YELLOW SHEET
Office of the State Auditor of Missouri
Claire McCaskill
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YELLOW SHEET Office of the State Auditor of Missouri |
May 1, 2003
Report No. 2003-40
State universities and colleges need more cost containment measures to balance increasing tuition
Providing higher education at an affordable price has become increasingly difficult with recent state budget pressures and large decreases in state funding. Average tuition for Missouri's 4-year public colleges and universities is the highest among the Big 12 states and second highest among the contiguous states. (See page 5) In addition, a national report ranked Missouri's recent tuition increases among the highest. (See page 4) This audit reviewed in-state undergraduate tuition levels at the state's thirteen 4-year public colleges and universities and analyzed trends in annual tuition, state support, enrollment and operations between 1998 to 2003.
Decreased state higher education funding increased tuition
A national study showed Missouri had the highest negative correlation between state appropriations and tuition. This negative correlation means when state funding decreased, tuition almost always increased. In 2002 and 2003, withholdings for most 4-year schools totaled 18 percent of original appropriations. In fiscal year 2003, the state cut 10 percent of state funding from the core fiscal year 2002 budget amount. Audit analysis showed Missouri's higher education spending at 10 percent of total state spending in fiscal year 2001, which was 1 percent below the national average. (See page 8)
Increased school spending also affected tuition levels
For fiscal years 1998 through 2002, total expenditures increased 23 percent for the 13 schools. During the same period, inflation measured 15 percent by the Higher Education Price Index (HEPI), the index used by most colleges and universities to measure inflation. College and university officials attributed much of the increased spending to areas beyond their control, such as a more than 20 percent increase in employee benefit costs, increased enrollment, technology and utilities. (See page 9)
School officials said enrollment figures should be considered when analyzing growth in unrestricted expenditures. Audit analysis showed, between 1998 and 2002, aggregate unrestricted expenditures per full-time equivalent student for all 13 schools increased by 10 percent, which was 5 percentage points below the HEPI's rate for the same time period. In addition, administrative costs make up 8 percent of total unrestricted spending. Audit analysis showed administrative cost increases ranged from 17 percent to 71 percent at various schools. (See page 12)
Department's academic program reviews did not effectively analyze instruction costs
Schools spend about 44 percent of total unrestricted spending on instruction. Between 1998 and 2002, unrestricted instruction spending exceeded HEPI inflation growth for 4 of 13 schools. Department of Higher Education staff require schools to submit results of their academic program, or campus-based, reviews on a 5-year cycle; but auditors found these reviews did not have enough data to analyze cost-effectiveness. One school official said schools may not diligently conduct these reviews because school officials did not sense department officials used the reviews at all. Department officials said they did not have enough funding to thoroughly analyze academic program reviews submitted by each school. (See page 13)
State and school officials reassess how to contain academic costs
Because of recent budget constraints, department and school officials have started new initiatives to assess the cost-effectiveness of various academic programs. The audit discusses cost analysis efforts underway by the department, University of Missouri and Southwest Missouri State University. The department's program - Results Improvement Initiative - will assess the cost-efficiency of targeted programs. University of Missouri created a task force to review academic programs and, specifically, the instruction costs associated with programs having low enrollment and/or completions. The task force report said traditional program reviews were not sufficient in the current limited resource environment and recommended the university regularly conduct viability audits , not just during down economic times. (See page 13)
Department officials agreed with the audit's two recommendations: to help schools assess cost-containment efforts and to collect data to determine the cost-effectiveness of existing academic programs. (See page 15)