This is a re-post that originally appeared on the Pioneer Institute's website. Pioneer Institute is an independent, non-partisan, privately funded research organization that seeks to improve the quality of life in Massachusetts through civic discourse and intellectually rigorous, data-driven public policy solutions based on free market principles, individual liberty and responsibility, and the ideal of effective, limited and accountable government.
Later this month, the University of Massachusetts’ Board of Trustees will again vote on tuition and fee increases. In the fall of 2015, UMass charged 13th highest of 172 public universities in the U.S., higher even than UC-Berkeley and UCLA, the two top-ranked public universities according to US News and World Report Rankings of Public Colleges.
Longer term, the system’s manner of financing a multi-billion burst in facility capital expansion has come at the expense of attention to its deferred maintenance backlog, and places UMass in a precarious financial position. The UMass Board, the governor and the legislature will need to begin asking hard questions in order to discharge their fiduciary responsibilities to the University as well as to Massachusetts taxpayers.
On May 17, 2016, Pioneer Institute issued a three-part report entitled “UMass at a Crossroads” about the University of Massachusetts’ recent and continuing expansion of capital facilities, its operating costs, student enrollment, deferred maintenance, and rising out-of-state enrollment. The report asks if UMass’s expansion is sustainable, and if so, how will it be paid for? The main findings are as follows:
- UMass Board of Trustees has adopted a $6.98 billion capital plan for fiscal years 2015-2019. To put the scale of this capital expansion into perspective, the report cites university documents showing that the current capital value of university assets is $10 billion. The report also reveals that the university has completed $3.8 billion in capital additions over the past decade. To put the scale of the proposed $6.98 UMass expansion into further perspective, the ongoing public policy emergency concerning the Green Line extension concerns a $1 billion cost overrun to the proposed $2 billion project.
- While constructing $3.8 billion in capital additions over the past decade, the university allowed its deferred maintenance backlog to grow from $2.7 billion to $3.3 billion, a management shortcoming not unlike that which occurred at the MBTA, which allowed its deferred maintenance backlog to grow to $7.3 billion while it undertook enormous system expansion.
- UMass has increased student enrollment by 27.3% over the past decade, more than 10 times the rate of other New England public universities and twice that of Massachusetts private universities. UMass has adopted policies to increase enrollment further, including a 12.5% increase between FY2014 and FY2018.
- UMass’ recent and planned future enrollment growth seems at odds with a projected decline of high school graduates in Massachusetts of 11.4% over the next 12 years.
- UMass’s rapid growth has strained university finances. Between FY2005 and FY2016, operating losses (prior to state appropriations) at the university grew from $416.7 million to $709.4 million.
- Annual debt service payments to finance the university’s recent expansion have risen from $88.5 million in FY2005 to $223.4 million in FY2016.
- As a result of rising costs, the university has been forced to raise tuition and fees for in-state students and will in the coming years feel even greater pressures to do so.
- UMass has adopted a policy of enrolling a growing number of out-of-state students, largely to raise revenue from higher tuition paid by those students. UMass-Amherst’s freshman class in the fall of 2015 was comprised of 28% out-of-state and international students. Pioneer’s report cites the controversy that ensued at UC-Berkeley and UCLA in 2014 when the entering class reached 28% out-of-state students. Governor Jerry Brown and the state assembly of California insisted on capping out-of-state enrollment at that level, which cap has since been instituted. In North Carolina, out-of-state admissions are limited to 18%.
- UMass adopted policies in 2011 to increase out-of-state enrollment by allowing individual campuses and programs to retain a higher percentage of out-of-state tuition revenue and to offer scholarships to out-of-state applicants. To promote international enrollment, three UMass campuses are paying consulting companies one-half year tuition for successfully recruiting a student from another country.
- Out-of-state students now comprise 59.1% of the master’s degree students and 77.5% of doctoral degree students at UMass-Amherst.
- UMass charges more for in-state tuition than the average of other New England state flagship campuses, but less than average for out-of-state students. The University of Vermont charges $8,626 more in tuition for out-state-students than does UMass.
- According to the State Higher Education Executive Officers Association, state support per full-time equivalent student at all public high education institutions in Massachusetts is higher than the national average and higher than four of the other five New England state university systems of higher education.
Instead of addressing these important findings and the legitimate public policy issues Pioneer Institute’s reports raise, UMass officials have chosen instead to respond by employing ad hominem criticism, stating that Pioneer wants UMass to be a mediocre university. Their misleading rebuttal is simply an effort to divert the public’s attention from the basic policy questions we did raise: Is UMass’s planned expansion affordable? And what obligation does a state institution of higher education have to in-state students?
