USM Chancellor Jay A. Perman Comments on Tuition and Fee Increases for the Upcoming Academic Year

Baltimore, Md. (May 5, 2021) Thank you, Madam Chair. I’m grateful for this opportunity to talk about the tuition and fee schedules we propose for the upcoming academic year.

Some of the things I’m going to share are things you’ve heard before, but I think it’s important to set the context for what we’re asking. I want to start with two statements of fact that underlie everything else I’ll say.

First, we understand that COVID has taken a devastating toll on students and families—on their physical health, their emotional well-being, and, not least, their financial stability. Recognizing the financial fallout of this crisis—recognizing that students and families are trying their hardest to make ends meet—this board voted last year to freeze all tuition and fees.

It was the right thing to do. It was compassionate and courageous. But that doesn’t mean it was easy. Because the System, too, was dealing with financial fallout on a scale few of us had ever seen before.

The second statement I want to make is that, for the last 14-plus months—as we’ve confronted this pandemic and what it means for the System—the one consideration that’s taken precedence over all others is protecting the safety of our students, faculty, staff, and neighbors. All of the decisions we’ve made have been guided by that priority. And while many of those decisions have had significant financial implications, it’s not those implications that prevailed as we fought through this crisis.

We haven’t been irresponsible financially; we haven’t been reckless. But we absolutely committed to the fact that money wouldn’t drive our decision-making; safety would.

Reducing density on our campuses—with most universities at or under 50 percent capacity—was one of those decisions with a massive fiscal impact. We housed fewer students; we fed fewer students. We saw enrollment drop, cutting our tuition revenue. Our event revenue—including athletics—went to nearly zero when we prohibited large gatherings on campus. Our contracts and grants suffered—as the pandemic slowed research, training, and service activities.

And at the same time that we suffered these losses, our costs kept climbing—costs for technology, PPE, COVID monitoring and testing, building modifications, cleaning protocols.

And, of course, this pattern of new and ongoing fixed costs and falling revenues diluted our financial strength. Certainly, we’ve made do, patching this budget hole with our fund balance (what I call our “escrow account”).

But then we suffered a major blow when the state cut the base budgets of several agencies. The System’s base cut was among the most significant—about $120 million. We are grateful that the governor restored about $24 million of that cut with a supplemental budget supporting our public health and health professions programs.

So now our budget cut stands at about $94 million. And I need to be very clear here: That means that every single year, we flip the calendar and start the year $94 million in the hole. Every year. And so many of the cost-cutting measures that our universities put in place last year will have to continue.

And that’s irrespective of the federal monies we’ve received. And, yes, we did get some much-needed stimulus funding. In three separate packages, the System got nearly $450 million in non-student-aid funding—that is, money we’re actually able to use for institutional support.

But you have to remember that this $450 million is one-time money. It’s not enough to cover the budget gap we’re already looking at—a gap of about a half-a-billion dollars. And certainly it doesn’t cover the hole we’re staring at in outlying years—a hole fed by that base budget cut of $94 million a year.

I’ll say it again: Our federal money is one-time money. Universities can’t hire faculty and staff with one-time money. They can’t offer multi-year financial aid packages for our students with one-time money. They can’t sustain a strong research enterprise with it—activities that improve the human condition; that contribute to conquering pandemics themselves.

The bottom line is that, after a one-year freeze, we need to raise tuition and fees. What we’ve proposed—and what Regent Attman will go over with you—is a schedule of tuition and fee increases not exceeding 2 percent for in-state undergraduates, and 5 percent for out-of-state undergraduates and for graduate students.

This is a reasonable increase, keeping us competitive in our education product with our peer institutions, many of which didn’t grant a tuition freeze last year and are pulling away from us in terms of price.

And, even with this increase, the System remains a very good value for the money. Our tuition prices and student-debt levels remain below national averages—in some cases, far below. Maryland ranks 26th among the 50 states in cost of public in-state tuition and fees. We’re more affordable than our neighbors: Delaware, Pennsylvania, and Virginia. 

Let me give you an example: College Park and Towson together account for more than half of the System’s enrollment on residential campuses. Both schools have analyzed their costs vs. their conference peers. When adjusted for regional cost-of-living, College Park is the least expensive school in the Big 10. Towson is the second-most affordable school in the CAA, with a resident tuition rate at only 40 percent of the conference’s most expensive competitor.

You know better than anyone that—at every level—this System has made access and affordability our prevailing long-term priority. This increase does not jeopardize it. Our partnership with the state—their appropriation support—has allowed us to maintain modest tuition increases.

But modest though they are, these increases are necessary. Without them, our universities have told us they’ll need to continue the hiring freezes they enacted last year, holding key faculty and staff positions vacant. This is a huge concern.

You’ll recall that, last year, we focused on keeping our faculty and staff whole as this crisis unfolded. To the extent that we could avoid furloughs and layoffs, we did. But we actually did lose a number of employees nevertheless—many contingent, part-time, and student employees. And, yes, we committed to no new hires. But you can’t freeze hiring forever.

We’re seeing damaging gaps in our corps of faculty and staff, which means larger class sizes, fewer course offerings, and longer time-to-degree completion—which, itself, is a financial burden on students.

Sustaining these hiring freezes impacts student support services. The universities have said that academic advising will suffer—mental health counseling, career planning, technology support, disability services. all of these will suffer—putting student retention and completion at risk.

Universities have told us they’ll have to reduce financial aid. And that, counterintuitively, without a tuition increase, their ability to help their most vulnerable students—their low-income students, their Pell-eligible students—is harmed. Because with more tuition dollars comes more aid dollars.

Universities have told us they’ll have to defer maintenance projects, affecting their ability to improve the condition, longevity, and safety of their buildings and infrastructure.

Universities have told us their research mission will be weakened. Over this last year, we’ve lost nationally prominent faculty, and their associated research dollars. These kinds of vacancies imperil our research enterprise—and with it, the training it provides, the facilities it builds, the knowledge it creates, the prosperity it fuels.

Before I ask Regent Attman to take over, I do want to mention the room and board increase on which you’ll also be voting. As you know, all room and board functions are required to be self-supporting. No state funds are provided for these operations. But these functions have been hit just as hard—maybe harder—than our academic enterprise.

Labor costs have increased significantly, and these are costs that our universities have no control over: state-imposed cost-of-living adjustments, minimum wage increases, higher fringe benefit costs. Plus, food costs are escalating. Utility costs are rising. Our contracts are getting more expensive.

And in tandem with all of this, revenues from these functions have plummeted: First, when our universities refunded room and board last spring—after the pivot to remote instruction. And then when the universities significantly reduced their housing and dining occupancy to align with public health guidance.

This twin-hit has had a devastating financial impact on our auxiliary services, and closing that deficit without a fee increase would be virtually impossible without some reduction in staffing. These staff members are, for the most part, our most vulnerable employees, our lowest paid employees. We have to protect them as best we can.

With the resumption of on-campus living and learning this fall—which is what our students and families want—these housing and dining services will be operating at full speed. We can’t continue to starve them of revenue. We have to give room and board the support they need so they can, in fact, be self-supporting.

And with that, I’ll respectfully ask Regent Attman to take you through the numbers.


Contact: Mike Lurie
Phone: 301.445.2719