Missing formula increases tuition



Tuition has been on the rise for more than a decade, due in part to the South Dakota Board of Regents not having an established funding formula.

In 1998 the BOR made the decision to drop its enrollment-based funding formula. At the time high school graduation rates were falling and so was college enrollment. Since then there has not been an increase in the BOR budget base, except when there was a specific request for funding. In effect the state has been allocating money to the BOR based on the number of students that were enrolled in 1998.

The lack of a funding formula has led to a dramatic shift in how higher education is paid for in South Dakota. As few as 10 years ago, the state paid 59 percent of the cost of higher education— this year, state support was at 39 percent. Tuition and fees are one of the only ways the BOR has to make up for the loss of state support.

“There has certainly been a shift in costs,” said BOR executive director Dr. Jack Warner.

When enrollment numbers began to rise and universities began to grow, there were fewer state dollars available per student. In response, tuition rates increased.

Warner also said, while there isn’t a funding formula, the BOR has been successful in lobbying the State Legislature for funding of specific projects. The recent approval of $10 million of one-time money from the state to make up for federal stimulus dollars that were lost this year is one example.

Monte Kramer, the BOR’s vice president of finance and administration, said the regents made an agreement with the legislature in 1999, called the Resource Compact, which would have provided for inflationary increases to its budget base. This would have made the BOR the only state agency to receive inflationary budget increases.

The agreement would have helped slow the growth of tuition costs had the state followed through. However, the governor’s office has never included the increase in its annual budget recommendation, which the legislature bases its budget process on. Thus the BOR never got the inflationary budget increase.

“It’s a loss of around $300,000 to $400,000 a year,” Kramer said. “It’s in the neighborhood of $3 million the BOR has had to make up with tuition.”

Until the recent economic downturn the BOR had success in lobbying the legislature to support specific programs and priorities. According to Kramer, this was just one of the reasons for the long absence of a funding formula.

“Once you abandon a formula it’s hard to bring on a new one,” he said. “You have to get people to buy in.”

During this year’s legislative session, Senator Bob Grey of District 24 introduced SB 122, a bill that would have created a new performance-based BOR funding formula. It was ultimately tabled in committee, but represented some interest in a BOR funding formula for the first time in more than a decade.

“We need to develop a formula based on performance,” Grey said. “Ultimately we want our universities to produce graduates.”

Grey, who tabled the bi