University of Kentucky officials want to raise tuition by 6 percent for students and rule out raises for faculty and staff next year as they deal with a $43 million hole in the school's budget.
For in-state freshmen and sophomores, that means tuition would jump from $9,128 this year to $9,676 in the 2012-13 academic year. For out-of-state students, tuition would increase from $18,740 a year to $19,864.
UK's tuition will have grown 147 percent since 2002 if the UK Board of Trustees approves the tuition increase, as expected.
UK has lost $50 million in state funding since 2007, President Eli Capilouto said in a campus-wide email sent out Friday afternoon. Over the next two years, it faces another $20 million loss in the state budget, and another $23 million gap from rising fixed costs, such as utilities and health care.
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"We live in a 'new normal' with reduced or flat state appropriations and heightened concerns about affordability and access," Capilouto wrote in the email. "Challenging budgets and hard decisions, however, cannot be an excuse to shrink from our responsibilities. We must remain true to our founding mission and think anew about how to accomplish our goals. In other words, we increasingly must find the answers to our challenges from within."
While there will be no raises in 2012-2013, Capilouto said there will be a 5 percent merit pool for raises in 2013-2014. In addition, administrative units will be cut at higher rates to "help protect the academic core."
Health care premiums and parking fees will not go up, he said. Housing rates for traditional residence halls will not increase, but "premium housing" in newer dorms will cost 6 percent more.
The Board of Trustees will consider the proposals as part of next year's budget. They also can consider ways to increase revenues. For example, allowing in 250 more freshmen, increasing the retention of upper class students by 5 percent, and attracting an additional 250 transfer students would result in a gross revenue increase of $14 million, Capilouto said.
Spokesman Jay Blanton said the freshman class is expected to increase next fall but an exact number had not yet been determined.
Capilouto sent his message on the same day the Council on Postsecondary Education set caps on how much tuition can increase at Kentucky's public universities, a move that indicates how much those schools will probably charge this fall.
The council voted to allow up to 6 percent tuition increases at UK and the University of Louisville, 5 percent for the regional schools and 4 percent for the Kentucky Community and Technical College System. U of L already has announced a proposed increase of 6 percent.
Council staff recommended the rates after considering such factors as state funding, which will be reduced by $62.6 million over the next two years, and fixed costs.
For example, the council estimated that retirement costs and health insurance for public universities could go up $5 million. Other fixed costs, such as utilities and contractual obligations, could increase by $57 million.
Kentucky still fares well in national affordability rates, but the trend of higher tuition will eventually become untenable for students and universities, said John Hayek, associate vice president of the CPE.
"It's a significant policy equation that state leaders have to wrestle with," Hayek said. "We have very aggressive goals, and when we look at increases in tuition over the past decade and the lower rates of increase in family income, it will be very difficult to maintain the progress we've seen over the past three or four years. It will put some very tough questions on the table in terms of how do you increase state support to higher education."
Hollie Swanson, chairwoman of UK's University Senate, said faculty and staff knew the budget picture was bad.
"I think we'll have to see how we manage it," she said. "It's a concern whether we can fulfill our obligations — we have no fat, we're into bone and muscle."
The hardest part is knowing that the burden on students and families is getting heavier, she said. "All the of the faculty struggle with that."
That burden has been changed drastically by the Kentucky General Assembly.
Since 2006, state lawmakers have cut spending on public higher education by $105 million, and an additional decrease of $62 million has been approved for the next two years.
The state has nearly reversed the ratio of student support versus state support for Kentucky's public universities.
In 1999, students paid 33 percent of college costs, while the state paid 67 percent. In the fiscal year that starts July 1, CPE figures show that students will bear 61 percent of that load while the state pays for 39 percent.
If current trends continue, student tuition will pay 73 percent of the costs by 2021, compared to the state's 27 percent.
"Students aren't that concerned with all the details of this, what we know is that we're paying more as individuals," said Micah Fielden, UK's Student Government President and student representative of the Board of Trustees. "What's become evident over the past few years is that the state is lessening support so students have to pick up the cost. It's a bad trend. It's getting close to unaffordable. Students are either dropping out or working one, two or three jobs just to try to make ends meet."
Even so, tuition increases won't solve deficits at any school, said Western Kentucky University Gary Ransdell. WKU faces $5 million in state cuts. That hole might be filled by tuition, but then he faces another $5 million hole in compensation, and another $5 million in fixed costs such as utilities.
"I don't know where it will end," Ransdell said after the CPE meeting. "Tuition will always go up a bit, but it gets better when there's state funding that can help out. Our first goal is to get to a point where we're not getting cut."
CPE Chairwoman Pam Miller said Friday she hopes the commission will look hard at the need for new revenue in higher education.
"I would say the current situation of annual budget cuts is untenable, and frankly, it's an emerging crisis for our universities," Miller said. "They can't take care of their buildings, they can't increase student scholarships, and our public universities are turning into private universities. The answer is a successful tax reform package that will gradually increase the revenues of the Commonwealth and enable them to do what's right for higher education."