NASHVILLE – Public higher education’s business model is broken, and twin pressures to fulfill its mission and ensure sustainable funding have brought the University of Tennessee to a crossroads, UT President Joe DiPietro said today.
DiPietro’s remarks came during testimony at the last of Gov. Bill Haslam’s 2014 budget hearings ahead of the upcoming 2015 legislative session.
“We will not be able to achieve the state’s priorities or fulfill our mission by continuing to raise tuition to make up for decreasing state funding and putting the cost burden on students and their families,” DiPietro said.
“The University is committed to owning this problem, and we know we must become a different place with a new and different business model. We seek to partner with you and the state to effectively address the multiple concerns.”
DiPietro completes his fourth year as UT president on Dec. 31. He promised to dedicate his next four years in office to finding a long-term solution to UT’s funding challenges.
DiPietro cited an ongoing focus on maximizing efficiencies and enhancing effectiveness under way at UT since the 2008 recession and state funding reductions since that year that now total $125.1 million, or 24.8 percent of 2008 base appropriations. Since that time (FY07 to FY14), he said:
- State funding per full-time equivalent (FTE) student at UT formula units (Knoxville, Chattanooga and Martin campuses) has decreased by $2,400, or 29 percent (from $8,200 per FTE down to $5,800 per FTE)
- Twenty-two percent more degrees have been awarded, and the four-year graduation rate has increased by 7 percent
- Net tuition and fees increased $1,400, or about 50 percent
- Students receiving grants or scholarships increased 8 percent and is now at 76 percent
- UT has seen a 5 percent increase in high school GPA of incoming freshmen, a 3 percent increase in freshman ACT scores, and a 6 percent increase in first-year retention
“Our campuses have responded to unprecedented financial challenges over the last six years even as they have continued to admit, retain, and graduate a growing number of the state’s very best students,” DiPietro said. “Our non-formula units – critical to fulfilling our mission – have dealt with equally severe funding challenges and, yet, have served 6 million Tennesseans, and counting.”
DiPietro cited statewide UT non-formula unit outreach, including:
- Extension: 5+ million contacts
- AgResearch: 64,000 contacts
- College of Veterinary Medicine: 33,000 patients
- Institute for Public Service: 19,700 requests for assistance; trained 11,000
- Health Science Center: 1+ million patients
“The total budget of the University of Tennessee is currently $2 billion, and state appropriations make up about a quarter of that. The remaining 75 percent of our budget is funded by tuition, grants and contracts, and other sources,” DiPietro said. “Yet our economic impact to the benefit of the entire state in fiscal year 2013 was $4.6 billion, and I believe that demonstrates a strong return on investment of the state’s funding. We are good stewards of the tuition dollars we collect and the state funding we are appropriated.”
Because the current approach to funding public higher education in Tennessee is unsustainable, DiPietro said, UT is seeking recommendations and feedback from leaders inside and outside the University on efforts to maximize efficiencies and on developing a funding model for the future.
“I’m asking for input on creative ways to generate revenue and cut costs, and everything is on the table,” DiPietro said. “We’re looking at every line item of our budget, and developing state and national peer comparisons in critical areas that demonstrate our progress and effectiveness.
“Even as we’re doing this work, which includes increasing fundraising and looking for more entrepreneurial ways to generate revenue, we must still rely on the support of the state.”
The Complete College Tennessee Act, Drive to 55, Tennessee Promise and other higher education innovation have both put Tennessee in the national spotlight and planted seeds to support great strides in workforce development and economic prosperity, DiPietro said. Properly funding these efforts is necessary to fully achieve desired results, he added.
UT’s top funding priorities, as cited by DiPietro:
- $25.7 million in new funding for all formula units (THEC recommendation, consistent with outcomes formula), of which UT’s share is $9.7 million
- $7.3 million in increased funding for UT non-formula units, a 3.1 percent increase (THEC recommendation)
- State funds to complement UT matching funds for two UT buildings on THEC’s top six capital projects list:
- UT Institute of Agriculture-West TN 4-H Center (2nd on THEC list): $14.3 million to go with $1.59 million UTIA has raised from reserves to purchase 1,200 acres in Hardeman County
- UT Knoxville-Science Laboratory Facility (6th on THEC list): $83.7 million to go with $18.75 million in reserves and a facilities fee to construct a new, multidisciplinary building
- $53 million to fund 11 capital maintenance projects at UT sites statewide, ranging from roof replacements to fire safety upgrades to general building improvements
- Full state funding for cost-of-living pay increases for UT employees
- Tuition increase: 4 percent or lower (THEC recommendation)