Individual campuses were supposed to keep the money generated by new SUNY tuition hikes—but SUNY central is changing the rules

In August 2011, Governor Andrew Cuomo signed legislation to support SUNY’s so-called rational tuition policy. Rather than unpredictably raise tuition to support ongoing state budget cuts, the legislation provided SUNY colleges and universities with tuition increases of $300 per year for five straight years. This plan was considered “rational” because it allowed both institutions and students to plan their future financial needs with some degree of certainty. One important aspect of the plan, which helped create unified support, was the so-called “hold harmless” clause. That is, in exchange for the agreement to increase tuition, the state agreed not to cut its allocation to SUNY, as they had so often done in the past. Alfred State President John Anderson expressed this agreement clear and succinctly:

“Students across the SUNY system are in agreement with the Chancellor’s plan as well, provided that the increase is used at their respective campuses, and not to help refill the state’s empty coffers as was done in the past.”

The italics are mine.

As Anderson made very clear, students supported the increased tuition at their respective campuses because they were led to believe that the tuition would remain on their campuses, while their state allocations would not be cut—“hold harmless.” The state has held up its side of the bargain, but SUNY bureaucrats have not.

SUNY is no stranger to budget cuts. When I began my career at Buffalo State College in 1990, the state provided 60 percent of our total funding. Over the past 20 years, that support has fallen to less than 30 percent at Buffalo State and the other comprehensive colleges. While a similar trend has happened at the university centers, they still receive over 40 percent of their budget from the state. Of course, as state support has declined over the years, tuition was raised to offset the loss of funds.

In the late 1990s, as state support continued to decline, SUNY decided that it needed to develop a model to allocate the dwindling state funds. During the development of their model, dubbed BAP and/or RAM (budget allocation model/resource allocation model), I was given the task of evaluating the implications of the new model for Buffalo State. A sophisticated statistical model was developed to estimate allocations based upon costs of instruction. Now, as we all know in academia, it’s more expensive to run research institutions like UB because PhD programs are expensive—small classes with high-paid professors. Even with this in mind, early iterations of the model projected allocations for the research centers (UB, Stony Brook, Albany, and Binghamton) that were less than what they were currently receiving. Since the centers dominate SUNY, the model was tweaked until the projected outcome was close enough to the current actual distribution to be acceptable. RAM included several components, the main two of which were costs of instruction and research (mainly measured as the dollar value of grants received by institutions). If the tuition component couldn’t be tweaked to generate the right outcome, then the research component could.

During its early years, once the right outcome was generated, the RAM/BAP model functioned fairly well—meaning no one really complained about the outcome, and it also created a raison d’etre for SUNY bureaucrats. While the model marked a radical change for SUNY, there was an additional, more important, change that came along with it—institutions would now be allowed to keep their own tuition. Prior to this, all funds were sent to SUNY central, then reallocated in some fashion back the colleges and universities. The new model would provide more transparency.

In theory, the RAM model was supposed to create a more competitive environment among SUNY institutions: Better institutions would attract more students and therefore more funds. In practice, it drove administrators at many institutions (including our own) to strive for quantity over quality (though, to prevent this, there was a cap on annual enrollment growth). At Buffalo State, enrollment targets were set at the maximum allowable so as to generate as much money as possible, and, by hook or by crook, we met those targets. Unfortunately, too much of that money went to feeding a growing bureaucracy.

Fast-forward to the 2008 economic crisis: SUNY institutions experience two years of across-the-board cuts, and RAM gets put on the back burner. In 2011, students have agree to the five-year rational tuition increase, because they are led to believe that those funds will be retained at their respective campuses (“hold harmless”), and most institutions state they intend to use the funds to bolster academics. In fact, Buffalo State’s new president made this very commitment in his fall State of the College Address. However, while the state would maintain its promise of “hold harmless,” little did he know that SUNY bureaucrats would reinterpret its meaning.

There are a lot of bureaucrats at SUNY central, and they’ve now gone four years with little to do. Idle hands are the devil’s play things. Time to resurrect the dead! A working group, appropriately titled the resource allocation team or RAT, began to work on a new allocation model. Like politicians dueling over the fiscal cliff, the RATs periodically leak information about possible outcomes. The early iterations of the model generate reduced allocations at the colleges and increased allocations for the university centers. For example, Buffalo State is projected to lose $2.7 million, and UB is projected to gain $4.5 million.

Of course, the RATs claim this was all done in the name of objective modeling, but there is no such animal. Models are tweaked until the desired outcome is generated. In the case of Buffalo State, the tuition component of the model generated a reduction of about $700,000, and the remaining $2 million cut was generated by the research component of the “model.” Buffalo State receives a lot of state grants, and SUNY bureaucrats decided that state grants should be less valuable than federal grants. Voila!

Is this just sour grapes? Look, I have no problem with SUNY (or the state) allocating more funding to the university centers than the colleges. On average, the state allocation covers about 45 percent of the university centers’ budgets, while the colleges receive about 30 percent of their budgets from the state. Even though they are more expensive to run, the centers probably do generate a greater economic impact than the colleges, so a greater subsidy is warranted. However, under the rational tuition policy increase, students were led to believe that their dollars would be used to bolster academics at the institutions they attend, just as president Anderson stated. I think it’s a crime that SUNY bureaucrats—not politicians—decided to reallocate state dollars in the middle of this five-year tuition increase.

At Buffalo State, many of our students come from low-income households, and we are proud to provide access to higher education for a very diverse population of students. These students will be paying higher tuition each year for the next five years and they will be harmed to the tune of $2.7 million in cuts by SUNY’s decision—not the state’s—to reallocate state resources. Chancellor Zimpher, this is not the definition of “hold harmless.” Governor Cuomo, is this what the state intended with its rational tuition policy? I’m no lawyer, but it seems to me that students at the colleges that are losing state funding have an actionable grievance.

Ted P. Schmidt is an associate professor in Buffalo State College’s Department of Economics & Finance and co-editor of Heterodox Economics Newsletter. The views expressed above are his own and do not represent those of Buffalo State College or his department.