Trustees raise ’10-’11 tuition

 

By Sammy Roth

Tuition is going up to $29,200 next year, a nearly five percent increase from this year’s tuition.

The Board of Trustees approved the increase in December after it was recommended by the Business Office. This year’s tuition is $27,825, a six percent increase from last year.

Chief Financial Officer Rob Levin said that although tuition increases every year, the six percent increase for this year was slightly higher than usual because of the economic recession, which began in late 2008. But he added that tuition increases for this year and next year would have been even higher if not for smart decisions the Business Office made in past years.

Levin said that during the middle of the decade, when the economy was in better shape, the school experienced an “unprecedented” financial boon, getting high interest rates on its money and having to spend less than expected on financial aid and faculty health insurance.

“It was almost like tripping over money,” Levin said. “Everything good that could possibly happen did.”

But Levin said that since the economy is cyclical, with bad times generally following good, the school decided to save, rather than spend, much of this money.

“We didn’t adjust our budget to this temporary reality,” he said. “As a result, we ran some significant surpluses.”

When the economy went sour a year and a half ago, Levin said, these surpluses came in handy.

But ultimately, the school still planned to run a deficit. To keep this deficit to what they estimated at the time as $500,000, they increased faculty salaries slightly less than usual and raised tuition slightly more than usual. Without planning for a deficit, Levin said, they would have had to freeze faculty salaries and raise tuition by 10 percent.

Tuition has increased every year since Levin came to Harvard-Westlake 25 years ago. One reason for this, he said, is inflation: faculty salaries have to keep pace with the cost of living. But inflation only accounts for a fraction of the annual tuition increase. During the last quarter-century, tuition has risen every year at a rate of about inflation plus four percent.

Levin chalked up this increase to the increasing cost of technology. When Levin arrived at Harvard-Westlake, the school did not have any full-time computer services employees. Now it employs 13 and spends $3 million per year on technology.

In most industries, Levin explained, advances in technology lead to productivity gains. For example, he said, because of the Internet, Amazon can sell many more books per employee than a neighborhood bookstore can. Costs go up, but increased productivity means businesses have fewer salaries to pay.

Schools, Levin said, are different because they are “inherently unproductive.” He said that most educational institutions spend more and more money on technology without increasing their productivity.

“One of our selling points is we have terrible productivity,” Levin said. “Amazon doesn’t advertise that they can sell 75 books for every one person. But we sure advertise, ‘We have only 14 people in a class. [We have a small] student/teacher ratio.”

Spending more on technology while paying the same number of faculty salaries is why tuition must increase faster than inflation, Levin said.

But Levin knows that if tuition keeps rising at inflation plus four percent every year, Harvard-Westlake will become less affordable to more and more people. He said the Business Office has a long-term goal of slowing the annual increase to inflation plus two percent.

The first step in doing that, he said, is increasing the school’s endowment. He said that the Advancement Office has set a goal of increasing the endowment from $36 million to $500 million during the next 20 years, which would slow tuition increases to inflation plus three percent.

Past that, he said, the school is still looking for ways to slow tuition increases. Levin knows that eventually, a major change might be necessary.

“If we’re going up faster than inflation, than fewer and fewer people can afford to pay the tuition,” Levin said. “Over the next 25 years the odds are we’re going to have to adjust.”

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