MSU project gets caught in veto overrides, governor withholdings

Higher education is coming at a higher cost than expected in Missouri, despite legislators’ attempt to cap tuition increases through the Higher Education Student Funding Act of 2007, according to Missouri State Auditor Nicole Galloway.

Galloway identified a loophole in the legislation she said allows universities to maneuver around the tuition cap by increasing supplemental student fees. Some state schools have increased fees by up to 138 percent, to offset the $1,500 per student reduction in state funding between 2009 and 2015.

Missouri State University President Clif Smart said this practice does not apply to MSU. According to the school, less than 1 percent of the university’s $274 million income comes through supplemental fees and less than 6 percent of courses at the Springfield campus have supplemental fees attached.

“We are not using the supplemental fee process to support the general operations of the university,” Smart said. “It may be true for others; not true for us.”

Smart said the fees typically directly pertain to school courses, supplies and equipment.

One exception is the $10.2 million Taylor Health and Wellness Center.

MSU students approved a student fee of $29 per semester beginning in fall 2017 to help nearly double the size of the health education building and add services. The $10.06 million Plaster Sports Complex renovation in 2014 also was funded, in part, through student fees. Bond money and private gifts covered the rest of the cost.

MSU is caught in the middle of what some consider a political chess game in Jefferson City between Democratic Gov. Jay Nixon and a Republican majority.

After 13 of Nixon’s vetoes were overridden by the Missouri General Assembly on Sept. 14, the governor responded the next day by withholding $57.2 million from the state’s fiscal 2017 budget – with nearly $6.38 million affecting improvements at the University of Missouri and MSU.

The impact on MSU amounts to a loss of $1.9 million of the $5 million originally appropriated for the $33.8 million Glass Hall renovation and expansion underway.

“Obviously, we were disappointed by the withhold,” he said, noting the university would appeal to the governor to release the funds. “We also will work to fill the [gap] with private money.”

Staying in line
While acknowledging the rise in funding the past two years, Galloway said the overall state funding for higher education decreased during the six years reviewed.

Under the law, increases to in-state undergraduate tuition cannot exceed the increase of the Consumer Price Index for that year, unless a waiver is granted by the commissioner of higher education. The waivers were only granted to institutions once, in 2012, when cuts to funding led 11 of the 14 public institutions to increase tuition above the CPI.

“To grow overall net tuition, some school officials indicated they have pursued nonresident, graduate and international students, for whom HESFA doesn’t limit tuition increases,” Galloway’s findings state.

Smart said MSU has worked to increase international and out-of-state students to grow enrollment because there is minimal growth in the number of students graduating from Missouri high schools, to add diversity to the student body and to increase revenue.

The Missouri State University Board of Governors approved a $1 bump in tuition for undergraduate resident tuition for both 2015-16 and 2016-17 academic years.

Records show the board also approved a 2 percent bump for out-of-state undergraduate and graduate students, a $10 per credit hour increase in online classes and an $11 bump in student services fees for 2015-16.

“However, we have maintained affordability in all these categories of students and have only modestly raised tuition over the past six years,” Smart said.

Galloway also found that tuition rates rose about 1.6 percent per year on average while the CPI rose about 1.8 percent a year, which means the institutions were abiding by the law. But supplemental fees continued to rise.

“The purpose of the Higher Education Student Funding Act is to keep the cost of college affordable for Missouri students and families. It defeats the intent of the law when there is no cap or limit on certain fees,” Galloway said. “The General Assembly should take action to address this issue, because while fees continue to rise, state funding per student has decreased.”

She said now is a critical time for state schools because they’re forced to make difficult decisions regarding lack of funding and the best use of resources.

All or nothing
In his withholding, Nixon cited what he calls special-interest tax breaks in Senate bills 641, which prohibits disaster payments from being subject to state income taxes, and 1025, which exempts instructional classes, such as yoga, from sales taxes.

“The tax breaks were contained in Senate Bill 641 and Senate Bill 1025, both of which were originally passed by the General Assembly in May after lawmakers had passed their budget,” Nixon said in a news release. “Their $59.1 million impact was not taken into account into the budget.”

Budget adjustments are a regular part of the governor’s toolbox.

“We are a AAA credit-rated state, and we keep our budget balanced,” Nixon said. “Because of what the General Assembly has done, these cuts are both real and necessary.”

It seems that history is repeating itself: Smart was disappointed previously in Nixon’s withholding of nearly $1 billion from the state’s fiscal 2015 budget, which directly affected the university’s budget. Nixon withheld $1.32 million for the school’s occupational therapy program and $2.2 million in matching capital for the construction of the Davis-Harrington Welcome Center. The governor released both appropriations before the end of the fiscal year.

House Rep. Charlie Norr, D-Springfield, said the political climate at the capital makes for gridlock, and it’s led to an “all or nothing” mentality.

“We don’t discuss, we don’t compromise. That’s not a good thing for the people,” he said. “College tuitions and things fall into that category, it’s just ‘cut, cut, cut’ every chance we get [then] it’s tax breaks and tax incentives. I don’t think that’s going down the right road.”