Higher education funding issues


What's at stake?

A strong economy requires a strong higher education system. Montana public colleges and universities attract more than $100 million annually in externally funded grants and research that help businesses and agriculture.

Technologies developed at Montana universities have helped create over 30 Montana businesses in recent years, creating jobs and contributing to Montana's economy.

A well-educated workforce and university research are top concerns for businesses looking to relocate in Montana or anywhere else. If we want to improve Montana's economy, we must invest in higher education!

Inadequate state funding means loss of economic opportunities. Many potential university research projects were lost in recent years due to a lack of state matching dollars.


What happened to higher education funding?

The state's share of funding has dropped dramatically. The state's share of funding for the Montana University System has fallen from 73% to 47% in the past 12 years, while student enrollment and fixed costs have risen. The University System at every level has economized to cover revenue losses and maintain academic excellence. The result: fewer academic options, larger class sizes, and higher faculty workloads.

Montana invests far less than peer states. The Montana Legislative Fiscal Division (LFD), in a 2000 study, compared Montana with seven "peer" states that use similar funding mechanisms for higher education.

The study found that of all these states, Montana makes the lowest investment in the per-student cost of higher education. Yet Montana's colleges and universities still must try to make their students competitive in national and international job markets.

Montana state funding per student is $2,629 (nearly 40%) less than the average of these seven peer states.

How much of the cost of educating a student does Montana's state funding cover? Only 47%. That's about 20% less than the average of our seven peer states.


How has the problem affected students and higher education?

Student costs are soaring. Combined tuition and fees for Montana resident students have nearly tripled since 1992. At a time when more jobs require higher education, fewer Montanans can afford the tuition.

D-minus for affordability. The annual survey of the National Center for Public Policy and Higher Education (NCPPHE) in Washington, DC, gave Montana public higher education a D- grade for affordability.

Montanans priced out. A study by the nonprofit Lumina Foundation for Education found most of Montana's public four-year colleges and universities are unaffordable for low- and median-income students, even with loans. Even some of our two-year technical colleges are out of reach financially for low-income students.

Fewer academic options for students. From 1999 to 2000, 63 majors, minors, and options were discontinued throughout the Montana University System. That means fewer opportunities for students. (Office of Commissioner of Higher Education)

Colleges and universities are struggling. The Northwest Association of Schools and Colleges studied both UM and MSU in 2000. The report described the Montana University System as struggling to maintain essential programs.

The report said: "There is at UM…an increased inability of the library to provide adequate collections to support the teaching and research needs of students and faculty. The capital equipment budget…for the College of Engineering (MSU) is clearly not adequate." And, "Instructional laboratories are in need of modernization and technology enhancements in classrooms…performance, studio, and work spaces and technical equipment one requires in a professional school are past their useful limit."

Low salaries, high workloads for faculty. Faculty salaries in Montana are among the lowest in the nation. Only North Dakota, South Dakota, and Wyoming pay their faculty less. Surprisingly, these same states all provide more total dollars for higher education.

Faculty workloads in Montana continue to be among the highest in the nation. Our faculty members teach more courses and generate more student credit hours than those in almost any other publicly funded university system.

What Montanans are saying: "Working two jobs barely pays for a fourth of what it costs freshman Matt Singer to study for a year at the University of Montana. And that's even before the estimated 20 percent increase in tuition expected to kick in across the state at Montana colleges and universities after the final budget passed at the 2003 Legislature last week. 'It's definitely going to price some students like me out,' said Singer, a Billings native and economics major at UM." ("U-system to hike tuition 20%," Helena Independent Record, April 30, 2003)

What Montanans are saying: "About two [tuition] increases ago, we meekly asked the question: At what point are we pricing average Montanans out of a higher education? ...We don't hold the increases against the regents. They're swimming upstream in an attempt to maintain quality. Students attending the Montana schools already were paying fees 14.4% higher than at peer institutions outside the state.

"At the same time, state support for higher education, per student, lags those other [peer] states by anywhere from 30 to 45 percent. It's embarrassing. It's unfair to students and their families, and it's directly linked to Montana's economic standing in the nation: at the bottom of the barrel. We've repeatedly made the case that the surest way for Montana to climb the economic ladder is to make a financial commitment to and investment in its children." ("Are we there yet?" Great Falls Tribune editorial, Mar. 28, 2002)


What are the solutions?

In 2002, Great Falls businessman and Board of Regents member Mark Semmens suggested a broad list of possible investments that could substantially improve higher education's impact on Montana's economy and quality of life. These suggestions include:

  • Address serious faculty salary shortfalls at two-year and smaller four-year campuses.
  • State funding to help colleges and universities meet the cost of inflation, including the rising costs of utilities and libraries.
  • Provide a greater percentage of state funding for faculty salaries.
  • Support increased repair and maintenance expenditures to preserve existing facilities.
  • Expand programs, resources, and workforce training efforts of two-year institutions.
  • Expand programs tied to growing market sectors and the needs of businesses.
  • Create a business and community development and outreach office.
  • Increase state financial aid through Baker Grants.
  • Increase tuition and fee waivers for honor students and veterans.
  • Fund tuition for two-year colleges and smaller four-year campuses to ensure affordability for all Montanans.

These recommendations would help keep public higher education strong and make it more affordable for Montana students. In today's economy, Montana cannot afford to let this investment opportunity slip by.

These recommendations will require action by the Montana Legislature.


