Wednesday, 14 August 2013 16:41

Bonds increase costs for students at PASSHE universities

By Ken Mash, APSCUF Vice President

For many years we have gone through similar processes. We receive reduced or flat funding from the Commonwealth, and then we all begin to ponder how we will make it through yet another year with fewer resources while still providing the quality education that is the mission and hallmark of the Pennsylvania State System of Higher Education (PASSHE).

 

Each year we all honestly and earnestly ponder the balance that must be struck between maintaining our universities as they are and placing additional financial burdens on our students and their families.

With regards to financial burdens, capital projects increase the weight students and their families must already carry. This year alone, the PASSHE Board of Governors has approved a $30 million project at East Stroudsburg, $32 million for upgrades at California University’s student union, a new turf at Mansfield, and dining hall renovations at Indiana University.

The continued issuance of bonds for capital projects surely increases the ever rising debt which PASSHE battles. In the last decade, PASSHE’s debt has risen from $439.9 million to $941.7 million - roughly a 114 percent increase over ten years.

Bonds are paid for in different ways. In some instances, these bonds may be paid off by auxiliaries, most notably by students through additional or increased fees, for projects like dorms, student centers, dining halls, and recreation centers. While these projects may be desirable, many have questioned whether, in a time of declining resources, they are necessary.

More striking, there is a lack of concern about how the costs of these projects are shouldered by students through mandatory fees and increased costs. Between 2000 and 2010, average fees increased 117 percent, while room and board increased 80 percent. Most of these drastic increases are due to the increase of capital projects on campuses. While there seems to always be trepidation over the rising cost of tuition, there seems to be little parallel concern about how fees drive up the cost of a college education for Pennsylvania’s students. There is also little discussion about how these additional totals create sensitivity about any tuition increase.

Even when bonds are not directly paid for by the students, when they are accompanied by promises of full or partial repayment by foundations, it is still the students who shoulder the costs if these promises are not kept. Because the universities are on the hook when promised repayments fall through or costs are overrun, the bonds are paid for with education and general funds.

It doesn’t take an accountant or a budget expert to figure out that in an era of declining resources, there are zero-sum situations with our budgets. If funds from these budgets are being used to pay back bonds, that money is not being used for academics or athletics.   We are in a position to actually see how the increased cost of bond repayments directly impacts educational quality by straining the resources that service the heart of our institutions. This concern has been given a renewed importance because Moody’s has put PASSHE on review, in part, because of increased debt.

Bells and whistles can undoubtedly attract students. But even PASSHE’s own commissioned study suggests that the primary reasons why students attend our universities are academics and cost. These bond issues strike at both funds available for academics and the overall cost of a college degree at our universities.

The faculty and coaches hope that in the future we will see increased scrutiny of the bond issues, that we will see how the mistakes of the past have been turned into lessons for the future, and that we will share consistent concern for quality education and student costs, whether the source be tuition or the burdens imposed by these bonds.

Last modified on Wednesday, 14 August 2013 16:46

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