REGENTS REPORT

South Dakota Higher Education: Good Investment. Great Future. NO. 52, 09/20/96

The Bottom Line on Tuition

And What It Means for South Dakota's Universities

Recently there has been national attention on the cost of higher education. While much of the attention has focused on rising tuition, little attention has been given to the where tuition dollars go. In an environment of increased accountability, South Dakota public higher education recognizes the importance of fiscal responsibility and of maintaining quality programs. This means challenges for higher education as the costs of delivering quality public higher education continue to rise.

WHAT ARE THE PRICES OF PUBLIC HIGHER EDUCATION?

Studies have shown that people generally overestimate the true cost of higher education and underestimate the value of financial aid that students receive. In one recent sample of Americans, respondents were simply asked to estimate the average cost of attending a 4-year public university or 4-year private liberal arts college (excluding room and board); the results are shown in the table below.

PUBLIC ESTIMATES OF NATIONAL AVERAGE TUITION &AMP FEES

SOURCE: Trusteeship, July/August 1996

In South Dakota the average annual tuition to attend a 4-year public institution was $2,688 in 1995-96^*; 7% less than the national average of $2,865 in the same year. In the last 15 years the national average for tuition at private colleges rose 216%, and at public universities average tuition rose 226%, while tuition at South Dakota's public universities rose 131%.

PERCENT INCREASE IN AVERAGE TUITION: FY 1981-96

SOURCE: Trusteeship, July/August 1996; Board of Regents

*For purposes of national comparison 1995-96 tuition data were used. For 1996-97 the average tuition/fees for a resident to attend a South Dakota university is $2,764.

This document was produced by the South Dakota Board of Regents. For more information, contact Zachary Ainsworth at (605) 773-3455, or Email: zacha@bor.state.sd.us

WHY UNIVERSITY COSTS INCREASE

Universities must make a number of unique purchases that are required to maintain competitiveness and quality educational programs, such as academic journals, books, and laboratory equipment. According to the General Accounting Office (GAO), public college and university expenses increased by 121% between 1980 and 1994-this is 50% faster than inflation. For example, one basic journal for science programs, Chemical Abstracts, cost $3,500 in 1977, but today costs over $17,300! This is particularly troubling since books and academic journals are basic staples of providing quality educational programs.

The Association of Research Libraries (ARL) conducted a survey showing that between 1986 and 1995 libraries bought 9% fewer journals but increased spending on acquiring journals by 100% due to rising subscription costs.

The rapid growth in science and technology has made it necessary for universities to buy ever more expensive laboratory equipment and computers, as well as compete with business and industry for qualified faculty.

State and federal funding has not kept pace with the rising costs of operating universities.

SOUTH DAKOTA RELIES HEAVILY ON TUITION

As noted above, the costs of delivering higher education have increased significantly, even above the rate of inflation. The level of state appropriations has remained fairly constant-the difference is made up with tuition increases. This is similar in many states; the chart below shows the educational appropriations and the tuition for regional states in 1994-95. Tuition tends to be higher in states where appropriations are a relatively small proportion of tax revenue. The pie chart shows South Dakota public universities' reliance on tuition dollars to pay for operating expenses. The percentage of tuition support for South Dakota's public universities has increased 4.5% since FY 1992

EDUCATIONAL APPROPRIATIONS AS PERCENT OF TOTAL TAX REVENUE AND AVERAGE TUITION FOR PUBLIC UNIVERSITIES: 1994-95

SOURCE: GAO, Board of Regents

HOW UNIVERSITIES WERE FUNDED: FY1995 (OPERATING EXPENSES)

SOURCE: Board of Regents

CONCLUSION

Rising college costs can be attributed to a number of factors. In recent years the costs of operating public higher education has increased at a rapid rate and South Dakota is not immune to this trend. South Dakota's universities rely heavily on tuition dollars to provide educational services, but the Board of Regents has taken action to keep tuition reasonable for South Dakota students by adopting a policy to hold resident tuition increases to the rate of inflation.

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