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House Finance Committee FY2010-11 Operating Budget Hearing
February 17, 2009
Testimony by Edward R. MacKay
Vice Chancellor & Treasurer, and Chancellor-Elect
University System of New Hampshire
The University System of New Hampshire is very appreciative of the operating support provided by the Governor and Legislature, and proud of our record of working together to find solutions that continue to provide affordable access to programs of quality for New Hampshire residents. The Governor’s proposed Appropriations of $97 million in FY10 and $100 million in FY11 underscore his understanding of our long standing partnership, and affirm the collective commitment to the role public higher education plays in New Hampshire’s future.
Professor Ross Gittell has quantified the present economic impact of the USNH, and the historical position our faculty, students and staff have played in New Hampshire’s economic vitality and development, and are prepared to replicate and expand. Trustee Dupont briefly described the lengthy, rigorous process involved with the initial development of our request to ensure it represents our most essential needs and priorities, and how the Board is committed to being responsive to the unprecedented events that have subsequently altered the landscape.
In response to Chairman Smith’s request, Chancellor Reno will forego detailing the numerous challenges he and the presidents faced in responding to the State’s immediate need for USNH payments to balance the current budget, and how the USNH institutions contribute in many ways, often not well recognized, to the very fabric of New Hampshire life.
There is a common theme. The USNH has been and will be part of the solution for the future of our State, standing shoulder-to-shoulder with elected officials in efforts to produce the educated and informed citizens essential to the quality of life we cherish.
The University System priority is to achieve its collective mission of delivering affordable access to programs of quality; programs that span leading edge research to public service activities to teaching that creates and inspires successful graduates. We will do so through accomplishing the distinct missions for each of our institutions, enabling residents to select opportunities that best meet their needs. This is our core function, and it is important the Committee understand the context and factors that impact our capacity to provide that service, and how we measure ourselves.
As Ross stated, the USNH is an anchor and stabilizing force in the New Hampshire economy, and our main product – educated residents, workers and business owners – are the foundation for the State’s economic future.
This impact has been generated from relatively modest levels of State support (NH ranks 50th in support for public higher education as measured in per capita spending and per $1,000 of personal income), but the consistent incremental increases (averaging 3.7% annually over this decade) have been a solid and crucial base for leveraging USNH assets to make the investments necessary to achieve the qualitative goals inherent in our mission. However, when adjusted for the increase in the number of in-state students over this period (approximately 1.5% per year), the net dollars available is reduced substantially.
With a declining subsidy for the price to charge New Hampshire residents, the USNH has had to be extremely cost efficient. Spending per student at UNH is 16% below the median for comparable universities, and 23% below the median of the other New England land grants. KSC and PSU also spend less than similar institutions. Higher education institutions face many of the same cost head winds confronting the State and businesses, such as utilities (10.3% per year increase during the decade), employer medical costs (10.5%), and need to properly maintain facilities (7.7%). But the particular challenge for USNH has been, and will continue to be, how to offset these factors without reducing quality or passing the full impact of these costs onto students.
This efficiency has not come at the expense of quality. Quality has increased as documented by several key indicators. For this fall, the USNH received a record number of applications for admission (nearly 26,000), enrolled a record number of students (more than 31,000), and had record retention rates (80-90%). Graduation rates exceed those of peer institutions, and surveys that measure student satisfaction yield exceptional results. These nationally normed instruments highlight the extraordinary level of student engagement that characterizes each of our institutions.
Price is best represented by the overall Cost of Attendance (tuition, fees, standard room and board, or “CoA”), and the USNH is pleased to be able to report the average CoA has increased less than 6% per year during this decade. Why is a lower rate of increase important? As the public four-year higher education system, we have a particular commitment to first generation college students (27% of UNH students are first generation, 38% at KSC, 41% at PSU, and 70% at GSC). These students, and many others, are “price sensitive” and the CoA “sticker price” may discourage capable students from enrolling. Appropriation increases are needed in the upcoming biennium, and will be needed in future biennia, to “catch-up” on the underlying level of State support and enable the reasonable tuition rate increases to continue. It is also essential to maintain non-resident tuition at a competitive price, as this population provides a subsidy for our in-state students (but please note that even at equal percentage rate increases of 5%, UNH annual resident tuition increases would be $470-490 versus $1,150-1,200 for non-residents).
The USNH has mitigated the impact of these price increases on all students through significant increases in financial aid. Since FY2000, USNH institutional grant/scholarship dollars for in-state undergraduate students increased 16% per year. It is important to note we will continue to meet all financial need as defined by the federal methodology for direct expenses of in-state students during their first year of enrollment, understanding that aid packages will include “self-help” components of work and loans. Because of the USNH commitment to financial aid, every qualified New Hampshire student is able to attend our institutions.
More than 70% of degree candidates receive some form of aid, but the average debt for bachelor’s degree recipients from USNH residential campuses in FY2008 still ranged from $25,000 to $27,000. Given price sensitivity and the growing level of debt, a focus in our budget planning is the expansion of the Affordable College Effort (ACE) – a program first proposed by Governor Lynch in the 2005 budget – to the fourth year of enrollment for the most needy New Hampshire students. The ACE program replaces the loan component of an Aid package with a grant, and includes all New Hampshire residents with an Expected Family Contribution (EFC) of less than $1,000.
Furthermore, the USNH has built a strong relationship with the Community College System to facilitate access to USNH four year programs. Through efforts such as the Connections program and NHTransfer.org, this collaboration provides what may be a lower cost pathway for students who need or elect to initially enroll in a community college.
The history is clear. The USNH has been a good steward of the resources provided, and exhibited the entrepreneurial spirit and expertise required to generate “self help” in reducing expenses and seeking non-state revenue sources. However, numerous factors, including the $7 million contribution to the State this year, have severely eroded our capacity to respond to other fiscal pressures.
Elected officials in New Hampshire – and throughout the country – must make very difficult decisions this year. The proposed level of Appropriation support for next year ($97 million) is a decline of $3 million from the current level, and would normally trigger serious consideration of in-state tuition increases to offset this shortfall. That has not been the response. First, we are working with the Governor’s Office to determine what funding, if any, is available within the federal economic stimulus package to increase support in FY10, and possibly in FY11.
Second, Trustees and senior management are committed to reducing the rate of spending increases over the biennium. Presidents have been regularly communicating with their students, faculty and staff since November, explaining the nature and severity of the fiscal issues, building support for reducing expectations for compensation, and engaging the entire community in examining new ideas for cutting costs and increasing revenue. The outcome of these efforts will not be known for some time, and is a continuing process. But what can be stated now is that we will take the actions necessary to preserve our role in the State and achieve our mission. Nothing less is acceptable.
The USNH response is another example of the commitment to be a resource to the State, an asset in addressing the present and evolving challenges, and a genuine partner in seeking solutions that look beyond the immediate difficulties to ensure New Hampshire residents will continue to have access to affordable programs of quality. We look forward to working with the Committee members on Division II next month, and all officials involved with the budget this session. We are available to meet with any committees or individuals that have specific questions, and are appreciative of the opportunity to begin that exchange today. Thank you.