Tuition raises, hiring freezes, constant construction – people all across campus have expressed concern about the changes happening at the university. The Tropolitan sat down with Senior Vice Chancellor for Financial Affairs and Online Education Dr. Jim Bookout to gain a better understanding of how the finances for the university work.
According to Bookout, the tuition raise is nothing to worry about when it comes to the financial state of the university
“Everything that you can think of, everything you see while you're here, is paid in part by tuition revenue,” Bookout said. “The tuition increase would certainly go to cover those increases related to inflation and other price increases that we have no control over.”
The price for undergraduate tuition is rising from $408 per credit hour to $424 per credit hour. Last year, tuition increased from $388 per credit hour. While tuition rates were frozen during COVID-19, the post-pandemic years saw the highest average inflation rates in three decades.
Most of the university’s expenses can be categorized into the following categories: salary, benefits, library expenses, capitalized equipment, other expenses and debt service, with 53% of the cost being salary and benefits, or student services.
As a public university, Troy is partly supported – but not fully funded – by tax money. To help combat inflation, Troy has seen a 9% increase in state appropriations in the last two years and is expecting a $5.4 million increase next year. Still, the university relies on other revenue sources, including tuition, athletics and auxiliary revenue, which includes parking fees and room and board profit.
“Had we increased tuition on average by our historical rates, we would have had $20 million more . . . so not only did we not receive a tuition increase, we still had our costs increased by the inflation rate,” Bookout said. “You can only survive so long in that environment.”
In 2021, TROY’s Clear Cost Tuition pricing model eliminated many common fees, like lab fees and technology fees, and established a single rate for classes whether they were online or in-person.
“When you look at it that way, we are the most affordable, because tuition and fees combined, per credit hour, we're the lowest in the state,” Bookout said. “No fees. No enrollment fee. No library fee. No rec center fee. No technology fee. No facility fee. No general fee. No program fees. No differential fees for different degrees.
“It's crazy what schools charge. We don't charge for these things.”
The university has a multi-million-dollar reserve. The amount of money the university puts into reserve every year varies greatly, but it creates a safety net if enrollment begins dropping severely.
Bookout explained that all the money in the reserve has an allocated purpose – mostly deferred maintenance. The university is currently in need of $30 million more than the reserves’ balance, and so expenses are deferred appropriately. 56% of buildings on campus are over fifty years old and require continuous maintenance.
Already this year, $11 million has been spent replacing steam plants in the dormitories with tankless water heaters. Another $6 million has been allocated to the Trojan Village dormitories where there was cracked façade, leaking windows, and in some places, the building was slightly sinking.
“We don't budget reserve for renewal and placement because if we did, we'd have to increase tuition to cover it, so we handle it by using any leftover money from all our sources of revenue and all our reasons for expenses,” Bookout said. “To give you an idea of how that works, last year we had to spend $2 million out of reserves because we had a net loss, and the year before, we had a $10. 4 million net gain that we put into reserves, but the projects I just mentioned consumed all of that.”
Currently, there are at least 130 vacant positions, worth $8 million, that are not being filled.
Bookout said to think of the hiring freeze as a “critical-needs-based freeze.” The university is still hiring needed professors, IT personnel and other needed faculty. The “freeze” is a part of an effort to strategically review university roles to make all the campuses run more efficiently and sustainably.
“We can say we're under a ‘please be conservative notion,’” Bookout said. “That critical need is either you're going to save money by improving a process, or you're going to generate revenue, so there's a return.”
Bookout also explained there is no risk of closures of any kind – such as Birmingham-Southern, a private university that recently announced it will be closing at the end of the semester. Bookout explained how, when the government gave aid money to academic institutions, Troy was able to put $29 million into reserves. Other institutions are seeing the consequences that come from, in part, investing that aid money unwisely.
“You want good student service, but you want it to be affordable to students, and that's what our focus is,” Bookout said. “Once you focus on that, then everything else falls into place.”
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