Missouri State Auditor's Office

Tuition Continues to Rise Faster Than Inflation and Personal Income

This report is a follow-up on our 2003 report titled Review of Higher Education Tuition Levels (Report no. 2003-40). Audit objectives included evaluating the status of prior recommendations and focused on tuition increases and factors affecting tuition levels. Missouri's public institutions continue to have some of the highest tuition levels in the Midwest. Although institutions had taken a variety of actions to reduce costs, some institutions still may not be operating as efficiently as possible because comprehensive on-going efficiency evaluations were not performed and the Department of Higher Education (DHE) had no formal centralized clearinghouse to identify, explore, and implement best practices.

Missouri's tuition continues to rank high

Over the last three fiscal years (2004-2006) Missouri's average tuition level increase (27 percent) has been the lowest of the Big 12 states, with only one other state among the contiguous states having as low an increase. However, Missouri's $5,829 average annualized tuition for 4-year public institutions was still the highest tuition among Big 12 states, second only to Illinois among the contiguous states, above the national average of $5,491 for fiscal year 2005-2006, and continued to increase at rates above inflation and personal income. Our analysis also found funding for state tuition assistance grants had decreased during the 4-year period of 2002 to 2005. In both 2000 and 2002, Missouri received a D+ grade on its affordability of higher education from the National Center for Public Policy and Higher Education. In 2004, Missouri received an F on affordability along with 35 other states. (See pages 7-11)

Past cuts and lack of increases to state funding continues to affect tuition levels

In fiscal years 2002 and 2003, the General Assembly cut state funding for higher education due to state budget pressures. Most 4-year institutions experienced state budget withholdings totaling approximately 18 percent of original appropriations during 2002. In fiscal year 2003, the state cut 10 percent of state funding to higher education from the core fiscal year 2002 budget amount. In fiscal years 2004 through 2006, state funding to higher education remained relatively stable but at the new lower levels. For fiscal year 2007, a 2 percent increase in higher education's funding was approved by the General Assembly. However, this increase in appropriations will likely not meet inflationary measures much less restore years of cuts to higher education's appropriations. In addition, above-inflation spending by some institutions during fiscal years 2003 through 2006 also influenced increasing tuition levels. (See page 12)

DHE not performing statutorily required mission reviews

DHE halted formal mission reviews in 2002 due to budget reductions and staff turnover, according to DHE officials. As a result, DHE has not collected information and data for assessing the cost-effectiveness of academic programs—the largest component of higher education spending. Officials said DHE had historically completed some mission reviews each year, but state law requires mission reviews of colleges and universities once every five years. As a result, these officials contend a new review cycle would not be required until 2006, because DHE completed formal reviews for all institutions in 2001. However, the officials also noted the formal reviews would only begin again with reinstated funding and personnel. (See page 15)

DHE lacks authority to arbitrate disputes between public institutions

The use of consortia and collaborative agreements often result in more economical opportunities for students to obtain higher education services. However, a recent dispute concerning an agreement between two Missouri public institutions resulted in legal action. As of June 2006 this dispute had not been resolved. DHE unsuccessfully attempted to arbitrate a settlement between the institutions. As a result, these institutions are spending public resources to litigate the issues. (See page 23)