Emphasizing the need to keep a University of St. Thomas education affordable, the Board of Trustees on Thursday approved a 2010-2011 undergraduate tuition and fees increase of 3.5 percent – the lowest increase in 16 years.

The increase, when combined with average room and board increases of 3.7 and 3 percent, respectively, will result in a comprehensive fee of $38,813, or 3.5 percent higher than this year’s $37,509. Tuition will total $29,952 for full-time students, with a 5 percent surcharge on business and computer science courses because of the higher cost of faculty in those areas.

Undergraduate tuition increases have averaged 6.2 percent a year over the last five years, and the last time they were under 4 percent was in 1994-95, when tuition, room and board each increased 3 percent. Trustees favor lower tuition increases over the next several years as an effort both to slow the rising costs of private higher education and to respond to the recession, which has made it more difficult for families to afford a St. Thomas education.

“This is part of a genuine, concentrated plan to slow the general trend of tuition increases and further emphasize the university’s strategic direction of access,” said Dr. Mark Dienhart, executive vice president and chief operating officer. “Everyone, but particularly our Board of Trustees, realizes with this challenging economy that we just can’t raise tuition by 6 percent every year and be seen as fully respectful of the impact of this recession on prospective students and their families. We need to make fundamental changes.”

Graduate programs were given more discretion in setting higher tuition increases next year. They will range from 3 percent in some education and psychology programs to 4 percent in the School of Law to 5.9 percent in most MBA courses. (See table for details.)

Dienhart said the moderate undergraduate tuition increases will be achieved through a wide variety of cost-cutting measures, including reductions in non-compensation expenses, voluntary early retirement programs and elimination of some staff positions by attrition. St. Thomas expects to eliminate at least 46 staff positions in the next fiscal year, including at least 27 through early retirement programs.

Despite the lower tuition increases and spending cuts, St. Thomas will increase its salary pool by 2 percent for faculty and staff. Faculty will receive a 1.5 percent base increase, with the remaining 0.5 percent distributed in merit and equity increases. Staff raises will be determined through a performance assessment process this spring and summer.

The 2 percent increases in the salary pool will amount to $2.3 million. To achieve the required cost reductions, in addition to a reduction in positions, St. Thomas will need to reduce fringe benefit costs by $1.4 million. Under consideration are instituting a modest (1.4 percent or less) reduction in the university’s 403(b) pension contribution (now at 10.4 percent); requiring a one-year eligibility period for all new employees (new employees over age 40 now can participate in the pension plan immediately); and establishing a vesting period of up to four years before an employee gains ownership of the pension funds contributed by the university. Even with those potential changes, St. Thomas’ retirement contributions and benefits package will continue to be the equal of, or superior to most, regional private colleges as well as larger Catholic peer institutions.

“The challenge presented by this effort to moderate pricing increases created an immediate $10 million problem to solve,” Dienhart said. “It proved impossible to do that without touching compensation expenses since they are such a large proportion of our budget.

“In these tough economic times, we came to believe it makes sense to put more money directly into people’s pockets than to maintain the same level of retirement fund contributions and have little or no salary increase, as we had last fall. This is a difficult balancing act, and we’ll continue to look at options over the next several months before settling on a course of action.”

Circumstances vary, but many employees would benefit more from an increase in take-home pay as opposed to continued 10.4 percent contributions to retirement funds. Pay increases build a larger base upon which retirement contributions are made over a longer period of time, and that same base is increased for counting Social Security benefits upon retirement. For employees not at the cap of their voluntary contributions to retirement funds, the additional compensation could be sheltered from taxes, just as the university’s contribution is.

Trustees became more involved in the budget process last fall, creating a special task force that established operating budget priorities for the next several years. Those priorities include annual undergraduate tuition increases of 3-4 percent, annual salary increases for faculty and staff, investment in the Opus College of Business to ensure American Association of Colleges and Schools of Business accreditation, investment in the School of Law as it pursues national ranking, and contributions of at least $1 million a year to the university’s “quasi-endowment” fund (which is akin to a savings or reserve account). For more information about those priorities, read Father Dennis Dease’s blog today in The Scroll.

Departments reduced non-compensation expenses by up to 10 percent or by a lesser amount if they were able to cut compensation costs. Mark Vangsgard, vice president for business affairs and chief financial officer, cited several examples that will lead to both short-term and long-term savings:

• Enrollment Services will further emphasize electronic technology in recruiting undergraduate students, reducing paper, printing and postage costs by $80,000.

• December commencement exercises will be eliminated and spring post-ceremony receptions will be downsized, resulting in annual savings of $70,000.

• Information Resources and Technology will reduce non-compensation budgets by 7.5 percent through steps such as renegotiating software maintenance and computer lease terms, repurposing servers and reducing telecommunication costs.

• The faculty-staff dining room in Murray-Herrick Campus Center, closed in December to provide temporary office space for the Athletic and Health and Human Performance departments, will not reopen when they move into the Anderson Athletic and Recreation Complex in August.

