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An Upward Spiral: Fee Maxima Issues

Nicola Kean



Opening that nasty blue bill that the University sends you every year, you may have noticed that the figures on it have been steadily increasing. Fees at Victoria increased five percent across the board this year, and another five percent last year. Now, at an emergency University Council meeting last Monday, the University decided to apply to raise fees for Humanities, Education, Law and Architecture by ten percent in the second trimester.

Council members, and the five or so students watching, must have felt a distinct sense of déjà vu sitting in the grandiose Hunter Building Council Chambers. The same arguments and justifications were resurrected from the debate last year, which ultimately failed miserably. While the financial position of the University has certainly declined since then, there are other motives behind the application.
One of the strongest is to send a message to the Government that the current level of tertiary funding is unacceptable. And, in doing so, the most important stakeholders in the University – you – are being shafted.
The story behind the latest attempt to raise fees goes back, as these things tend to do, to the tertiary reforms of the 1990s. The picture painted by University management is that Victoria is an unwitting victim of a changing political situation. From the mid-1990s, when university fees were first introduced, to the current Labour Government freezing fees in 2000, fees were allowed to rise dramatically. But Victoria failed to raise fees as much as it could have, so when the freeze came in Vic was left in a position of disadvantage relative to other universities.
In 2003 the Government introduced the fee maxima scheme, which capped fees at a maximum level and ruled that fees could only be increased by five percent each year. Universities can be granted an exemption to the five percent limit by the Tertiary Education Commission (TEC), if they can prove the financial circumstances are dire enough. It is a measure that, according to New Zealand Union of Students’ Associations (NZUSA) Co-President Joey Randall, was originally set up to prevent individual courses from suffering from underpricing. Instead, he argues, universities have been attempting to cheat the system by applying for blanket exemptions.
While Vic’s surplus has dropped – projected to be down to 1.6% at the end of this year, Vice-Chancellor Pat Walsh says the University is not facing serious financial trouble. “Our fees, for architecture for example, are $1000 less than at Auckland. It does not cost $1000 less to educate an architecture student in Wellington than in Auckland. The only way we can provide the kind of quality programme in architecture that we should is by finding that $1000 from somewhere else.”
Currently, that somewhere else is the cash-cow commonly known as the Commerce Faculty – money from which is used to cross-subsidise other courses. While it is coping adequately with propping up the rest of the University at the moment, it is not going to be able to for eternity.
What this means for students is that, at the very least, fees will continue to rise by the maximum allowed: five per cent each year. In 2007, Victoria, Canterbury and Massey Universities were the only ones to take advantage of this.
At a fee setting meeting at the end of last year, the Council passed a resolution that the University will continue to raise fees by the maximum every year until fees are brought into line with other universities. Full stop. So there’s not much point getting upset about it and baring your bum in protest, a la David Cassidy in 2005.
But perhaps what is more disturbing is the University’s repeated attempts to receive an exemption to the fee maxima rules. An application made a year ago for the second trimester of 2006 was turned down by the TEC, and after last Monday another is about to be made. “What it sounds like”, says VUWSA President Geoff Hayward, “is that it is the continuation of a tactic that is becoming less effective. A tactic that ultimately always screws students over.”
In order to gain an exemption, an institution has to meet three criteria proving that – essentially – they’re knee-high in financial shit. The cost of providing a course must not be being met by the revenue from the course; the costs of the course must not be able to be met by cross subsidisation from other courses; and finally if an exemption weren’t granted then the course wouldn’t be able to fulfil the educational requirements set out by the Government.
On these grounds the TEC ruled that Vic was undeserving of an exemption last year. However, on these same grounds Massey University was allowed to increase fees by 10 per cent for 2007. In the proposal to the Massey University Council at the end of last year, the Chief Operating Officer put forward similar justifications to Victoria for increased fees. Except, because of dropping student numbers and depreciation costs, Massey is facing a deficit for 2007. It also had a deficit of $1 million in 2005 – the year the University chose not to increase student fees at all. The same year, it was the only university that failed to meet the Government guideline of a three percent surplus.
