REPORT OF THE |CITIZENS’ COMMISSION
ON THE FUTURE OF
THE CITY UNIVERSITY OF NEW YORK |

Section 1.

BARUCH COLLEGE LIBRARY

Presented September, 1971


No?

-2-

47 } TABLE OF CONTENTS

Ls.

II.

TI1.Funding RecommendationS..+e.cecececeresccororserrrrre®

Iv. The Hon. Louis E. Yavner's Dissent.....ccccccccccccccccececers

eee cereereoce

Members of the Commission..cccecoessorssserrrrr®

PEEEACES 6 as vs 6 ere 0 + 0:0 0:0 we se sla SSGieeieigaierenne & 5.6.8 Salsisizive ses oe

ececce

eeceeee 3

seeseeee 4

seeceeee 7

A. Introduction. ..ccccccecccecesecsessesesresecrrcrs
Be Summary of RecommendationS..+--e-sererrerrersrcrercecress 9
Cc. Needs of the City University. soccccccecccccccecssereseeeell
D. The Commission's Perspective...scccercerecseccecsecereeeeld
1. City and State ContributionS...ccrcceccecccccscecsorereeelb

2. The Question of Tuition for Full-time Students...........23

3. Fees and Tuition Charges for Graduate and Non-Matriculated
Students. ..cccccccscccccvcesevescccersssors wisyerereeree 30

4. Financing the University's Construction Program..........35
E. FOOtNOCES ccs cccccccccccccccccerccccenessersssessncasece - 40

APPENDICES
Inventory of Alternative Funding Sources for City University
Operating Costs and Sources of Financing
Financial Aid to Students and the Impact of Tuition
The Free Tuition Issue in the City University
City University Capital Financing
Persons or groups the Commission has met with

Biographies of Commission Members.

wares?


-3-

MEMBERS OF THE COMMISSION

The Hon. Robert F. Wagner, Chairman

The Hon. Emilio Nunez, Vice Chairman

Mr. Robert A. Bernhard
Mr. John T. Burnell

Dr. John V. Connorton
Mr. Thomas J. Deegan
Mrs. Sylvia Deutsch

Dr. B. Bernard Greidinger
Mr. Preston Lambert

Dr. Trude W. Lash

Dr. Arthur C. Logan

The Hon. Jacob Lutsky
Mr. James P. Murphy

Mr. David Starr

Dr. Francisco Trilla

Mr. Gus Tyler

Mr. Hector Vasquez

Rev. Dr. M. Moran Weston

Louis E. Yavner, Esq.

Adolf A. Berle, Esq. 1895-1971

Staff

Special Research studies by

Peat, Marwick & Mitchel & Co.,
and by Office of Urban Affairs of

City University. General staff
assistance by Office of Urban Affairs

University Policy Liaison
Vice Chancellor Julius C. C. Edelstein

Research Coordination and
Staff Services

Dr. Stanley A. Lefkowitz
Mr. Duncan B. Pardue
Secretarial Services

Mrs. Lillian Kandeh

Editor of Report

Robert F. Wagner, Jr.


-4-

PREFACE

This is the first section of a report on the future of the City Universi:

y
of New York, as submitted by a Citizens' Commission appointed by the Board of
Higher Education in November, 1969, to study the future of the University in
all its aspects.

The Citizens' Commission was appointed late in 1969 and was organized in
the early weeks of 1970, in the wake of the Board of Higher Education's decision
to advance the date for the full achievement of an Open Admission policy for the
City University from September 1975 to September 1970. The University's
administrators, the Board, and key State and City officials perceived that
opening the University's gates would be a revolutionary undertaking, with far-
reaching implications for the City University's size, structure, mission, social
function, educational character, governance, and last but not least, its cost
and funding. Because of this perception, the Commission was established, with
the tacit agreement and support of the State Commissioner of Education, the
leadership of the Board of Regents, the Governor, the Mayor, and the State and
City Legislative leadership.

The scope given the Commission was enormous. Specifically, in a
resolution at its November 12, 1969 meeting, the Board of Higher Education gave
the Citizens’ Commission on The Future of the City University the following

charge:

The focus of study of the proposed Citizens! issi

s' Commission on
the Future of the City University is the governmental and
institutional relationship of the City University; its role
in the public educational systems of New York City and of

New York State; its basic thrust and coverage; and the factors
of cost and support. >


-5-

Clearly the Commission was asked to deal with some of the most difficult
and controversial questions on the list of undecided issues in New York City
and State. Simply to master the basic facts about the City University with its
ten senior colleges, eight junior colleges, graduate division, affiliated
medical center and 197,664 students (of whom 102,530 are full-time students)
would have been a difficult task in itself. The Commission's task was made
all the more difficult because in 1970 and early 1971, it found itself caught
near the center of a vortex of fiscal, governmental and political forces very
much involving but also incidental to the future of the City University.

The budget-fiscal crisis of 1971, with the State and City facing a
cumulative budget gap of two billion dollars, inevitably dominated almost. all
other considerations of the Governor, the State Legislature, and the Mayor of
New York City during the latter half of 1970 and the first half of 1971. The
chief and almost only interest generated by the City University in Albany during
the 1971 Legislature was the University‘s 1971-72 budget, and how to cut it.

Originally it had been hoped that the Commission could submit its
recommendations to the 1971 session of the Legislature, that these recommendations
might form the basis of legislative actions and policy decisions on the
University, especially the determination of its future funding by the State,
perhaps with the support of both the Governor and the Mayor.

However, it became evident that the 1970-71 budget crisis, coming on with the
sudden fury of a thunderstorm, precluded the consideration by the 1971
Legislature of basic long-term measures requiring a major increase in the State's
share of the support of the University -- or any arrangement involving a com-
prehensive accommodation between the Governor of New York and the Mayor of New

York City.


}
|
hi
1)
}
|

il |

4}

a6

Consequently, the Commission, rather than try to move into the middie

of the State-City budget crisis, delayed the completion and submission o¢

its report until the start of the 1971-72 academic year, and the start of a ne,
budget and legislative cycle for the University. Moreover, the resignation of
Chancellor Albert H. Bowker and the appointment of a new Chancellor, Dr. Robert
Kibbee, made the start of the 1971 academic year an appropriate time for a
comprehensive review of the University's future and its problems.

The Commission has decided to submit, and make public, its report in four
separate and successive sections. The first section deals with the future funding
and fiscal support of the University. From the beginning to the end of the
Commission's studies, this proved the most difficult and controversial of all
the aspects of the University's future.

By logical order, the first section of the report could have dealt with the
scope, mission and structure of the University; alternatively the first section

might have dealt with the relationship of the University to the City and State

Governments and to the State University. But in the course of our deliberations,

it was demonstrated that the key question for the future of the City University
is the University's future funding and financing -- how and who should bear the

burden of the dynamically expanding costs of the University. In the course of

the Commission's meetings and interviews with key officials of the City and State
Governments, it was emphasized that the cost and funding of the City University

were the main objects of the deepest concern. ‘The Commission finally felt that

its analysis and recommendations in this area could serve best as the leading

edge of the entire report.


INTRODUCTION TO FUNDING RECOMMENDATIONS
a EENDAT IONS:

Clearly, the central questions confronting the City University involve
its future financing and funding. Without the answers to the fiscal questions,
it is impossible to assess the educational future of the Institution. All the
other crucial questions and problems involving the future of the University
radiate from this central one.

A strong feeling developed within the Commission that this should not
be so, and that funding arrangements and formulas should be subjected to the
logical development of what is best for the University in terms of function,
structure, and governmental relationships. But the Commission clearly recog-
nized the overpowering force of current realities. The future funding of the
City University is unavoidably the key to its future.

The arguments for and against the various approaches to the solution of
the University's fiscal problems tend to be elliptical if not circular -- to
intersect, coincide and collide with other major questions concerning the
future of the University, equally circular, interconnected and unresolved.

The question of increased student contributions to the cost of the
University -~ the tuition issue -- runs into the following unsettled policy
and power conflict issues: (1) the "right" of the City to maintain a free
tuition policy for New York City students, while simultaneously demanding a
greater percentage of State contribution to the cost of education of those
students; (2) the "right" of the State to insist that in return for its
contribution to the City University, the same fee structure applicable to
State University students should apply to those in the City University;

(3) the "right" of all New York youths to an undergraduate


without being forced to pay tuition charges;

education, at public expense, .
+ that all New York City students “who

(4) the "right" of the State to insis

tial t+ of the cost of their
can afford to pay" be required to pay & substan par

education.
revolve around the basic

All the above questions, and many others,

questions of authority -- who does have and who should have the right and the

power to decide affirmatively or negatively the free tuition and other

questions, thus marking the end of the unending circle of arguments on this

issue.

In the same way, proposals to increase the State's percentage

contribution to the cost of the City University raises the following pertinent
’
questions:

(1) Is the State justified in insisting, as a condition for in-
creasing its percentage contribution to CUNY, on greater control over the City
University both for budget and policy? At what point of percentage contribution
to the cost of the City University should the State exercise the same degree of
control over the City University that it does over the State University?

(2) If the City agreed to yield control of the City University
to the State, in return for the State's assumption of the major burden of the
cost of the University, what would happen to the social orientation and
responsiveness of the City University to the needs of the City (aside from
free tuition)? What would be the effect and impact of such a change on the
special mission of the City University, as now understood?

In its deliberations, the Citizens! Commission has arrived at
answers to these questions. Some are dealt with directly in this section of
the report. Others are touched on only by implication tut will be fully covered

in subsequent sections of the Commission's report

-9-

SUMMARY OF RECOMMENDATIONS

The funding recommendations of the Commission on the Future of the City
University will not please everyone. The Commission discovered early that
there was no possible fiscal formla or funding plan for the University which
could accommodate the sharply differing approaches to the fiscal future of the
University. The fiscal program we are recommending below, however, seems to
represent a realistic and desirable alternative to the present way of doing

things. These are the Commission's basic fiscal recommendations:

1. The State should progressively increase its percentage contribution
to the operating cost of the City University from the present 50:50 division
with the City to a new level of 75 percent, increasing its contribution by 5
percent annually until the 75 percent level is reached. Specifically, the

final arrangement would be for the State to match on a 3:1 basis every dollar
which the City contributes in tax levy to the operating cost of the City

University, within the framework of the total City University budget, approved
and certified as required by present law. This recommendation would apply to

community as well as to senior colleges.

2. The principle of “free tuition" for full-time undergraduate students
at senior and community colleges should be continued.

3. The present "free tuition" policy effectively obscures two prevailing
Practices which we deem inconsistent with the principle and justification for
free tuition and which consequently demand remedy. First, free tuition does
not apply to the University's 32,000 graduate students nor to the 47,000 non-
matriculated students attending senior and community colleges. Second, all


-10-

students at the City University of New York non-instructional fees, without

regard to ability to pay. The entire prevailing system of student charges shoula

be overhauled and restructured on the basis of ability to pay. The application

of fees for all students and tuition charges for graduate and non-matriculated

students should be graduated in accordance with family income, without in-

creasing the general level of those fees and charges. (See page 34 for

details of the formula).

4, The total tuition and fee income collected by the University (aside

from student activity fees) should be directly devoted to the support of the

construction program. The present State Law (CUNY Construction Fund Act) should

be amended to provide for the preemption and use of such income for this purpose

without the subsequent substitution by a State-City contribution in the same
amount. Thus the State would no longer be required to make a fifty percent con-

tribution to the servicing of City University Construction Fund debentures.

5+ The law should be amended to require the City to provide, as a separate

and priority portion of its annual tax-levy contribution to the operational costs

of the City University, and as part of the annual certification of the City

University budget, the balance of whatever amount is estimated by the Construction

Fund and agreed to by the Mayor, as required for the ensuing year to support the

debentures of the Construction Fund.

The enactment of the above recamendations, which are conceived of by

the Commission as an interconnected, total funding program, would create a

rational system for financing the City University, a system that would allow

educational considerations rather than political considerations to dominate.

-ll-

The rest of this section of the report presents the Commission's
conclusions and its reasoning behind these conclusions on each of the

five points.

NEEDS OF THE CITY UNIVERSITY

There can be no question that financing the City University, which is
already a difficult problem, will become even more so in the future. In fiscal
1967-68, the University budget (including debt service) was $186.6 million; in
fiscal 1968-69, $207.9 million, an increase of 14.4 percent; in fiscal 1969-70,
$251.6 million, an increase of 21 percent.

For the fiscal year 1970-71 (the first year of Open Admissions), the City
University's operating budget was $332 million, a 32 percent increase over the
previous year. In fiscal 1971-72, the University will receive $385 million, an
increase of 18 percent over the previous jeans According to its Master Plan,
by 1975-76, the University will require $916.5 million for its operation. 2

Even though this projection is predicated on a slower rate of growth over
the next four years, the increase in cost will be substantial -- all the more so
because the projections do not provide for the creation of major new institutional
or curricular programs, but only for the implementation and gradual expansion of
those already established.

Even if the University's budget requests are annually cut as drastically
as they have been in recent years (between 10 and 20 percent), the 1975-76
budget figure would still be $82h million? In fact, it has been estimated that
the University's absolute survival budget for 1975-76 would be greater than twice

the 1971-72 actual budget.”


-12-

ast sums of additional fiscal

Clearly the City University will need v

support over the next several years.

blem facing the University, however, is not confined to
roblem

a number of collary issues, the most

The funding p:
the cost of operations; there are

ch is financing the Capital Construc!
of the most restrictive factors handicapping

tion Program.
critical of whi

The shortage of space is one

the Open Admissions Program. Even before Open Admissions the University faced

a space problem. In 1969 private four-year colleges had gross space of 324

square feet per full-time equivalent student; the State University had gross

space of 358 square feet; and CUNY had gross space of 84 square feet.> Major
pending expansion projects, including the construction of the projected York
College campus in Jamaica, the new Bernard M. Baruch College in Brooklyn, the
new Medgar Evers College near Bedford Stuyvesant, the projected major additions
to City College -- all depend upon the adequate financing of the Construction
Program.

The Construction Program was launched in 1966 under the terms of an
approved Master Plan calling for the completion of the Construction Program by
1975, at a tentatively estimated cost of $615 million for the senior colleges
alone. Since 1966 inflation, increased construction costs, and expansion of
the original plans have driven the total estimated cost to $923 million for
the senior colleges. This estimate does not include a projection of future
price inflation nor do these figures include community college construction

costs estimated at $367 million for the next five years.© (The community

college construction program is not covered by the City University's Capital
Construction Fund.)

“14

The prospect is made all the more difficult because until last Spring
financing the Capital Construction program was legally limited by the
amount of revenue from student fees and graduate and non-matriculated student
tuition charges at the senior colleges.

Even though the counsel to the Construction Fund ruled that this no
longer had to be the case, there has been no indication that any other source
would be forthcoming to pay the additional debt-service needed for increased
bonding capacity.

Continuation of present arrangements means that the Construction Fund
is in serious trouble. As of last Spring it was estimated that the Fund
faced a deficit of between $573 and $373 million by 1975-76. A retarded
construction rate will mean a continuing and increasingly critical space
shortage. Failure to meet construction goals means that the University must
rent more space which increases its operating costs.

It is crucial, to meet the space needs of the increasing enrollment of
the University, that the revenue available to support construction bonds be

increased and that the present system be changed.


-14-

THE COMMISSION'S PERSPECTIVE

7 the outset, the Commission realized that a new and more orderly
‘rom ’

method of financing the City University had to be found. This year's
budget crisis involving both Albany and New York City gave added force to
the Commission's initial realization. One possible alternative considered
by the Commission was increased assistance from the Federal Government.
However, a delegation from the Commission which made a trip to Washington
found that this possibility was not at present realistic. (The federal
approach is treated in a subsequent section of our Report.)

Basically, the Commission has examined the following issues:
(1) the State and City contributions to the operating cost of the University;
(2) the question of tuition for full-time students; (3) the present fee
structure and tuition charges for graduate and non-matriculated students;
and (4) the financing of the University's construction program.

In considering these four fundamental funding questions, the Commission
has tried to be mindful, not only of the increasing needs of the City University,

but also of the real financial Problems facing both New York State and New York

City. It has been our approach that our funding Proposals had to be realistic

as well as idealistic, aimed at what could be done as well as what might be
done,

-15-

In pursuing our responsibility we have attempted to leave no significant
alternative unexamined. Given the financial crisis before the City and State,
we have even considered recommending a significant reduction in the scope and
mission of the City University -- a course ultimately rejected because of the
crucial importance of CUNY to New York City and its citizens. (This subject
will be dealt with extensively in a subsequent section of the report on the
Scope and Mission of the City University.)