• Custodial services will be revamped to day cleaning operations, with evening cleaning taking place only in the O’Shaughnessy-Frey Library Center, the Frey Science and Engineering Center, the Anderson Athletic and Recreation Complex and the Anderson Student Center (the latter two after their construction). This change will result in positions being eliminated through attrition.

• A number of academic programs will increase class size to reduce overloads and improve the use of full-time faculty. Other programs have deferred some faculty hiring, and by eliminating under-enrolled graduate sections they were able to reduce adjunct salary costs.

Tuition rates for next year have not been set at all of Minnesota’s private colleges, but St. Thomas expects to remain moderately priced for its undergraduate programs. This year, St. Thomas ranks ninth in tuition, sixth in room and board, and eighth in comprehensive fee among the 17 institutions that are members of the Minnesota Private College Council. (See table for details.) Only four MPCC schools have had lower comprehensive fee increases over the last five years than St. Thomas.

Funds generated from tuition increases will help pay for ongoing and special expenses necessary to continue to provide a high-quality education, Vangsgard said. Specifically, these expenses include:

• Undergraduate financial aid. St. Thomas will increase its financial aid budget by 5.6 percent, thus lowering the gross tuition increase of 3.5 percent to a net tuition increase of 2.2 percent. The financial aid budget has increased an average of 11.9 percent a year over the last five years, effectively lowering the net tuition increase during that time period from 6.2 percent to 3.4 percent per year.

  More than 80 percent of undergraduate students – and virtually every freshman – receive financial aid through scholarships, grants, loans and campus employment. St. Thomas subsidizes the education of all undergraduate students, including those who do not receive financial aid, because tuition covers only 80 percent of instruction-related expenses. The remaining 20 percent comes from gifts, endowment and investment earnings, and contributed services of religious personnel.

• New faculty. The Opus College of Business and the School of Law will add several faculty positions as part of their respective efforts to achieve AACSB accreditation and a national ranking. 

• Health care expenses. Expenses associated with the health benefit plan for employees are expected to increase 10 percent in 2011 on top of a projected increase of 7.5 percent this year. St. Thomas covers 62 percent of medical premiums, with employees picking up the balance.

• Building projects. Major improvements on the St. Paul campus will include the renovation of the main campus greenhouse and preparation of adjacent spaces for two new laboratories and three new faculty offices for the Biology Department. There will be code-related elevator retrofits in O’Shaughnessy Educational Center, Aquinas Hall and Dowling Hall, and exterior brick repair will occur on the upper floors of Brady Hall.

  Construction will continue on the Anderson Athletic and Recreation Complex, which will open in August, and will begin later this spring on the Anderson Student Center. Portions of McCarthy Gymnasium also will be renovated. These projects will be financed by gifts and bonds sold by the university; the associated interest and operating expenses will be covered by gifts and therefore will not impact tuition. 

• Technology improvements. St. Thomas will complete the re-wiring of the final buildings under the first phase of the Digital Convergence Initiative. The multi-million dollar project is designed to upgrade network wiring in older buildings, increase capacity on the wired and wireless networks and provide a single converged network for voice, video and data. When completed, the new network will provide students, faculty and staff with greater network capacity and speed, access to greater online services for instruction and business functions, and increased security. In addition, St. Thomas will again raise its connectivity to the Internet to meet campus demand, and begin work on a new Web content management system that will, among many features, complement access through mobile devices.  IRT also will begin piloting Google e-mail and applications for students. 

• Library collections. St. Thomas will add 11,000 volumes – books, bound periodicals and audio-visual titles – over the next year. The libraries’ budget will be allocated 70 percent to electronic content and 30 percent to print, and they will add a new “discover” layer (search interface) that will make it easier for users to search catalogues and hundreds of databases. The libraries also will implement Digital Commons, an institution-wide repository for St. Thomas-produced digital content such as faculty publications and student papers. 

St. Thomas again expects to enroll a freshman class of 1,325 this fall. That would be the sixth straight year of freshman classes averaging above 1,300 – others were a record 1,352 in 2009, 1,322 in 2008, 1,314 in 2007, 1,299 in 2006 and 1,325 in 2005. Increases in the size of the freshman class are not projected in the foreseeable future. Graduate programs will need to be the source of revenue growth in the future, but are currently projecting stable enrollment.

“It has been a difficult year in terms of our economy,” Vangsgard said. “Students and their families are having a more difficult time affording a St. Thomas education, and employees feel other pressures. We all are trying to work together to provide an affordable education and make St. Thomas a better institution for all who come here.”

Vangsgard and Dienhart will hold an information session on next year’s budget at noon Tuesday, March 2, in Room 126 of John Roach Center for the Liberal Arts.

References linked above:

• University of St. Thomas tuition (per credit hour) 2010-2011
• University of St. Thomas residence hall rates (2010-2011)
• University of St. Thomas board rates (2010-2011)
• 2009-2010 Comprehensive fees for Minnesota private colleges and universities