Where will the money come from?

We need to invest in education. It's clear that Montana needs to make major investments in higher education just to get us back to where we were a decade ago in terms of the state's share of funding.

Revenue is available. The Stand Up For Education coalition has not, as a group, taken a position on revenue sources. However, individual organizations within the coalition have proposed the following revenue options:

End the decades-long tax cutting binge. Over just the past six years, the legislature has approved $450 million in tax cuts that disproportionately benefit out-of-state and even international corporations and contribute to recent state budget deficits. These cuts have not delivered the economic development gains that were promised.

"Freeze" the business equipment tax at 3%. Unless the legislature does so, the tax could easily fall to zero. This would deprive the state, local governments, and schools of millions of dollars in revenue that can only be backfilled with increased taxes on residences and small businesses. 

Institute a general sales tax to provide homeowner and corporate property tax relief and new revenue. 

Consider new or increased taxes on goods and services that are now relatively under-taxed compared to surrounding states. These might include tourist, cigarette, lodging, and alcohol taxes, for example.

Montanans are willing. Recent polling shows that most Montanans voters are willing to increase state taxes to provide better funding for public education. The poll shows overwhelming receptivity (77%) to a tobacco tax increase to provide more state funding for education. Solid majorities of Montana voters also support increases in alcohol and tourist taxes, according to the poll. (Harstad Strategic Research for MEA-MFT, December 2001)


Education & economic development: What business leaders say

Montana business leaders call for better state funding. Many Montana business leaders recognize the importance of a quality education system as the foundation to economic development in Montana.

The following are excerpts from an article about Montana business leaders and education funding ("Quality education system is the key to Montana's long-term financial success," Great Falls Tribune, Feb. 3, 2002):

"…it's our belief that a quality educational system is the foundation to economic development," said Tom Scott, president and CEO of First Interstate BancSystem in Billings.

Education from preschool to post-graduate study is just one of many ingredients that need to be blended together for successful economic development, said John Kramer, executive director of High Plains Development in Great Falls. A direct connection exists between low education levels and low wages, he said.

The quality of the state's education system is key for businesses, said George Carlson, the director of the McLaughlin Research Institute.

"You'll never get any business if there aren't decent public schools, and if those start to decline, it's all over," Carlson said. "Education is economic development, especially at the university level. It supplies a pool of talented people who have the capabilities of starting businesses and going to work."

Research performed at the state's universities is economic activity that brings in outside money, he added. Carlson is worried, however, that support for education has declined since he arrived in Montana in 1989.

"They say they support education, but in dollar terms support has declined since I've been here," Carlson said of state leaders. "By standing still you will be behind. Montana's traditionally had very good schools, but I think other places are trying to get better and investing funds in it."

In the group's discussion draft of a paper titled "Invest in Education: Observations and Recommendations to Expand Montana Jobs and Income Levels," Montana's educational funding and economic growth are compared to several states, including North Dakota. During fiscal year 2002, North Dakota will invest $318 per capita on higher education, while Montana invests $166.

"In 2000, North Dakota posted the nation's second highest growth rate in per capita income, at 7.5 percent," the report states. "North Dakota's average per capita income now exceeds Montana's by more than $2,200, or 10 percent. If our income levels were even equal to those of the average North Dakotan (as they were 10 years ago), the total personal income in this state would be $2 billion greater than it is."

For Ian Davidson [of Great Falls], chairman of Davidson Companies, … educating Montanans about the importance of education as an economic development tool is a top priority.

"Education is an investment, not an expense," Davidson said. "It's a major factor in how you'll develop the economy."



College tuition and student loans for Montana students. Montana Guaranteed Student Loan Program. Office of Commissioner of Higher Education. See also Jan. 8, 2002 Associated Press article, "Study says colleges too costly," by Tom Laceky. See also MEA-MFT report, "Montana Higher Education: Public Supported or Public Assisted?" See also Feb. 19, 2001 Great Falls Tribune article, "Huge debts drag down graduates," by Carol Bradley

State funding for Montana University System. "University System Funding Study, SJR 16," MT Legislative Fiscal Division, Jan. 2001.

Comparison of Montana University System funding with "peer" states. Montana Legislative Fiscal Division study, 2000.

Loss of course offerings at Montana colleges and universities. Office of Commissioner of Higher Education www.montana.edu/wwwbor/Jan25-01Presentation.PPT   See also Feb. 18, 2001 Great Falls Tribune article, "Funding malnourishment crippling campuses," by Carol Bradley.

Montana higher education's role in bringing in research and grants, helping start new businesses. Office of Commissioner of Higher Education www.montana.edu/wwwbor/Jan25-01Presentation.PPT  

Condition of higher education libraries, laboratories, classrooms. Northwest Association of Schools and Colleges study of UM and MSU. See also Feb. 18, 2001 Great Falls Tribune article, "Funding malnourishment crippling campuses," by Carol Bradley. See also 1998 report by MSU-Bozeman Faculty Council that chronicles $60 million in building maintenance backlog.

Higher education faculty salaries, workload. American Association of University Professors Chronicle of Higher Education, April 2001. US Department of Education. National Center for Education Statistics. Integrated Postsecondary Education Data System's Preliminary Salary Data, 1998-99. “Higher Education Contract Analysis System,” American Federation of Teachers, 2001.


Stand Up For Education
1232 E. Sixth Avenue
Helena, Montana 59601
(406) 442-4250