Purdue News

May 2005

A monthly letter from President Martin C. Jischke

Dear Purdue Partners,

One of the most difficult challenges university administrators and trustees face is deciding what share of the cost of education students and their parents will pay. The challenge is formidable for a variety of reasons, including the fact that the value of a university degree is so great in today's knowledge-driven economy.

Another factor is the complexity of university funding. Since the creation of the modern public higher education system under the Morrill Land Grant Act of 1862, government has underwritten the cost of educating each student who attends a state-supported university. The states have invested in the future by making appropriations to public institutions like Purdue, thus increasing the number of people who are able to earn college degrees. Historically, states have paid a greater share of the cost of education than students have. Obviously, this is a tremendous benefit for students who take advantage of the opportunity.

Federal and state governments, philanthropic organizations and universities also provide financial aid to individual students. This support can be based on need or academic merit, and it both increases access and eases the financial burden on students.

However, the underwriting of higher education is much more than a subsidy for individual college students. In the long run, the investment pays off handsomely for states and communities. Well-educated citizens have greater earning power, pay higher taxes, become entrepreneurs, lead community organizations and enhance the quality of life for everyone. Like a teacher whose influence continues through generations, money that supports higher education keeps paying dividends indefinitely.

In recent years, demands to fund new programs and to shore up others have put heavy pressure on state budgets. The share of the cost of education being supported by public funds has declined steadily in Indiana and other states. In the 1993-94 academic year, the state paid for about 60 percent of what it cost to educate an undergraduate at Purdue; the student paid about 40 percent. Today, the proportion is almost exactly reversed.

This shift in the cost burden is a primary reason for the increase in the tuition "sticker price," but it is not the whole story. Universities also must deal with the heavy inflationary pressures that confront all people-intensive enterprises – salary competition, increasing benefit costs, legally mandated but unfunded expenses – and they must operate and maintain extensive physical facilities.

All of these issues were on the table as Purdue's Board of Trustees and senior administrators discussed the budget for the fiscal year that begins July 1. In addition, we were deeply concerned about our ability to keep the initiatives in the university's strategic plan on course and on schedule.

In addition to the need to provide modest salary increases that would keep Purdue competitive for faculty and staff, the University had to confront a repair and renovation backlog that aggregates to more than $400 million – a true crisis for our campuses.

Ultimately, the trustees approved a budget that will increase student fees 6 percent in each of the next two fiscal years. This means students from Indiana who attend the West Lafayette campus will pay $366 more for the 2005-06 year. In addition, new students who enroll in 2006 will pay an additional fee targeted exclusively to the repair and rehabilitation problem. At West Lafayette, this fee will be $250. On the three regional campuses, it will range from $60 to $79.50. By combining revenue from this fee with reallocation of funds from other sources, we will be able to start addressing the repair and rehabilitation backlog which has accumulated during the 10 years Purdue has not received the full funds called for in the state's formula created for this purpose.

Although the new budget continues the trend of higher fees for our students, we also were able to increase financial aid by 6.5 percent for next year. This increase will ease the burden on families. Despite the increase, Purdue's student fees will remain among the lowest in the Big Ten and one of the best bargains in all of higher education.

This was a difficult budget to develop, and it will be difficult to implement, but I believe it is the best solution we can have. Purdue will remain affordable, and its academic quality will remain excellent.


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