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RD14D00 

St. Mary’s College of Maryland 

Response to the Department of Legislative Services 

FY2013 Operating Budget Analysis 

~ 

Senate Budget & Taxation Committee 

Senate Education, Business, and Administration Subcommittee 

February 16, 2012 

~ 

House Committee on Appropriations 

Education and Economic Development Subcommittee 

February 20, 2012 

~ 

Joe Urgo, President 

Tom Botzman, Vice President for Business and Finance 

Introduction 

St. Mary’s College of Maryland, located in Historic St. Mary’s City, was designated the state’s public honors college in 1992. The College is grateful to the governor, the legislature, and to the Maryland Higher Education Commission for their ongoing commitment to higher education and to St. Mary’s College of Maryland. 

St. Mary’s charter as a public honors college results from visionary legislation with two institutional goals that are frequently at odds with each other. St. Mary’s College is charged by the state of Maryland to provide both: 

(1) the promise of public education affordable to all and thriving on diversity, and 

(2) high standards of academic excellence 

The College had 1,962 full-time undergraduate students enrolled for the fall 2011 semester and a fiscal year 2012 operating budget approaching $70 million, of which the State of Maryland provides approximately $18 million as a general fund grant. The College does not receive additional operating funding from the state or the local governments. St. Mary’s College of Maryland attributes much of its success to the strong support received from the State of Maryland for its operating and capital budgets. 

Supporting the two goals articulated by the legislature’s vision for the College—the educational requirements of honors students and the promise of access—has placed strains on both revenues and expenditures. Tuition and fees, for example, have risen at roughly double the rate of the general fund over the past seven years. At the same time, expenditures for institutional financial aid have increased at nearly four times the rate of the general fund and double the rate of tuition revenue increases. St. Mary’s has studied its tuition and financial aid in detail and continues to explore methods to uphold the public trust by providing an honors liberal arts education to any high-capacity student attending the College.

The analyst’s report notes that the College developed a plan to improve affordability, which would effectively improve retention and reduce the need for students to obtain loans. The plan proposes freezing or reducing tuition coupled with state funding to maintain budgets, increasing state funds for need-based financial aid, and expanding the DeSousa-Brent Scholars program from one year to four years. The College wishes to continue to explore these concepts, and other routes, to providing support for all of our students. Also, the College is ambitiously moving forward with fundraising efforts as evidenced by a recent $1 million private gift for student scholarships. The College is eager to discuss options for funding the Private Development Incentive Fund to encourage and match private donations. We are appreciative of the significant and engaging discussions with members of the executive and legislative branches about our ideas for improving affordability and look forward to implementing several of these concepts with support from state government. 

St. Mary’s College supports the State Plan in gaining national recognition for academic excellence and effectiveness. We continue to keep the public trust as one of the best liberal arts colleges in the nation through a student-centered academic program open to all Maryland students. The College has a six-year graduation rate of 79%. More than 70% of St. Mary’s graduates pursue professional or graduate degrees within five years after graduation and half of our graduating students participated in study-abroad programs. St. Mary’s is also recognized as one of the top-ten small colleges nationwide for its number of graduates entering the Peace Corps. Further, St. Mary’s College works closely with the public school system and the nearby Patuxent River Naval Air Station to promote economic development and the growth of a highly qualified workforce. 

The diversity of the student body continues to be strong with approximately 20% of our 2011 first-year students being the first generation in their family to seek a bachelor’s degree. Further, 23% of the incoming class of 2015 is drawn from minority groups. Last year, over 60% of our students received institutional financial aid, with two-thirds of the aid provided based on need. 

Operating Budget for FY 2013 

For fiscal year 2013 the College requests its ongoing general fund grant plus the annual inflator, which approximates $313,000. The final fiscal year 2011 results included a 0.4% surplus of revenue over expenditures, a remarkable success given the ongoing national economic environment. The College continues to search for cost containment measures as a way to minimize future tuition and fee increases. 

