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Greenville Business Magazine

Higher Ed Commission Predicts ‘Financial Knife Fight’

Jan 12, 2018 09:48AM ● By Emily Stevenson

By Kristine Hartvigsen

This is not a test. The SC Commission on Higher Education (CHE) has launched an emergency alert in anticipation of severe fiscal weather for the state’s entire system of public colleges and universities.

At a packed, town hall-style discussion in Greenville on Jan. 11, CHE officials noted that a storm has been brewing for some 40 years during which the cost of higher education in our state has increased a whopping 1,120 percent.

“We are on the precipice of a disaster,” said Jeff Schilz, interim executive director of the Commission. “There are a lot of policy questions that need to be addressed that have gone on for more than a decade now.”

There is no single cause for the rapidly escalating costs, but — like the infamous, pizza-fueled freshman 15 weight gain — institutions experienced a boom of spending that has become unsustainable, inadvertently placing higher education farther out of reach for many families in the state.

The primary culprit, CHE maintains, is unchecked spending on capital projects (construction) as well as administration (mostly HR-related). These are expenditures that come with baggage like debt service and maintenance costs that last for many years.

In the midst of declining financial support from state government, colleges and universities rely heavily on the higher tuition they charge out-of-state students. Yet the majority of these students take their degrees earned here back out of state, leaving virtually zero return on investment for the state’s economy.

Any institution that depends more and more on out-of-state students will find it harder and harder to maintain their numbers, noted CHE Chairman Tim Hofferth, adding that other states are addressing their problems. “Our priority has to be keeping in-state students,” he said 

Those institutions with the highest spending by far are the state’s three major research universities, leaving the state’s remaining institutions increasingly vulnerable.

“These institutions will be in a financial knife fight to make their budgets,” Hofferth said. “We will lose one-third of our institutions. This is a billion-dollar crisis for the state.”

“This is only going to get worse,” Schilz warned. “The longer we wait, the harder it will be.”