But that doesn’t mean an institution has to be in the red to be granted an exemption. “The institution does not necessarily have to have a financial deficit to gain an exemption”, says the TEC spokesperson Moerangi Vercoe. “When the TEC assesses an application for an exemption it carefully considers whether the application addresses all three principles and whether it as a whole demonstrates exceptional circumstances which could grant a special case for exemption.” Which is pretty much bureaucrat-speak for saying Vic wasn’t close enough to the brink to be bailed out.
Desperate to figure out what it was that Massey had over Victoria in their application, the Vice-Chancellor made an Official Information Act request to the TEC for information. However, amusingly, Walsh says much of the documentation they received was blacked out, leaving the Council to do some further head scratching.
For Walsh, the TEC are currently interpreting the criteria too strictly. “How they interpret that criteria really is that for an organisation to receive an exemption to the fee maxima regime [it] has to have pretty much mismanaged its finances or had things happen to them to the point where it is in serious financial trouble.” And serious financial trouble, as we’ve already seen, is not what Victoria is currently facing.
“We have considerable financial challenges”, he continues. “If we had the fees revenue that other universities have, we would be in a much better financial situation.” Indeed, being able to charge the level of fees that the University of Auckland does would see an revenue increase of $4.2 million. A ten per cent increase in the faculties of Humanities, Education, Law and Architecture would, theoretically at least, see an increase of $1.7 million.
But, here’s the catch. An estimated eighty-five percent of students at Victoria have already enrolled and paid for their courses for the second trimester, and so can’t be charged an extra ten percent. Although if the application is granted, students in 2008 will be charged 15 percent higher fees than this year, in terms of making money this year it makes the application largely redundant. A symbolic gesture to a Government repeatedly accused of under funding the tertiary sector.
It’s a gesture that angers Hayward. “The proposal there again seems to be overzealous”, he says. “It seems to be saying ‘yes, we’ll lobby the Government, but in the meantime, we’ll pass the costs on to students.’” Essentially, the University – and by implication, the Government – are placing the burden of an inadequate tertiary funding system on students. While, as the Vice-Chancellor stated at the Council meeting, the the interest-free student loans scheme has somewhat dulled the effects of raising fees, the measure was merely fixing the symptoms of a larger problem. And student debt reached $9 billion last week.
The good news is that reform looks like it might be coming.
Slowly. A discussion document on the fee maxima system by the TEC is due out sometime within the next few weeks. The University Council, every time there is a fee rise, commits to doing more to lobby the Government for more money. Last year a tripartite forum of staff unions, Vice-Chancellors and the TEC was successful in gaining an extra $26 million in funding. Walsh says that they’ll be pressing for a repeat this year – and more.
But where in all of this negotiating is the student representation? After all, students have the most of lose out of rising fees by being shackled with debt. Randall says NZUSA has been attempting to work with the national Vice-Chancellors Committee instead of with individual universities, contrary to Chancellor Tim Beaglehole’s claim last Monday that students seemingly weren’t interested in a collaborative effort.
At Victoria in particular, Hayward says that efforts to work with University management have been met with resistance. “Actually we can do a lot more together, and the only way we’re going to get the government to listen to us is having strength of numbers. At the moment we’re not getting that full hearted unity that we should have if we want to get change from the government.” In response, Walsh says that there are too many differences in outlook for the students and the University to work together to the extent Hayward envisions.
Blame whoever you want, be it the University management, the Government, or both, but fees are going to continue to rise – unless there is wide-ranging systemic change in tertiary funding. You might as well get out your cheque books now unless students, University management and staff can all work together to lobby the Government for more money. Students can’t continue to be the easy quick fix to an institution’s financial woes, because students aren’t the only ones who will suffer from the current fee maxima system. If we want the knowledge economy there’s been so much talk about, then something has to change.