1. NON-BINDING TUITION AND MANDATORY FEE INCREASE TARGETS RECOMMENDATIONS, 2009-11: ISSUES AND INFORMATION Indiana Commission for Higher Education May 8, 2009

2. Statutory Duty and Timing  IC 21-14-2-12.5  (b) After the enactment of a state budget, the commission for higher education shall recommend nonbinding tuition and mandatory fee increase targets for each state educational institution. [emphasis added]  The 2009 Indiana General Assembly has not as of this date passed a state budget

3. Statutory Duty and Timing  When should the Commission make tuition and mandatory fee target recommendations (besides after a state budget is passed)?  The recommendation for what rate institutions should set their tuition is worthless after the institutions have already set tuition  When will Indiana’s public postsecondary institutions announce 2009-10 / 2010-11 tuition and fee rates?  The sooner the better for students  Some will wait until a budget is passed  Some may not  Ten day notice of intent is required  An executive session of the Commission could be called within a few days of the conclusion of the special session

4. Statutory Duty and Timing  Commission intends to recommend tuition and mandatory fee rate increase only for resident undergraduate rates  The statute is vague as to statutory requirements  CHE role is to coordinate the state’s system of higher education  Hold fiduciary duty to Indiana taxpayers  Strong public policy goal in promoting undergraduate education

5. Contextual Information (Because decisions about tuition and fees are not made in a vacuum)

6. Economic Circumstances  The Indiana and National Economy is in a severe recession, the second this century  US GDP*: -1.8% (FY 09), -1.6% (FY 10)  Indiana tax revenues*: -4.8% (FY 09), -0.4% (FY 10), 3.7% (FY 11)  Indiana has 8 th highest unemployment rate in country 10% (March 09)  Indiana family income has fallen to a 35 year low against national average * Indiana revenue forecast technical committee, April 2009

7. State Role in Tuition Rates  48 states use a state higher education governance system of either Coordinating Boards or Boards of Regents, or a hybrid of the two  Coordinating board similar to Indiana Commission for Higher Education, little or no authority over institutions  Board of Regents act as a “super board of trustees” over the higher education system, total authority over institutions  Hybrid systems typically have a Board of Regents over one sector of the system (e.g., community colleges), and a Coordinating Board over the other sector (e.g., 4-yr. Institutions)

8. National Picture: Role of U.S. States in setting Resident Undergraduate Tuition Rates

9. Association of Governing Boards Survey of Public Colleges and Universities, April 2009

10. Guiding Principles  Funding Adequacy  Access and Affordability  System Efficiency  Market Forces  Productivity

11. Funding Adequacy  Indiana’s public postsecondary institutions need adequate resources to carry out their missions, provide quality teaching, research and service, and meet the needs of the Indiana citizenry and goals of Reaching Higher.

12. 2009-11 State Higher Education Budget ?

13. State General Fund Operating Appropriations in HB 1001- 2009 CC report $ millions

14. State General Fund Operating Appropriations in HB 1001- 2009 CC report plus ARRA “part a” funds $ millions

15. State General Fund Operating Appropriations in HB 1001- 2009 CC report plus ARRA “part a” and “part b” funds $ millions

16. State Operating Appropriations

17. Student Tuition and Fees

18. System-wide Expenditure Increase Trend

19. 19 CAGR: 4.8% $12,176

21. Hoosier Enrollment (FTE) Trends 1994-2007 21

25. Higher Education Appropriations per FTE by State, 2007 Source: SHEEO SHEF, State Higher Education Finance FY2007. National Context Indiana has been below average in Appropriations per FTE for at least 20 years. More recently, Indiana ranks: 41 st – FY07 32 nd – FY05 37 th – FY03 35 th – FY01 Indiana’s adjusted Appropriation per FTE decreased by 24% between 1990 and 2007, compared to the national average of -8.4%. 25

26. Higher Education Tuition, State and Local Revenue per FTE 26 National Context Source: SHEEO SHEF, State Higher Education Finance FY2007.

28. Funding Adequacy Education and General Expenditures per FTE compared to peer mean State & Local Appropriations per Total FTE compared to peer mean USI 70%91% ITCCI 76%58% PUWL 78%80% IUK 79%108% IPFW 82%79% PUNC 82%67% PUC 85%75% IUSE 86%106% IUSB 87%103% IUB 87%75% IUNW 93%97% ISU 99%136% BSU 101%150% VU 104%91% IUE 105%117% IUPUI 107% 84%

29. Expenditure Concerns on the Minds of the Institutions  Salaries  Health Care expenses  Estimates 4%-6% per year  Energy/Utility Costs  Estimates are dip in 2010 and up again 2011  Endowment Income  To the extent interest income funds operating  Lowering of SSACI Grants to Low Income Students  Institutions may make up loss in SSACI grants

30. Access and Affordability Indiana’s public postsecondary system should provide every qualified student with access to and the maximum potential for success through high-quality postsecondary education regardless of financial need.

32. Indiana vs. U.S. Unemployment

33. Indiana Family Income compared to National Average 1974 - 2007

34. 34

35. Source: SHEEO SHEF, State Higher Education Finance FY2007. Net Tuition as a Percentage of Public Higher Education Total Educational Revenues by State, 2007 National Context 35

36. Access and Affordability Net Tuition Revenue as % of Educ. and Gen. Expenditures compared to peer mean CAGR in Resident Undergraduate Tuition and Fees 1998-2008 USI 116%7.3% ITCCI 140%4.4% PUWL 136%9.0% IUK 140%7.1% IPFW 120%7.8% PUNC 121%7.8% PUC 118%7.6% IUSE 114%7.3% IUSB 118%7.1% IUB 138%8.2% IUNW 110%7.2% ISU 84%8.9% BSU 77%8.7% VU 137%5.8% IUE 84%7.1% IUPUI 118%8.1%

37. System Efficiency. Indiana’s system of higher education should be seen as a coordinated group of interrelated and complimentary campuses with differential missions and pricing structures.

38. Market Forces. Indiana’s public postsecondary institutions operate in a regional, national and worldwide marketplace for students, employees and resources.

39. 2008-09 Resident Undergraduate Tuition and Mandatory Fee Rates

40. Market Forces Resident UG Tuition & Fee charges compared to peer mean USI 79% ITCCI 105% PUWL 84% IUK 116% IPFW 122% PUNC 104% PUC 92% IUSE 104% IUSB 118% IUB 89% IUNW 112% ISU 120% BSU 96% VU 159% IUE 97% IUPUI 99%

41. Association of Governing Boards Survey of Public Institutions, April 2009

42. AGB Survey, Steps Taken to Reduce Costs

43. Market Forces  CHE will monitor other states as state budgets are passed and tuition and fees are announced

44. Tuition & Fees at ITCCI Reaching Higher  Keeping Community College Affordable: “Keeping the percentage of family income necessary to pay tuition and fees at Ivy tech Community College at or below the national level.”

46. Productivity The Commission should consider the extent to which Indiana’s public postsecondary institutions are demonstrably efficient with existing resources in setting the target rates.

47. Productivity Expenditures per Degree compared to peer mean USI 90% ITCCI 83% PUWL 89% IUK 64% IPFW 90% PUNC 79% PUC 103% IUSE 73% IUSB 99% IUB 94% IUNW 91% ISU 108% BSU 94% VU 87% IUE 111% IUPUI 105%

48. Selected Inflation Indexes

49. Recommendations  Special Session?  2009-11 Higher Education Budget?  Executive CHE Meeting?  Further discussions and monitoring