2009-10 Enacted Budget Gap-closing Plan – Higher Education

Higher Education Initiatives

The 2009-10 Enacted Budget makes investments to help ensure that New York’s public institutions of higher learning have the resources necessary to provide a high-quality education to students.  It also removes potential barriers that could prevent New York’s residents from accessing higher education.

For SUNY and CUNY senior colleges, excluding fringe benefits, combined academic year General Fund and tuition support will increase by $165 million, or 4.4 percent over 2008-09 levels.  For SUNY and CUNY community colleges, funding will increase by $30 million or 4.8%. 

To help prevent reductions in the resources available for SUNY and CUNY’s core instructional mission in this time of unprecedented fiscal difficulty, the Enacted Budget includes the first undergraduate tuition increase since 2003-04. Breaking with the state’s more than 30-year practice of using 100 percent of the revenue from tuition increases to offset General Fund spending, the universities will realize a benefit from the tuition increase, and the resources available for their core instructional budgets will increase from last year.  This investment plan will mitigate reductions in General Fund support that were needed to address the state’s current fiscal crisis.  TAP funding was also increased by $44 million to accommodate the increased tuition rates in the 2009-10 academic year to ensure the neediest students can still access higher education.

In a time of rising borrowing costs and tightened lending, the budget will create a new affordable student loan program to help New York students gain access to the funds they need to finance their college educations.

In addition, $49 million of Federal American Recovery and Reinvestment Act (ARRA) funds were used to restore per-student base operating aid for the SUNY and CUNY community colleges to 2008-09 levels and $50 million was used to restore proposed changes to TAP award eligibility criteria. 

Gap-closing Actions

*Funding restored with federal funds

• SUNY/CUNY Tuition Rate Increases. To help prevent further reductions in the resources available for SUNY’s and CUNY’s core instructional mission in this time of fiscal crisis, the 2009-10 Enacted Budget reflects the first undergraduate tuition increases for these institutions since 2003-04, which the SUNY and CUNY Boards of Trustees have both already authorized.
  
  The SUNY Board increased annual undergraduate tuition by $620 or 14 percent (from $4,350 to $4,950 per year), annual graduate tuition by 14 percent and annual non-resident undergraduate and graduate tuition rates by 21 percent. These increases took effect in the spring 2009 semester, and were reflected in the 2008-09 Deficit Reduction Plan. The 2009-10 Enacted Budget also assumed that the SUNY Board would increase resident graduate tuition by an additional 7 percent, effective with the fall 2009 semester. The CUNY Board authorized an annual resident undergraduate tuition increase of up to $600 or 15 percent (from $4,000 to up to $4,600 per year). Additionally, the 2009-10 Enacted Budget also assumes that CUNY graduate and nonresident undergraduate first professional tuition rates would increase by 20 percent, with all CUNY tuition rate increases taking effect in the 2009-10 academic year.
  
  For the first time in recent state history, the Enacted Budget recommends that these tuition increases be tied to an investment plan. Breaking with the state’s more than 30 year practice of using 100 percent of the revenue from tuition increases to offset General Fund support, SUNY retained 10 percent ($7.6 million) of the 2008-09 fiscal benefit from the spring 2009 semester increase for enhanced investment.
  
  The 2009-10 Enacted Budget also included legislation codifying the state’s plan to increase the fiscal benefit SUNY and CUNY will receive as a result of the tuition increase in the future. This plan will allow SUNY and CUNY to retain 20 percent of the fiscal benefit from the 2009-10 full annual increase ($33 million for SUNY, $22 million for CUNY), 30 percent of the fiscal benefit from these tuition increases in 2010-11, 40 percent of the benefit in 2011-12, and 50 percent in 2012-13, contingent upon improved economic and fiscal conditions for the state.
  
