Higher Education Tuition and Fees - Legislative Analyst's ...

HIGHER EDUCATIONTUITIONANDFEES

OcTOBER 20, 1983

LEGISLATIVE ANALYST

STATE OF CALIFORNIA 925 L STREET, SUITE 650 SACRAMENTO, CALIFORNIA 95814

Legislative Analyst October 20, 1983

HIGHER EDUCATION TUITION AND FEES

Statement to the Senate Education Committee Sacramento, California

MR. CHAIRMAN AND MEMBERS OF THE COMMITTEE: You have asked that we comment on three specific topics having to do

with tuition or fees at UC and CSU: ? the need for a long-term policy toward tuition/fees, 1 the criteria that could be used in setting tuition/fees, and ? the process that should be followed in adjusting tuition and/or fees The material which follows discusses each of these topics

separately. For simplicity, as well as for reasons explained later, we will use the term ??fee" throughout this statement when discussing student charges. NEED FOR A LONG-TERM FEE POLICY

In the past five years, there has been a dramatic increase in resident student fees at the University of California (UC) and the California State University (CSU). Table 1 shows that in 1979-80, UC resident undergraduate fees were $731 per academic year, while comparable CSU fees were $204. For the 1983-84 academic year, these fees are $1,344 at UC and $671 at CSU. Thus, since 1979-80 fees at UC and CSU have increased 84 percent and 229 percent, respectively.

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UC and CSU Resident Undergraduate Student Charges Per Academic Year

1979-80 to 1983-84

Chan~e

From 1979-80 1979-80 1980-81 1981-82 1982-83 1983-84 Amount Percent

uc

$731 $775 $997 $1,294 $1,344 $613 84%

csu

204

222

320

505

671 467 229

While the absolute levels of these fees do not appear excessive when

compared to fees charged by public universities in other states, the manner

in which recent increases have been implemented and the lack of certainty

regarding future fee levels put the two segments and the students they

serve in a difficult position.

The state's experience during the last several years highlights the

need for a sound long-term policy for establishing student fees in higher

education. A clear policy would have the following benefits. First, it

would aid students and their parents in planning to meet the costs of

higher education by adding stability and predictability to the fee-setting

process. Second, it would make the Legislature's job easier by eliminating

the need for a protracted debate on fees each year.

In partial recognition of the need for a long-term policy toward

fees, the Legislature enacted and the Governor signed AB 1251 in September,

1983. AB 1251, which is based on recommendations made by the California

Postsecondary Education Commission (CPEC}, puts in place a long-term fee

policy for the CSU system. As we will discuss later in this statement, we

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have some concerns with the process established for CSU by AB 1251. In addition, we believe that a comprehensive fee policy covering higher education is needed. CRITERIA FOR FEES

There are numerous criteria that could be utilized in establishing student fees. These include a student's level (for example, undergraduate or graduate), the student's academic program, the number of units taken, family income, the cost of instruction, the extent to which a student derives personal benefit from higher education, the cost of student support services, and fees at comparison institutions.

Having given considerable thought to the matter of student fees, we conclude that whatever comprehensive long-term fee policy is adopted by the Legislature, it should be based on three principles:

1 student fee levels should reflect the private (as opposed to societal) benefits from higher education,

1 the system of calculating the fee level should be predictable and easy to understand, and

1 adequate financial aid should be made available to needy students so as to preserve access to higher education.

Private Benefits. We believe the state's policy should recognize that higher education results in both private benefits and public benefits to society as a whol e. Private benefits are those benefits that are retained by the individual student and include increased income, personal enrichment, and broader options regarding lifestyle and employment. Public

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benefits include increased tax payments, increased economic development (due to the supply of an educated workforce), and an informed citizenry.

These benefits accrue in differing amounts, depending on student level and program. Thus, the private benefits of professional school programs in law and medicine are usually greater than the benefits of a general undergraduate program.

Simplicity. We believe a second major criterion that a fee policy should satisfy is operational simplicity and predictability. A system that is predictable and simple to understand and administer is beneficial to the student and parents, as well as to the the institutions themselves because (1) it clearly defines the required contribution of the student and (2) it provides more certainty in the budget planning process. APPLICATION OF THE CRITERIA

Using these principles as a framework, we believe that fee charges in California higher ed ucation should:

1 be based on a percentage of the state's General Fund appropriation and student fee revenues which support the particular segment, i.e., UC, and CSU, and

1 vary according to student level and/or program. While student fees ideally should be related to the real or perceived private benefits from instruction, policy planners to date have not developed a model capable of calculating such benefits, and perhaps they never will. The Carnegie Commission, for example, has addressed this question. In a study entitled Higher Education: Who Pays? Who Benefits? Who Should Pay?, the commission concluded that:

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