In considering each of the four main issues, we have considered a wide
variety of proposals and their implications. For example, in the area of
the contributions made by the City and State, we not only studied a number of
different funding formulas but also the costs and benefits of the total incor-
poration of the City University into the State system. We also examined
other possible alternatives such as the creation of higher education taxing
districts, a university investment corporation, and the possibilittes of an
entirely new system, the "voucher system" of government contributions directly
to students, so that they can attend the universities of their choice. In
the area of possible tuition charges, we not only looked at the possibility of
a larger contribution by students in the form of tuition and fees; we also
looked at the plan now in operation at Yale and proposed for public institu-
tions of higher education in Ohio whereby students would pay back the cost of
their higher education over a period of thirty-five years. No approach has
been neglected or rejected out of hand.

The following represents the Commission's conclusions and general

reasoning on the four main issues involved with funding the City University:


-16-

1. City and State Contributions:

The Commission recommends that the State pro, ressively increase its ercentape
contribution to the operating cost of the Cit University's senior colleges fron
the present 50:50 division with the City to a new level of 75 percent increasin,

its contribution by 5 percent annually until the 75 percent level is reached. tp

the case of community colleges, the Commission recommends that the State also
progressively increase its percentage contribution to the operating cost of the

community colleges which are a part of the City University from the present 40:60
division with the City to 75 percent, increasing its contribution by 5 percent

annually until this 75 percent level is reached. (This recommendation reflects,

among other things, the Commission's belief that the community colleges should

be an integral part of the City University -- a subject to be discuesed in a
subsequent section of the report.)

Certainly during recent years the State has shown an increasing concern with
higher education. It still legs behind California in the total amount it con-
tributes and ranks only twenty-first in terms of per capita supports In 1960,
slightly less than 4 percent of the State budget went to higher education. In
1970, just over 10 percent of the total State budget went to higher cducatitonie”
The State University of New York hes been the principal beneficiary of this

increase.

I 60"
n the 1960's, State appropriations to SUNY increased by 646 percent -- from

51.1 million to $381, i
$361.2 million. In contrast, the State contribution to the City

University grew to a maxim f "onl sion believe
um "
of “only” $134.6 million. The Commissi ieves

the State should further
raise its contrip;
ution, to ratin,
costs ercent of all o

2 Over the next five years.

-17-

The Commission has made this recommendation for the following reasons:
There is the matter of responsibility. The support of public education
has historically been a primary state responsibility. This has been recognized

throughout the United States. During the last half century there has been a
growing realization that this responsibility includes higher education as well.
In 1965-6, public four-year colleges in the United States received 68.1 percent
of their income from state governments; in California the proportion was 83.5

n . é
percent. A number of cities contribute a portion of the cost of operating a

two-year college, but_no city outside of New York supports a major university

system. The State Constitution does not clearly establish the State's legal

responsibility for funding public higher education in New York. However, the

State has, in fact, assumed the total responsibility for funding public higher
education, outside New York City, but only partially within the City. This
situation has an historic base, but it is an educational -- and political --
anomaly.

There is the matter of equity. New York City residents are bearing a
disproportionate share of the cost of higher education throughout the State.
Estimates of the share of State revenues produced by New York City range from
43 percent (State Budget Office) to 47 percent (Citizens' Budget Commission) to
51 percent (New York City Budget Office) The generation of revenues can be
looked at in a variety of ways. The following table,which shows the tax

revenue sources for financing public higher education in New York State, uses

the Citizens' Budget Commission figure of 47 percent, which is a reasonable one.


-18-

ING OPERATING
‘VENUE SOURCES FOR FINANC. 12
onere OF PUBLIC HIGHER EDUCATION (1970-1972)

venue Source
System Tax Revenue Source

All Other Areas

New York Cit;
Of State

State University (a) $179.2 million $202 million

(Excluding community colleges)

City University (>)
(Ineluding community colleges)

a. Costs Paid From Local Revenues 146.6 ——
>. State Share of Costs 63.0 1.3

Community Colleges Outside of hh
New York City (State Share) (c) 21.6 2h.

$410.4 million $297.7 million
The total State appropriation to the State University operating budget

for 1970-71, as shown in the Executive Budget, was $381.2 million.

Other sources of State University funds are student fees, federal and
foundation grants, etc. Total operating expenditures from all sources

will exceed $500 million.

Total City and State appropriations to the City University budget for

1970-71, as shown in the City Record, amounted to $281.2 million.

Student fees, bond financed expenditures, etc. will raise total

expenditures to the approximate budgeted total of $332 million.

Total S tate appropriation ($68 million) as shown in the Executive Budget

less 40% (the State share) of the operating budgets of the community

colleges in New York City, as shown in the City Record

-19-

New York City pays for approximately 60 percent of the combined City
and State contributions to public support of higher education in New York State.
The City's relative share of the benefits of higher education is almost
exactly in reverse proportion to what the City pays - there were approximately
287,000 full-time students receiving public higher education in New York State

in the Fall of 1970, the first year of Open Admissions. Of this number 110,560

were from New York City as the following table demonstrates:

NEW YORK CITY STUDENTS RECEIVING HIGHER EDUCATION IN NEW YORK STATE 13

Number of Full-Time Students

SUNY:
Community Colleges 1,874
Senior Colleges 11,783
Graduate 1,308

Total 14,965 (a)
(b)

CUNY:
Community Colleges 28,084
Senior Colleges 64,701
Graduate 2,810
95,595
Overall Total: 110,560

a. This represents 8 percent of the total number of full-time students at SUNY,
a drop from 10 percent in 1960. However, it should also be noted that the
actual numbers have increased from 4,503 in 1960 to 14,964 in 1970.

b. At the City University 95.5 percent of students at Commnity Colleges,

96.2 percent of students at Senior Colleges, and 78.7 percent of students
in the Graduate Program come from New York City.

Even with the advent of Open Admissions, only 40 percent of the
total number of students receiving public higher education in New York State come

from New York City.


-20-

-time as well as full-time

Even if the comparison is based on part:

. esent system is
students at CUNY and SUNY, the basic unfairness of the Pr ¥

atill apparent. The following chart shows the geographic origin

of all students at public institutions of higher educetion in New York

State:

14
GEOGRAPHIC ORIGIN OF STUDENTS *

GEOGRAPHIC ORIGIN OF

*
New York City New York State * Total
(Exc. N.¥.C.) Out_of State Enrollmer
State University 13,833 133,219 8,b17 155,469
City University 119,865 7,808 2,057 129,732
Community Colleges
Sponsored by the Board
Of Higher Education 53,167 1,473 1,223 55,863
All Other Community
Colleges 5,176 63,406 1,657 10,239
Totals 192,042 205,906 13,354 411,303

ae

Enrollment figures are the Fall 1970 full-time and part-time enrollment (under
graduate and graduate), based upon enrollment statistics furnished by the State

University Office of Institutional Research and the City University Office of
Data Collection and Evaluation.

Including Foreign and Unavailable

Of the total approximately 47 percent come from New York City and 53 percent

from New York State exclusive of New York City.

Neither of these calculations which show that New York City residents
are paying a disproportionate share of the cost of higher education takes

into account the State's contribution to private institutions of higher

education, In 1970-71 this amounted to §26 million.45 tp addition, the

State sponsored a number of programs, particularly the Scholar Incentive

Program, whose benefit went to students other than those at the City University:

If these figures were taken into account, it would make the ratio between the

amount of contribution and the amount of aid received appear to be even more
discriminatory against New York City.

-21-

The point about equity can be made in still another way, in terms of
the amount of State support provided for each full-time equivalent student

(F.T.E.) at the City University and at the State University. In 1969-70,

CUNY senior colleges were supported by the State at the rate of $1,033 per

FTE student. SUNY four-year colleges received $1,662 per FTE student, and

SUNY University Centers received $2,902 per FTE. Thus State support of

students enrolled in the City University on an FTE basis was 46.6 percent

that of students receiving public higher education in New York State outside
New York city.1®

Whatever basis of analysis is used, the present basis or formula for
State funding of the City University is inequitable to the taxpayers of New
York City, not to mention the New York City students enrolled in the University.

Increased State funding is needed because of fiscalrealities. Both the

City and the State face the problem of governmental costs rising faster than

revenues. In the City, governmental costs are increasing nearly three times

faster than revenues; in the State in 1970-71, revenues rose 9 percent and

costs 15 percent. Although the general fiscal problem faced by both the City

and State is similar, the State is, in general, in a better financial position

than the City. The State has the power to determine its own tax structure and

level of tax rates; the City must obtain State legislative approval for tax

measures it wishes to enact. Personal income and business taxes, which are

highly responsive to economic growth and expansion, constitute only 12.9 per-
cent of City revenues compared with 58.8 percent of State revenues. Also, the
State's debt service obligations at present amount to only $150 million per year,
less than 2 percent of the 1970-71 State budget, compared with $976 million for

17
the City, more than 10 percent of the City's 1970-71 budget.


-22-

In view of these and other related factors, New York City will fing it

increasingly difficult over the next several years to obtain the funds to

support its increasing governmental costs, including the money required to

support the City University, with its mounting budget. As the Citizens’
Budget Commission has observed, "The amount spent by the City Government has
tripled in the last decade, while virtually all its problems have increased
rather than abated." Since New York City's problems have become more intense
and demanding of remedy rather than otherwise, the City might find it
difficult to maintain the present 3.3 percent of the City budget for the
City University, much less increase the University's portion to 5.3 percent
in 1975-76, which is the projected level of needs With the present 50-50
ratio of support between the City and the State, the City University would
face the prospect in the years ahead of receiving less than the amount it
absolutely mist receive in order to survive.

Realizing that the State as well as the City are caught in a financial
Squeeze, the Commission has not recommended 100 percent State funding as was
recommended by the Schwulst Commission on New York City Finances in 1966-67,
nor the percentages recommended by Mayor Lindsay in successive proposals to

the State Legislature.

It should also be noted that the Commission, in recommending a 75-25

percent division between the State and City, ia recommending a ratio of State

support substantially below that provided for public higher education in

California and other states, According to staff estimates, the cost to the

State of the proposed 75 percent contribution to the City University would

-23-

be roughly half of what the total would be if the State were to support

CUNY at the same level it does SUNY.
The following table indicates what would happen in 1975-76 if the

Commission's recommended funding formula were put into effect:

1975-76 Projected Budget

Present Formula: New Formula: (75:25)

Total $824.9 million $824.9 million
City Share $417.0* $279.5 **
State Share $386.5* $525.0

* This projection, using the current funding formula includes City and State
contributions to the anticipated debt service (a total of $104.8 million).
The application of the new formula would save the City at least $137.5 million
in fiscal year 1975-76. Whatever fees are paid by students would lesson the
City's contribution.

%k This number includes the total anticipated debt service of $104.8 million.



-2h-

ission does not believe that increased State support for the
The Commissiot

City University must mean State control of the University. (This is a sub-
vi

ject dealt with in a later section of this report.) Funding without contro]

is already the rule in secondary and elementary edueation; tn New! York ‘State,

In addition, the City University, as an independent institution, not only
,

has a unique tradition and character but also a very special importance for

New York City and its future.

2. The Question of Tuition for Full-Time Students:
The examination of the desirability and possibility of a larger

contribution from the students in the form of increased tuition and fees
constituted a major portion of our original assignment from the Board of
Higher Education. No subject before the Commission was more carefully exa-

mined or more hotly contested.

The Commission declares its support of the principle of "free tuition" fer

undergraduate students, and recommends the continuation of the University's
bresent policy in this regard.

Free tuition is more than a cherished tradition, a slogan or a sentiment.

T
t has deep meaning for Sreat numbers of New Yorkers -- alumi, students, parents,

and
faculty. After an intensive examination of various alternative forms of

i
Rcreased student charges, such as the imposition of a tuition charge on a

deferred pay t
Payment basis, as in the plan now in operation at Yale, the Commission

concluded that th
ere are compelling arguments for the principle as well as the
practice of free tuition for undergraduates fi
-- for

benefits

-25-

"Free tuition'', as aphrase of language, contains an internal contradiction.
Tuition means charge for instruction. The correct term is "no tuition". However,
the battle flags of free education at City University have long been inscribed
with the fighting phrase "free tuition". The historical background is worth
recalling. The Free Academy, established by City-wide referendum in 1847, which
evolved into the City University in 1961, was the first free municipal university
in the nation. It was authorized by the State Assembly and overwhelmingly approved
in a referendum by the voters of New York City. Such a tradition ought not be
destroyed, nor fundamentally altered, without long-range purpose.

In its original name, it was not accidental that the word "Free"
preceded the word "Academy" or that the State Legislative Act authorizing the
establishment of this institution underlined this concept by defining its
purpose as "extending the benefits of education gratuitously", Free State
Universities had been established previously, largely in small towns. But
the Free Academy was the first free municipal institution of higher education
in the nation, and it was authorized only five years after the City had set up
its Board of Education to conduct free schools at the lower academic levels.

New York City's attachment to the "free tuition" policy has not diminished
over the years. If anything, it has increased, as the Commission discovered
at its public hearings and in meetings with students, faculty, and elected
officials. Students, faculty, alumni, and civic organizations throughout the
City as well as the Mayor and the leadership of the City Council all recommended

the maintenance of "free tuition" both as a principle and as a practice.


-26-

has not taken its position simply
The Citizens' Commission, however,

b € the past, nor because of the degree of public support for "free
ecause 0: 9
tuition".

The same argument which has historically applied to free primary and

secondary education is applicable today to higher education. With vocational,

professional, and societal pressures demanding the college degree as an
almost essential requirement for any but the most menial white-collar job,

a college education is quickly passing into the category of a necessity. It
has become a social right rather than a special opportunity for aspiring men
and women. This phenomenon provides much of the justification for the
University's Open Admissions Programs, doubtless the way of the future for
all public universities. In fact, the extremely high percentage of high
school graduates who choose to go on to college indicates the extent to which
young New Yorkers see further education as a necessity.

Recent data compiled by Robert Birnbaum and Joseph Goldman for their

study The Graduate: A Follow up Study of New York City High School Graduates

of 1970 indicates that 76 percent of all New York high school graduates were

enrolled as full-time students in post secondary institutions at the start

of the 1970-71 academic year. Indeed there are at present more students in

college than there were in high school in 1920.

In the light of this development, the abrogation of the no-tuition tradition,

just after instituting an Open Admissions Policy, would seem to be an acute

contradiction of this new foundation of the University's educational policy.

To admit
into the University, for the first time, large numbers of the economically

and socially disad
y Vantaged and then, immediately thereafter, to impose, for the
first time, tuition charges upon the student body
>

Would justifiably raise basic
questions of social sincerity,

Then, too, there is the question of equity. A common argument for
tuition is that college students tend to come from the more affluent sectors
of society. Not only can they afford to pay tuition, the argument goes,
but they have an obligation to pay. However, the data shows that the
students attending the City University are not the children of the affluent.
Of CUNY students, 73 percent of senior college freshmen and 80 percent of
community college freshman come from families in which neither parent attended
college. This compares with 53 percent for freshmen nationally at four-year
colleges and 70 percent at community soliagea More than 11,000 of the 36,000
freshmen who thronged into the City University under Open Admissions in
September 1970 would not otherwise have attended any college or university.
As Robert Birnbaum and Joseph Goldman concluded in their study: "Open Admissions
at CUNY can be identified as the sole factor responsible for increasing the college
going rate in New York City to 75.5 pareauty Most students at CUNY come from
poor and lower middle income families. This was true even before the initiation
of the Open Admissions program. The following table presents gross family income

data forQUNY freshman in 1968-69.

GROSS FAMILY INCOME OF CUNY STUDENTS 1968-69 2°
Community Senior SEEK ollege
Colleges Colleges Discovery TOTAL
Gross Income
Under 4,000 10.7 5.4 28.0 23.0 9.7
4,000-5,999 19.0 52.9% 13.0 38.5% 42.0 90.0% 29.0 73.0% 17.9 49.3%
6,000-7,999 23.2 20.1 20.0 21.0 21.7
8,000-9,999 19.4 38.9% 22.0 49.0% 7.0 10.0% 21.0 27.0% 19.8 41.3%
10,0004, 999 19.5 27.0 3.0 6.0 21.5
15,000-19 ,999 5.8 8.2% 8.1 12.5% 0.0 0% 0.0 0% 6.3 9.4%
20,000-Over 2.4 4.4 0.0 0.0 3.1


-28-

not available for the average family income
s are

Although precise figure:

stion that this student
of Open Admissions students, there can be no que tion

income families.
population is heavily made up of those from lower inco!

