Part 4 | Colleges Padding Budgets with Fees and Surpluses

May 18, 2008

Fourth of five columns
For release May 21 and thereafter
990 words (Editors: Note length)

By Andrea Neal

Cory Barker, who just finished his sophomore year at Indiana University in Bloomington, has never used the campus bus system but still has to chip in $110 a year for its operation. “I don’t ride the bus. I will never ride the bus,” Barker says.

Like every full-time student at IU, Barker must pay that and other mandatory charges, including $210 for health services and a $158 activity fee that helps fund extra-curricular programs.

As if tuition weren’t high enough already, students at Indiana’s four-year public colleges find themselves paying extra for services they may never use, sporting events they may never attend, meals they may never eat and dormitory renovations they may never see.

“They’re multiplying,” says Stanley G. Jones, Indiana Commissioner for Higher Education. “There are simply more fees. Apparently they (universities) think they need more money.”

Making the situation worse is an element of mystery. Some fees are itemized on university websites or on invoices. Most are lumped together into a single “tuition and fees” sum. That’s the case with intercollegiate sports subsidies, which have come under criticism because they benefit the few (athletes on scholarship) at the expense of the many (the rest of the student body).

At Ball State University, athletic subsidies total almost $8.5 million a year, about $474 per student. The money funds athletes’ scholarships “and permits all students to attend athletic events without charge.” At Indiana State, students pay $4.7 million; at University of Southern Indiana $2.2 million. Indiana and Purdue, two schools with TV income and generous donors, don’t run deficits in their athletic budgets so don’t have to charge athletic fees.

Increasingly, students are also hit up for recreation centers equipped as lavishly as private health clubs. These are financed through revenue bonds backed by student fees.

Indiana State students pay $100 per year for a $24 million recreation center that opens in 2009. The facility will house a three-court gymnasium, aquatics area, fitness center, climbing wall and elevated track. Ball State students will begin paying a mandatory fee in 2009-10 for a $39 million wellness center with a five-court gym, suspended running track, cardio fitness area and climbing wall. The fee is tentatively set at $90 for 2009-10 and $180 thereafter.

Universities defend these costs, saying today’s students demand amenities and will favor campuses where they are offered. But there are critics too. “There's a downside if you are a student who never uses the facility: probably about 50 percent or more of the student body,” says Professor Emeritus Murray Sperber of Indiana University who’s written extensively about hidden costs in college. “Why should you have to pay for something that is of no value to you?”

The same can be said about a portion of room and board fees. All of Indiana’s public residential universities set rates high enough to cover not just operational costs and maintenance but future capital needs, like dormitory renovations. The planned surpluses range from $600,000 per year at the University of Southern Indiana to $12.5 million at IU.

On a per capita basis, Ball State University has been the most aggressive, tapping students this year for $10.6 million to fund capital projects. Thomas Kinghorn, vice president for business affairs, said the school’s policy is to set aside 3 percent of replacement value of existing housing and dining facilities. It’s not a surplus, he said, but the best way to deal with depreciation of assets.

In essence, today’s students pay for tomorrow’s upgrades. The policy has allowed Ball State to accumulate reserves so large that — instead of selling bonds — it’s paid cash for major renovations and new buildings, which Sperber and Jones say is unusual. Such is the case with three current projects: the $46.5 million North Residence Hall, the $30 million renovation of DeHority Residence Halls and the $22.9 million Pittenger Student Center renovation. The practice adds about $1,000 a year to a student’s room and board rates and leads to an ironic twist: While the college amasses money to avoid debt financing, students borrow to pay their bills.

Also unusual: the structure of Ball State’s dining plan. Though other Indiana universities have moved toward optional meal plans with varying price ranges, enabling students to save money, Ball State has stuck with a single-priced full meal package. If students don’t eat the allotted meals, the forfeited money — millions each year — goes into the renovation account.

Purdue, which generates about $10 million a year from room and board fees for its renovation fund, has taken a different approach to long-term projects. Since 2006-07, students have been paying a 2 percent surcharge to fund improvements set out in a master plan. The fee, which will expire after 2008-09, has paid for things like sprinkler systems, air conditioning and major building renovation.When it comes to setting fees and room and board rates, university trustees have final say. Amounts are merely reported to the Commission for Higher Education, which has no oversight role.

As fees have multiplied, students have become more vocal in opposing them. Purdue students this year rejected a proposal for an activities fee, even though it’s the only Big 10 school without one. Barker, the IU student, said his beef with the activities fee he pays is that students don’t really know what it funds.

To IU’s credit, it has posted a long list of fees on its website so students know what they’ll shell out each year. Neil Theobald, vice president and chief financial officer, said the university would have no problem itemizing bills further to show how room and board fees are allocated, for example. That would no doubt please parents, students and state policy makers who are poised next month to recommend new accountability measures for university finances.

“The more transparent we can make fees so people know what they’re paying for, the better off we are,” said Theobald.

Andrea Neal, a adjunct scholar with the Indiana Policy Review Foundation and former editorial page editor of the Indianapolis Star, teaches history at St. Richards School in Indianapolis.



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