Trustees to meet to discuss tuition increase
As in the past, Notre Dame students can expect a tuition increase for the 2002-2003 academic year, due to growing expenses and a slowing economy, University officials said.
The Board of Trustees will meet Feb. 7 and 8 to review the budget, which is in its final stages of completion.
Officials could not comment on the exact amount of the increase before the Board of Trustees approved the budget, but Scott Malpass, vice president for finance and chief investment officer, said he did expect to achieve Notre Dame's goal to keep the annual increase below 5 percent.
When contemplating a tuition raise, officials must consider several factors, said Father Timothy Scully, executive vice president and a member of the Officers' Budget Committee, which works closely with the Board of Trustees in recommending a budget. "Most important is the net effect that tuition will have at Notre Dame," he said.
A subset of the committee establishes basic parameters for the budget, recommends them to the Officers' Budget Committee and then to the finance and investment committee. After review by the budget subcommittee of the Board of Trustees, the budget meets the entire Board for final approval.
"The Officers' Budget Committee meets frequently throughout the year to analyze data relative to the cost of living, salary increases and faculty benefits, financial aid, tuition increase a whole range of cost drivers and the need of campus, and potential revenues," said Malpass.
Overall, the Budget Committee considers the operating costs of the University and determines how much money is needed to finance them.
"Tuition doesn't come close to paying for a Notre Dame education. What you pay is about half of the actual cost. We have to consider how these costs will increase," said Dennis Moore, director of public relations and information.
According to Malpass, tuition and fee revenue make up about 55 percent of the total budget, so in effect students pay 55 percent of the actual cost. Revenues from the bookstore and athletic programs as well as earnings from the endowment make up for the difference.
Notre Dame's endowment, which is among the 18 largest educational endowments in the nation, is valued at approximately $3 billion. Most of this money is donated for a specific purpose and cannot be used to defray tuition costs. Only about 10 percent of the endowment is comprised of unrestricted funds that may be used freely.
Earnings on the unrestricted endowment flow to the University's operating budget, where some contribute to financial aid, said Malpass.
The committee also takes into account the pricing policy established by peer institutions with which the University competes for students and faculty, said Scully.
"We try to keep our tuition, room and board very competitive with top institutions, and we seek to be more affordable. We're looking to be less and we're succeeding considerably," he said.
Scully described the budget process as a balancing act. "We're tuition-driven and tuition-dependent because we get so much of our revenue from tuition. We're competing for faculty and students. As a result we have to be careful about tuition because if we fall behind, then salaries fall behind and we ultimately affect our ability to recruit talent," he said.
The slowing economy presented an added challenge to the budget this year.
"We're operating in a different economic environment now, and this may affect the endowment and the budget. Nobody is certain what will happen in the next few months, so we have to account for that," Moore said.
In the good markets of recent years, said Malpass, the University earned a great deal of money on its investments.
"That money flowed into the budget and allowed us to rely less on tuition. But that was an unusual market Now we are not making as much on our investments, so we have to rely more on tuition for revenues," he said.
Malpass said that despite the present economy, the University would continue in its commitment to modest tuition increases.
The recent contract buyouts of former head football coaches Bob Davie and George O'Leary will not impact tuition, said Moore.
"That is a separate element of the overall picture of our budget. It's really a drop in the bucket when dealing with a budget our size," he said.
While increasing tuition, the University strove to maintain its dedication to financial aid for its students. Officials lauded the recent improvements in financial aid.
The average financial aid package has increased from $2,500 to $14,000 over the last decade, said Malpass. "We are meeting the full need of students, and our increases in financial aid exceed the increases in inflation and tuition."
In the past decade, the inflation rate has been in the 2 to 3 percent range, while tuition has increased in the 5 to 6 percent range, said Malpass. Students often raised this criticism, but Moore called it an inaccurate comparison.
"Inflation takes into account the normal cost of living and maintaining a household. We have to consider atypical expenses like salaries, new equipment, books, technology, competing for the best professors, and facilities which are built through alumni donations but whose operating expenses are not covered by the gifts and then become part of the budget," said Moore.
Officials touted last year's 4.9 percent increase as the lowest percent increase in more than 40 years. This $1,430 increase raised tuition, room and board to $30,530 and met with some criticism from students and parents.
But Moore justified recent tuition increases, "based on the quality of education we are providing and our aspirations to be better."
Malpass said many critics did not understand the financial structure of the University. "We're offering the best education, providing quality, recruiting the best students and professors, expanding technology these are all very expensive. At the end of the day, we're providing a great experience. I think you can judge that by what the value of a Notre Dame degree is," he said.
Officials said they expected the Board of Trustees to continue to approve annual increases in tuition.
"We're not content to rest on our laurels as an institution," said Moore. "We have a lot of aspirations to become better, and those cost money."
All News Stories for Thursday, January 31, 2002