Even before the start of Open Admissions, the student body of City
en fe}

i m or daughter
University came largely from families for whom sending @ SO) ug)

i 1 hardship. Th
through the University represented @ substantial financial har| p e

t hh
cost to the student, exclusive of contribution to ss board at home,

was estimated to be between $1,000 and $1,300 per year. According to the

University's Need Analysis System, @ family of four with one wage earner

would need to have an income of at least $15,000 a year to be able to send

3
a son or daughter to the University without undue hardship. As the previous
table made clear, very few students at the City University come from families
with gross incomes above $15,000 a year.

Based on these facts, it is clear that for the great majority of students,
a tuition charge would be hard to bear. Most students at the City University
and their families do not have incomes which could support tuition charges
without imposing a substantial family hardship.

Of course, most advocates of tuition do not base their arguments on
student impact but rather on other practical concerns. A common argument is
that tuition will substantially increase the City University's revenues. The
Commission examined this argument very carefully and concluded that the finan-
cial benefits generated would not be of critical fiscal significance,
certainly not enough to offset the costs in terms of principle. New York

City's Budget Director estimated that the net gain for the University would
%

be no more than $25 million a year. Indeed, at the last session of the

Legislature, in the last days of the session, there was an almost successful

move to mandate tuition on CUNY students. This move was suddenly aborted,

-29-

after the legislative leaders had received a study showing that even if
tuition charges were imposed on the students, the State would make no major
saving in terms of its contribution to CUNY. The only substantial effect
would be to force the City to increase its costs.

A study conducted by Peat, Marwick and Mitchell for the Commission
concluded that a $400 tuition charge -- the highest amount most tuition
advocates believe possible as an initial tuition charge -- would increase
the University's revenues for 1971-72 by $37 million, less than 10 percent
of the City University's operating costs. The amount would be $48 million
in 1974-75 when Open Admissions would be in full operations! This figure
is approximately 6 percent of that year's Master Plan projection of CUNY
costs. Clearly the imposition of tuition in itself would not be sufficient
to solve the financial crisis facing CUNY.

Moreover, the estimated University revenues which would be generated by
a $400 tuition would be diminished by the cost of the student financial aid
programs required to defray the tuition charges for very needy students.

The assessment of a $400 tuition (and a concurrent elimination of non-
instructional fees) would result in a net added annual cost of $330 ($400
less current general fees) for senior college students and $360 for community
college students.

The increase in the level of family income necessary to cover these
costs would substantially increase the number of CUNY students eligible for
financial aid.

But the City University is already critically short of funds for financial
aid programs (although the City University receives more in federal funds for
student aid than any other University in the nation).

A recent study by

the Executive Committee of the University Faculty Senate, states that in the


- 30

he amount of finanoj
ily i pelow $8,000, t nite
wi family incomes

case of students with

d criteria of the
aid for which they were eligible, under the standar

28
Analysis System, was $14,994,000 more than there was available. There
Needs Analysi: Ry
ly isnot enough financial aid money, and all students eligible for aig
simply is no’

have had to be cut back proportionately+

If funds were made available, from City or State sources, to meet the

¢ '
needs of the needy as,for instance, by expanding the State's Scholar

Incentive program, the imposition of tuition charges would result in even
less of a saving for the State and the City.

There would be other disadvantages. Access to the City University
without payment of tuition is one of New York City's major attractions to
middle income families. The imposition of tuition would certainly be a major
incentive for middle income families still remaining in New York City to
migrate to the suburbs.

Another practical argument used by tuition advocates runs as follows:
The governor and legislative leaders urgently desire a tuition imposed at
CUNY comparable to that at SUNY. In return for imposing such a tuition, the
City University would receive greatly increased State support.

It is the judgment of the Citizens! Commission that the achievement of
comparability with the State University does not provide a sufficient in-
ducement for the breach of the tradition and principle of no tuition at the

City University. Moreover, on the basis of the Commission's discussions with

State officials, there is no tangible evidence that the imposition of

tuition on City University students would lead to substantially increased

Support by the State in eppreciation for the action taken.

Th i 4 +
@ Commission did give Serious attention to the possibility of rec-

omending a "shadow" tuition:

Students would be charged a tuition which, 3"

-31-

turn, would be reimbursed by the City government. This plan had been put
forward -- and rejected -- in 1965. Its aim is to impose tuition without
actually requiring the students to pay it. After careful study, the
Commission rejected this possibility, since it clearly would not satisfy
those State legislative leaders who advocate tuition, and at the same time

it would represent an abandonment of the free tuition principle.

3. Fees and Tuition Charges for Graduate and Non-Matriculated Students:

In the course of its study, the Citizens' Commission concluded: The

Bresent free tuition policy effectively obscures two prevailing practices

which we deem inconsistent with the principle and justification for free

tuition and which consequently demand rememdy. First, free tuition does

not apply to the University's 32,000 graduate students nor to the 47,000

non-matriculated students attending senior and community colleges. Second,

all students at the City University pay non-instructional fees without

regard to ability to pay. The entire prevailing system of student charges

should be overhauled and restructured on the basis of ability to pay. The

application of fees for all students and tuition for non-matriculated

students and graduate students should be graduated in accordance with family
income, without increasing the general level of those fees and charges.

The present system of free tuition applies only to full-time matricula-

ted undergraduates. For 1970-71, 80,000 students (approximately 47 percent

of total enrollment) paid tuition. This total can be broken down as follows:


Graduate Students

Non-Matriculated Students at Seni

Non-Matriculated Students

In addition, all students pay fees.
ays $70-$100 in fees.

matriculated undergraduate who Pp

st
The following table sets out exactly how the sy!

work.

~32-

Number_of Students
Number of Stucen's
32,000

or Colleges 27,500

at Comunity Colleges 20,500

TOTAL 80,000

30

CITY UNIVERSITY FEE SCHEDULES

Graduate Students

Tuition: Teacher Education Matrics
All Other....

Non-Instructional Fee..
Total. sees

Senior Colleges - Undergraduates

Matrices: Tuitlonieccccceseccsscccccece sees
Non-Instruc. Fee, Full-Time
Non-Instruc. Fee, Part-Time

Non-Matrics: Tuition.......seceeceeeesees
Non-Instruc. Fee, Full-Time
Non-Instruc. Fee, Part-Time

Community Colleges

Matrics: Tuition.. sees
Non-Instruc. Fee, Full-Time
Non-Instruc. Fee, Part-Time

Non-Matrics: Tuition..........
Non-Instruc. Fee, Full-Time

Non-Instruc. Fee, Part-Time
Total......eces

Other
Continuing Education....
Out-of-City Students...
Summer Session Tuition ~ Com. Colleges
Miscellaneous Fees.

Total...

Grand Total..
*Cr.

Fee*

Number of (Per Credit or

Students

8,000
24,000

32,000

60,000
16,000

1,500
26,000
103,500

20,000
6,000

500
20,000
46,500

Fee Schedules
Effective 9/1/70

Tuition 29
$45 /creay t
$18/creait

$15 /credit

{This includes every full-time

em of student charges

Revenue
(1970/71)

-33-

As has already been mentioned, the cost of attending the City University -
exclusive of room and board - is, at present, somewhere in the range of $1,000 -
$1,300. Fees and tuition are, or would be, in addition to this cost. More-
over, as income data presented earlier in this report made clear, for most
students, attendance at the City University represents a financial hardship
without taking tuition charges into account.

Among the hardest hit by the present system are non-matriculated students.
By virtue of the time of their graduation from high school, they are not eli-
gible for Open Admissions. Yet substantial numbers of them have higher aca-
demic records than many Open Admissions freshmen. In addition, many of them
were, in fact,eligible for matriculated status but because of financial need,
are required to work during the day hours to help support their families.
Thus, this sroup which includes a large number of those least able to pay fee
and tuition charges are paying as much as $250 per weneatee What makes their
situation worse is that they are not eligible for most forms of student finan-
cial aid.

Like non-matriculated students, the approximately 24,000 graduate students
(not counting the 8,000 graduate students in the Teacher Education Program)
are charged fees plus tuition on a credit-hour basis. A student taking nine
credits a semester - a reasonable load - pays $900 per eat Although gradu-
ate students are eligible for the City University's student financial aid pro-~
grams, these programs, it is estimated, are able to supply only about one
third of graduate students' financial wewag.”

Ideally "free tuition" should be extended to cover graduate and non-
matriculated students, and their fees should be eliminated. However, the
Commission views such an "ideal" course as impractical at this time. Complete
elimination of present tuition and fee charges would diminish the University's

revenues at a time when it is already hardpressed. More than that, it would


-34-

1 construction program not only because it needs the funding
capital co

cripple the
tes on construction fund bonds are kept down by

put also because interest Ta
t debt service is pledged by t
has decided that the most realistic and equitable

ition and fee charges.
the fact tha
Instead, the Commission
ommend a new system of fees and charges, based on ability to
to rec

should be graduated according to family

approach is

pay. All tuition and fee charges

income level. Such a plan might be structured as follows:

SUGGESTED FEE SCHEDULE

Schedule I* - One Wage Earner

Number of Members in Family

Income 1 2 3 4 5
Below $7500 10% 0 0 0 0
7500 - 10,000 25% 20% 10% 0 0
10,001 - 12,500 507, 35% 30% 20% 10%
12,501 - 15,000 75% 60% 55% 45% 35%
15,001 - 20,000 100%, 85%, 75% 65% 60%
Over 20,000 100% 100% 100% 100% 100%
Schedule II* - Two Wage Earners

Number of Members in Family

Income 2 3 4 5
Below $7500 0 0 0 0
7500 - 10,000 5% 0 0 0)
10,001 - 12,500 25% 20% 10% 0
12,501 - 15,000 55% 40% 35% 25%
15,001 - 20,000 75% 60% 55% 50%
Over 20,

900 100% 100%, 100% 100%

*For each additional
3
Tudent in college, take fee from one column to the right:

-35-

Thus, the amount of student charges, including fees for all students and
tuition for graduate and non-matriculated students, would vary, depending on
(a) family income, (b) the number of persons in the family, and (c) the num-
ber of wage earners. In the case of a family of more than one member, with
one wage earner, with an income below $7,509 a year, no fees would be paid;
in the case of a family of four or more, with only one wage earner, and an
income between $7,500 and $10,000 a year, no fee would be paid. Full charges
would be levied at the $15,000 - $20,000 income level and then only for a
family of one, with one wage earner.

The gradations in the scale are based on the scale used by the Univer-
sity in its Needs Analysis System.

This proposed change in the fee and tuition structure involves a means
test. The Commission regards this as unfortunate. However, it should be
noted that at the present time, according to University estimates, somewhere
around 75 percent of CUNY students fill out financial questionnaires which
require data on family income.

While not the ideal system, this proposed method of graduating student
charges on an ability to pay basis, will not only correct a major inequity

but also give the phrase "free tuition" real meaning.

This plan has one major practical drawback. It will decrease the
amount of revenue from student charges and thus, undercut the Capital
Construction Program. The exact amount by which it would reduce revenues
is uncertain, due to the lack of hard up-to-date information on the family
incomes of students. Preliminary staff estimates, however, indicate that
35

revenue from student charges might be reduced by as much as 50 percent.

The implications of this and its meaning for the Capital Construction Program


de

-38-

tribution to 75
dation that the State increase its con
Commission's recommen

ted, then this device
£ the University's operating costs is accep’
percent 0:

would not be necessary.
lew tte oO pay om tax levy, the
Ns York City would be coum to pay, fr >
Second, ed

after subtracting
f the projected amount required for debt service,
balance of the p'

the projected income from student tuition and fees, in each fiscal _
‘1d be that the Construction Fund's

The major advantage of this system wou.

d by the amount collected from
bonding capacity would no longer be restricted by *
student charges This would make it possible for the University ° eee
the probable capital construction deficit for 1975-76. Of course, "
the City would be obliged to pay that portion of debt service not covere
by income from students, it would be picking up an added cost. This would
be more than offset by the savings to the City which would result from the
reduction of its share of the operating costs. As an earlier projection
(page 23) indicated, in 1975-76 the City would save $137.5 million under the
proposed forma compared with the present formula.

One real disadvantage of this arrangement is that it would probably
result in a reduction in the rating of the City University series bonds, and
therefore, in a higher interest rate. It is estimated that bonds based on a
“promise to pay” by the City would result in an interest rate of approximately
8 percent, meaning that the construction program might cost an additional
$30 million. While this would be unfortunate, it would be worth it, in order
to eliminate the present artificial bonding ceiling.

Third, the State would cease to pay any portion of debt service. Under
present 50-50 arrangement, it is estimated that the saving to the State would

range from slightly more than $8 million next year to something over $20

-39-

%
million by 1975. This saving would, of course, be small in relation to the

increase in State's share of operating costs under the new financing formu-

la recommended by the Commission.

It should be pointed out that given the Commission's recommendation
to have community colleges fully integrated into the CUNY system, the com-
munity college capital construction program would be operated in the same

manner as the senior college construction program. This would have real ad-

vantages for community colleges. Since community colleges in New York City

have the same relationship to the State as do community colleges in other parts

of the State, the §tate pays 50 percent of construction costs out of its an-

nual capital budget. The City's share is part of the overall City construc-

tion for which municipal bonds are issued. Since the City's annual capital

needs exceed its debt limit, pressure is created to slow down or defer ex-

penditures for community college construction. Of the 1970-71 capital budget

of $800 million, for examply, only $6.3 million was approved for CUNY

37
facilities. The community college construction program involving a total

estimated expenditure of $367 million for the next five years might never be

completed under the present system.


1. All figur
office of the Vice Chi

2. Revision to Master Pl

3. Appendix 2,
prepared by Peat,

4. ‘Internal University $

5. Office of Pl

following table provides mo

es on past and presél

-40-

S:
FOOTNOTES:

ancellor for Budge

an (1968),

ces 0
"operating Costs and Sour!

Marwick, Mitchell & Company» pp-293.
,

ources +

anning in Higher Education,
re detailed information:

nt CUNY expenditures pr

and Planning.

section II, p-24

ovided by the

f Financing," Staff paper

State Education Department. The

Q) BQ STUDENT
SQUARE FOOT SPACE DATA FER FULL-TIME UIVALENT.

Az_FOUR YEAR COLLEGES

Type of

Institution Year
Private 4 year es
suvy 4 year va
cuNY 4 year nai

B. TWO YEAR COLLEGES

Private 2 year 1967

1969
SUNY Community 1967
Colleges 1969

CUNY Commnity 1967
Colleges 1969

Gross
Space
per FIE
Student

306 sq. ft.

32h

346
358

88
8h

458 sq.ft.
453

81
82

99
70

Net

Space
per FIE

Student

197 sq.ft.
208

23
230

53
50

280 sq.ft.
306

99
55

61
48

I&RE
Library
per FIE
Student

68 sq. ft.
T1

8h
82

38
34

88 sq.ft.
95

38
36

a
33

Office
Space
per FIE
Student.

19 sq.ft.
20

22
22

11
12

18 sq.ft.
a1

11
11

10.

11.

12.

13.

14,

15.

16.

17.
18.
19.

-41-

Appendix 5, "City University Capital Financing," Staff paper prepared

by the Office of Urban Affairs and Peat, Marwick, Mitchell, and Co., pel.
Ibid, pp 1-2, 6, 7.

M.M. Chambers, "Appropriations of State Tax Funds for Operating Expenses

of Higher Education," Chronical of Higher Education, October 27, 1969,

pp. 4-5.
Appendix 2, op.cit., p.8.
New York State Executive Budgets, 1960-61, 1970-71.

"Study of Income for Higher Education, "Carnegie Commission on Higher
Education, May, 1968, Appendix E, Table 3.

Calculations by Office of Urban Affairs. Basic data from Appendix 2,

op.cit., p. 12.

"Report on Place of Residence of Student Enrollment for 1970;' Department

of Budget and Planning, Office of Data Collection and Evaluation, March, 1971.
Enrollment figures are for Fall 1970 full-time and part-time enrollment
(undergraduate and graduate), based upon enrollment statistics furnished by
the State University Office of Institutional Research and the City University
Office of Data Collection and Evaluation.

New York State Budget, 1970-71.

Alan J. Krupnick, "Study of Finances of the City University of New York,"
Prepared for the Financial Planning and Budget Committee of the University
Faculty Senate, September, 1970, pp.22-33. (It should be noted that in order
to obtain a genuinely fair measure of comparison between support for CUNY
and SUNY these figures do not include the costs of dormitories and food
service at SUNY.

Appendix 2, op.cit., pp. 9-10.

Ibid., p.5.

Based on calculations by the Office of Urban Affairs, City University of NY.


