Tennessee Governor Bill Haslam

NASHVILLE -- After pushing changes to teacher tenure laws in 2011 and overhauling civil service this year, Gov. Bill Haslam now plans to take a close look at Tennessee's system of higher education, including its "cost structure."

"You'll see us turning our attention a lot more to post-secondary education," the governor said in an interview with Chattanooga Times Free Press reporters and editors last week. "I do think it's kind of where the challenge is right now."

Haslam said in addition to examining higher education costs, he wants to boost the number of Tennesseans with college degrees, ensure educational quality and find ways to better mesh the types of graduates with employers' needs.

Today, members of the Tennessee Board of Regents' Finance Committee are scheduled to look at yet another round of tuition increases this fall. Recommendations include boosts of 3 percent to 6 percent at most four-year universities and two-year colleges such as Chattanooga State and Cleveland State.

Students at the Regents' state technology centers, meanwhile, are looking at a 5 percent to 10 percent tuition hike.

Finance Committee members will make recommendations to the full Regents board.

The University of Tennessee system later will consider tuition increases of 3-6 percent at its institutions, such as UTC.

Figures provided by the Tennessee Higher Education Commission show average tuition at the University of Tennessee system and Regents colleges and universities has more than tripled between 1990 and 2012 as state appropriations fell.

Haslam, a Republican who took office last year, said public colleges and universities have a "legitimate beef" with state government because "they do get a lot smaller percentage of their total funding from the state than they did 30 years ago and 20 years ago and 10 years ago."

That is largely attributable to soaring Medicaid health care cost demands on Tennessee and other states, Haslam said. States have cut back their commitments to higher education funding as a result, the governor added.

But beyond that trend, Haslam said, "I think the issue coming back for all of us and the question we have for higher education is when the costs keep going up over inflation for a long time, why is that? And are we addressing that in the right way as a state?

"Maybe there's some legitimate reasons for that," the governor said. "But if you ask then what are you going to do with post-secondary [education], part of it is coming back and looking at it and saying is the entire cost structure of higher ed the right one for the next 20 years?"

In the state budget that takes effect July 1, Haslam cut state funding of higher education by 2 percent, or $19.3 million. But the governor also acknowledged changes in the state's funding formula that reward schools for doing a better job in nudging students along and graduating them. That was $25 million.

The governor described it as a "net wash," but higher education officials said they are grateful there were no real cuts. Haslam also provided $209 million for capital construction and another $70 million for maintenance, the first such funding in several years.

Since 1990, average tuition increases at the state's four-year schools have increased 368 percent versus a 76 percent rise over the same time in the federal Consumer Price Index, which measures the "average basket" of goods and services that a household purchases such as food and gasoline.

The figure averages 317 percent for two-year colleges.

For example, a full-time student at Chattanooga State paid $840 in tuition and mandatory fees in 1990-91. In 2000-01, it was $3,257. This year, the amount was $6,797. It represents a 324.6 percent increase since 1990.

John Morgan, chancellor of the Regents system, said he thinks the governor is "exactly right. We need to think long and hard about cost structure of higher education, also the entire financial picture of education."

Still, Morgan added, higher education costs run higher than the Consumer Price Index. The CPI measures average changes in the "average basket" of goods and services needed by households in areas such as food and gasoline.

"People need to be cautious about using the CPI," Morgan said, noting the major cost for higher education is "buying labor. And the bulk of the labor we buy is among highly educated employees."

But he quickly added, "that doesn't mean we don't need to be controlling costs" and noted higher education has made cuts over the past several years in the wake of the Great Recession.

Higher education institutions across the nation use a Higher Education Price Index developed by CommonFund Institute, which includes eight categories for operational costs such as salaries and benefits for faculty as well as utilities, supplies and materials, and miscellaneous services.

Meanwhile, Higher Education Commission figures show the state has failed to keep up with its own special funding formula for public universities, colleges and technical schools.

The state last fully funded the formula, which calculates the cost of post-secondary education and the state's share, back in 1987.

In 2000, the state was paying 89 percent of its share of the formula. Then the bottom fell out during the recession. This year, Tennessee is funding just 58 percent of its share of the formula.

During the 1980s, state appropriations funded an estimated 70 percent and tuition 30 percent of higher education's operational costs. But that has been turned on its head. Today, state appropriations cover just 34 percent, according to THEC.

Russ Deaton, THEC's associate executive director of fiscal policy and administration, said higher education's "high water mark" for funding was about $1.34 billion in 2007-08. That fell to $1.06 billion last year. At the same time, enrollments soared.

THEC figures show that more than the past 12 budgets, the state's spending on four-year institutions fell from about $546 million to about $510.5 million, around a 9 percent cut.

Tuition rose by 128.1 percent and accounted for just over $1 billion in funding.

Still, Deaton said, while higher education tuition around the nation has "risen faster than anyone's comfortable" with seeing, in Tennessee "you have not seen runaway total spending."

Contact staff writer Andy Sher at asher@timesfreepress.com or 615-255-0550.