UAFS submits budget that includes 7.49% tuition increase

Editor’s note: This is the second of three stories about budgeting challenges at the University of Arkansas at Fort Smith. Link here for the first story.

With reductions in revenue sources in 2022 and this year, the University of Arkansas at Fort Smith is tightening its belt and making tough decisions on how best to keep a balanced budget. One of those decisions is to raise tuition.

But even with a tuition increase, the university will continue to be one of the if not the most affordable four-year higher education institution in Arkansas.

UAFS has faced confounding variables in the equation as it has worked to prepare its budget for fiscal year 24, which it provided to the University of Arkansas System Board of Trustees on April 28. The variables include reduced enrollment which negatively affects tuition and fee revenues; the loss of approximately 10% of its annual operating budget when Sebastian County voters did not vote to renew a sales tax which provided more than $6 million in revenue for operations; the end of federal pandemic support for higher education which provided millions of dollars of relief; and a reduction in the state formula funding as a result of decreases in enrollment and credential production.

From the end of FY2018 to FY2022, UAFS decreased its revenue by 27.4%. This reflected what was happening at the University of Arkansas at Little Rock and the University of Arkansas at Monticello in the UA System, which had 22.9% and 27.4% decreases in revenue, respectively, during the same period. The University of Arkansas for Medical Sciences had a 52% decrease during the period. The University of Arkansas at Pine Bluff saw a 0.49% increase in revenue, while the University of Arkansas at Fayetteville saw a 6.17% increase.

THE TUITION PROPOSAL
One way UAFS seeks to increase revenue in FY24 in order to make sure it has a balanced budget is to raise tuition. There is a snag in that plan, though.

When the UA System board sent out guidelines for the budgeting process to all its institutions at the end of March, it limited institutions from raising tuition and fees by more than the Higher Education Price Index of 5.2%. As an exception, UAFS may be allowed to increase tuition and fees in percentages greater than 5.2% if the university’s Board of Visitors supports the increase. The UAFS Board of Visitors has agreed to that increase, said Dr. Terisa Riley, UAFS chancellor.

The UAFS budget submitted on April 28 includes a 7.49% tuition and fee increase for newly enrolled students, the largest increase in a number of years. The UA System Board of Trustees will meet on May 25 to review the submitted budgets.

In 2020, as the COVID-19 pandemic was beginning, the UA System had one budget parameter for its institution: There would be no tuition and fee increase. Tuition and fees make up about 22% of the UAFS revenue. In 2021, Riley made the decision not to raise tuition and fees for students in hopes of helping families facing financial difficulties in light of the pandemic.

“We went three years without any increase to tuition rates,” Riley said.

ENDING THE PROMISE PROGRAM
Last year, tuition was increased slightly from $171 per credit hour for in-state undergraduate students to $175 per credit hour. This rate increase did not affect students enrolled in the UAFS Promise Program, which fixed tuition rates for students who remained enrolled and on track to degree completion. The Promise program has held a tuition rate for FY20, FY21, and FY22 of $171 per credit hour for in-state undergraduates. For those students enrolled in the Promise Program in FY23, the per credit hour rate will continue to be $175. The Promise program began in the fall of 2019 and only enjoins tuition, though mandatory and non-mandatory fees could change.

“The program really is an exceptional idea in theory that families coming into an institution could bank on what the cost would be, that they would not change as long as a student is on track to timely graduation. You don’t have these unexpected large inflationary rate increases,” Riley said.

UAFS made the decision this year not to continue the Promise program for students entering UAFS for the first time this fall or for those no longer eligible for the program. With that in mind, members of the university budget council made up of faculty, staff, administrators and students, went to work looking at what reasonable increase in tuition could help the university continue to offer the programs needed and keep a balanced budget. They suggested a 7.49% increase in tuition and fees, Riley said.

“The budget council sat down … and began to look at … they started to look at what the real expenses are and what the needs are within the campus. Part of their recommendations included some increases in fees, which would then impact the Promise students as well as the new students in Fall ‘23. And then they recommended a fairly sizable tuition increase for the students coming in 2023 that would put them above the 5.2%,” Riley said. “I was impressed by their thoughtfulness, considering how much money was needed in certain areas of campus operations. They dug in on a much more micro-level and most budget councils.”

PELL GRANT SUPPORT
If the budget is approved by the Board of Trustees, new, in-state undergraduate students and students no longer enrolled in the UAFS Promise Program beginning in the fall will be charged $188 per semester credit hour.

Though they suggested a large increase to the tuition, the council wanted to make certain students wanting to attend UAFS could still afford to do so.

“We have carefully assessed this proposed increase in consideration of a federal increase to Pell Grant maximum awards, meaning that our Pell-eligible students should not see large increases to their out-of-pocket costs to attend UAFS in FY24,” Riley said in an email to staff April 14.

With approximately half of UAFS students qualifying for the federal Pell Grant, it was important that any tuition increase not price them out of attending. Pell Grant maximum awards have been increased for this year. If a student is fully Pell-eligible, which means they are taking at least 12 credit hours a semester and meet the financial criteria, they will receive $6,850 for the semesters. Pell grants do not increase if a student takes more than 12 semester hours.

If the tuition increase is approved, full-time in-state UAFS students taking 30 semester hours (15 a semester) will see an increase of $600 for the 2023-24 year than this past year. The Pell Grant increase is about $500 more, Riley said.

In order to keep other costs low for students, UAFS will not raise housing rates except for four-bedroom units. Last year, rates for all housing except four-bedroom units increased. Because housing occupancies have risen in recent years, the university is able to hold the rates where they are even with utility costs that have gone up over 7%, Riley said.

But where does that put UAFS in terms of being the most affordable four-year institution in the state?

“We expect it to remain in the top most affordable institutions in the state,” Riley said. “We do not know what other schools will do with their tuition. I know UA-Monticello is asking for a 5.2% increase, but even with our increase, our tuition will stay lower. The only one I’m not certain about is UA Pine Bluff. If they do not increase their tuition at all, theirs might be lower.”