20.

21.

22.

23.

2h.

25.

-42-

ert Birnb: ne_Graduat: A Follow-up Stud:
irnbaum and Joseph Goldmen, 2! Gl
Robi si rn p
of New Yor y High 9 De
of New York High School Graduates of li 0, May 1971, Pp
aracteristics,"

reshman Ch.
American Council on Education, "gtudy of F

1970.

Birnbaum and Goldman, op.cit-» P- 69.

i 7 Freshmen Characteristics," 1968,

i tion, "Study of
American Council on Educa’ ’
The Study included data from City, Hunter, Baruch, Bronx Community, and
ie UK

New York City Community Colleges. The SEEK and College Discovery data
were random samples from the September 1969 enrollees.

October 7, 1969. The following

CUNY University Commission on Admissions,

table outlines what is estimated to be the higher parameter of expenses,

It does not take into account cost of living increases since 1969.

1969-70 Student Budget

Fees (Including student activities) $100 .
Books 200
Transportation ($1 per day, 40 weeks) 200 28.
Lunch ($1.50 per day, 40 weeks) 300 29.
Personal expenses (clothes, medical,
recreation, insurance) 500 30.
Sub-total $1,300 31.
Contributing to room and board at home 800 32.
Total $2,100 33.
3h.
The Need Analysis System adopted by CUNY institutions and published on April
1, 1970 estimates that a four-member family with one wage earner could
contribute as indicated below. The expected contribution to college expense®
is based on the deduction of taxes and average family living costs, 4§ 35.

determined tet
ned by the Budget Standara Service of the ¢ nity Council of Gree 36.

tiie caatnatiies
-43-

New York, from gross annual income. One fifth of the balance, which
is considered discretionary income, is assumed to a reasonable contribution

toward college expenses.

Gross Annual Family Expected Contribution to

Income College Expenses
Below S7sB000 sass
8,060 $ 55
8,580 138
9,100 211
9,620 29h
10,140 36T
10,920 482
1,440 554
11,960 627
12,480 700
13,000 113
13,520 846
15,600 1,116

Testimony before the Citizens' Commission.

Appendix 3, "Financial Aid to Students And the Impact of Tuition," Staff
paper prepared by Peat, Marwick, Mitchell, and Co., p.9.

Alan J. Krupnick, op cit., p.3h.

Department of Budget and Planning, Office of Data Collection and Evaluation.
Ibid.

Office of Urban Affairs, City University of New York.

Internal University Sources.

Ibid. Unfortunately the data from these financial questionnaires has not as
yet been put into a form which would allow for an accurate estimate of the
impact of an ability-to-pay formla such as the one recommended by the
Commission on fee and tuition income.

Office of Urban Affairs, City University of New York.

Ibid.


#14

{NVENTORY OF ALTERNATIVE FUNDING SOURCES

FOR CITY UNIVERSITY
FOR CITY UNIVERSITY

STAFF PAPER PREPARED FOR
THE CITIZENS' COMMISSION

BY

PEAT, MARWICK, MITCHELL & CO,

The information presented in this preliminary staff paper is intended for the sol?
use of the Citizens' Commission on the Future of the City University of New york.

The contents of this paper in no way represent the position of the Commission 0”

any issue discussed herein and are not for publication or attribution.

a

INVENTORY OF ALTERNATIVE FUNDING SOURCES
FOR CITY UNIVERSITY

The following possible sources of funds for the City University
are discussed briefly below:
+ Student tuition
+ State government
. Federal government
. City government
. Higher education taxing district

. University investments corporation

In each case some of the possible social, economic and political
implications are indicated. Wherever the use of one source of funds has

an impact on the availability of other sources, this is also noted.

STUDENT TUITION

A tuition fee could be established not to exceed the present
maximum tuition charged by the State University, currently $400.00 per
student per year. This tuition would apply to all students in the University.
Tuition income could be reserved to meet debt service on capital construc-
tion, as is the case with State University. If tuition income were applied
to operating costs, it would not have a dramatic impact (perhaps 10% at
current levels). Applied to construction,however, such income would goa
long way toward solving the capital funding problem.

Full use would be made of State and Federal Programs to reduce
or postpone the actual cost to family and student. A City-funded tuition

support program could be added to cover the costs of students in cases



NaF

ome or existing State and Federal aid do not

where either family inc:

ition charges could
ition charges. Or tu

wh money to meet tu:

provide enoug!

one
duated in relation to income, with a requirement that any
be gradua'

ta.
laiming a tuition reduction submit family income dai
c
Such a policy would place an additional financial burden upon
uch @

middle and upper middle income families whose income level is such that
e

they would not be eligible for support from State and Federal and City
e"

scholarship sources.

A major fiscal impact would be felt by the State government.
The State would be mandated to provide an increased level of State support
e

for City University because of increases that would be generated in the

existing State student aid programs. These programs include the Scholar

Incentive and the Regents Scholarship programs for which, at the present
time, City University students are eligible for only nominal amounts.

In addition a case could be made for a special scholarship program to
parallel the State University Scholarship Fund.

The disadvantages of a tuition policy are:

. It would put an increased burden on middle and upper middle
income families, from whom the City University system has
drawn strong public support in the past;

. Low income families might be discouraged from applying to
City University unless the existence of student aid was

widely publicized,

The most serious difficulty, however, is the emotional attachment

of students and alumni to a "free" University as demonstrated by the outcry

whenever the issue has become a public controversy.

An alternative to establishing a tuition policy would be to

increase fees, but this has several disadvantages in comparison. Students
who are financially in need would still not be eligible for the State

Scholar Incentive program and Regents scholarships. Thus the major burden
would shift to families in the low income and middle income groups. Such

a policy would probably seriously hinder the City University's goal of

open admissions.

STATE GOVERNMENT

Increased state support could take the form of increases in
either capital or operating funds, or conceivably both. The increased
dependence of the City University on the State would probably result
in considerably tighter controls by the State upon the administration
and operation of the City University.

Having the State provide a larger percentage of capital
construction funds has some attractions incommensurate with the amount
of funds involved. Once plans are approved for capital construction
Projects and funds dedicated in the State's four year capital budget,
it is difficult for the State to change that contractual commitment.
This has been evidenced in recent State budget crises when local
assistance and operating funds were cut, but very few reductions were
made in pre-approved capital construction projects,

Consideration might be given to adopting a per-student subsidy
to supplement existing State aid. Such a subsidy might take the form
of a payment to City University of a fixed amount per enrolled student
or per degree granted. One advantage of such a formula would be the

predictability of this income to the City University.


State could also expand to include higher education in its
The State

n education at the elementary and secondary level.

present aid to urbai

assist elementary and secondary

The purpose of the existing program is to

e ons to provide special programs a s e to
ducational institution! id ial gs nd assistance
luca

id in poverty areas The City University's open admissions program
students in .

ill enroll many students from poverty backgrounds. This will necessitate
wi

the provision of special courses, increased counseling loads and other
le Pp

services which the State could logically underwrite.

There are a number of advocates of the proposition that state

aid should take the form of issuing vouchers to all eligible high school

graduates which could be applied against tuition at any institution

in the state, private or public. Sonsideration is being given to

such a plan now in Wisconsin, The main beneficiaries of such a plan
would probably be the private institutions. Advantages to CUNY from
such a scheme seem remote. It is conceivable that such a plan could
be attractive if its features included (a) more aid per student than
is presently provided by appropriation, (b) freedom from overlapping
budgetary reviews and fiscal controls aad (c) a means of resolving the

tuition-no tuition question on a statewide basis.

FEDERAL GOVERNMENT

Direct support from the Federal government to City University
for operating expenditures or capital construction seems very unlikely.
Prospects are not good at present for any new general program of
Federal aid to higher education.

However with increasing concern for the urban environment
and the recognition of the need to develop new skills and professional

manpower to solve big city Problems, increased Federal support may

become available to support such Programs on a national scale. City
University, given its location, might well be able to make a case that
it should be a major operating center for the establishment of such
university-affiliated programs.

Another possible source of Federal funds is Federal support
for educational innovation in higher education. Substantial Federal
funds are now available for educational innovation at the secondary and
elementary level. The City University is assuming a new major role
with its open admissions policy, which will make university education
accessible and meaningful to victims of poverty. Any Federal programs
for educational innovation in higher education should be available on
a large scale to City University.

Increased aid from the Federal government to community colleges
for vocational education programs as a part of the national manpower
training act may also be a source of funding.

An aggressive attempt to utilize the funds of the Department
of Labor for manpower training within the community colleges of New

York City might make available additional sources of revenue. Many of

the existing programs offered by the community colleges are,in fact,
manpower development programs and as such should receive an increased

amount of funding from the manpower development program.

CITY GOVERNMENT

Given the extreme budgetary pressures on the City, the University
is not likely to find the solution to its financial problems by looking
there. This position might be slightly altered if the Federal Govern-
ment were to assume the funding of some existing City programs. The

welfare program represents the most likely transfer of a City expense


blish

nt were to estal
deral Governme:

If the Fe

providing adequa

city of a large

to the Federal Government. ee eon
income maintenance program
ide in
— t would relieve the

i
sible to shift funds to

for New York city res idents,

therefore make it po
ersity system. The Cit:
s adopted, the localities

financial burden and t y Budget ottive
port of the city Univ!
proposed formula i

n under the present formula.

increase Sup]

warns , however, that if the

tha
could be worse off in the long run

HIGHER EDUCATION TAXING DISTRICT sock eeate to
Special taxing districts are now in use in New
pec
. If a higher
ide for such services as parking, sewers and water
provi
ific tax
axing district were given the power to levy a spec

education t:
in effect, self-supporting or largely

or series of taxes, it could be,

1d
self-supporting. Possible sources of tax levy by such a district wou
be through a surcharge to the City income tax, the dedication of a

portion of the stock transfer tax, perhaps a portion of an increased

property tax, or a portion of an increased sales tax. The overriding

difficulty here is that these taxes do not produce sufficient funds
in toto to throw off by surcharge an adequate supply of funds. Currently
the sales tax produces about $496 million, the personal income tax about
$258 million and the stock transfer tax about $275 million. Furthermore,
it is widely believed that the current 6% sales tax in the City is
already at maximum level.

Such taxing districts could be established by the State

Legislature and given the power to levy specified rates of tax. The

taxes raised by the special education district could be utilized by city

University for operating and capital construction costs, If the taxes
levied were high enough, they could act as a complete substitute for State

support and City support of the University system. If lower amounts

of taxes were levied they could be utilized to cover a portion, perhaps
50% of the cost of running the University, with the other 50% shared
equally by the City and State.

Such an alternative would give the City University a clear
indication of expected revenues over a period of time. Since the
revenues would tend to be predetermined, some control would be estab-
lished on operating costs.

The chief disadvantage of the dedicated tax, of course, is
the tendency for the need to outrun the supply of funds. In states
where dedicated taxes are important fund sources, increases in the
level or rate of the tax are usually hard to obtain. In addition, the
dedicated tax is, politically,a Pandora's Box. Everyone would like
his own. For that reason such taxes are unpopular with economists and

fiscal officials.

UNIVERSITY INVESTMENTS CORPORATION

As an additional source of income, the special education
district could be given the right to establish a university investments
corporation. The university investments corporation could utilize excess
revenue generated by the tax levy to invest in various kinds of real

estate, bonds, securities, etc. The investments corporation could also

* be utilized by the university as a means of borrowing funds by pledging

its investments and real estate behind its bonds without committing the

University, the City, or State to the bond holders. Under such a


financial system the State Legislature could retain ultimate control
the special education district and the invest-

over the operations of
right to abolish the spec:

ial

ments corporation by reserving its

district.

Appendix #2


DOCUMENT #18

ICING
OPERATING cosTs_AND SOURCES OF FINAN

FOR
STAFF PAPER PREPARED
THE CITIZENS' COMMISSION

BY

PEAT, MARWICK, MITCHELL & co.

The information presented in this preliminary staff paper is intended
for the sole use of the Citizens' Commission on the Future of the City
University of New York. Thecontents of this paper in no way represent
the position of the Commission on any issue discussed herein and are
not for publication or attribution,

OPERATING COSTS AND SOURCES OF FINANCING

This paper presents the Projected increases in costs for both
the City University and the State University through 1975. It also examines
the relationship of expenditures for higher education to projected total
expenditures of the city and the state. Section 2 assesses sources of
future financing for the City University. It should be noted at the
outset that operating cost Projections for two such large, public univer-
sity systems depend upon many factors which are uncertain, and that an
even greater degree of speculation is involved in projecting total city
and state expenditures. For example, a projection of New York City's
budget prepared a little over four years ago, after careful study, by
the Mayor's Temporary Commission on City Finances underestimated the
1970-71 budget by $1.4 billion. The figures in this paper, therefore,

are intended primarily to provide a perspective.

CITY UNIVERSITY OPERATING COSTS

Actual operating costs for the City University have been
increasing at a rapid rate. Total approved budgets, including city debt
service, for the current year and the preceding three years, as published

in the City Record, are as follows:

Total Budget % Increase
Year ($ Millions Over Prior Year
1967-68 $181.6 -
1968-69 207.9 14.4%
1969-70 251.6 21.0
1970-71 332.0 32.0


Ns ,

70-71 budget m V: pwa: ity d
ay have to be re’ ised upward since the city an

Moreover, the 19 es based on a freshman enrollment of
eas

state granted workload budget incr

1 enrollment will apparently approac ,000.
iment will ap tL th 35,00

30,000, while the actua

68 Master Plan submitted to the Regents by City University
The 19! las

th 1975-76. These pro-
d latively detailed projection of costs throug|
included a re

nto jor facto’ ch wou future
to account four major factors which 1d influence

jections took i

costs:

Workload increases which would result from expanding enroll-
lor!

ment.

The substantial increases in salary costs resulting from
collective bargaining, as well as a moderate increase in
other operating costs.

The cost of needed improvements in student services in areas
such as admissions, counseling and testing, as well as needed
improvements in other support services such as secretarial
help for faculty members,

. The increasing cost of debt service to finance projected

new construction.

In the 1969 revision of the Master Plan these projections were
updated to reflect the cost impact of the Open Admissions policy. Historically,
approved budgets have been somewhat lower than either Master Plan projections
or budget requests by 10-15%. The following figures show the Master Plan projections

as well as an adjusted projection which revises these figures downward by 10%:

Master Plan ‘% Increase Adjusted

Projection Over Prior Projection
Year 4$ Millions) Year ($ Millions) % Increase
1971-72 $474.4 42.9 $427.0 28.6
1972-73 575.2 21.2 517.7 21.2
1973-74 681.0 18.4 612.9 18.4
1974-75 792.3 16.3 713.1 16.3
1975-76 916.5 157 824.9 15.7

It is not at all certain that the adjusted projection is more realistic, but
for purposes of this Paper these are the figures we will use. While there is
a marked difference between the two projections in the increase for 1971-72
as compared with the current approved budget of $332 million, both sets of
figures imply a compound rate of annual expenditure growth of nearly 18% per

year over the next four ensuing years. This may well be a realistic estimate

of the rate of growth which can be anticipated, considering that the compound
growth rate over the past three years has been just over 22% per year.
An interesting picture also emerges from relating the actual budgets

for recent years to the adjusted projections, as follows:

Total Budget

Year ($ Millions) % Increase

1967-68 $181.6

1968-69 207.9 14.4%
1969-70 251.6 21.0
1970-71 332.0 32.0
1971-72 427.0 ona
1972-73 517.7 21.2
1973-74 612.9 oe
1974-75 713.1 ieg
1975-76 824.9 15.7


n the city University budgets

weh i
suggest that the rate of gro
s

4 its peak this year.

The figure Nevertheless, it is clear that the

may have about reache

e next five years a

ven if the
s for sharply increasing costs, &
outlook in thi eee ace.
is not quite as steep aS during the Pp
rate of increase 18 oie pete
be that costs will rise even more rapidly
It could well be en
As indicated above, enrollment growth thi
ae ay ome ich the present approved budget was based, and
tt on whic!

tantially exceed tha "
_ The construction program is lagging,

y iditional 4
0: i rating costs.
forcing a sharp increase in rented space which increases ope 4
re.
e truc! c ci ic: rr rojects,
Meanwhile, construction costs 4 e escalating on the deferred pro.
ant 4 fi

Ev ore significant is the fact that Open Admissions provides an entirely
en m

£
new perspective for the thousands of students who normally drop out 0.

high school each year. This new policy may well influence substantial

additional numbers of high school students to complete their high school

education. If there is a significant improvement in the high school comple-

tion rate, it would cause University enrollment to expand even more rapidly

and could have a major cost impact on the City University.

