REGENTS REPORT

South Dakota Higher Education: Good Investment. Great Future. NO. 69, 04/04/97

Tuition and Fees

State Policy-Makers Send Message to Students and Families

Many have noticed the rising tuition costs in South Dakota and around the nation, there are two primary reasons for this. First, rising inflation for colleges and universities outpaces consumer inflation. Universities make purchases of items not typical of the average consumer (i.e. academic books, journals, lab equipment, chemicals etc.) and these items have increased substantially in cost in recent years. Second, state support has been diverted from universities to other needs, such as Medicaid, corrections and criminal justice, and tax cuts. These have been the trends across the nation, as well as in South Dakota. Faced with these political realities, the burden of funding higher education has shifted to the students and their families.

1. INFLATION

Higher education institutions face inflation on a basket of goods different from the normal consumer. For instance, this year the regental institutions are making significant investments in technology such as high-tech soft-ware and scientific laboratory equipment, and there are the continual costs such as subscribing to journals and acquiring new books. For example, the average annual subscription cost in 1996 for a chemistry/physics journal was $867. In 1996 academic libraries saw a 10.8% increase in the cost of periodicals that are necessary for their students. Inflation of this basket of goods typical to higher education institutions is measured by the Higher Education Price Index (HEPI) which is 3% this year. The chart below shows recent increases in HEPI inflation.

Percent Increases in HEPI from Prior Year: FY1990-97

SOURCE: Research Associates of Washington
2. WHAT IS THE FUNDING SHARE?

South Dakota has traditionally had less state support per student than other states. One measure of this is commonly called the "tuition factor", which is the percentage of tuition and fees as a proportion of tuition and fees plus state appropriations. The national average for the tuition factor was 33.0% in 1994 (the last year national data are available). That same year the tuition factor was 38.5% (or 61.5% state share) in South Dakota. This year, the tuition factor is about 42% for the South Dakota public university system.

Percentage of Student and State Support - FY97

"Tuition Factor"

NOTE: Does not include Cooperative Extension, Agricultural Experiment,

Animal Disease Research & Diagnostics Lab, or School of Medicine

SOURCE: FY97 Fact Book, Board of Regents

The tuition factor has been increasing in recent years, while the state share has been decreasing in South Dakota (see chart below). This translates into an increased burden on students and families to fund their higher education.

Tuition & Fees (tuition factor) and State Share: FY89-96

(of Tuition & Fees plus State Appropriation)

SOURCE: FY90-FY97 Fact Books

CONCLUSION

In order to maintain quality higher education in South Dakota, tuition and fee increases are necessary to off-set increased costs associated with inflation and the declining state support.