MSU Will Use Reserves to Cover $6.3 Million Budget Withhold, Could Raise Tuition If Cuts Ongoing

Jan 17, 2017

Missouri State University has a $6.3 million hole to fill as part of $146 million that Gov. Eric Greitens is withholding from the budget due to a projected state revenue shortfall.

On Tuesday, a day after Greitens’ announcement, MSU President Clif Smart told reporters the spending restrictions account for 7.2 percent of the school’s state appropriations for the current fiscal year.  

Smart says Missouri State will use one-time money from reserves to make up the loss, but any ongoing withholdings will likely mean tuition hikes and could affect personnel.

“One of things we’ll be asking our board [of governors] to evaluate is retroactively adding a tuition increase for last year that matches the CPI [Consumer Price Index],” says Smart.

For the average student, that would cost $46 more to attend school.

MSU's Carrington Hall
Credit Scott Harvey / KSMU

“We will waive that and not collect it this year but it will be on the books for next year. And then of course we will have to evaluate tuition policy next year after we see what the governor’s budget is.”

Smart categorizes the restrictions into two issues. The first being budget withholdings in the current year, which the president anticipates will be covered by reserves. The second issue deals with any ongoing funding restrictions.

“So if, for example, the 7.2 percent cut that we just got – or that withhold – if that continues than we have to either increase revenue or make budget cuts on an ongoing basis to fill that hole.”

But Smart cautioned that that scenario is premature. Greitens’ proposed budget, which he’s expected to outline in February, will in part guide MSU’s next steps.

MSU last raised tuition two years ago, according to Smart. Over the past eight years the university has raised tuition a total of 10 percent, less than the rate of inflation during that span. He says Missouri four-year schools have led the country in holding tuition down.

“As a nation, tuition went up at public universities over 40 percent, or over four times our [Missouri’s] increase.”

The more robust the state funding, he adds, the less tuition raises are needed. Most of the school’s money comes from state appropriations and tuition.

“So if one goes down the other has to go up.”

Should any cuts be ongoing, Smart says every unit will evaluate how they can reduce services to save costs. Tuition hikes may not cover all that is lost, he said, noting that some service reductions could include personnel.

“I don’t think we could deal with a major ongoing budget cut without reducing personnel,” said Smart.

Personnel accounts for 65 percent of MSU’s budget.  

Besides core funding restrictions, impacts by the withhold include the remaining dollars for the joint mechanical engineering program with Missouri S&T. MSU, through other collaborations, is also indirectly impacted by restrictions to the UMKC Pharmacy program and the University of Missouri’s medical program that are in Springfield.

Smart says the university’s Board of Governors will have a better idea of how it should proceed after Gov. Greitens releases his budget plan in February. Greitens, who was sworn into office Jan. 9, took to social media Monday to announce the budget restrictions. He says over $700 million in budget cuts will be necessary just to make the budget balanced in the next 18 months. Monday’s $146 million withholding was the first step.

“This dire situation is unfortunately no different than that faced by many Missouri families,” Greitens said. “When the economy’s tough and you work fewer hours you make less money. When healthcare costs rise you have to spend more money on healthcare. This combination of a bad business climate and costly Obamacare has hit our state’s bank account hard.”

Greitens said the solution is more jobs and higher pay for Missourians.

Speaking to reporters Tuesday, President Smart said, “This is not a problem of the governor’s making; we are not critical of him for making these decisions. But they obviously have consequences.”

Shortly after the budget is released in February, the university says it will hold a town hall meeting to share information, receive input and review the process for handling potential long-term budget reductions.