COST IMPACT ON LOCAL REVENUES
The City's share of the total City University budget for 1970-71

is $146.6 million, slightly over 44% of the $332 million total. Interviews

with officials of state government and legislative leaders have made it

very clear that the state will not increase its share of City University costs

without the imposition of tuition and a change in the governing structure

to give the state greater control.

Thus if we are projecting the future

financing of the City University as it Presently exists, we would have to

assume that the city will continue to Pay about the same 44% share of the cost-

This would mean that the city's share of the cost will rise to approximately

$365 million by 1975.

Over the past decade, local revenues have grown from $1.875 billion to
$4.426 billion, an average rate of just about 9% per year. Real estate taxes,
the largest single source of local revenue, accounted for about half of the total
revenue, but are growing at a slower rate (7.3%). The outlook for future revenue
growth from this major source is not bright because of the decline in residential
construction in the city over the past five years. However, even assuming that
overall local revenues during the '70's will grow at the 9% rate of the ‘60's,
it is clear that the City's share of City University costs would require an

increasing percentage of local revenues, as follows:

NYC Share of
Projected
Projected City University City University
Local Revenues Total Budget Cost as % of
Year ($ Billions) ($ Millions) Local Revenues
1970-71 $4,426 $146.6 3.3%
1971-72 4,824 187.9 3.9
1972-73 5,258 227.8 4.3
1973-74 5,732 269.7 4.7
1974-75 6,248 313.8 5.0
1975-76 6,809 363.0 5.3

Throughout the United States (and for that matter in almost every country
throughout the world) the responsibility for public higher education is con-
sidered to be a state responsibility. While there are a number of cities in the
United States which contribute some portion of the cost of operating a community
college, no city is supporting a major university system. In fact, the municipally
Sponsored colleges and universities in cities such as Detroit, Cincinnati, Akron,

Omaha and Houston have all become fully state supported in recent years.


the state has
k State outside of New York City,
In New Yor! ; ee
ibility for public higher education.
1 respons

¢ to expect the city to all
es to fulfill a responsibility

accepted ful ocate such a sub-

situation, it is unrealisti

easing share of its resourc

i incr
stanciah aa Considering the outlook for munici-

which properly belongs to the state.

d from local
it is clear that the level of funding require
eae aoe g formula could be achieved only

anc in}
revenue sources under the present fin

ith tl rc Yo it a e state ly bear some
test difficulty, if a 11. The state must certain’
with the greate:

oportions,
ibility for allowing the problem to grow to such large prop
respons
ity i
1so be recognized, however, that the unequal burden on the city is
It must also
i 1
extent self-imposed by continued insistence on no tuition, as wel
to some -

willingness to permit state participation in University governance.
as ul

THE OUTLOOK FOR CITY EXPENDITURES AND_REVENUES

Over the past decade, city expenditures have been increasing at a ratec

slightly over 12% per year. During the past few years the rate of increase has

been accelerating, and the 1970-71 budget of $7.791 billion represented a 15.9%

increase over 1969-70. Despite the increases in real estate taxes and the
introduction of personal income, stock transfer and other new taxes during this
period, local revenues have not been able to keep pace with the growth of
expenditures, In 1960-61 local revenues supported 77.5% of city expenditures.
By 1970-71 this had fallen to 56.8%, and indications are that by 1975 local
revenues will cover only about half of total expenditures, unless substantial

new local taxes are enacted, or rates are further increased.

At the same time, there is little indication that the rate of growth in city

expenditures is likely to slow down in the foreseeable future. The following

figures from the Executive Expense Budget show the increase this year over last

for eight major budget categories which account for about 80% of the city's

expenditures:
1969-70 1970-71
Budget Budget
Category & Millions) {S$ Millions) % Increase
Human Resources $1638.5 $1861.4 13.7%
Education 1299.5 1474.4 13.5
Debt Service 675.6 796.2 17.8
Health Services 585.2 725.2 23.9
Pensions 433.7 518.0 19.4
Higher Education 228.3 287.9 26.1
Charitable Institutions 235.4 276.2 17.3
Environmental Protection 226.9 257.9 13.7

The fact that expenditures are growing so much faster than local revenues not
only makes the city increasingly dependent upon state and federal aid, but also
means that competition for a fair share of local revenue will become increasingly
intense. In such a climate of contention it seems very unrealistic to expect the
City University's share of local revenues to be increased by 60% over the next

five years, as would be required by continuation of the present financing

formula.

THE SITUATION AT THE STATE LEVEL

It should not be assumed that, because of New York City's financial problems,
City University would automatically be better off under state financing. The
State of New York is already spending a very substantial portion of its budget

on higher education, as the following figures from the 1970-71 Executive Budget

reveal:


1970-71
Expenditure
Millions
Category ssst.2
Scholarship
luding SUNY
State University (Inc nat «a0
Community Colleges a
SEEK js
Urban Centers so.
i iversity
Oa A aaie Community Colleges SEEK,
Urban Centers, etc.) «3
tudent Assistance
: (Scholar Incentive, Scholarships
and Fellowships) ,
Higher Education Assistance Corp.
26.0
Private Colleges ("Bundy Money")
8.0
Medical and Dental Schools
54.0
Fringe Benefits (estimated)
Total $721.9

The total amounts to just over 10% of the total approved budget of $7,127

million. Ten years ago slightly less than 4% of the state budget went to

higher education.

The demand for higher education funding at the state level does not
show any sign of slowing down in the years immediately ahead. The State
University prepared an estimate for the 1968 Regents Statewide Master Plan
which projected State University operating costs, exclusive of community
colleges, of $897.7 million for 1975-76. Measured against the 1970-71

State University operating budget of $437.8 million, this would imply a

15.5% per year rate of increase in costs. No updated projections have been
published since 1968, but a current Projection would probably be higher

by a significant amount because of such factors as acceleration of open
admissions and the advent of collective bargaining for State University
faculty. The Community Colleges are continuing to expand at a rapid pace,
and the state this year will contribute $68 million as its share of
community college operating costs, an increase of 55% over last year's

$44 million. The rate of growth in Student Assistance funds will probably
accelerate as more liberal admissions policies draw an increasing percentage
of the disadvantaged into the systems of public higher education. An
increase in the formula aid to private higher education under the Bundy law
will be sought at the next legislative session. Thus, the outlook is for
continued rapid growth in expenditures for higher education at the state
level. In fact, if the trend of the past decade continues, by 1975 approxi-
mately 15% of the state's budget will be devoted to higher education.

Moreover, the disparity between growth of revenue and expenditures
is equally a problem at the state level, Comparing 1970-71 with 1969-70,
current revenue increased 9.3% while expenditures increased 14.8%. The
result was that debt financing of expenditures more than doubled this year
compared to last.

In some important respects the state is in a better financial
position than the city to finance increasing costs. The state has the power
to determine its own tax structure and level of tax rates, whereas the
city must obtain state legislative approval for changes it wishes to make.
Personal income and business taxes, which are highly responsive to economic

growth, constitute only 12.9% of city revenues, compared with 58.8% of


lo

e obligations presently amount

te's debt servic
an 2% of the 1970-
of the cit:

tal
me 71 state budget,

y's 1970-71

state revenue. Also,
er year, less th:

to only $150 million P
x the city,

more than 10%
compared with $796 million fo

budget.
‘ e the state is ina somewhat better

pears that whil

it is also
sing costs of high 2

Thus, it ap!
er education,

fon to finance the incre

y University's growin,
Under either the Pp

d not be

posit ,
4 financial needs wou

lear that the Cit)
: resent joint city-

easily met under state financing.
ngement OF under full state financing, the City

state financing arral
creasingly intense compet.

ition to

University will continue to face ing

secure an expanding share of revenue.
On other grounds, however, there are compelling reasons why
the state should assume the same degree of responsibility for public
education in New york City as it does elsewhere in the state.

higher
lic higher education, especially at the

As noted above, pub

college and university level, is universally recognized throughout the

United States and throughout New York State, with the exception of New

York City, as a state responsibility. The financing of public higher

education in New York City is an ironic anomaly, in that the reason the
city is now paying so heavily for higher education arises out of its
willingness, in the absence of.a statewide higher education system, to
provide higher educational opportunity for generations of poor immigrants.

A second major reason is that New York City is bearing a

disproportionate share of the cost of higher education throughout the state.

[errr —

1l

Estimates of the share of state tax revenues produced by New York City
range from 42% (state estimate) to 47% (Citizens Budget Commission)

to 51% (N.Y.C. Budget Office), There are various ways of looking at
sources of state revenue. The state, for example, will argue that

the income taxes paid by a Wall Street stock broker or mid-town office
worker are not generated by New York City, if the stock broker lives in
Scarsdale, or the office worker commutes from New Jersey. Studies by
the state's own Office of Planning Coordination, however, show that
more than half of the persons employed in the state find employment in
New York City. In fact, it could be argued that the large share of state
sales and use taxes derived from suburban Westchester and Long Island
are really generated by New York City, Without getting overly refined,
however, it seems reasonable to conclude that at least half of state
revenues are generated by the economic activities of New York City.
This means that the city is supporting, in addition to all expenditures
financed by local revenue, at least half the cost of all expenditures
financed by state revenue. When both city and state expenditures for
City University, State University and the statewide community college
system are analyzed in this context, the unequal burden on the city

clearly emerges.

BARUCH COLLEGE LIBRARY


12

Financing

urces for gher Education

Tax Revenue oe Public Hi

operating Costs °

Revenue Source
Tax All Other Areas

ie of the State

System

0.6 million
1. State University® 5190.6 million $19

(Excluding Community Colleges)

bd
2. City University sees) ;
Community Co 146.6
sg Paid From Local Revenues ap a3
B. State Share of Cost

3. Community Colleges Outside of 23.0 23.0
. New York City (State Share)’ _ 23.0

$427.5 million $280.9 million

Totals

to the State University eee budget
on.

for 1970-71, as shown in the Executive budget, was $70 Be a

ch ources of State University funds are § Noe eee. cil gutces

te sation grants, etc Total operating expenditur

‘oun > .

will exceed $500 million.

a The total state appropriation

fi
b Total city and state appropriations to the City Unigene waco or
1970-71, as shown in the City Recor, amounted tos pen ee .
tures, etc.
Student fees, bond financed expen ’ ;
capend tures 6 the approximate budgeted total of $332 million

¢ Total state appropriation ($68 million) as shown in the Executive Budget,

less 40% (the State share) of the operating budgets of the community
colleges in New York City as shown in the City Record.

Thus, New York City is in reality the source of support for
60% of combined city and state contributions to the budgets of the three
major systems of higher education, while 40% is provided by the rest of
the state. Yet the relative share of the benefits is in reverse propor-
tion, in that roughly 43% of the total enrollment is made up of students

from New York City, while 57% comes from the rest of the state, or out of

state,:as indicated in the following table,

*Enrollment figures are the

13
Georgraphic Origin of Students*
New York New York State Total
City (Exc. N.Y.C, Qut_of State Enrollment
State University 11,785 94,702 6,407 112,894
>
City University 87,050 4,999 885 92,934
Community Colleges
Sponsored by the Board
of Higher Education 31,191 673 302 32,166
All Other Community
Colleges 3,060 £3,406 1,657 68,123,
Totals

133,086 (43%) 163,780 (54%) 9,251 ( 3%) 306,117 (1007

Fall, 1969 full-time equivalent enrollment, based
upon enrollment statistics furnished by the State University Office of
Institutional Research and the City University Office of Planning.

The state Education Law does not, in itself, clearly establish

the state's legal responsibility for higher education. When the corpora-

tion known as the University of the State of New York was established in

1910, it was given jurisdiction over all institutions of higher education,

both public and private, but its responsibility to provide for public

higher education was not specified. One of the recommendations of the

recent state Constitutional Convention was that the law be amended to
state explicitly that the responsibility for public higher education rests

with the regents and is a function of state government, Nevertheless, the

state has by its actions since 1948 made it abundantly clear that it has

accepted full responsibility for public higher education, except in New

York City. The financial realities now make it imperative that this

exception be ended, and that the state provide the degree of support to
higher education for residents of New York City that it is providing for

residents elsewhere throughout the state.


1

section 2
RSITY
cITY UNIVE
sources OF FUNDS FOR ¥” spRaNGEMENTS

OEE ENDER FULL STATE FINANCING

if
ources of funding would change
the s

To illustrate how ort for public higher education
P

1 of sup!
the state provides the same leve

the rest of the state, projections
ghout

hrou!
in New York City as it does t'

ees of funding under that financing
ng sow’

have been prepared showii

rangements.
stem compared with present cost-sharing ar ng
° d total budgets as
he projecte:
begin with ¢!
These projections

d on the present
3. In projecting sources of funds base!
shown on page 3.

ost tive share of
t-sharing arrangements, it is assumed that the rela
cc

cost y ‘y ents W e the same in future years
id by city, state and students ill be th 6
st pa: >

t > nor 5 n each S| bab 1;
it is at present, even though some mi shift i th share probably
as Ss al

his
ld occur from year to year. Thus, the relative shares for tl
wou!

projection are:

cut - 44.2%
State - 40.5%
Students - 12.7%
Other - 2.6%

Total - 100.0%

If the state were to finance the City University on the same
basis as it finances the State University, it would not automatically
pick up the full share now paid by the city, The community colleges
sponsored by the Board of Higher Education are already financed on the

same basis as community colleges elsewhere in the state, so the city cost

for community college operations would continue. The community college

costs were projected as 17% of the total budget, the present ratio of

15

community college enrollment to total enrollment is relatively stable
for this period,

The city would also be obligated to continue paying the debt
service on municipal bonds issued primarily to finance City University
construction before the establishment of the Construction Fund in 1967

This cost has been projected at $10 million per year, which is approxi-

mately the present level,

[ween respect to tuition, it is assumed that if the state were

to provide the same degree of Support as it now provides for the State

University, it would require a comparable tuition charge of $400 per year

for full-time undergraduate students, However, it is also assumed that

the tuition income from the senior colleges would be dedicated to support

capital financing for new construction, and would not be available for

paying any part of operating costs.] Community college tuition income is

assumed to be part of operating income, as it is elsewhere in the state,

Income from tuition presently being paid by graduate and part-

time non-matriculated students, as well as non-instructional fees paid

by all but matriculated undergraduate students, which accounts for 83% of
the total, is assumed to continue.

Taking all of these factors into account, the sources of funding,
based on the State University financing formula were projected. A third
Projection was also prepared on these same assumptions, but also assuming
a new city financed student financial aid fund to supplement state and
federal programs. With the long tradition of free tuition, it is likely
that some new student financial aid program would be established by the city,

if tuition were imposed, This third projection is predicated on a city


16

duate student, the amount
ll-time undergra
contribution of $200 per fu
Temporary Commission on City Finances several
8

recommended by the Mayor"

gs not necessarily to imply that the funds would be

years ago. This i
ne the dollar level of

determi
distributed in this manner, put simply to

total funding.

The table attached presents the results of these three projec~
tions of sources of funding. perhaps the most significant fact which
emerges from the tables is that if the state were to support the City
basis as the State University, the state's cost

University on the same
ase next year by $150 million.

y University students for new or increased

ld incre In addition, the imposition
would inc:

of tuition would qualify cit

state scholarship funds, which would add something in the range of another

$10 million to the state's cost. While testimony before the Commission

by legislative leaders indicated that the state would provide full

financing for City University, given the introduction of tuition and

appropriate changes in control, it is at least somewhat questionable whether
the state could absorb such a large cost increase all at once. Perhaps
some phased transition of cost would be more realistic.

The tables indicate a gradual decline in the share of costs paid
by students, if tuition were imposed, but this is misleading because most
of the tuition income would not go to operations, but would be used to
support debt service. A $400 undergraduate tuition charge would by 1975
be generating over $40 million per year and would be sufficient to support

the financing of about $500 million in new facilities, depending upon

interest
rates. It should also be noted that given the current lag in the

const;
Tuction program, tuition could be introduced on a phased basis

1
For example, a tuition of $100 per year, increasing by $100 in each of
ch o

three subsequent years, should
be adequate to su
pport the planned con-

truction when t e :
8 Program, when taken together with present sources of financi
ng.

