Rep. Rick Becker: What I Learned by Watching 30 Minutes of the Last State Board of Higher Education Meeting

This guest post was submitted by state Rep. Rick Becker, a Republican representing District 7 in the Bismarck area.

A few days ago I read that the North Dakota State Board of Higher Education (SBHE) was considering allowing college presidents to offer out-of-state students the in-state tuition rate. Because this touched on two bills I introduced in 2017, I looked into it further, and watched video from the meeting. (Both of those bills failed, but if passed, they would have saved the ND taxpayers over $50 Million per year.)

Allow me to provide some background: North Dakota students pay tuition which varies at each institution. The tuition doesn’t come close to covering the actual cost of their education. That’s where the ND taxpayer comes in. Using taxpayer money, the legislature makes an appropriation to fund the portion of higher ed costs which exceed tuition revenues. It varies year to year, and institution to institution, however, the taxpayer-funded portion of the cost usually exceeds the portion paid by our students – and that is without including the cost of building construction and maintenance! What it comes down to is that the state is heavily subsidizing our students’ education.

For the student to bear the entire cost of their education, tuition would need to be raised to over 200% of current in-state tuition. Enter out of state students: they could pay as much as 267% of in-state tuition at some of our institutions. That would cover the entire cost of their education, freeing the ND taxpayer of that burden, except that hardly any out of state students actually pay it. Minnesota students pay only 12% more than ND students (112% of in-state tuition), while numerous other states are offered subsidized rates of 125%-150% through reciprocity programs. And then, of course, there are all those tuition waivers, especially at NDSU, when the ND taxpayer picks up the entire bill.

The request to allow college presidents to give in-state tuition rates to any out of state students was a hurried reaction to the announcement by the South Dakota board to offer students of six contiguous states the SD in-state tuition rate. The sense at the meeting was that this was an urgent issue, and not acting on it immediately would have dire consequences on enrollment. The following are my observations on that meeting.

When the college presidents say “Jump!”, they expect the board to ask, “How high?”

Proponents of the opinion that a critical function of Higher education is economic development continue to misrepresent retainment statistics.

The folks that want to bring students in to the Universities regardless of the cost to the taxpayer always refer to inaccurate “retainment” statistics. Retainment refers to the percentage of graduating students who take employment in North Dakota. The idea is that when we bring someone in from out of state, and they decide to stay, get a job, pay taxes, and raise a family, the benefit to us is greater than the cost of subsidizing their education. I understand the concept, but this whole thing is a farce, and I wish they would just stop.

To begin with, the retainment statistic is usually misrepresented, commonly intentionally so. Some people call intentional misrepresentations lies. In the SBHE meeting it was stated that SD claimed 30% retainment of out of state graduates as support for their decision to further subsidize out of state students. Bresciani called that “modest” and said, “Specifically for NDSU, it’s double what the SD rate is.” So Bresciani claimed 60% of out of state students at NDSU are retained after graduation. Hearing statistics like this is troubling in light of the fact that the North Dakota University System (NDUS) conducted a good and thorough study about retainment over several years.

Proponents of the opinion that a critical function of Higher education is economic development continue to misrepresent retainment statistics.

The facts are these: the retainment for out of state students in the first year is 31%, 24% for year two, 22% for year three, 20% for year four, and continues to decline after that. I believe 20% is the number we should be using, because the economic value to someone retained is only realized if they actually stay for several years. Here’s the catch no one talks about; the retainment statistic is for graduating students, but only 60% of students complete a bachelor’s degree within 6 years, and very few after that. The 20% of retained students cited are from the 60% of graduating students. This means that 12% of all out of state students are retained for at least four years. Twenty percent of graduating and 12% of all out of state students stay in ND for at least 4 years. I suggest we use these statistics, and demand honesty and transparency in our discussions. One may agree or disagree that the cost to subsidize out of state students is worthwhile, but let’s start on common ground. Oh, by the way, the calculations show that the cost to the North Dakota taxpayer for every single out of state student that stays at least four years after graduating is about $225,000.00. Seriously.

The board is not clear as to whom they ought to be accountable.

Thankfully board members Dan Traynor and Nick Hacker recognize accountability to the ND taxpayer in addition to responsibility to the student. As Traynor noted, “Our greatest responsibility is not necessarily to (college) presidents. Our greatest responsibility is to run a good system, and to run an effective and cost-effective system for the taxpayers.”

Board member Casey Ryan, on the other hand, seems to believe the board is accountable to no one, or perhaps only to the college presidents, as noted in several statements throughout the meeting.

Board chair Don Morton made the unsettling statement, “The taxpayers support higher education. The students are better customers than the taxpayers. They pay a lot more of the budget than the taxpayers do.” Firstly, I didn’t do the calculation for the current biennium, but at least recently that is completely untrue; the taxpayers are paying a lot more than the students. But if it were true, and if you believe that your best customer (to whom the board ought to be accountable) is whoever pays the greatest portion of the higher ed budget, then who is the “best customer” at UND and NDSU? Minnesota and other out of state students outnumber ND students there, and they pay more in tuition. According to the SBHE chairman then, their best customer and to whom they out to be accountable is the out of state student.

