SIOUX FALLS, S.D. (KELO) — The state of South Dakota has short-funded its public colleges and in turn, made students make up some of the shortfall, a 55-page report from two retired higher education officials said.
Former University of South Dakota president Jim Abbott and former South Dakota Board of Regents president and member Harvey Jewett addressed the report to Gov. Kristi Noem, the board of regents, the state Legislature and the people of South Dakota. The report was dated Feb. 24.
The report said about $250 million has been cut in state university funding since 2010 in a combination of cuts by the Legislature and the Board of Regents. Fees charged to students have increased from 2010 to 2020, the report said.
A spokesperson for the South Dakota Board of Regents said executive director Paul Beran had not yet thoroughly read the Abbott and Jewett report and could not comment for this story.
To fix the funding problem, the public should pass a half-cent sales tax designated for higher education, the Abbot and Jewett report said. Also, the state needs to make sure the Higher Education Facilities Fund (HEFF) is matched by the state and reviewed, the report said.
The report cites the HEFF surcharge as particularly troublesome. The state’s HEFF charge is 11.5% on tuition. The HEFF is charged to students and is used to pay for new construction and major renovations of university facilities. However, while HEFF, general funds or student fees are to be used for academic facilities, Abbott and Jewett cited that HEFF is not always used for academic facilities.
The state should revise HEFF so that the state matches it dollar for dollar, the report said.
“The state can not just abolish the HEFF process overnight, but the system should be carefully reviewed and revised,” the Abbott and Jewett report said.
The state needs to ensure that HEFF is used for academic purposes and it must also increase funding to universities, Abbott and Jewett said in their report.
Another fee that shifts costs from the state to the student is called a maintenance and repair fee or M & R fee, pays for general repairs and maintenance.
Students are paying for professors and others to teach but also for repair and maintenance of academic facilities. The state pays for only a small amount of new construction and major renovations, according to various state documents and the Abbott and Jewett report.
HEFF money has been used for various projects on the six public university campuses in Aberdeen, Brookings, Madison, Vermillion, Spearfish and Rapid City.
South Dakota’s HEFF fee and other student fees are large sources of money to pay for new or major renovation projects at public universities, according to the Board of Regents FY 2020 budget hearing report.
HEFF and other student fees have paid for $765 million in new facilities or renovations on campuses since 1997. In contrast, the state has paid for $80 million in renovations or new facilities. Grants have paid for $460 million in new facilities and major renovations. The figures are included in the Board of Regents FY 2020 report.
While HEFF and other student fees generated money for major renovations, new projects and repairs, universities also receive money from their respective foundations, grants and bonds, including bonds issued with the help of the Board of Regents.
Fiscal year reports from three universities provide examples of HEFF as revenue, uses of HEFF and a use for another general student activity fee.
At Northern State University in Aberdeen for 2019, HEFF money was earmarked for bond payment and for renovations including new restrooms at the Johnson Art Center and for planning and design of air handlers at the Barnett Center, according to the NSU fiscal year 2018 report.
For 2018, HEFF money was designated for bond payment and to pay a portion of new turf, according to the NSU fiscal year 2017 report.
In Vermillion, the University of South Dakota’s fiscal year 2018 report listed about $88,000 in revenue from HEFF maintenance and about $4.4 million in HEFF capital.
USD has used bonds, foundation and similar money to pay for large projects such as housing and a Dakota Dome roof project.
At South Dakota State University, HEFF revenue for FY17 was primarily used for the campus north tunnel extension, for the Northern Plains biostress chiller replacement, storm sewer improvements, and for various other smaller construction projects, according to the SDSU FY17 annual report.
SDSU received a total of $8.8 million in HEFF, which consisted of $6.1 million in M&R HEFF and $2.7 million in general funds HEFF, according to the FY17 report.
As do other universities, SDSU uses bonds, foundation and similar money to help with large capital projects such as the $24.8 million received from the SDSU Foundation for the Dykhouse Stadium project and the performing arts center project and others, according to the SDSU FY17 report.
Dakota State University in Madison uses money from student activity fees to make payments on a bond for its share of a joint community center with the city of Madison, according to the DSU 2017 annual report.
The Board of Regents also sidestepped when it reduced the total number of credits to graduate from a four-year institution from 128 to 120, according to Jewett and Abbott.
The reduction to 120 credits resulted in a loss of revenue to the state. And while it appeared to be a positive for students in lower tuition, it wasn’t, the letter said. The reduction didn’t increase student enrollment while fees and tuition continued to increase and state funding continued to be cut, the letter said.
The Board of Regents said in its FY20 report that a reduction in credits to 120, two fewer courses of exploratory study and adding three high school dual credit courses can result in a $5,277 savings for a college student.
Also, the Board of Regents pointed out in the FY20 report that the state froze tuition in fiscal years 2015 and 2017.
But according to Abbott and Jewett’s report, the state needs to take different action.
“…without HEFF charges South Dakota would have virtually the lowest tuition and fee rates in the country, the Board of Regents should consider raising the number of hours required to graduate back to 128 or, more likely, making an annual tuition adjustment to ease the revenue loss over time,” the report said.
The situation outlined in the Jewett and Abbott report isn’t particular to South Dakota.
Research completed by the Governor’s Office of Accountability, the Pew Trust and the Center on Budget and Policy Priorities, for example, illustrate a national trend in a decline in public funding for state college and universities and an increase in tuition.
Forty-five states spent less per student in the 2018 school year than in 2008, according to the Center on Budget and Policy Priorities (CBPP).
In 2018, state funding for higher education in South Dakota was 6.2% lower than in 2008, the CBPP report said in an Oct. 4, 2018, report. Tuition increased by 33.7% from 2008 to 2018, according to the report.
Meanwhile, although North Dakota cut its per student funding by $1,939 from 2017 to 2018, the CBPP said, the state was still spending more per student than in 2008.
The 2014 CBPP said from “2003 to 2012, revenue from state sources shrunk from 32% of total revenue to 23%. Meanwhile, growth in tuition revenue outpaced that of all other types of revenue over this period, increasing from 17% to 25% and making tuition the top single source of revenue for public colleges.” Tuition includes tuition and revenue from fees charged to students.
While the GOA report was from 2014, other research indicates the trend cited in 2014 did significantly change.
An Oct. 15 issue brief released by Pew said while state level general purpose funding for higher education had rebounded, the 2017 levels were still below the 2007 levels.
The Pew brief said during “2008-13 state appropriations for public post secondary institutions fell by $13.8 billion, or nearly 20% in real terms.”
The South Dakota Board of Regents cites in its fiscal year 2020 budget hearing report that “state support of South Dakota public higher education increased from 41% to 44% over the past five years.”
The Abbott and Hewett letter said the Board of Regents figure is misleading because it does not account for student paid tuition and fees, the HEFF surcharge on tuition, and room and board. When those student payments are taken into account, the state’s percentage share of funding is 34.3%, according to Abbott and Hewett’s report.
Another fee paid by students is the University Support Fee (USF) which includes a fee designed for maintenance and repair or (M&R as referred to in state documents).
The M&R fee of $3.34 per on-campus credit hour was expected to generate $1.9 million for maintenance and repairs, the Board of Regents FY2020 report said.