Advisory Committee on Finance & Budget (ACFB) to the ACC Board of Trustees

Report On ACC Tuition Policy  — April 2004

Summary of recommendations:

               [1] The ACFB supports the proposed revision of the Board’s tuition policy to restate the existing principles in terms of discounts from average cost of instruction and to add a provision ensuring local market competitiveness.  We also strongly support the inclusion of an explicit directive for a “recommendation from the President of the tuition level required to produce the results called for in the College’s policies and master plan”.  Tuition level is important, but it should be the result of college planning, not the primary driver of it.

[2] We also recommend that provision of priority in registra­tion for in-district students be made the justification to local taxpayers for permanently keeping the target ratio of out-of-district to in-district tuition at about its current value, rather than redoubling it to match the recent increase in ACC taxing authority.  In the absence of a provision for in-district priority we recommend that the current $3/year limit on tuition-differential growth be retained, although we see this as less desirable, and less defensible to criticism from taxpayers, than prioritization of registration.

[3] We recommend that, in estimating the costs and benefits associated with additional enrollment, ACC financial planning and program assessment use models that fully allow for the increased level of indirect expenses eventually required to sustain service quality.  We expect these marginal costs to typically be roughly 80% of the average cost of instruction, implying that expansion of enrollment is not generally a long-term financial benefit to ACC, even though it should be pursued because it is of great value to the community and to students. 

[4] ACC economic models should be refined to reflect the net costs of different programs and instructional-delivery modes (such as distance learning and high-school-based courses).  This will show what the long-term costs of program expansion or contraction will be and identify the (relatively few) programs that can be expanded without requiring higher tuition or tax support.  We expect modeling of instructional-facilities costs to be particularly informative, since their relatively low fraction of total costs implies that additional space at peak times (from larger or more numerous classrooms) will often be self-financing over the long term even if the space is not used at off-peak times.

[5] We urge caution in the provision of tuition waivers other than for financial need, since the usual effect of tuition waivers is that other students must pay more to cover the associated costs.  However, we find that provi­sion of Early College Start waivers to all qualified in-district high-school students (at least for the first few courses) has a plausible strategic basis as a way of broadening political support from existing taxpayers.  Our remaining reservations about the fairness of in-district ECS waivers would be allayed if they were extended to the first few courses of other “College Start” situations (which would probably require legis­lation).

[6] ECS waivers for out-of-district students are more problematical, since in most cases they entail subsidy from tax or paid-tuition revenue.  This has the potential of undermining both political support from in-district residents and the motivation for out-of-district residents to support annexation of their region to the ACC district.  On the other hand, the substantial social benefits from accelerating the education of successful high-school students, combined with possible differences in what it will take to motivate their college participation, make it worthwhile to carefully examine how out-of-district high-school participation might be encouraged while minimizing unfair subsidies.  One option is greater use by the administration of the authority already conferred by existing policy to lower out-of-district tuition based on economic need.  The ACFB will provide further advice on this topic after it gathers and analyzes more comprehensive information on the topic than is currently available.

[7] Finally, we feel that current ACC policy and master planning does not give adequate strategic guidance on the provision of financial aid, with the consequence that ACC’s efforts in this area are mainly administra­tion of programs of external origin rather than being an integrated response to the needs of this community and to the special circumstances of such people as high school and reentry students.  Due to the great social and economic benefits of expansion of the fully-educated portion of the population, consideration should be given to focusing a greater portion of college revenues on need-based scholarships, even at the necessary price of some reduction of general tuition subsidies. 

 

Policy language implementing the ACFB recommendations is given below. 

This is derived from the Kaplan/Hernandez proposal, but with significant changes or additions where marked in bold below. 

A-4. TUITION RATES (incorporating recommended amendments)

      [1] The tuition rates for in-district college-credit students shall be set by the Board, based on consideration of a recommendation from the President of the tuition level required to produce the results called for in the College’s policies and master plan.  Except when the Board explicitly directs otherwise, tuition rates for other students shall be set by the President in accordance with this policy. To the extent feasible, general charges shall be assessed as tuition.

      [2] The college's average cost per credit-hour shall be computed by dividing total annual institutional costs, less any costs associated with self-supporting college activities, by the annual total of credit hours qualifying for state reimbursement.

      [3] Average tuition-plus-fee rates for Texas residents who are not residents of the ACC taxing district shall be, to the nearest dollar, [80% of] a the difference between the average cost per credit-hour and the average state reimbursement per credit-hour, except that ACC's rates shall not exceed the tuition-plus-fee rates for comparable courseloads at either Texas State University or UT-Austin [and the differential between these rates and in-district ones shall not increase more than $3/credit-hour each year].a  The President is authorized and encouraged to use any available method to lessen the impact of this tuition differential on economically-disadvantaged students.

      [4] Tuition-plus-fee rates for non-residents of Texas shall be at or above the average cost per credit-hour.

      [5] The President may adopt rules waiving all or part of the tuition and/or other charges for senior citizens, ACC employees, district-resident high-school students, or other high-school students in classes whose direct costs are paid by their schools, with an annual report to the Board on the nature and extent of such waivers.  Any other type of waivers may be granted only when approved annually by the Board, preferably by February for the following school year.b

      [6] The President shall set charges for non-credit and continuing-education classes that at least cover opera­tional, indirect, and overhead costs, except where specific below-cost sectors have been approved by Board vote.

      [7] Each ACC master plan shall include an integrated plan to provide scholarships for ACC students, concentrating on local students whose ability to attend ACC is contingent on such support.  This plan shall contain a comprehensive analysis of the needs of current and prospective students, taking into account textbook and living expenses as well as tuition and fees, and making allowance for the differential impact of federal tax credits and grant eligibility on the various types of students.

      [8] The college registration system shall give district-resident students opportunities to register for ACC classes and programs for at least one week prior to comparable students who are not district residents.a

NOTES: 

      [a] The 80%-of-average-unreimbursed-cost figure would be appropriate only if provision 8 is adopted, in which case the second bracketed phrase (beginning “and the differential …” should be omitted, since the 80% figure would put the out-of-district target close to the current level.  If provision 8 is not adopted, then the phrase “80% of” should be omitted and the $3/CH/year phase-in limit retained.

      [b] If other types of ECS waivers are found to be permanently desirable after the further investigation now being planned by the ACFB, they would subsequently be added to the first sentence of provision 5.