition for out-of-state students by 40%, from $16,529 to $9,964.
Four years ago this change would have been illegal. Until 2012, state law required Mississippi’s universities to charge out-of-state students “not be less than the average cost per student from appropriated funds.” That would be the $16,529 figure.
In 2012, legislators amended the law to give the IHL Board the authority to waive this requirement: “The Board of Trustees of State Institutions of Higher Learning may, in its discretion, consider and grant requests to approve institution specific policies permitting the waiver of out-of-state tuition when such an official request is made by the president or chancellor of the institution and when such request is determined by the board to be fiscally responsible and in accordance with the educational mission of the requesting institution.”
The rationale of the old law was that state taxpayers should not subsidize tuition for out-of-state students. That is still the law with regard to community colleges (with limited exceptions).
The argument over subsidizing tuition for out-of-state students is an old one. Ole Miss has argued for decades that out-of-state students, like tourists, bring money into the state. Economic impact statements were composed to back up this argument.
Since the 2012 law was passed, out-of-state students have caused most of the enrollment growth among universities. From 2009 through 2014 (latest published IHL numbers), total headcount enrollment increased from 73,712 to 79,704. However, in-state enrollment fell slightly from 58,453 to 58,175. Out-of-state enrollment at our two largest and growing universities, Ole Miss and Mississippi State, is currently 41% and 34% respectively.
As universities demand higher appropriations from the Legislature and more bond money for new buildings, are legislators aware much of this will go to fund out-of-state student growth?
In 2013 IHL adopted a new formula for allocating state appropriations. The formula, driven significantly by student credit hours generated by each university, includes credit hours generated by out-of-state students, but does discount them by 15%.
Since state appropriations for universities aren’t growing significantly, the more students there are in the formula the less money each institution gets per student. Are legislators aware how much the allocation per in-state student has fallen?
The USM decision also brings to light another question. “USM has cut staff, but still has a larger university’s buildings and faculty,” the newspaper article reported.
So, is it better for the taxpayer and state to fill such unused capacity by discounting out-of-state tuition? Or would it be better to scale back and reduce capacity at shrinking universities and add capacity at growing universities?
Legislators should answer these questions in favor of Mississippi taxpayers, which is not always IHL’s priority.