At Long Last, a Stable Funding Plan and a Compact for the Future

July 11, 2011 | CUNY Matters, The University

Capping the University’s decade-long drive for a stable tuition policy, Gov. Andrew Cuomo and the state Legislature have authorized modest, predictable tuition increases while protecting  needy students who receive Tuition Assistance Program aid and guaranteeing that New York’s financial support of CUNY won’t diminish in the next five years unless a fiscal emergency is declared.

The agreement achieved by Gov. Cuomo, Assembly Speaker Sheldon Silver and Senate Majority Leader Dean Skelos in June, covering both CUNY and SUNY, places the state at the vanguard of innovative financing to sustain and grow public higher education.

Chancellor Matthew Goldstein conceived of this approach — called the CUNY Compact — early in the decade. Through countless speeches, legislative testimony and private conversations, he steadily gathered support. Those efforts bore fruit, remarkably, as New York State wrestled daunting financial challenges through the legislative session.

“I don’t know of any other state that is trying anything like this,” said Terry W. Hartle, senior vice president at the American Council of Education. “The long-term trend in state support for higher education has been down for the last 40 years. New York has been no exception. This is an extraordinarily important step. The unique part is that in an era when public support for public higher education is hemorrhaging, New York State has provided predictability.”

He added, “It’s a bold move that will pay dividends for years to come. This is good for institutions, it’s good for the families, and it’s good for the state.”

After congratulating the leaders in Albany and applauding the Governor for “making it happen,” the Chancellor observed: “This change will reverberate for many years ahead for this University. It will finally give us the economic stability that we have longed for.”

At a meeting the Board of Trustees in late June, Chairperson Benno Schmidt said: “This deserves to be seen as this chancellor’s greatest achievement to date. CUNY has gone from being the large public institution least well able to plan its future to the public university, I think it’s fair to say, that is now best able to plan its future,” with more predictable revenues than other major public university systems, like California’s, Michigan’s or Wisconsin’s. “I expect that the next five years will be the best five years that CUNY has ever seen.”

Schmidt noted that he had pinpointed these problems in 1999, when he headed a mayoral commission that probed the then-troubled University. He quoted from the panel’s report, “An Institution Adrift,” which said: “The state and city appropriations processes need improvement. Currently these processes are characterized by a one-year time horizon and economic and political unpredictability. Such features can only discourage CUNY from adopting a strategic investment approach and institutional planning.” The new law changes all that.

The CUNY Compact has four facets:

• A state “maintenance of effort” commitment not to reduce financial support over the prior year, although it may increase it. In the two prior years, state aid fell some $300 million. The governor could suspend this commitment by declaring a financial emergency, but, Goldstein said, “If we did not declare a state of emergency in this past year [when the state faced a huge budget gap], it is hard to see, short of a cataclysmic event, that it would happen.”

• Modest but regular tuition increases, instead of erratic, jumps of up to 40 percent, usually in bad economic times when students could least afford it. Now tuition can rise up to $300 a year in each of five years.

• More philanthropic contributions, which under Goldstein’s prodding have risen from $35 million a dozen years ago to more than $200 million a year now. In his remarks to the Board, he indicated that colleges would be expected to ramp up fundraising even further.

• More efficient operations.

The first two pillars of the compact solidly fell into place with the governor’s signature on the bill passed by the Legislature on June 24.

As the chancellor and his team broadened support for this plan through the years, the State University of New York got on the bandwagon. The new legislation makes similar provisions for that system, as well.

State funding for CUNY community colleges fell by $10.6 million. However, community colleges will hold steady due to higher tuition and the city’s restoration of more than $20 million in the final municipal budget approved by Mayor Michael Bloomberg and the New York City Council. The city agreement also restored funding for most University centers and institutes at the current year’s levels.

The state legislation allows CUNY to raise tuition up to $300 a year in each of the next five years for undergraduates from New York State, but it builds in an offset for students who receive full aid under the Tuition Assistance Program (TAP). Those who receive less than the full TAP allocation will receive partial offsets, according to a formula that has yet to be devised.

“This is something we worked very hard to convince not only the governor, but also the state Legislature to allow, and I’m glad  that it is in there,” the Chancellor said.

In a significant break from its frequent practice, the state allowed the University to keep all of the revenue from the new tuition, rather than shunting most of it to state coffers. “The commitment is made that when students pay a dollar, that dollar stays at the University for investment purposes,” Goldstein said.

That will be the source for funding the TAP offsets, but it will leave substantial amounts that, the chancellor said, will allow the University to invest in education. The law also directs CUNY and SUNY to propose ways of reforming TAP, which is now capped at $5,000 a year.

Goldstein said he would ask Schmidt to convene the Board’s Executive Committee in late July “so we can really understand” the details of what has happened “and be in a position to set tuition targets.” He said tuition would be adjusted in consultation with the college presidents and after a public hearing.

Last November the Board increased undergraduate tuition by 5 percent effective with the spring semester of 2011. (That generated $40 million, which the University successfully fought in Albany to keep.) The Board also raised tuition for the fall of 2011 by 2 percent, while empowering the chancellor to add another 3 percent if it is needed.

The new law changes the calculus. “The state government just approved up to a $300 tuition increase, but that represents a little under 6.2 percent,” Goldstein noted. “We want to look at that number and also look at out-of-state tuition and graduate student tuition.”

He added that with more favorable finances, the University will quickly re-evaluate prior spending decisions, which have affected faculty hiring for the fall, when registration is likely to once more hit new highs. The university has accepted 5.7 percent more freshmen and 7 percent more transfer students than last year.

He added that “an historic change like this could not happen without the collective effort of so many well-meaning people.” He praised the vice chancellors for working long nights; the Albany lobbying staff; college presidents who worked the phones and legislative offices; “many, many faculty who stood up, made calls, took trips.” And, he said, “The students were unbelievable. The students really spent a lot of time leaving their classrooms. I wasn’t always happy about that, but they don’t ask me for permission; they do what they think is best.”