The University of Tennessee school system, including its branches in Memphis, Chattanooga, Martin, Tullahoma and Knoxville, have suffered from the sharp cut in funding from the state government brought on by the 2008 financial crisis and its subsequently slow recovery.
Nashville politicians have decided to provide UT schools with only 55 percent of the necessary funds for a mandated wage increase.
Other state-funded institutions, such as the Tennessee Department of Transportation and Tennessee Department of Education, receive full funds from the state government and have since the financial crisis.
"Fifty-five percent of the budget for the Knoxville campus at one point was state-appropriated dollars," said Charles Peccolo, interim chief financial officer for the UT system. "Forty-five percent was student fees, so their theory was, 'Why do we give them the full 100 percent? Why don't we give them the 55 percent, and they need to raise the other 45 percent of the mandated increase.'"
The 108th General Assembly will hear UT, among other things, advocate for the full cost of mandatory wage increases.
The recession of 2008-09 has left the U.S. – and Tennessee – in a slow recovery. Due to the nature of Tennessee's collection of revenue, a system made mostly of sales and franchise and excise tax, which makes up 53 percent and 15 percent of revenue respectively, the economy suffered and left the state government with considerably less revenue, which then affected students.
According to the budget for the UT system, from 2008 to 2012, the amount of funds available for higher education dropped from $509 million to $410.7 million.While more recent years saw the gap narrow to about $50 million, Peccolo noted that if Nashville does not provide enough money, funds must be found elsewhere.
"If you have a pie and one part of it goes down, the other part has to go up," he said. "If state support goes down, tuition and fees go up just to maintain the same ratio."At the Oct. 28, 2013 meeting of the Board of Trustees, Bill Fox, Ph.D in UT's College of Business, presented his overall economic outlook for the state, while placing a focus on making available the funds for higher education.While Fox noted that Mr. Haslam has expressed support for higher education in speeches, he expects less focus to be given to four-year universities.
According to Fox, any renewed education dollars would likely go first towards Tennessee Gov. Bill Haslam's Drive to 55 initiative, a program put in place to increase the percentage of Tennesseans with some form of higher education.
"He (Haslam) has certainly indicated strong support for this Drive to 55," Fox said, "(so) maybe he can find some additional tax revenues to put into helping support that, but it would likely be to generate dollars for technical schools (and) two-year schools."
According to Peccolo, in the past year the franchise and excise tax brought in $150 million less than what the state was hoping. Given the state's constitution, which prevents debt being issued to cover operating expenses, Tennessee will once again be facing fiscal belt-tightening. Peccolo reminds students that other activities take precedent before state financial support of colleges and universities. According to Peccolo, higher education comes in fourth place behind bigger ticket items on annual state appropriation bills.
"There's two, three bug funding needs ahead of higher education," Peccolo said. "There's health care ... (and) prisons are a big financial requirement of the state. And then K-12, and understandably those things take priority for any kind of added capacity the state has as far as additional revenue."
Fox found that when adjusted for inflation, state income is still less than before the recession.
"The state has fewer dollars inflation adjusted," Fox said, "so it's not surprising that the university has gotten less money."
Peccolo sought to do away with the misconception that the cost of higher education has increased. Rather, he finds, the cost in Tennessee has gone down, but the price for students to attend school has gone up due to decrease of government funds.According to the Higher Education Price Index, the cost per full-time student from 2002 to 2012 has gone down from 17,880 to 16,755.
"We're being much more efficient," Peccolo said. "But who's paying for that? That's the difference, and the difference is that a heavier burden is placed on student tuition."
Not adjusted for inflation, tuition at UT has gone up by 56 percent since 2007; a fact that students like Kristen Williams, a freshman in journalism and electronic media, are concerned will hurt them financially. Williams, who has already accepted federal grants and student loans, said she wouldn't be surprised if the cost of tuition increased while she's in Knoxville.
"It's stressful, because I'm already having to work throughout the year and then (work) two jobs during the summer," she said. "I'll probably still be in debt for about two years after I graduate."
Haslam will be laying out his budget for the next fiscal year at Monday's annual State of the State address, but Fox recommends those expecting more funding from Nashville to remain cautious. Collections from the corporate franchise and excise tax have decreased by 13-14 percent from last year, and he expects broad funding for the UT System "to be flat at best."