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Posted: February 01, 2010

Higher ed: Cash course

As public universities secure less money from the state, they're hunting for new sources of revenue

Nora Caley

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The cuts in state funding for Colorado's colleges and universities present the schools with an opportunity, not just a temporary setback. At least that's how the leaders of these public institutions of higher education are trying to view the cuts.

These decision makers say they are finding new ways to generate revenue, raise productivity and plan for the future. They also say that although they might seem more self-sufficient, they are not headed toward privatization.

"We are simply embracing a new reality," says Kay Norton, president of the University of Northern Colorado in Greeley. "That does not mean we think the state should not invest in its citizens, but we are trying to be realistic about how we're going to handle the situation."

Stephen M. Jordan, president of Metropolitan State College of Denver, puts it this way. "Our belief is that the issues all of higher education is facing for the near term, the next three to five years, are not going to change dramatically in terms of getting positive overnight. Our approach was to say, ‘OK, if that's the case what can we do to help ourselves in this time period?'"

The good news about the state budget cuts is that the American Recovery and Reinvestment Act of 2009 includes funding to avert state cuts to secondary education. In Colorado, the stimulus bill provides $620 million in state fiscal stabilization funds for public colleges and universities to maintain fiscal 2008-2009 funding levels in years 2008-09, 2009-10, and 2010-11.

Jordan says returning funding to usual levels doesn't mean business as usual. Instead of paying for things that had been cut, Metro developed new programs that would help staff work more productively. For example, the school set aside $1 million for a capstone program, in which senior faculty agree to retire in July 2012 but stay on until then to help with a project, such as developing a distance education course. Meanwhile Metro would hire a junior faculty member at a lower salary to replace the outgoing faculty member.

Another program hired technology experts to switch certain tasks to an electronic version, such as digitizing student transcripts or updating alumni files so they may be contacted for donations and other communications in the future. Metro also funded two grant writers.

"We fully recognize now is not a good time to be in a capital campaign, but now is a great time to build relationships," Jordan says.

Colleges are also working to increase enrollment. Norton says for Fall 2009, UNC increased overall enrollment by 2 percent, new freshmen by 12 percent, and graduate students by 5 percent. At UNC as in other universities, some students subsidize others.

"All enrollment is not equal," Norton says. "All programs do not cost us the same to deliver, and all students do not pay the same price, so we have a very complex mix of programs and costs and revenues to consider when we're talking about increasing enrollment."

In January, UNC opened Centerra, a satellite center for graduate education studies in Loveland. "Those are revenue positive," she says. "We are either already delivering or preparing to deliver online or specialized locations to meet the need of employers for workers with graduate or advanced degrees."

Another way to generate revenue is to attract international students. The University of Colorado is working with state legislators to include in the upcoming session a flexibility bill that will change, among other details, the number of international students CU can enroll. The current rule is that among first-year students, 55 percent must be Colorado residents and 45 percent nonresidents, including international. For the whole university, two-thirds must be resident, and one-third nonresident.

Phil DiStefano, the chancellor of the University of Colorado Boulder, explains that the school now has 1,000 international students and would like to increase that to 3,000 over the next five years. Meanwhile, he says, CU Boulder is expected to grow from 30,000 students to about 32,000.

"One of the things we have to ensure the state is we are still going to admit the same number of residents that we've been admitting for the last five years," he says. "One of the issues is, will nonresident and international students substitute for Colorado residents? The answer is no. We want to admit the same number of resident students, especially at the undergraduate level."
Increasing graduate school enrollment can also help generate revenues. John Stevenson, interim dean of the Graduate School for CU Boulder, says about 15 percent of the total student body are graduate students. "That's very low," he says. "Among our peers it's often 20 or 25 percent or more."

Sometimes increased enrollment only means more costs. Nancy McCallin, president of the Colorado Community College System, says enrollment for Spring 2010 is up 38 percent compared to Spring 2009. In general, as unemployment goes up, so does enrollment at community colleges. Many students are jobless adults who hope to make themselves more hirable.

"Tuition covers only part of those costs," says McCallin, noting that even with the federal stimulus money, the schools' per-student funding is down.

The 128,000 student system is handling the shortfall by increasing its philanthropic requests and continuing to partner with businesses to help pay for work-force training. For example, health-care systems or ambulance companies provide equipment needed for emergency response training, thus creating a pool of talent when the company needs to hire people.

There are also energy partnerships, such as with Suncor, the large refinery in Commerce City. Later in 2010 new revenue will be available to CCCS from gambling revenues, a result of voters' passage of Amendment 50 in November 2008.

Finally, universities can also try a tuition increase. Colorado State University in Fort Collins will ask for a 9 percent tuition increase for next year. Tony Frank, the president of CSU, knows this is controversial.
"Everybody worries how fast it's going up," he says. "A 10 percent increase amounts to $400 roughly, so there are different ways to look at it."

According to the New York-based College Board, in its Trends in College Pricing 2009, the average published price of tuition and fees for in-state students at four-year public colleges in the U.S. was $7,020 for 2009-10, a 6.5 percent increase ($429) from the previous year. After adjusting for inflation, the average net price paid for tuition and fees by public four-year college students overall was lower in 2009-10 than it was five years ago.

Frank would like to increase the number of nonresident students enrolled, too. "We are about 18 percent," he says. "We think we can triple that number in five years."

So do all these efforts amount to privatization? Not really, say the experts. "What does it mean to privatize something?" Frank asks. "We have legislators talking about de-funding public universities. Someone would have to talk to me about the difference between privatization and de-funding. People get concerned that privatization is bad public policy, but when we talk about de-funding, it doesn't generate as much concern."

McCallin says privatization would be difficult for community colleges.

"Our mission is affordable and open access to education, so it's probably unrealistic to think you can provide that because of the amount of money it would cost," she says. "You'd have to double tuition. If that were to happen it would cut off affordable access in the state of Colorado."

Jordan doesn't see privatization in Metro's future but he does see the public college acting more like a private business. "If this is a moderate term event, we need greater flexibility to operate," he says. "In the long run it's in the state's interest to have us move in ways that allow us to keep costs down."

Some of the state's private schools did not respond to interview requests for this story, and others declined. "DU receives very little state money since we are a private university," Jim Berscheidt, associate vice chancellor, University Communications for the University of Denver, said by e-mail. "In addition, as a general rule University officials do not discuss gifts or fundraising practices."

DU and others did receive federal stimulus money, though, according to Recovery.gov, the website that tracks Recovery Act spending.

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Nora Caley is a freelance writer specializing in business and food topics. She can be reached at noracaley@comcast.net.

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