BSU’s Kustra talks savings and tuition

BSU’s Kustra talks savings and tuition

by
Idaho Freedom Foundation staff
January 26, 2010
Idaho Freedom Foundation staff
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January 26, 2010

Idaho universities and colleges are facing a $35 million reduction in the next state budget, but Boise State University President Bob Kustra said decisions made now could have long-term consequences.
“Here we are today in a world where we are redefining higher education as a public good,” Kustra said. He said reductions in state funding could trigger tuition increases that could lead to fewer students attending college. “You can see tuition playing a larger and larger role.” Kustra said shifting to higher tuition could lead to Idaho and the U.S. losing out competitively to China, India, and other nations.
Enrollment at BSU and other state schools has grown during the past decade. During the same time, in-state tuition has more than doubled at all four institutions. “Tuition simply doesn’t cover all the cost of education,” Kustra said.
Kustra spoke to lawmakers on the Joint Finance-Appropriations Committee (JFAC). Some on the panel questioned BSU’s reserve funds set aside for bonds and new building construction. Boise State has more of these reserves, called net assets, than any other state school. BSU’s net assets have grown from $61 million to $91 million during the past four years.

University net assets, courtesy of the Legislative Budget Book

University net assets, courtesy of the Legislative Budget Book

Those totals have changed since June. BSU spent $4.5 million of reserves to cover Gov. Butch Otter’s spending holdback in September, and has set aside another $5 million for the holdback announced this month, according to Stacy Pearson, BSU’s vice president of finance. Other universities have also used reserves to cover holdbacks.
“We were told by JFAC last year to increase our reserves last year,” Idaho State University President Arthur Vailas told lawmakers. ISU has also drawn down its reserves since June due to holdbacks. “We’ve been using our reserves to offset the exponential decline in state appropriations.”
“It’s important to see how they might be able to spend down their reserves at this point in time to help us through this thing,” Rep. Darrell Bolz, R-Caldwell said. He has asked all state university presidents about their unrestricted net assets when they appeared before JFAC.
“It’s difficult to hear about tuition increases… at the same time we see your reserves growing,” said Sen. Dean Cameron, R-Rupert. “That seems to be a little contradictory to me… We would encourage you to have reserves… except in times of difficulty like what we have.”
BSU’s reserves have built up in part because of a strategic reserves fee for students that started in fiscal year 2006. Full-time students pay $420 a year. Students paid $50 a year for that fee four years ago. That money goes into leveraging money for construction projects.
“If we don’t get state funding, we have to figure out how to grow on our own,” Pearson said. She said that fee is making a difference to the BSU campus. “If we had not embarked on that program, there would be no (new) buildings at Boise State University.” Pearson also said that some of those unrestricted reserves will repay bonds during the current fiscal year.
“Clearly there is some wiggle room in our unreserved funds,” Kustra said. He also told lawmakers that he’s looking into other ways to save money during tight times. BSU is looking into having the Idaho Department of Administration run its mail services. Kustra also wants to separate BSU’s offices overseeing buying equipment and hiring staff from the state. Other states allow universities to run their purchasing and personnel, Kustra said. “We’re trying to find ways where we can work with the state where we can save money,” he said.

“We were told by JFAC last year to increase our reserves last year,” Idaho State University President Arthur Vailas told lawmakers. ISU has also drawn down its reserves since June due to holdbacks. “We’ve been using our reserves to offset the exponential decline in state appropriations”

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