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Tuition Link Raises Questions about USC Building Projects

University of South Carolina administrators were not necessarily acting out of the goodness of their hearts when they admitted more freshmen than ever to the Columbia campus this fall.

And last fall.

Indeed, as Carolina collegiates begin hitting the books following the start of the semester Thursday, the influx of students represents another sign of a multidimensional USC growth spurt several years in the making.

It is witnessed in a swelling student population, consistently increasing tuition levels, and a vastly expanding physical presence through construction.

But, is there some connection among these three trends? Or are they simply occurring independently of one another?

Given that state laws ties a university’s tuition revenue to the amount of bonded debt the school can take on for building projects, the questions are worth pondering.

And not just in USC’s case, either.

No doubt, for anyone who cares about the stewardship of many millions in state higher education funding – and the proper role of publicly supported colleges and universities in relatively poor, rural South Carolina – whether the link between tuition and construction is a factor in decision making at the schools is important to consider.

Yet it is a largely overlooked issue, both in the media and in the messaging from higher eds about the direction they are taking.

When it comes to USC, regardless of whether its tuition revenue is driving its building boom, the administration needs to better explain how brick-and-mortar projects are funded, says Ernie Wiggins, immediate past chairman of the university’s Faculty Senate admissions committee.

“And it needs to be something that’s not just rhetoric,” says Wiggins, a professor in USC’s School of Journalism and Mass Communications. “The (construction) dollars are coming from somewhere.”

This year, the anticipated size of USC’s freshman class – some 4,550 new students – sets a school record for the second straight year, according to university administrators. And it swells the Columbia campus student population to more than 30,000 for the first time.

Of course, all of those new bodies mean lots of new money – an extra $8 million in USC’s budget, administrators calculate.

Likewise, yet another tuition hike also is netting the school more revenue.

As part of a system-wide $1.2 billion budget for this year, the USC board approved a 3.9 percent tuition increase for in-state and out-of-state students attending the main campus in Columbia.

Administrators anticipate the boost to generate about $9.75 million.

The increase brings yearly tuition and fees for resident students at the Columbia campus to $10,168; for nonresidents, $26,351.

To put the $10,168 cost for South Carolina kids to attend USC for one year into perspective, it approaches one-third of the state’s average annual per capita income. That was $33,163 in 2010, according to the U.S. Bureau of Economic Analysis.

To put the $10,168 price tag further into perspective, it is nearly 2.5 times what USC charged in-state students for tuition and fees in 2000-01 – $4,260.

But Carolina is hardly alone in this regard.

From metropolitan statistical areas to podunkville, almost every state-supported school in South Carolina has jacked up its tuition more than 100 percent over that stretch. (See the numbers yourself at the state Commission on Higher Education website.)

The escalation has besmirched the Palmetto State with the highest average tuition rates in the Southeast.

“You all have been top for a number of years now,” says Joe Marks, data services director for the Southern Regional Education Board, a nonprofit, nonpartisan organization based in Atlanta that advocates for educational improvement in this region.

Amid its tuition hikes, meanwhile, USC Columbia has been on a mad construction spree.

Some of the bigger examples include public components of the university’s fledgling Innovista research campus, a new Arnold School of Public Health building, an athletics village under construction, and plans for new School of Law and Moore School of Business facilities under way.

To be fair, private fundraising covers a big part of the tab for USC’s construction endeavors.

Still, some observers might wonder whether the university’s larger class sizes and steady tuition increases are related to its many building projects.

Or, put another way, is the USC administration using the student body as a construction funding bank?

The question becomes more pertinent in the context of how schools incur bonded debt for capital projects under state law.

It happens through an application process to the S.C. Budget and Control Board, which must approve virtually all state construction projects.

Under section 59-107-40 of the S.C Code of Laws, an application from an institution seeking capital bonds must include:


  • the school’s tuition and fees schedule;



  • the total amount of tuition revenue the college netted in the previous fiscal year; and



  • an agreement that the university’s “tuition fees shall be revised from time to time and whenever necessary to provide the annual principal and interest requirements on the proposed bonds,” and all outstanding state bonds that have been floated for the school to that point.


In addition, section 59-107-90 of the code caps the level of state bonded debt that schools can incur and actually ties that amount to their tuition. The law says a university’s annual debt service payments on state bonds cannot exceed 90 percent of its tuition revenue in the previous year.

In a February report, the national credit rating agency Fitch cited the tuition-construction link in evaluating the state’s debt in general obligation bonds. “By statute, state institution bonds are also secured by tuition fees received by the university,” the report says.

Not surprisingly, to what extent the tuition-construction link might be driving USC’s physical expansion is a matter of debate.

To journalism professor Wiggins, that there is a link seems undeniable. But just like a municipality’s debt capacity depends on its tax revenue, he says, “In a way it kind of does make sense.”

What Wiggins says he worries about is the wherewithal of USC’s facilities to absorb the growing student population. “I do have a concern about that,” he says.

In the General Assembly, Democratic Rep. Lester Branham of Florence County chairs the Higher Education Subcommittee of the House Education and Public Works Committee.

“I kind of doubt that,” Branham says. “I don’t think they raise tuition just to be able to build.”

Asked about the runaway costs to attend college in the Palmetto State, the lawmaker says he thinks students still get a good bargain. “For all they’re getting out of the college experience and that kind of thing, I have no qualms with it.”

For its part, the USC administration points to state funding reductions in explaining the university’s tuition increases. USC’s state support has been cut in half in just the past several years, the administration refrains.

Data from the Southern Regional Education Board confirm a dramatic decrease in USC’s state funding: From 2000-01 to 2008-09, the share of the university’s operating dollars provided by the state has declined from 65 percent to 31 percent, the lowest in the Southeast, according to the SREB.

“They really don’t care for higher education, some folks don’t,” Branham says when asked about the downward trend.

To what is he referring – perhaps a cultural attitude that perceives higher education as elitist?

“I think part of it is that,” Branham says, “and I think part of it is ignorance.”

In any case, if you’re wondering how USC’s tuition increases compare to its state funding cuts, the answer is favorable for the university, according to former Gov. Mark Sanford’s executive budget for this year.

From fiscal years 2005 to 2011, USC’s state funding dropped $48.3 million while the university’s tuition hikes brought in $65.8 million, for a net difference of $17.5 million to the good, the budget blueprint says.

Hmm, that’s not a bad chunk of change to leverage against, say, a building project or two.

Reach Ward at (803) 254-4411 or eric@thenerve.org.

Higher Education