On Monday, February 20th, Jim Prince, the Vice President for Business and Finance, at Kalamazoo College lead a forum in Bissell to explain and discuss rising tuition prices, where tuition is spent, endowment, and investment in divestment of fossil fuels at K in efforts to be transparent with the K community.
The forum included a PowerPoint on the value of an education at K, expenditures, revenues, salaries, endowment logistics, explanations of the College choosing to not divest, and an overview of the projected budget for the upcoming academic year. The PowerPoints are available to the K community on the “K Student Body” Facebook page and were shared with The Index.
A common question is, why does K cost so much? Prince assured that tuition is very much comparable with other Colleges that are similar to K. Additionally, larger institutions have more students to cover expenditures. Right now, Kalamazoo College has about 1,400 students; therefore, “K’s expenditures must be covered by a relatively small revenue base,” Prince said.
Prince stated that if he were student, he’d asked the College why are they not drastically reducing tuition to follow the example of other institutions. “A reduced tuition impacts financial aid because students will still expect financial aid, but the financial aid award will have to be reduced,” Prince said. The reduction in aid would be due to the lack of revenue coming to the College based on a lesser tuition price.
The sticker price of Kalamazoo College is about $56,000. “Financial aid then reduces that cost about 52%,” Prince said.
“Revenue has to go a long way to meet a lot of operational costs,” Prince said. Prince hopes that by the end of the four years at K that students will be able to notice the value of their education from this institution. According to Prince, to continue to offer multiple opportunities to students, K invests in expensive programs, like study abroad.
Proceeding to fully answer the question of why does K’s education cost what it does, Prince stated that approximately 61% or $29 million of expenditures goes towards personnel, salaries, and benefits. The College prides itself of primarily hiring full time faculty, instead of a large number of adjunct professors that could lessen salary expenditure. While hiring adjuncts may save the College money, the College is more interested in the quality based on the amount of time full time professors are able to offer during their time at K.
Prince has also stated that along with offering a competitive faculty salary among similar institutions, the College must take into account the price of healthcare benefits, which have increased under the Affordable Healthcare Act. The College invests about $4 million in healthcare for employees.
Around campus, there has been talk about Kalamazoo College being in financial trouble and expecting a deficit with the upcoming budget. Prince assured that, “the College is not in financial trouble. We have no short term borrowing need and any given year the budget may not meet the revenue.”
Although K is not in any immediate financial trouble, there is a projected deficit. The College’s strategic reserve is projected to be out of money next year. A reason for this is smaller classes due to lower than expected enrollment and the upcoming graduation of the largest class on campus, Class of 2017.
Goals to fix this problem are to continue to build the endowment, tighten the budget, striving for higher retention rates from the first year to the second year, admit and award financial aid early, and change in residence hall policy that will keep Juniors on campus longer.
A factor in the College choosing to not divest in fossil fuels was because it disrupted the endowment. Prince encourages students to look into a long term divestment proposal that meets the guidelines and aligns with the endowment. “The board has heard students, they understand it’s an important issue,” Prince said. “I can’t speak for the board, but it’s possible.”
“These pressures are not unique to K. It is a national problem [among institutions],” Prince said. Prince is hopeful that students are able to understand the value of their experiences and education at K. For example, he shared that 92% of the Class of 2016 has secured full time employment and a considerable amount are enrolled in graduate programs.