School of Management tuition increase delayed by Board of Regents

Lex Treinen/Sun Star Reporter
May 7, 2013

Students at the UAF School of Management may have to pay a little extra for their education if a proposed tuition hike makes it through the Board of Regents later this summer.

A proposal for instating differential tuition of an additional 25 percent for upper level credits for SOM was delayed at the April 11 and 12, Board of Regents meetings. The board members said they needed more time to consider the proposal. Differential tuition means that certain programs within a larger university system charges different tuition rates based on the predicted earnings of graduates and the program costs. Differential tuition has never been approved for any school or college in the UA system.

In a Powerpoint presentation to the Board of Regents, SOM Dean Mark Herrmann explained that the school is in danger of having to cut classes and even departments if they do not find a new way to increase revenue. SOM enrollment has increased approximately 72 percent in the last five years while funding has declined slightly due to legislative pullbacks, according to Herrmann. In the presentation, Herrmann explained that about three quarters of the SOM budget comes from state funding and the other quarter comes from student tuition. Due to this and the flat legislative funding, the School has not been able to keep up with increased costs, not to mention increasing class offerings to allow more students to graduate in four years. Herrmann said that in surveys, business students most often complained about the shortage of class offerings, something he thinks a tuition increase would fix.

Board of Regents member and ASUAF president Mari Freitag, expressed concern about the proposal after her last BOR meeting. “I usually try not to pass judgement on things until I hear the story of the administration as well, but unfortunately the administration didn’t really reassure me much more than from what I read in the references,” Freitag said.

Freitag said one of her major concerns was that the proposal doesn’t ensure that other schools and colleges at UAF wouldn’t raise their tuitions.

According to a University of Nebraska study that Herrmann cited in his presentation, 37 states now have differential tuition for business programs. Before the next meeting, the Chancellor’s Office will have to determine which schools besides the SOM might have to raise their tuition to support their programs.

At a planning session last November, the SOM Executive Management Committee cut the SOM’s operating budget, which pays for things like office supplies and student travel, by 40 percent from $440,000 to $290,000. Since then, the SOM received money from the Provost to bring it back up to $350,000, a net decrease of about 20 percent. Herrmann said that in addition to operating budget cuts, the student business clubs were no longer funded by the operating budget and instead were funded mostly through private donors.

About 95 percent of the SOM budget goes to teachers salaries, which are among the highest at UAF. According to its website, the SOM is ranked among the top 1.4 percent of business schools worldwide because it is dually accredited in management and accounting. According to the 2011 salary database, the median salary for a full time professor at the SOM was about $106,000. The median salary for the College of Engineering and Mines was about $90,000, and the median salary for the Department of Anthropology was $58,000. According to Herrmann, these higher wages are required in order to attract talented faculty to Fairbanks. Since business graduates tend to have good opportunities in the private sector, UAF and other business schools must pay their faculty market wages. Herrmann said that if wages are cut, faculty will leave. According to the Chronicle of Higher Education, the average salary for a tenured professor in a business school is about $111,000 in 2011, while for UAF it was about $131,000.

Business students were divided about the tuition increase. Mats Eriksson, a sophomore in Business Administration and Journalism, said that increasing the number of classes offered wasn’t important to him since he and his advisor had already decided for the next few years. As far as the quality of his education, Eriksson said he had some great classes and some unsatisfactory ones. “Some teachers in the SOM shouldn’t be teaching,” Eriksson said, “Some teachers don’t put much time or effort into teaching.”

Bobby Deroschers, the president of Associated Students of Business who worked on the proposal with the Dean said that his club endorsed the proposal. He said that the thought of increased tuition scares a lot of students at first, but once it is explained to them they tend to support it. When asked about the quality of teachers, Deroschers said that like in every department there are teachers “who think that once they have tenure they don’t have to teach as well.”

Herrmann says he does not think that very many students will be negatively affected by the tuition increase in the long run. “In the long run this will benefit them,” Hermann said. “One or two students might decide not to go [if we raise tuition], but for most of them UAF is still an affordable choice.” Herrmann said that UAF SOM tuition is currently 30% lower than other western universities.

Herrmann said he thought the proposal had a 50-50 chance of passing at one of the upcoming Board of Regents meetings in either June or September. If it passes, tuition for 300 and 400 level classes would cost about 25 percent more, affecting mostly juniors and seniors.

Freitag said she is generally very supportive of the SOM was concerned that not enough options had been examined before the differential tuition proposal is tried. “I think that if they really wanted to save their school they might try to look at other ways besides tuition increases,” she said. “I’ve always said that tuition increases should be the last thing that you should do.”

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