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New tuition plan aiming to attract out-of-state students could cost NDSU $3.3 million

BISMARCK--The State Board of Higher Education voted to approve a new tuition plan intended to make North Dakota public campuses more attractive to out-of-state students with the aim of alleviating a chronic shortage for skilled workers.

Under a new tuition plan slated to take effect in 2019, North Dakota State University could face a revenue decline of almost $3.3 million a year, a shortfall that could require a 3-percent tuition increase to maintain revenue levels. The plan was approved Thursday, Oct. 27, by the North Dakota State Board of Higher Education. File photo.
NDSU gateway on Tuesday, June 14, 2016. Matt Hellman / The Forum

BISMARCK-The State Board of Higher Education voted to approve a new tuition plan intended to make North Dakota public campuses more attractive to out-of-state students with the aim of alleviating a chronic shortage for skilled workers.

The changes, approved Thursday, Oct. 27, are slated to be implemented in fall 2019, but can be altered or delayed if problems arise as more information becomes available.

The new tuition rate structure would decrease the state university system's annual tuition revenues by about $13 million from their 2014-15 levels, a projection that doesn't take into account anticipated enrollment increases.

North Dakota State University could see revenues drop by almost $3.3 million per year, and is one of two campuses that could require a 3 percent tuition increase to keep the changes "revenue neutral." The other campus that could require a 3 percent tuition increase is the North Dakota State College of Science in Wahpeton.

The University of North Dakota could see tuition revenues plunge by $10 million, according to the analysis. Six of the state's 11 public campuses have indicated they will seek exceptions to the new policy because of adverse revenue effects.

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The long lead time before the new tuition plan is implemented in fall 2019 is intended to determine whether the new, per-credit tuition rates can be "revenue neutral" to campuses without imposing an undue burden on rates charged to North Dakota students.

But questions about the ramifications of the tuition changes drew concerns from some board members.

Nick Hacker, a board member from Bismarck, argued for delaying the new tuition rates until more information is in hand.

"I think more study needs to be done," he said. Instead of passing the new plan, and adjusting it later, if necessary, Hacker asked: "Why don't we study it and get it right, or almost right, the first time?"

But other members said it was important to move ahead with the tuition changes, given the severity of the state's ongoing workforce shortage.

Kevin Melicher, a board member from Fargo, called the workforce challenge a "huge issue," and gave as an example the statewide shortage of nurses. Melicher said he favors reducing out-of-state tuition to help draw students from other states.

Surveys have shown up to 40 percent of out-of-state students remain in North Dakota after graduation.

Don Morton, a board member from Fargo and the site manager of the Microsoft campus in Fargo, said revenues can be increased from enrollment growth. He also said there is a great need for skilled workers, including those from outside the state.

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"I think it would end up being revenue neutral," with increased enrollment, Morton said.

North Dakota competes in a global economy, he said. "We can't put a fence around North Dakota. By bringing these out-of-state students in, it's a huge win for North Dakota."

Except for Minnesota, which has a reciprocity agreement with North Dakota, out-of-state students would pay $1.20 for every $1 that North Dakota residents pay for tuition, a decrease from $1.25. Minnesota students pay $1.12.

International students, except for those from Manitoba and Saskatchewan, will pay $1.75 in tuition for every $1 paid by North Dakota residents. Students from the two neighboring Canadian provinces would pay the out-of-state tuition rate.

Mark Hagerott, chancellor of the North Dakota University System, said the intent of the new plan is to allow flexibility to the individual campuses to respond to their unique circumstances.

Campuses will be allowed to propose tuition rates, but the state board will have to approve tuition levels.

The earliest tuition levels could change would be next spring, when tuition will be set for 2017-18, although it is more likely the changes would come in spring 2018. By then, the board will know how much state funding will be provided for higher education by the North Dakota Legislature, which will grapple with declining state revenues.

"There's a lot of factors at play, said Tammy Dolan, the university system's chief of finance.

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