There is significant disparity when it comes to understanding how a government entity differs from private business.

I do think that in some sense government should be attempted to be run as a business, in that it should look for efficiencies, get rid of waste and redundancy, and be mindful of spending. In reality, government does not and cannot run as a private business. In private business the goal is to make a profit. The way to make a profit is to offer a product or service that is a good value to someone. Every decision made in private business first assesses the financial risk. It does a cost-benefit analysis. After a decision is made, it does an outcome analysis; was the money well spent? This does not occur in government. The financial cost to the government bureaucrat or elected official is zero. It is impossible for a government entity to behave like a business, because it has no risk, and the incentives are not financially based.

Hacker gets it. Referring to competing with South Dakota to offer the cheapest tuition, he said when we see competing products being discounted, we want to discount, too. The difference is “our product is funded by the taxpayer.”

Traynor gets it. He said, “There’s pressure on college presidents to increase enrollment. And if college presidents could give away the product of an education away for free to increase the enrollment, they may want to do that. But when you give away the product of an education, you create a greater burden on the taxpayer.”

Ryan doesn’t get it. He said, “If a university or college is a business, why should the legislature be telling the business how you should charge students?” He made several references to running education as a business, all of them off the mark due to his ignoring the fact that there exists a balancing factor called “cost”.

Allowing year after year tuition hikes in the face of huge increases in state funding of higher education is proving to have consequences beyond student debt load.

Over the last decade North Dakota has been an anomaly. We have dramatically increased state funding for higher education AND have significantly increased tuition at the same time. Nearly all other states have increased tuition rates, because they simultaneously decreased state funding. The combined increase in tuition and state spending in ND over the last 10 years is $4,345.00 per student. Compare that to the U.S. state average of $858.00! If we had not allowed any tuition increases over the last decade, we would still have had the highest increase. Comparatively, in the last ten years Minnesota increased only $762.00, Montana increased $601.00, and South Dakota increased $1,315.00.

Just last year NDSU increased tuition 10.5%. Over ten years, NDSU tuition has gone up 51%. In the face of profligate state spending on higher education, Bresciani has advocated for year after year tuition hikes on our students. Now suddenly it’s an emergency to decrease tuition for out of state students. I think it would be better if we advocated for decreasing tuition for ALL students.
Richman correctly pointed out, “Generation Z are much more cautious about affordability.” Hacker recognized the hypocrisy of the entire situation saying, these students don’t want to take out big loans, “yet we as a board are continually granting tuition increases”.

People seem to see the handwriting on the wall. The problem is that they refuse to actually read what it says.

I have long been saying that the current system of higher education as we know it is dead. Technological innovation is making education cheaper, more accessible, and more convenient than is ever possible with a strictly traditional system. Successful adaptation would require large-scale change, and there is no evidence that the vision or appetite for that exists.

Nearly everyone acknowledges that change is coming. Morton said that the data indicate there will be declining enrollment in ND for at least the next 10 years. That trend is occurring in many states, making the prospect of getting more of their students a difficult proposition. He indicated that we are going to see “real disruption”, and that the prediction is that many colleges across the US are “going to go under”. Ryan said, “I think this is the first shot over the bow of many we’re going to see as time goes on.”

Yes. Things are changing. There will be colleges shutting down, and ND is not immune. The college experience of my children will be completely foreign to my grandchildren. There is wholesale change coming. Thus far, it seems any identified solutions lack recognizable long-term strategy that does not cling to the now-outdated model. To repeat the oft-used phrase, the Titanic is sinking, and the solution is to rearrange the deck chairs.

The proposed three board system is a terrible idea.

If nothing else, I think the biggest takeaway is that the Governor’s proposal for a system of three boards of higher education is a bad idea. The proposed concept is that the current SBHE would be replaced with a board just for UND, a board just for NDSU, and a third board for everyone else.

It is abundantly evident that the modus operandi in that situation will be parochialism. The current single SBHE balances the needs and wants of each institution with those of the others, and the general wants of the institutions with the responsibility to the taxpayers. We are fortunate to have the likes of Traynor and Hacker on the board. Having boards dedicated to a single institution will lack any sense of balance. It will be much more likely to be populated with sycophantic yes-men and yes-women to the presidents. “Taxpayers be damned, it’s what we want for our school!” Our current single board is less likely to waste taxpayer money than the proposed three boards. It wouldn’t surprise me if the presidents frame this meeting in a manner to lend support to the idea of a three-board system, when in fact what occurred at the meeting clearly indicates the opposite.

Rob Port is the editor of SayAnythingBlog.com, a columnist for the Forum News Service, and host of the Plain Talk Podcast which you can subscribe to by clicking here.

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