17


18

Year

1970-71
1971-72
1972-73
1973-74
1974-75

1975-76

1971-72
1972-73
1973-74
1974-75

1975-76

Total
Budget

$332.0
427.0
517.7
612.9

713.1

824.9

270.9
315.2

364.6

Appendix #3

SOURCES OF FUNDS FOR THE
CITY UNIVERSITY BUDGET

Projected Sources of Funding the City
University Budget,
Formula is Continued

if Present Cost-

Projected Sources of Funding, if City

University Were Financed on Same Basis

State Student City
Share Share Other Share
$134.6 $ 42.2 $ 8.6 Fs

172.9 54.2 11.2 $33.9
209.7 65.7 13.5 39.0
248.2 77.8 16.0 44.4
288.8 90.6 18.5 50.0
334.1 104.8 21.4 56.3

Differences
City State Student
Share Share Share
$154.8 + $149.7 + $5.1
189.8 + 185.8 + 4.0
226.5 + 223.9 + 2.6
265.2 + 264.4 +
308.3 + 309.5 - 1.2

Added City Cost
for Student
Finencial Aid @ $200
Per F.T, Student

fi

$22.4

24.7
26.6
28.5

29.6

as State Universit:

State Student

Share Share Other
$322.6 $ 59.3 $ 11.2
395.5 69.7 13.5
472.1 80.4 16.0
553.2 91.4 18.5
643.6 103.6 21.4



- Page 2

DOCUMENT
#13 colleges are eligible for State scholarship or loan programs. Unlike the Fed-

eral programs, which are geared only to financial need, some of the State
awards are based primarily on academic qualifications, with award amounts re-
lated to tuition charges and influenced by financial need. The State currently
makes annual awards of over $70,000,000 through its several aid programs, as
shown in the table below.

Amount for

Type of Award 1969-70
Undergraduate scholarships $30,600,000
Scholarships and fellowships - graduate
AL AID TO STUDENTS and professional level 2,300,000
EINANCI:
FINANCIAL
Scholar Incentive Assistance 35,600,000
AND THE IMPACT OF TUITION , ,
AO TE
State University Scholarship Fund awards 1,800,000
TOTAL $70,300,000

Source: The State of New York Executive

STAFF PAPER PREPARED FOR Budget for 1970
THE CITIZENS' COMMISSION

BY Three State aid programs which are particularly significant for this
PEAT, MARWICK, HITCHELL & co, paper - the Scholar Incentive Awards, the Regents Scholarships for High School
Graduates, and the State University Scholarship Fund - are described in the
Appendix.
Federal student aid is administered principally through the Regional
Office of the United States Office of Education, which allocates funds to

the i New York, New Jersey, Puerto Rico and the Virgin Islands. The aid is awarded
18 fi i ‘

the agleawe ce presented in this Preliminary staff paper Is intended for —
of New York, The Cn Commission on the Future of the City University
the Commission on any tees of this paper in no way represent the position °
attribution, ue discussed herein and are not for publication oF

to approved institutions by a panel consisting of Government representatives
and financial aid officers from representative institutions. The panel bases
its judgment on an assessment of past performance and on annual proposal
Tequests from each public and private institution. These requests project
Rumbers of students and amounts of assistance that will be required by type of

ald Program. The major Federal programs are Educational Opportunity Grants,



ai - Page 3

Natio’

Executive

available to ©

$6 mi
Appendix to tl

The
throug!

systen. (The

contain aid provisions suc!

programs a)

programs have been develop:

Each college in the CUNY system
donors for grants, scholarships and loans.

ing the extent of aid from these sources i

lieved to be

nal Defense st

pudget of the .

lion available £0

his papet-

nh direct subsidy of abo’

re discussed in other study pal

ke
Loans, college Wor
udent

ity of New x

mn Federal sour

ork projects 1

yyy students fro

69-70- se programs are al:
8 als
x 1969-70

The:

£ New York provide:
ut half of the net ©

City 0

City also provides special

ed at the City funding level.

modest in scope.

STUDENT NEED AND
_ABILITY TO PAY

A report by the CUNY University Commission on Admissions, dated

October 7, 1969, provides data concerning recent costs for a commuting student

in the CUNY system. The following represents their estimate of a student
budget:

PaY

1969-70 Student Budget

Fees (including student activities) $ 100
Books 200
Transportation ($1 per day, 40 weeks) 200
Lunch ($1.50 per day, 40 weeks) 300
Personal expenses (cl,
recreation, nc nedical, 500
$1,300
800

$2,100

study and Guaranteed Loans, The
fat $15 million will be
ces in 1970-71, compared with

0 described in the

.g support to resident college students
perating costs of the Cuny
programs for the disadvantaged, which
fh as SEEK and College Discovery Fellowships. These

pers). No other scholarship or loan

has some funds available from private
No consolidated information regard-

s available. However, it is be-

Page 4

This same report also illustrates sample family gross income levels

for CUNY freshmen in 1968-69:

Community Senior College

Gross Income Colleges Colleges SEEK Discovery TOTAL
under 4,000 10.7 5.4 28.0 23.0 9.7

4,000- 5,999 | 19.0 52.9%]13.0 38.5% |42.0 90.0%] 29.0 73.0% |17.9 49.3%
6,000- 7,999 | 23.2 20:1 20.0 21.0 21.7

8,000- 9,999 ]19.4 39 oy | 22.0 7.0 21.0 19.8
10,000-14,999 {19.5 789% | 97°9 49-0% | 575 10.0%] 6-9 27.0% | 208 41.3%
15,000-19,999 | 5.8 g 97/ 8.1 , 0.0 0.0 6.3
20,000-Over 2.6 SET ae 7%) oo 1 og | 5p 94%

Note: These data for the colleges were supplied from a study
of 1968 freshman characteristics complied by the
American Council on Education. It includes data from
City, Hunter, Baruch, Bronx Community and New York City
Community colleges. The SEEK and College Discovery

data were random samples from the September 1969

enrollees.

A new Need Analysis System has been adopted by CUNY institutions, and

was published on April 1, 1970. This report illustrates the annual family con-

tribution to a college student's expenses that might be reasonably expected,

given several categories of income level and family size. According to the sys-

tem formula, a four-member family with one wage earner could contribute as indi-

cated below:

Gross Annual Expected Contribution
Family Income to College Expenses*

Below $7,800 -
$ 8,060 55

8,580 138


Page 5

(cont 'd)

*The contribution may b

ected Contribution

to college Expenses*

Gross Annual

Family Income zit
$ 9,100 294
9,620 367

10,140
482
10,920 4

55

11,440
627

11,960
700

12,480
773

13,000
846

13,520
1,116

15,600

e affected by assets, savings or

extenuating circumstances.

Note:

This formula is applied by deducting taxes and
average family living costs, as determined by the
Budget Standard Service of the Community Council
of Greater New York, from gross annual income.
20% of the balance, which is considered discre-
tionary income, is assumed to be a reasonable
contribution toward college expenses. It should
also be noted that development of the Need Analy-
sis System included a more thorough study of
Student expenses, which suggested that average
college costs for a commuting student in the CUNY

system may range from about $1,000 to $1,300 per

regular academic year,

stor

The University Commission on Admissio,
ns

into projections for 1970-7], Their results indicate th
that more than 20%

; of the
entering freshmen class would require $1,300 each ina 1 ai
mnual aid to meet basic
lege costs, and th,
colleg 7 at more than 4% of the freshman class would requi
equire some

additional assistance beyond $1,300 toward their living
expenses,

The estimates
for the combined upper three classes approximate on
ie

chalf of the amounts needed
by the freshmen.

Stat
ated in dollars, the Commission Projected that about $66
million would be required for cuNy undergraduate student financial aid £
id for
1970-71.

CUNY
now lacks consistent data on student aid awarded for prior years
,

and does not have a system to collect such data. Central coordination of the

CUNY financial aid activity has been in force for only a year, and some data is

just being made available on a system-wide basis. It has been found, however
> >

that many students who were qualified for aid have not received it. Moreover

it is generally acknowledged that the full extent of CUNY student financial

need has not been correctly assessed in former years. For these reasons, in

addition to the impact of open admissions, it is difficult to evaluate the $66

million projection in relation to prior levels of need.

AID INEQUITIES

The above analyses do not take into account any further reforms that
might be desirable in student aid administration. It will be noted that, of
the major State and Federal aid programs described in the Appendix, only the
two loan programs are available to part-time students. If a student must work
to contribute to family support, he may not be able to cope with a full time
academic program, and will therefore be ineligible for most types of aid.
Another discriminating factor is a heavy reliance on loans. Evidence suggests

a higher attrition rate for students from low income families. If these



page 7 1
include 10ans+ only to ieave college Wi thoy

5 that - t
ge pinatson of reduced income potentia) and fy,
e com ~

al
ents obt
per into poverty.

rovides free tuition for all Matriculatey

EE INCOME CUNY P'
the basic policy of

esidents of Ne

$45 per term.
nity colleges pay tuition fees, which

; all student.
ew York Citys however» MES PAY a gener |

students who are T' In addition, graduate student, |
$10 to 8 and

n varies from

he senior and commu!

ndicated in the table below.

fee whic!

natriculants in ¢

non-! |
d, as i i
have recently been Ancresse’s |
Schedule Effectiy, |
Current Schedule 9/1/70 f
Fee* Feex |
(Per Credit or (Per Credi: i
tor |
Bategots Per Semester) Per Semester)
Graduate Students
*
Tuition: Teacher Education Matrics $10 er. $45 crt
35 cr. 45 cr. }
All Other 18 50 |
Non-Instructional Fee
Senior Colleges - Undergraduate
Matrics: Tuition #05 20+
Non-Instruc. Fee, Full-Time 35 35
Non-Instruc. Fee, Part-Time 7 Vv
Non-Matrics: Tuition 18 cr 18 cr.
Non-Instruc. Fee, Full-Time 35 35)
Non-Instruc. Fee, Part-Time 17 17
Community Colleges
Matrics: Tuition 0. 0
Non-Instruc, Fee, Full-Time 20 20
Non-Instruc. Fee, Part-Time 10 10
Non-Matrics: Tuition
Non- Te
Now instruc. Fee, Full-Time a a
on-Instruc. F, 20 20
ee, Part-Time 10 10

* s
Cr. = tuition on a

Per cred
per Semester, it basis; all other fees are per capita,

Note: this Schedule 1
xCludes continuing education, out-of-City

and
Other Special fees

The purpose of this paper is to explore some of the financial implica-

tions that would result if a $400 per year tuition charge were imposed on City

University students. The emphasis will be on major types of aid available,

student need and ability to pay, and the net effect on sources of funds flowing

into the City University.

FINANCIAL AID
‘ADMINISTRATION
__ADMINISTRATION

In common with most states, New York has been experiencing rapidly
rising costs for higher education, along with a rapidly increasing number of

students to be educated. Few institutions - public or private - attempt to

recovet the full costs of higher education from the students or their families.
The rractice has been to increase tuition and fee charges at a lesser rate than

that of educational cost increases and, in many cases, to mitigate the impact

of increased charges to students through expanded student financial aid programs.

Student financial aid is typically administered or coordinated by an
officer of the educational institution; however, the sources of funding may be
the Federal Government, State government, City government or private sources.

Aid generally takes the form of grants, loans, or some type of work/study arrange-
ments and may be related to scholastic merit, financial need, or both. It most

often consists of a "package" of several types and sources of aid, tailored to

the requirements of the individual student applicant.

SOURCES OF

FINANCIAL AID

Educational financial assistance funded by New York State is provided

The public institutions are

through the University of the State of New York.
in the case of CUNY, no tui-

Subsidized by State funds and charge low tuition or,
Students at both public and private

tion for matriculated undergraduates.


page 8

USE OF FEE

d by CUNY senior Colle,
INCOME _ he fees currently collected DY BSS. which
Most of the he Construct
in 1969-70, are pledged for the ction Fung ProRtag
illion in
exceeded $24 m

These revenues are deposited with the city Which

to provide new facilities.

ting funds sufficient to offset the amount Pledged,
dded opera
provides a

- amounts collected by community e917
£ fee income - am € Bes
The balance 0}

g - totalled about $7 million in 1969-79,

T
and minor fees of several type: .

urposes.
es were used for general operating purp
revenu

THE IMPACT OF
_Turrion __

The most common interpretation of the tuition recommendations js that
a tuition equal to the SUNY rate (currently $400 per year) be imposed on ful).
time matriculants of CUNY, that the existing general fee for those Students be
eliminated, and that fees for graduate students and non-matriculants continue t

on the same general basis as before.

(a) Impact _on the City University

Applying these assumptions to the latest CUNY enrollment and expendi-
ture projections, the impact of fees and tuition is expressed below, in millions

of dollars, with Construction Fund fees and other student fees combined:

(2) (3)

Fee and Tuition Income

(4)
Total Projected

CUNY Expenditures
(From Master Plan)

(1)
Fee Income
Without Tuition

1970-71

42,
1971-72 is ;
1972-73 49.2 474.4
eT4 57.6 oye

Q) The 1970-7)

ani ‘
2 meteases are 8.2% ite on CUNY estimates under new fee schedules.
(2) The 1979-7] amount reflects cum istent with recent experience.

estimates 9. -instructional
Matriculant. f fees less non-i

Increageg are at 8.2% annually. | aw
; each ae ; 133, 2005
(4) Recent expernect ively. *2F axe 95,300; 111,800; 123,600; }

these requested figures may be reduced by

tion plan would be to increase revenues by $31

Million in 1970-

71 and
to $48 million by 1974-75, and increasing

This i
net Contribution would, of course, be diminished
by any student financial aig Programs established by th

e City of New York to
lessen the impact of tuition on needy Students

(b)_ Impact on the Students

current general fees) for Senior college Students,

and $360 for community college

students. The CUNY need analysis formula would req

uire from $1,650 to $1,800 of
additional family after-tax income to generate the added contribution to cover
tuition. The increased costs and the resulting increase in the level of family

income necessary to cover these costs, would substantially increase the number

of CUNY students eligible for financial aid, (A one wage-earner family of four

would require an income in excess of $15,000 to meet the basic college costs,
which would now approximate $1,400-$1,700 per year). Based on the 1968-69

family income data for CUNY freshmen cited above, as many as 90% of the families

from which the expected 1970-71 CUNY freshman class of 35,000 will be derived,

Could have incomes of less than $15,000 per year, and would therefore be eligible
for some student financial aid under these revised conditions.
(c) Impact on Federal Aid Programs

The impact of a CUNY tuition plan on Federal aid would be significant
since the annual CUNY funding request would reflect about a 30% increase (an
added $330 to $360) in average college expenses for each commuting student re-
quiring aid. It must be noted, however, that the actual allocation of Federal
ald to CUNY for the current year represented less than 50* of the amount CUNY
requested, Although some Federal aid increase over present levels could be

limitations
SxPected if tuition were charged, it is evident that overall lim


ae

page 10

es - at least i
allow substantial increas nm the Short
g will not
ocation of Feder:

any absolute increase in the CUNY aig

on Federal fund al aid to each state is somewhat ine
1 all
since the tota
ther evident that
he expense of other higher education instity.

run.
elastic, it is fur

n would likely be at t

allocatio
Another serious limit,

ation of the Federal aid is
7 State.
tions in New York

ize the higher living costs in the New York area,
0 recogni:

that it fails t
deral awards to stud
; ly restrict Fe: ents who.
idelines severe Se
The family income gu.

and virtually eliminate awarg
exceed $6,000 per year, i
gross family incomes
income exceeds the $9,000 level.

(d)__Impact_on State Aid Programs

The following illustration, as reported for 1969-70 by the New York
State Education Department, compares State aid available to SUNY students and

to CUNY students at similar family income levels:

Illustrative Scholarship and Scholar Incentive Annual
Awards to Undergraduate Students

$400 tuition charge Tuition-free College
Family (State University of New York College) || (City University of New York)
net Scholarship Nonscholarship Scholarship
taxable holder iz holder holder Non-
balance Scholar- | Scholar Scholar | State || Scholar- Scholar | scholar-
of 1 ship incentive | incentive | Univ. ship incentive ship
student | award award award | schol.|| award award | _holder
$1,800 |] $400 7 $200 | $200 $350 - e
3,000 400 - 200 - 350 - -
5,80
7800 400 a 200 . 350 . 2
7,500
, ms 7 200 = 350 - .
9,300 2
i 50 100 100 . 250 _ 2
Ht

amily net taxable b

lance i,

and deducti ; S the gross 4 “ious
te bala come tax purposes less all allowable exemp

nce of $1,800 is income

mor , approximate]: ross incot

a Hee one dependent chiig i comparable to a g! nee

ily,
For the typical two-child fami’)

Page 11

tudents. Under a $400 tui-
tion plan, as much as 50% of the cuny full-time enrollment (stud

students with
family incomes of less than $8,000 annually) would be eligible £ h

€ for scholar

incentive awards of $200 per year. such awards would total over $10 milli
™. ion

of additional State aid for CUNY students during 1970-71 under th d
e propose

tuition policy.