Pioneer has no interest in UMass becoming a mediocre university. In fact, our reports laud UMass for the progress the university has made in recent years. Our goal is to encourage the school to become an even better place to educate Bay State students.
The vast majority of the data in our reports came directly from the university’s website, including the school’s Annual Indicators Reports, Annual Financial Reports, and the FY 2015-2019 Capital Plan. As clearly expressed throughout all three Pioneer reports, our central goal is to raise awareness surrounding some of the largely unexamined features of changes at UMass over the last decade. These include enrollment trends, scale of new construction and mounting debt, as well as UMass’s own reporting of its deferred maintenance. It is imperative that these items be transparently disclosed to Massachusetts citizens, who contribute much to UMass’ funding, and that lawmakers have a clear understanding of the changes we’ve observed as they determine UMass’s future mission and levels of state support.
Had UMass officials been diligent in responding to our report, they would not have asserted the following:
- “Pioneer has an agenda of protecting those Massachusetts private institutions that haven’t been able to keep up with UMass in terms of enrollment, rankings, and stature.”
- “The focus on UMass-Amherst ignores the rest of the system. If you can’t get into Amherst, or Lowell, you can get into Boston or Dartmouth. And if you can’t get into any of those, you can get into a community college.”
First, nowhere do any of the three reports express concern about the effect of UMass’s growth on the commonwealth’s private colleges and universities in a way that suggests an agenda. Our reports bring up a number of questions regarding these schools as considerations for policymakers in taking a comprehensive look at higher education enrollment trends in Massachusetts. As mentioned throughout our reports, our aim is to start a policy conversation — the implications of UMass’ growing enrollment for other schools in Massachusetts is just one component that should be a part of this discussion.
Second, UMass must follow a sustainable path. In the past decade, the university has built over $3.8 billion in new infrastructure, nearly two-thirds of which was financed with university debt. As a result, total UMass debt has more than tripled from $946.2 million to $2.9 billion between fiscal years 2005 and 2016. Instead of addressing that debt, UMass either plans to spend or has underway another $6.9 billion in infrastructure investments over the next five years. No funding source exists for more than $3 billion of those projects.
Pioneer is endorsing a “time-out” on expansion, and there are additional facts to support that recommendation, including:
- The number of high school graduates in Massachusetts is entering an extended period of decline.
- Legitimate questions about whether state taxpayers should fund such massive capital additions if they are in large part designed to accommodate growing numbers of out-of-state and international students.
- UMass’s outstanding building repair needs are massive. Much like at the MBTA, UMass’s massive investment in new infrastructure has come at the cost of existing facilities. The university rates “Very Poor” on the Facilities Condition Index, which is the standard measure of higher education facilities management and has greatly exceeded the industry standard for an acceptable level of facilities in need of repair since 2010. By contrast, Massachusetts state colleges fall in the “Ideal” category.
UMass is asking for an increase in state appropriations. In the coming weeks, they will also seek tuition and fee increases. The university can’t have it both ways, seeking a new financial model and also asking for more public assistance. In a February 1 meeting with UMass President Marty Meehan, he noted that he saw no reason to cap out-of-state and international enrollees, and stated that he saw no problem with such enrollees reaching even 40 percent of the overall student body. If that is the direction UMass plans to take, there should at least be a public conversation. Responsible legislators should not be “overly simplistic” in assuming that the UMass building program will not have long-term effects on the state budget.
As discussions over these issues develop, we believe some basic questions need to be asked:
- Should the state respond affirmatively to UMass’s pleas for additional funding if the university continues to expand out-of-state and international enrollees?
- Will UMass’ policy of charging lower out-of-state tuitions relative to other New England state universities and granting merit-based scholarships to out-of-state and international students have a crowding out effect on in-state applicants? Does it make sense for UMass to increase out-of-state tuition to bring this fee more in alignment with what other New England public universities are charging for non-residents?
- Should state taxpayers support expansion-related increases in salaries, fringe benefits, and pension and retirement obligations for the teaching and administrative staff if the number of Massachusetts students is not driving that expansion?
- Is UMass on a sustainable fiscal path? If not, what can be done to change that?
Pioneer’s analysis has started an important public policy discussion. We hope UMass leadership will engage with something more sophisticated than a rah-rah retreat to understandable pride in one’s alma mater. The questions we list at the start of this public statement need answers; they are ones that any responsible university administration and public university board would ask.a