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VOL. 38 | NO. 49 | Friday, December 5, 2014

Higher ed officials told to find other funding sources

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NASHVILLE (AP) - Faced with flat revenue projections, higher education officials will have to find ways to cover costs at their institutions because the state won't be able to help them anytime soon, a top economist said Wednesday.

Bill Fox, director of the University of Tennessee's Center for Business and Economic Research, spoke at a meeting called by the Tennessee Board of Regents to discuss funding options. The board oversees six state universities, 13 community colleges and 27 colleges of applied technology.

Last week, higher education officials told Gov. Bill Haslam at a budget hearing that they'll be forced to continue raising tuition if the state doesn't provide adequate funding to help with costs. They noted that higher education hasn't received a substantive increase in state funding in about 30 years.

Fox told the board on Wednesday that state government will have very little revenue growth for the foreseeable future, and t hat higher education institutions will have to be creative in raising money and make better use of their current resources.

"On average, we're getting just under 3 percent revenue growth," Fox said. "With the inflation rate around 2 percent, it tells us that at absolute most, we're getting 1 percent growth in revenue. When we average it out, new growth won't be strong enough for Higher Ed. to see significant new dollars."

Higher education officials said their main objective is to find ways to operate more efficiently and avoid tuition hikes.

"The bottom line is, we're going to have to figure out how to do much better without expectation of huge amounts of money coming in," said TBR chancellor John Morgan. "It's really about organizing in a way that we can be more effective."

In June, the Board of Regents approved increasing tuition 5.8 percent at its 13 community colleges, up to 6.9 percent at its six universities, and 8.5 percent at its 27 colleges of applied technology.

In the case of the universities, East Tennessee State University saw the biggest jump, with an increase of $442 per year.

Most students in the University of Tennessee system, which is overseen by a separate governing board, saw a 6 percent jump after the UT Board of Trustees approved the increase.

"We believe that tuition increases have reached a point where they're counterproductive. Every time we raise tuition now we drive students away, so we can't keep doing what we've been doing," Morgan said.

Haslam, who attended the Regents' meeting, concluded budget hearings with all his state agencies last week. In August, the Republican governor asked them to submit plans detailing how they would cut up to 7 percent of their budgets. Haslam has said the cuts are contingent on state revenues, and he hopes he doesn't have to make them.

"We get it; we have the same math problem that you do," Haslam said Wednesday. "We don't have any ma gic goal. What we can do is focus on things we can control, which is how can we run both systems in the very best way possible."

The State Funding Board will meet Thursday to hear economists' revenue estimates for the upcoming budget year.

The board will come up with a consensus figure based on those estimates then present it to the governor, who will decide whether to use it in constructing the budget.

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