To make City University aid programs equivalent to those available
for SUNY students, a scholarship fund similar to the State University Scholar-

ship Fund would have to be set up for CUNY students. The SUNY fund pays the

difference between tuition cost and the scholar incentive award for students
with extreme financial need, which has been defined as students with gross
family incomes of about $5,000 or less. Even assuming that this income cri-
teria were not raised to reflect the higher cost of living in New York City,
it appears that about 20% of all CUNY students might be eligible for such an
award. This new program would cost about $4 million if effective in 1970-71.
Such an aid fund might be financed by the City, the State or jointly by the
existing funding formula.
A summary of the impact of a $400 tuition charge on all funding

sources is presented in Exhibit A. The further assumption is made for this

illustration that the net funding relief provided by the adoption of a tuition

Policy will be shared equally by the City and the State.



cLTY UNIVERSITY oF
PROJEC' ED_F' NDING SOL
igi Sources for
soni 970 ee 1970-71 Funding
ranting qauest Assuming Tuition
Ga millions) (Gin oe
369.9 : on

«Other 0.8
Capital Funds
— 11

_

State Funds
for SEEK 16.7

State Funds
for SEEK 16.7

Tuition
38.1

State
128.9

City
169.6

City
159.1

YORK
1970-71

RCE

er 0.8

Capital Funds

1.1

Projected Incidence
of a $400 Tuition
Charge (in millions)

ws 38.1

Net
Tuition From
Students,
Familics
and Other
Aid Programs
24.1

City Univ.
Scholar. Fund
| 4,07

State
Scholar
Incentive
Awards
10,0

Net Saved
From Reduction
of Current Fees

7.0

Net Increase
in Cost to
Students, Families
and Other Aid
Programs
17,1

APPENDIX

SUMMARY OF STUDENT FINANCIAL
AID PROGRAMS



Appendix #4

THE FREE TUITION ISSUE_IN THE CITY UNIVERSITY
TE CITY UNIVERS ITY

STAFF PAPER PREPARED FOR
THE CITIZENS' COMMISSION

THE OFFICE OF URBAN AFFAIRS
OF THE CITY UNIVERSITY

The information presented in this paper Is Intended porethe
sole use of the Citizens’ Commission on the sueire C) ig
City University of New York, The contents of th 7 Be rie
no way represent the position of the Commiss fon es a ee
discussed herein and are not for publicetion or a


ISSUE IN THE CITY UNIVERSITY

THE FREE TUITION

pespite periods of financial difficulties city
‘ Sovernments

n of free utition. have upheld the

During th
ditio g the depre
ra Pression Mayor LaGua

1. Introduction.

hey rdia cut Instructors!
a
Yor Wagner helped bring about f
ree

icipal colleges, and later in the City University ies rather than impose tuition.

Free tuition in the mun

ears old. Although it became a respected tradition

salar

tuition in the community collegesof th

of New York, is now 123 y € city in 1964 during a time whe

demands were being made on the City budget

. Nn other
it was not established initially by unanimous consent of the electorate ang it hag pressing

ed on several occasions during its history.

growing needs f y y
' g or higher education in the City in
recent years have made

blish the ''Free Academy" as

The public referendum in 1847 to estal it increasingly harder for the City to continue to Support the growth
‘owth of the City

ed serious debate in the city. The

proposed by the Board of Education caus University. Although State funds in very small amounts were availabl
Vvailable to the

Academy was to extend education "gratuitously" to persons who had been pupils municipal colleges through the years, these were not at all significant until 19
until 1948.

in the common schools. Many believed that higher education should not be at Federal funds were important during the years of education for vet di
rans under the

taxpayers! expense, despite the fact that a new public concept had taken firm rog GI Bill when the colleges were paid a "paper tuition"

cost of $9 a credit. This at

that higher education should be available to the sons and daughters of laborers, one time made up as much as 25 % of the colleges' budget.

mechanics and other working men. In fact, New York University, a private

When the GI's graduated, the colleges faced a financial squeeze. The postwar

tuition-charging institution, had been founded in 1831 based on that principle. population of the city had increased demands for all municipal services, but the

The referendum, after much public debate, finally passed by a six-to-one city's tax base had not expanded accordingly. In 1948 the State of New York, which

margin. But detractors of the new city institution remained vocal during its early for two centuries had left higher education largely in the hands of private institutions,

years and were not really silent until the end of the century. The mandate for took steps to establish the State University. This brought about state aid for the

free tuition remained as various revisions of the State Education Law took place, { Unicipal colleges (initially only for teacher education) under the first of a succession

Meanwhile, as the Academy grew and became the College of The City of of complex and constantly changing formulas.

New York, large numbers of its alumni became prominent in the professions, State aid increased annually from 1948 to 1966 when it reached a 50-50 ratio at

business and public service. They defended strongly the concept of free tuition, which it has remained, There have been recommendations for the imposition of

tuition from time to time, but each has been met with overshelming objections by

Meanwhile the City

and with each passing decade it became more firmly embedded as a tradition. in

fact it was n i i ivi
ot until the 1950's that free tuition was challenged again, and them oe University alumni, students, parents and civic groups:

not so much as a
concept, but because of financial difficulties the City was
encountering,


}

3.
difficult than ever to meet its share of the City University nag
finds it more
ion made it clear that it will
ore than one occasl =.
and the State has on m
ition is charged in the City Universit
-50 formula unless tul ,
beyond the 50-50

This paper will review the financial situations that brought about recom
? s

endations for tuition, the subjective reactions to the recommendations, and
m ,

the fiscal realities of tuition.

Il. The Beginnings of the Tuition Controversy

Although the municipal colleges experienced a growth in enrollment and
expansion of facilities in the years following World War II, the growth was not in
proportion to the increasing numbers of persons who by previous criteria had
been eligible to attend the free city colleges, Admissions depended on space

available, and the cut-off point based on high school average began to creep

upward each year. The tuition-free policy became, in effect, more of a scholar-

ship based on high school achievement than a means of guaranteeing free higher
education for large numbers of young persons from poor families. The blacks
and Puerto Ricans who had migrated to the city in large numbers following
World War II were the ones least able to meet the high de facto admissions
standards.

The slowness of capital constructional programs resulted from the fact
that college facilities were a Part of the City's annual capital budget along with
schools, hospitals, transportation, and other municipal facilities. As the city
was called on for more and more capital Projects and was held back by its

annual debt limi ;
imit, there were many postponements of college capital projects:

4,

Meanwhile, construction of State University f
acilities be,

i gan at
more rapid pace. When a study of the City's financial emt
a! proble

MSs wag ;
1951 by George Strayer and Louis Yavner made in

it
was recommended that the muni-
ani colleges be merged into the young State University syste;
™ in order for

more funds to be available,
The recommendation was not pursued, however Discussions of
. ns of such

a proposition stressed the point that the municipal institutions were acad u
femically

superior to the state institutions and would be degraded by such a merger, All

of the State teachers colleges were tuition-free at that time and the question of
state-imposed tuition was not yet an issue,

When Nelson A. Rockefeller was elected governor of New York in 1958,
he set about fulfilling his campaign promise to build up the State University. One
of his first steps was to appoint a group of nationally prominent educators to study
the higher educational needs of the State. The group, known as the Heald Com-
mission, was composed of Henry T. Heald, president of the Ford Foundation
and former president of New York University; Marion Folsom, former U.S.
Secretary of Health, Education and Welfare; and John Gardner, president

of the Carnegie Corporation.

id
The Heald Commission's report, entitled "Meeting the Increasing Demon
i i 5-year plan
= Higher Education in New York State" issued in 1960, outlines a 25-year P)
igher ion and graduate
calling for greatly increased public spending for higher education g
endations was that a uniform tuition charge of
mm

Studies, Among its specific reco
i in all public colleges,
#300 per year for all undergraduate work be established in all p

rebates were suggested

including New York City colleges. Automatic tuition

students from famil

than
ies with incomes Of less

for all ic: average or better



a he report al,
"other hardship" cases. T Pp SO urgeg State 6.

$5, 000 a year and for

d of Higher Education in proportion to state funds
Board 0:

The State Board of Regents upheld the tuition

3, A tuition charge at a public coll

lege
political pressure to raise it,

representation on the

* RO matter how low

> invites

allocated to the city colleges.

oposed rebate system w. 1

4, The pr " wE WOuld force stude .

a pauper @ est ~- a situation “abhorrent to is or virtually take

that would discourage many qualified but needy shea of students

y €nts from applying,"
" " plying,
5, Such a ‘means test would be complicated and cost}

and subjective designation of “hardship cases" would ° administer

invite lawsuits,

able."

i a easoni
mendation as "not unr’

s on which the Heald Commission based itg

recom

The basic argument

recommendations for tuition include

1, Many student attending the municipal colleges were well able to pay

6. The low tuition charge, combined with the
the modest $300 fee.

high .
rebates, and the large number of students who would oaministering
exempt, would result in negligible revenues for the © automatically
(at most 10% of operating costs), City colleges

2, A system of rebates would enable those qualified, but unable to pay,

, still to derive the benefits of a college education, . |
7. The rising cost of education has not overburdened the tax,

more than a century the same percent of New Yo: vers “EOE

i rk City's annual
budget--approximately 1, 4%--has gone to support ti fa ;
education. Pport tuition-free higher

3. The income from tuition was necessary for purposes of expanding
” facilities and maintaining quality in the face of rising costs and needs,

This was the most serious threat to free tuition that the city colleges

The result of the campaign was that the uniform tuition proposal of the

had ever faced. The result was a vigorous campaign, spearheaded by the City

Heald report was dropped from consideration by the State Legislature. However,

College alumni, endorsed by Mayor Wagner, the Board of Higher Education,

in the following year, 1961, Governor Rockefeller's Aid to Higher Education
prominent city officials and numerous civic groups. The Governor's office

bill that established the Scholar Incentive awards stipulated that the awards--

was flooded with petitions and more than 10, 000 letters urging the maintenance

up to $300 a year--could be given only to persons attending institutions that

of free tuition,

charge tuition. The same legislation abolished the free tuition mandate and gave

The major points in favor of free tuition included:

the Board of Higher Education authority over whether to establish tuition at the

if i: New York City, unlike most large cities, requires a predominant, highly
H trained and "white college"labor force, It is,therefore, vital to the

: city colleges,
City's economic interest to provide tuition-free education.

2 . The Board affirmed its intention to continue the free tuition policy and the
+ 4 1960 study showed that more than one-third of the students in the city
pies ane from families whose incomes were less than $5,000.
ny parents, therefore, find it is a sacrifi ir children
even to a tuition-free college, a

at
Same groups that had fought the tuition proposal the year before launched a battle

i ity was
‘orestore the free tuition mandate. That same year, the City University

. _ arate, parellel
Seated amidst legislative proclamations that it was to remain @ sep:

i ee tuition to
and autonomous institution. Despite the political impediments of fr
icated tha’
nor indicate
State aia imposed by the Scholar Incentive program, the Gove



o other state aid.

jon issue 2 parrier t

he would not make the tuit:
aid did indeed begin to inc
th, The University's budget had grown Sion

rease, but at a rate not in keeping With
State

the City University's projected grow

$19 million in 1949-50 (of which the State paid $4 million) to $47 million in 1959-69

(of which the State paid $13 million). Under a formula established in 1960, the

State was to pay one-third of operating costs for degree candidates in the first two

years of undergraduate studies, plus other mandated amounts for graduate education,

administration and teacher education. Supplemental aid was also provided and

non-mandated aid was given for doctoral programs. The 1960 legislation also
provided for the State to begin paying one-half of City University debt service for
construction costs.

The tuition issue, meanwhile, remained volatile. Several bills were
introduced in 1962 to restore the mandate. They were defeated by narrow margins.

New fuel was added to the heated tuition issue in 1962 when the State
University Trustees voted to establish a uniform tuition policy and to charge tuition
in the institutions that at that time did not impose such fees. New York City groups.
viewing this as another step toward state imposition of tuition in the city colleges,
tried unsuccessfully to have the State University measure reversed.

City officials and the Chairman of the Board of Higher Education sought

further assurance from the State that it would not make tuition a condition of increased

State support of the City University. It became clear, however, that the State would

not go beyond 50% support. In a letter to Gustave G. Rosenberg, Chairman of the

Board of Hi i :
of Higher Education, in March 1966, Governor Rockefeller wrote:

I stand ready to recommend ¢
7? a 0 t] A
‘0

ar Ure State a -
whatever the City is prepared to spend PPropriations

; Match on a 50-50 basis
Suggestions that State support

immediately raise the question of exten,

free-tuition university in New York City when thee

a uniform $400 eutbion Any boy or girl 80ing to ite Si

needs aid can get assistance from the State scholar tate University who

and from State University scholarship funds, The itt program

students is placed in the State University Income Sad Paid by the

to the repayment of the bonds issued by the H and is committed

F . jusing wi
the State University Construction Fund. . , Te Agency for
50% contribution by the State to the support ofThe City Universes ; bees

*rsity cou!

result ultimately in pressure to abandon the free

i ‘ tuiti
to the absorption of the City University of New York itd Lie and lead
University structure. ie State

10 bi
80 beyond the 50-50 matching basig

State funds for a
ate University charges

The State University by that time was making impressive headway on
its billion-dollar construction program. And its per-student contribution
for the State University kept moving ahead of its per-student contribution for
the City University until it was doubled in 1965-66.

City University construction, meanwhile, despite the 1960 improvement
in the formula for State aid, continued to be tied down by the City's annual debt

limit, cumbersome approvals and other problems that kept it from getting its

capital construction program very far beyond the drawing boards. As the

. i "
Master Planning process was refined at the University, it became evident tha

on-
the University could not meet its projected enrollments unless the capital c

strative and
struction program was speeded up. This set the stage for an admini

i ten the very
financial crisis in late 1965 and early 1966 that was to three

&xistence of the University.



-66
"Tuition Controversy” of 1965-6

Ill, The

this well-publicized episode actually was more @n OUCTOPPINg Of deep,
is well-

imbedded administrative conflicts and complexities which had its origins in the
imbedde

Jack of clear definitions of the respective roles of the Chancellor and the Chaitrmay

of the Board than it was the result of proposed tuition. The Chairman, who at that

time had served for nine years, continued to function as the University's chief

administrative officer. In the years since its establishment the University had

been without a Chancellor for about half the time. The first Chancellor resigned
and in September 1963 Albert H. Bowker was appointed as the second Chancellor,
The crisis of 1965, over-simplified, arose out of the University's lack of
success in (1) developing means to obtain the capital financing necessary to begin
concerted development of $400 million in new facilities necessary to meet the
tripling of enrollments expected by 1980; and (2) the fact that the City had indicated
it could not increase its contribution to the University's operating budget beyond
1965 levels, despite the fact that the University budget was expected to increase
by 25% a year. This, the Chancellor declared, would hamstring the University.
In October, the Chancellor proposed several formulas for increasing State
aid to the University. One asked for the State to assume the entire operat ing
budget of the senior colleges, the graduate division, the teacher education progra™

and the central services of the University, leaving only the community college in

their status quo situation,

The proposal i i i i
prop envisaged the "nominal imposition of tuition for those who

were going tuition- ;. ‘
going tuition-free, but with a proviso which would still preserve the actuality

of free tuiti i i
uition to City residents, . , The students would meet the tuition paymenté

two ways, neith ; . |
i y' ither a drain on their individual purses: (1) through the scholar incenti"
plan, ...

10,

ad (2) through @ Mayor's Scholarship which woug be
fr qual in a

eure Mount to the
emainder of the tuition charge after the Scholar-incentiye It
Plan had bee; ,
This, the Chancellor explained, would cost the ¢ Nn applied.”
e City $

24 million Je
"| ili i 8s for
966, And if the $20 million from tuition were pledged to the Stat
ate Dormitory
Authority, it would underwrite bonds for Construction in Xcess of the §
e $400

million needed for new facilities.

The Chancellor presented the several differents plans to the 11
~member

Administrative Council late in October and they were approved in principle, Th
. They

were to be presented to the Board of Higher Education on November 22, 1965

prior to the Board meeting, however, public discussion of the plan involving a
"paper" or "shadow" tuition took place, causing both a public uproar and an internal
turmoil between the Board and the Administrative Council.

