October 7, 2005

President Wilson convened the fourth SPBC meeting of 2005-06 at 8 a.m. The single agenda item was discussion of the policies and practices the University uses to set tuition for the next academic year. Because tuition is by far the University’s single biggest revenue source, it largely determines the size of the operating budget. Thus, it is natural that tuition policy should be the first major budgetary issue to come before the SPBC.

Before beginning the discussion, the President reminded the group that its role is advisory to him and the Vice President for Business and Finance. The President’s Cabinet also advises him on budgetary matters, and the final decision on the University budget is made by the Board of Trustees. Consequently, draft documents such as those presented at this meeting are subject to change, based not only on the SPBC’s advice, but also on input from other sources.  The focus of the group’s attention at this stage, therefore, should be primarily on issues and processes and not on every specific number in preliminary documents. Members of the group indicated that they understood this caution, but that they also needed the freedom to discuss budgetary issues openly with the constituencies they represent. The President indicated that such discussion is entirely appropriate, as long as no one reports at this stage, for example, that next year’s tuition will be a particular dollar amount. No figure will be final until the Trustees meet on October 25.

Vice President Klotzbach distributed a draft packet of materials that he was working on in preparation for the Board meeting. The packet contained historical information on IWU tuition, along with tuition histories for several comparison groups of colleges, specifically, schools with whom we have overlapping admissions applications, members of the Associated Colleges of the Midwest, members of the Great Lake College Association, and the US News Top 60 colleges.  He noted that, compared to these groups, our tuition increases were relatively higher during the 1990s. The President stated that his goal is to moderate the rate of tuition increases if possible, while still garnering enough tuition revenues to provide a strong base to the operating budget. The President noted that even with relatively moderate increases over the next few years, the University’s comprehensive fee (the total of tuition, required fees, room, and board) would exceed $40,000 before too long. Several members of the committee blanched at the words “$40,000 per year,” noting that $40,000 was, indeed, a “scary number.”

To provide some perspective on tuition’s relationship to the operating budget, Vice President Klotzbach also reported two facts that he believed were of strong interest to the campus:

(1) For every 1⁄4% increase in tuition, the University nets $75,000 (after backing out the addition cost of financial aid occasioned by tuition increases)

(2) For every 1⁄4% increase in the overall salary pool, the cost to the University is $80,000.

SPBC members were then invited to ask questions about tuition levels and policy. Among those questions were:

--Does tuition ever go down? (A: No.)

--How do study abroad students count? (A: We retain the tuition of those students studying in our London and Madrid programs. Tuition paid by students studying off-campus elsewhere goes to sponsoring institutions.)

--How are financial aid budgets managed in an environment of rising tuition? (A: The Board of Trustees has a policy whereby the percentage increase in the financial aid budget in any one year cannot exceed one-and-one-half times the rate of the comprehensive fee increase. Thus, if the comprehensive fee increases by 3%, the financial aid budget increase cannot exceed 4-1/2%.)

--Have we considered market reaction if, instead of being cautious, we were to raise tuition by double digits to allow us to achieve our strategic vision? (A: No. We are not yet convinced that our market position would allow us to compete with institutions that are charging significantly more than we are now; most of those institutions are more highly rated on a variety of measures than we are.)

--Have we considered freezing tuition for a student during his/her four years here? (A: No.  Institutions that have done so have found a number of budgetary complications that arise from freezing, and entering students each year are often paying a much greater amount than students who enrolled at the same institution before them. We would have to study the issue very carefully before considering it.)

--Have we modeled what the budget would look like if we increased enrollment to 2,250 or even 2,500 students? (A: Not at this time, as we lack the additional housing that would be required for enrollment increases of that amount; the official enrollment target remains at around 2,100, with some of that number studying off campus. We have the ability to do such modeling, however, if it becomes desirable.)

The Committee agreed to continue its discussion of tuition policies at a special meeting on October 13.

Distributed to all faculty and staff: October 13, 2005