Following a hurricane and a tropical storm, the College became aware of mold growth in two residence halls during the fall 2011 semester. Repeated remediation attempts were unsuccessful, leading to the decision to close the two residence halls for the remainder of the semester. Mold remediation and reconstruction of Caroline and Prince George residence halls is complete and students have returned to both halls for the spring semester. The total project expenditures are $3.426 million. The impact on College fund balances remain near previous projections with a projected fiscal year 2012 ending fund balance of $3.6 million. The College expects some cost reimbursement through insurance claims submitted to the State Treasurer’s Office Insurance Division. This one-time event has been entirely funded in fiscal year 2012 and will not have an impact on tuition, fees, or residence hall rates going forward. College leadership and the Board of Trustees continue to actively work toward models that moderate future increases to student rates. 

Capital Budget for FY 2013 

Design of the Anne Arundel Hall replacement is now complete. The College is requesting funds in fiscal year 2013 in the amount of $310,000 for archaeology field work. Construction funds are currently planned in the Governor’s CIP over a three year period from FY15 through FY17. 

The new facility will accommodate the history, anthropology, archaeology, museum studies, and international languages and culture programs of the College that relate directly to the historical and cultural legacy of Maryland's first capital. The building will also house staff, laboratories, and artifact curation space for Historic St. Mary's City Archaeology Department. This space that is critical to HSMC's accreditation by the American Association of Museums. Collocating this building with the City’s new Interpretive Center will enable the College and the City to remarkably advance the affiliation between the institutions by providing unique opportunities for research, teaching, and public interpretation. 

Our capital budget request also includes funds in fiscal year 2017 to design a new music and auditorium facility. This project will address long standing shortages in instructional space as well as provide a 700-seat auditorium to support a wide variety of cultural and community programs. 

 

Graduation Rates, Spring 2010
	Four-year Graduation Rate	Six-year Graduation Rate
All Students	72%	77%
Pell Grant Students	62%	82%
All Minority Students	58%	63%
All African-American Students	51%	76%

 

The President should comment on improving the second year retention rate of SMCM students. 

St. Mary’s retention rate is typically near 90 percent, and has recently dipped to 87 percent for 2011. A presidential task force is examining retention during the current academic year. St. Mary’s is focusing retention efforts on students receiving a Pell Grant as a federally defined group that represents the population with the fewest financial resources. Data indicates that the most critical retention issue for students is financial insecurity, and Pell Grant students compose the largest portion of the at-risk student population. The financial anxieties of high-need students compromise their academic performance, and place them at risk of failure. Over the years, this issue has worsened: our internal analysis indicates that Pell-eligible students had sufficient income to pay over 70% of the cost to attend in 2001–2002, but can only pay about 40% of the cost to attend today. It is a squandering of human capital to fund insufficiently the education of these high-capacity students. They have much more to offer the public with a college degree in hand than if they have a year or two of college courses but no degree. 

A key component of our continuing commitment to the founding legislation on academic rigor relies upon providing the resources needed to assist students drawn from minority groups and those with limited family resources and less college preparation. The proposed expansion of the College’s DeSousa–Brent scholars program to a four-year scope would accomplish much of the goal of matching majority and minority four year graduation rates. This metric is meaningful in two ways: 1) students in need of additional support in order to benefit from an honors college education would have the resources they need to succeed; and 2) such support would lower the total cost of attendance for students with fewer financial resources by helping them graduate in four years. An examination of graduation rates explains how these two components are related. Data tell us that by the end of six years, African-American students graduate at comparable rates to all other students. However, a substantial gap remains in the four-year graduation rate. 

As noted by the analyst, the extra semester or year to completion—during which such students become better acclimated to rigorous college instruction—imposes an additional cost on low-income students and their families. Additional funding to remove other obstacles to on-time completion will further decrease the total expenditure needed to complete a degree. Further, more rapid progress to degree completion will provide additional space to enroll new students, reducing the cost per degree awarded. Since the cost per degree awarded at St. Mary’s College is already near the average for the state, we would demonstrate that a public liberal arts college degree can maintain the highest levels of academic rigor at a moderate cost.

Loan Type	Demonstrated Need?	Maximum Loan Amount	Credit Check?
Perkins	Yes	$5,500	No
Federal Subsidized	Yes	$3,500 for the 1st year  $4,500 for the 2nd year  $5,500 for the 3rd and 4th years	No
Federal Unsubsidized	No	$2,000 for all years	No
PLUS Parent Loans	No	Cost of attendance less aid	Yes
Private Loans	No	Yes