  The newly established resident undergraduate tuition and fee rates for SUNY and CUNY remain affordable. They are below both 2003-04 levels after adjusting for inflation and those of all other public senior colleges in the Northeast and Mid-Atlantic region, as well as below the national average. Even after this increase, SUNY and CUNY resident undergraduate tuition rates remain below the $5,000 maximum threshold for Tuition Assistance Program (TAP) awards, ensuring that the neediest students will have their entire tuition costs covered. Savings amounts are net of the increase in TAP award spending that will result from the tuition rate increases (2009-10 Savings: $159 million; 2010-11 Savings: $151 million)
• TAP and Scholarship Modifications. The 2009-10 Enacted Budget included a reform related to TAP award determinations and the discontinuation of three current scholarship programs. Previously, income earned from private sector pensions was included in the calculation of net taxable income for TAP purposes, but income earned from public sector pensions was not. The Enacted Budget eliminated this inequity by including all pension earnings in TAP income eligibility determinations. The Enacted Budget also allowed the Regents Professional Opportunity Scholarship and Regents Health Care Opportunity Scholarship programs to sunset, and eliminated new awards for the Volunteer Recruitment Services Scholarship. (2009-10 Savings: $13 million; 2010-11 Savings: $18 million)
• Fund Shift to SUNY and CUNY General Revenue Accounts. The 2009-10 Enacted Budget assumes that $44 million of positive cash balances from SUNY’s and CUNY’s non-tuition revenue accounts will be used to preserve core instructional programs. (2009-10 Savings: $44 million; 2010-11 Savings: $44 million)
• Reduce General Fund Subsidy for SUNY Hospitals. The 2009-10 Enacted Budget included $129 million for annual subsidy payments to SUNY’s hospitals at Brooklyn, Stony Brook and Syracuse. While this represents a $25 million General Fund reduction from 2008-09 Academic Year subsidy funding level, this reduction will be more than offset by increased Medicaid (Disproportionate Share, aka “DSH”) payments. (2009-10 Savings: $24 million; 2010-11 Savings: $33 million)
• SUNY/CUNY Research Foundation Assessments. The 2009-10 Enacted Budget assumes that SUNY and CUNY will receive from their respective private, non-profit research foundations an amount equivalent to 10 percent of their indirect cost recoveries on federal grants as partial reimbursement for using state-funded facilities for sponsored research. General Fund support was reduced by commensurate amounts. (2009-10 Savings: $10 million; 2010-11 Savings: $10 million)
• Statutory College Reduction. The 2009-10 Enacted Budget included a $6 million reduction (on an academic year basis) in state support for the five SUNY statutory colleges (four at Cornell University and the College of Ceramics at Alfred University). After this reduction, in the 2009-10 Academic Fiscal Year the budget provides $100 million for the four Cornell statutory colleges, $55 million for the Cornell land grant mission, and $10.4 million for the College of Ceramics. (2009-10 Savings: $4 million; 2010-11 Savings: $6 million)
• Discontinue State Financial Support for the Neil D. Levin Institute. The 2009-10 Enacted Budget eliminated $3.1 million in state operating support for the Neil D. Levin Institute for the 2009-10 Academic Fiscal Year. The Levin Institute is a program within SUNY that focuses on developing managers who can work across borders and cultures. The Institute is not accredited and has no students of its own. It currently employs approximately 23 staff and has its state-owned headquarters on East 55th Street in Manhattan, which was purchased for the Institute in February 2005. The building will retain the name of Neil D. Levin and it is expected that the SUNY Board of Trustees will take appropriate action to ensure that Mr. Levin’s service and sacrifice continues to be recognized. (2009-10 Savings: $2 million; 2010-11 Savings: $3 million)
• Flight 3407 Scholarship Program. The 2009-10 Enacted Budget established a new scholarship program for surviving dependents and spouses of victims of Flight 3407, which crashed outside of Buffalo on February 12, 2009. Under this scholarships program, eligible recipients attending SUNY or CUNY schools will receive grants covering their actual cost of attendance, and recipients attending private colleges in New York State will receive grants in amounts equivalent to the average cost of attendance at a SUNY four-year college (about $18,400). (2009-10 Cost: $270,000; 2010-11 Cost: $324,000)
• New Student Loan Program (NYHELPs). Consistent with the recommendations of the New York State Commission on Higher Education, the 2009-10 Enacted Budget established the New York Higher Education Loan Program (NYHELPs) to provide students and parents who are New York State residents with access to loans to attend New York higher education institutions at rates well below those currently available in the private loan market.
  
  NYHELPs will be a partnership between the state, private lenders and higher education institutions, and is expected to provide loans to an estimated 45,000 community college, four-year college, and graduate students annually.
  
  Beginning in 2009-10, the State of New York Mortgage Agency (SONYMA) will issue $350 million per year in tax-free bonds to finance new fixed-rate loans of up to $10,000 per borrower. Under current market conditions, the borrower’s interest rate is expected to be approximately 8 percent. This rate compares favorably with other state and federal programs, and is up to 10 percentage points lower than the current rates for conventional private bank loans.
  
  NYHELPs will also provide an affordable variable rate option for students, which is expected to increase loan volume well over the amount available through the $350 million fixed rate component.
  
  The budget provided $50 million to help capitalize a default reserve fund that is a critical element of the program’s structure. The default reserve will also receive borrower fees, as well as contributions from participating higher education institutions that are equal to one percent of their students’ loan dollar volume. Beginning in 2010-11, the state expects to contribute $10 million annually to the default reserve fund. (2009-10 Cost: $50 million; 2010-11 Cost: $10 million)
• New Legislative Initiative. The 2009-10 Enacted Budget included an $8.6 million unallocated lump-sum appropriation within the Higher Education Services Corporation to support yet to-be-determined Legislative initiatives. Uses of the funds will be subject to approval by the Director of the Budget and a joint legislative resolution consistent with the Budget Reform Act of 2007. (2009-10 Cost: $8.6 million; 2010-11 Cost: $0)