Reference to the possibility of tuition as a means to solve the current
financial crisis had been made by President Meng of Hunter College to an alumni
gathering on November 6. President Gallagher of City College discussed the plans
with students on November 10 and was quoted in the press, The Chancellor then
explained the reasoning underlying the proposal in a statement dated for release

on November 11,

ae it lumni
All the statements attracted wide attention in the press. Students, alu

d called
‘nd other groups were consequently inflamed and the Chairman of the Boar

lat re oluti ed at the meeting
. ing on November 17, A resolution was adopted a

lo the i ion, regretted "that
; ard's adherence to th principle of free tuition,
e or approval of the Board,

“cent public statements made without the prior knowledg

is charged by Jaw with the

ha i
"e infringed upon the principle that . . - the Boar



11.

y University..." 12,

sole responsibility for governing the Cit

The resolution also declared that "The Board has a right to expect und cups, public finance special};
Wideq group: Pi lists and oth
others

fealty on the part of all its officers of administration to the policies and bylaws Legislative Committee issued 3 report in * he Joint

66 which

of the Board, irrespective of any other positions they may hold," geries of detailed recommendations

The resolution was communicated to the Chancellor on November 18 and the tuition be continued.

following day the Chancellor, the University Dean of Studies, the President of proposal to build units of the State University ;
'Y in New York City
vy to accommodate

Brooklyn College and the President of Hunter College each submitted resignations the expanding enrollments for which the City Uni
¥ Mhiversity had fear

ed it could not

These moves brought heretofore unsurpassed public attention to bear on the develop sufficient physical facilities,

problems of The City University, but unfortunately the tuition plan received such a gonna Sas ition
» the report recommended

the establishment of a "City University Income Fund, '

emphasis in press, radio and TV coverage that it overshadowed other aspects of 7
to which the State and

the University's problems, City would each contribute $200 annually per student, and the authorization of th
ton of the

The alumni and civic groups who had fought the imposition of tuition in the State Dormitory to issue bonds to finance construction. The report also called fo
* ir

past rallied again, but to bring greater pressure to bear on increased appropria- increasing State support of the University over a period of five years until the

tions to the City University in order to solve the financial crisis and the need for State was assuming 65% of the undergraduate operating costs, and 100% of the

expanded enrollments. The preservation of free tuition was an integral part of graduate program operating costs.

the campaign that was successfully carried out by the some thirty groups. The

proposal for a "shadow" or "paper" tuition was dropped.
Meanwhile, public officials, including Mayor Wagner, State Education

Commissioner James Allen, and the Joint Legislative Committee on Higher

Education took steps to help the University out of its crisis. The Board of Higher

Education worked out administrative revisions, re definitions and realignments

965.
that resulted in the Chancellor's withdrawing his resignation on December 14, t
Following a session of lengthy hearings at which testimony was give? by

City University officials, the Chairman of the Board of Higher Education, civic



Appendix

#5

DOCUMENT
#20

CITY UNIVERSITY CAPITAL FINANCING

STAFF PAPER PREPARED FOR
THE CITIZENS! COMMISSION

BY

THE OFFICE OF URBAN AFFAIRS
AND
PEAT, MARWICK, MITCHELL & CO,

~ le
The information presented in this preliminary staff paper Lope ag ag
me of the Citizens" Commission on the Future of The City of the Commission on
The contents of this paper in no wey represent the aa ees vetrloation.
“ny Issue discussed herein and are not for publication or



CITY UNIVERSITY CAPITAL FINANCING

uacy of present
tion of the adeq'
capt gare Hs aethods and administrative procedures.
rade University also faces 2 serio oben in
on i the level of operating suppor ff nerds fo
setts goes over the next five years. spi m
is set forth In document No. 18)

1, Introduction
The most critical problem facing The City
needed facilities can be provided the University simply corns

University Is Its capital construc.

tion program, Unless

shed, and the promise of educational

meet the enrollment goals it has establi
opportunity which has been made will have to be curtat led,
The construction program was launched In 1966 with @ master plan for completion,

by 1975 at a tentatively estimated cost of $615 millton for the senior colleges, to
be financed by construction bonds with student fees pledged toward the debt service,
The Master Plan calls for expanded facilities at each of the University's nine
senior colleges and new facilities for seven of the elght community colleges,

Since 1966, Inflation, Increased construction costs and further detailed plan-

ning has driven the total estimated cost to more than $1.3 billion:

$923 million

for senior colleges and $367 million for community colleges, This estimate includes

equipment but does not Include any estimate of futereccost Inflation which could

Increase substantially the actual cost, Delays have occurred as a result of the
complexity of procedures that Involve an Interlocking relationship between the

University and two other agencies and require approval by the Board of Regents and

the Governor, At the same time, it has developed that the projected fee income Is

not sufficient to underwrite the necessary construction bonds at the present market
rate at which they are sold,

The following summary table Illustrates the magnitude of the problem:

1, Total Senior Colle P,
2. Funds Already Committed
3. Remainder to be Funded
iy iota bonding Capacity
+ Less Funds Already Commi
6. Remalning Bonding capacity

$923 million
1

|
$747 mi Viton

$350 ~ $550 ait 11 ton $6" P
we a mil tion

"2.

7. Funding Deftcre (line 3 5
figures on Tine 6) Sleernate

$573 $373 mill fon
not funded through the Construction Fund, are 1 id ad ee
" Addition to tl
he fundin,
> the Universit,
extent of $10 milion for the cy
irre,

Until these facilities are completed i
Y finds itser¢ being forced

int year,

to rent space to the

to accomodate the regular enrol iment Increase plus be This ts necessary
the 1

Ncrease resulting from the

There is also a serious question whether, @part from the f;
‘und

the program can be completed within the next five years

Meanwhile, pro
ment will continue to increase at a rapid pace eo sacle
.

A full=tine sentor
colle =
graduate enrollment of 106,500, for example miner

e IS projected by 1975 up 1
- 2.
from 1967, Full ims

atime graduate enrélinent is expected to be 46,000 a= up 103 percent
| reant,

The pressing questions therefore are; Chow can the pace of the construction
pro=

al
gram be accelerated, and must the University increase fees to Obtain adequate financing?)

This paper will outline the present arrangements and the problems that have arisen

from them, and review alternatives that have been offered In proposed legislation and

elsewhere,

Nl. The Present Arrangement

With the passing of The City University Construction Fund Act by the State
legislature on July 5, 1966, capital financing and construction of all university
facilities, except community colleges, was removed from the New York City capital
budget and Placed under a tripartite arrangement Involving the University, the City
University Construction Fund, and the New York State Dormitory Authority

The Construction Fund ts empowered by law to provide facilities for the senior

cot and approve
eos Of the City University. [ts broad powers enable it to review pp

‘oved bj
Proposals for facilities that have been submitted by the University and appr’ YY



«36
mitted by law o= not required == to

Cah fas
Yo the Board of Higher Education. It Is Pe!

ith the Dormitory Authority for the financing and
tsw

enter Into arrangenen
(see Appendix A)

construction of facilities.
js to financ® construction, It is also

The Dormitory Authority Issues bond:
he Fund to prepare detailed designs;
d then monitors and evaluates construction progress,

seek bids, and carry out the
delegated by tl

actual construction, The Fun:

pebt service on the Dormitory Authority bonds Is pald in equal shares by the

City and the State, In order to obtain a more favorable Interest rate, fee incone

from the sentor colleges, and the Graduate Division ts pleged to guarantee payment

of debt service, The fee Income, however, Is not actually used to pay debt service;

8s soon as the City and State eacy pay their share, fee income is then released back

to the university's operating budget.
Community college capital construction is financed by a seperate and unrelated

arrangement. Since community colleges in New York City have the same relationship
to the State as do community colleges In other parts of the state, the State pays
50 percent of construction costs out of its annual capital budget. The City's
share Is part of over-all City construction for which mmicipal bonds are Issued,
Since(the City's annual capital needs exceed its debt limit, pressure is created to
slow down or defer expenditures for conminity college construction) of the 1970-71
capital budget of $800 million, for example, only $6.3 million was approved for CUNY
facilities, {t appears, as a result, that the community college construction progrem
cannot be completed in @ timely fashion, if at all, under this financing system.

The work of the Construction Fund is carried out by @ Board of nine trustees
and @ small administrative staff, Two of the Trustees are appointed by the Governor;
four, Including the Chairman, are appointed by the Mayor, and three serve ex officle
The chairman of the Board of Higher Education; the chancellor of the City University»
@nd the chairman of the New York City Planning Commission.

City University construction planning ts headed by the Deputy Chancellor who Is

tn cha of Cay
n charge impus Planning and Development, which has a professional staff of 38.

J

-4.

aad ttn, all of the individual colleges have
Ont

heir sta
or other professionals concerned wi th plannin mies archi tect/plamers
9

The Dormitory Authority maintains a Hew
ork Cit

'Y OFF;
persons devoted virtually full-time to CUNY pro; 'c8 with a staff of }2
jects,

Policy 4
dormitory Authority segment of the pregran, hy ver Y direction of the
» Fests with j
goard of Directors and senior administrative stort wh ts seven man
Ose head,
Ellsenere, New York (@ surburb of Albany) quarters Is in

The three agencies must wor:
k closely together to Provide universtt ‘i
y facili

Under present procedures | the Construction Fund requests the D thes,

Ormitory Auth
o d ority to

Issue notes Or bonds to provide the University with funds to hire archt
rchitects to

develop a oaster plan for each campus.) The master Plan sets forth the br

‘oad guide~

lines for size, location, use and gene
ral architectural s
tyle of the pro,
posed new

facilities, [The master plan is then subject to approval by the Board of H
rd of Higher

Education, the State Education Department
*

the Board of Regents, the Division of
the Budget and the Governor}

It Is not until all these approvals have been obtained that the Authority can

begin preparation of detalled schematic drawings, which typically require about a

ai
year to complete and which must be finished before bids can be sOught and construc=

tion contracts awarded,

While the Dormitory Authority is functionally responsible from the time the
mster plan Is approved until construction ts completed, the Construction Fund, in
“cord with its legal responsibility, monitors the progress, University planning
officials have taken steps to curb the involvenent of the colleges themselves in
the detailed design and construction phases. Chere are nevertheless obvious over=

la
Ping duties and divided responsibilities ang the different agencies,

One OF the serious problems in the approval process Is that, even though all

Pare
TeS are in agreement on particular facilities, no work can begin until 2 total

p a current project for about 14

Snpus
mster plan is approved, This has held u
"nths , hat the Governor desired

Ong the explanations offered for this delay Is ¢



-5°

hed for projects in the CIty University Master

that priorities be establ is!
to assign alternate priorities

i ant
Plan, The University, however, is refuctan
since all the projected facilities are needed to meet enrollment goals, it
munities involved for priorities to

not acceptable to any of the co
construction on their campu:

also is
ses, The University also

be set that would delay
emphasizes that none of its plans exceed state or national standards for

space. According to 1967 figures, cUNY's four-year colleges were utilizing

32.9 square feet per student for Instruction and research. The State

University at the same tine had 74.9 square feet per student, and private

four-year colleges in the state had 55.4, Reports from preliminary and
incomplete data collected in the fall of 1969 indicate a still greater dis-

parity between the City University and other institutions in the state,

As already indicated,Cenrol lnent has grown faster than new facilities
could be created) In the four years since the present construction began,
little was accomplished in the first year, substantial projects got undere
way in the second and third years, and virtually no progress was made in

the past year, In fact, the Fund is yet to take up the work for which it

was formed except for some work in planning and the carrying out of several
projects that were already in the planning stages prior to 1966, Here is a
list of projects in the construction program (anticipated commitments are in

1970 dollars):

(see chart on following page.)

Lehman
City
Brook!
Hunter
Queens
York

SE.

NOR COLLEGES costs

millions of dollars)

City Univers

ity Construction

Fund Commit;
ments Antic .
1970-71 Prior to € ee comi tnents

yn

Richmond

Baruch

John Jay

Graduate Center
College 17 (Initial
Presidents Houses

Master

Queens
Staten

Planning

$ 60%
130%
28%
83%
173
85
é)
90

Niolo oS wie fits.

COMMUNITY COLLEGE cosT:
a eWNITY COLLEGE COSTS,
(Not financed by The City University Construction Fund)

Community Colle
Borough of Manhattan

Borough
island

New York City

Bronx

Kingsborough

Hos tos

CC IX (Initial

timate b
Tent as e

ased on completed master plan,
ach master plan is completed wit!

Anticipated Commitments to 1975-76

Other cost figures are subject to refine-

hin the nex few months.



i
iy
ri
i
I
I
i

-Je

ment
111, Problems Arising from the Present Arran

As indicated above, increasing costs, administrative complexities, and relate,
indica x

factors have developed that jeopardize the senior college construction program, And
ic

the pressure on the New York City capital budget for hospitals and other mandatory

city construction is holding back appropriations for the community college construction

program,

Here are further details of the problems:

1, The actual fee income at levels now imposed cannot underwrite the CONStruct ion

now required for the senior colleges, The Construction Fund has a total borrowing

capacity of between $350 and $550 million, depending on interest rates, of which $176

million has already been commited, Under present bonding arrangenents, debt service

cannot exceed the annual amount of student fees from the senior colleges, Here is a

table of estimated possible bonded indebtedness:

Fees in Millions

Bonding capacity at various interest rates

6 8% M
1966-67 $17.2 26h, 268 ayes 193.6 176.7
196768 17.5 269.0 240.9 = 217.2 197.0 179.8
1968-69 21.9 336.7 301.5 271.8 246.5 225.0
1969-70 24.7 379.7 340.0 306.5 278.1 253.0
1970-71 35.7 5h8.8 443.0 401.9 366.7 336.5

2. For community college capital Projects, the squeeze on the City's capital

budget is manifest in the form of delays for community col lege construction, An

architect's contract for Kingsborough Community College was submitted in September

1969, for example, but is being held up by the City until October 1970, for both

technical and financial review, It should be noted that community college enrol Iment

Is expected to increase from 30,200 full-time equivalent students in 1967 to 42,600
by 1975 == a 4} percent increase,
3.

delays in master plan approval that hold 4P préparation of working drawings. Elapsed

tine from the start of a project until its comletion can range from 5 years and uh

ranging from 3 years, 3 months to five years, The following tabulation of steps

and estimated time required for each illustrates the procedures;

Approximate Tine Table for Major CUNY Construction Projects

Steps; Months Required:
1, Preparation of Campus Master Plan

12
2. Printing and Distribution of Master Plan 3
3. Approval by BHE and Construction Fund 2 to3
4, Review by State Education Department and
approval by the Board of Regents 6 tog
5. Review by State Budget Division and
approval by the Governor 9 to 12
6. Preparation of detailed design, bid
documents and awarding of contract 15 to 18
7. Construction 24 to 4
71 to 87

The University has developed master plans for each of the senior colleges,
although only one has been approved officially at the time of this writing. Four
of the community colleges have completed master plans but none have been approved,
Here is a summary of the various Stages of master plans for the senior colleges:

1, Lehman College Approved September 1970

2, City Collegex
3. Hunter College

Governor's approval
expected this fall

4, Brooklyn College* Now at State Department of Education

6, Richmond College Education in November or December
7. Queens College

Delayed due to problems in site acquisition

)
)
)
)

5. York College ) To be presented to Board of Higher
8. Baruch College )
)

9. John Jay College Static; temporary building now serving.

i fF
*Extensive construction Is now underway on projects planned prior ee bealaning oO
the present construction program, Master plans for these two camp ° ’
involve fewer new facilities than the other campuses,



=9-

It seems apparent, therefore, that capital financing methods must be developeg

that can raise the existing debt limit while simul taneous efforts must be made to

streamline administrative procedures in order to complete as much as possible of the
capital construction program by 1975. The interim alternative is for the university
to expand its current space rental program from the present $9 million annually to
an estimated $35 million by 1975. To meet the needs of increased enrollment this
fall, for example, rental space was increased from 921,000 square feet to 1,372,000

square feet, a 49 percent increase in one year.

Public funds are not being saved, therefore, by the delaying of construction,

IV. Proposed New Legislation

The City of New York submitted a bill to the last legislative session which
proposed a number of significant changes in procedures and financing for capital
construction, as fol lows :7

1, The present limitation that annual debt service cannot exceed the annual
amount of student fees would be abolished. In its place the bill provided for the
establishment, over a five-year period, of a $10 million reserve fund which could be
drawn upon in the event that either the City or the State were unable to meet its
share of annual debt service.

2, The community college capital construction program would be financed and
carried out through the Construction Fund and Dormitory Authority in a manner similar
to the present arrangement for the senior colleges,

3. The Construction Fund Board of Trustees would be reduced from nine members
to five, including a chairman appointed by the Mayor, the Chancellor of The City
University; the City and State Budget Directors, and the Chairman of the City Planning
Commission, This reorganization, plus proposed changes in procedures, were aimed

at expediting the subsequent reviews by the City or State Budget Offices,

eee
2, State of New York, Cal. No. 8949-A, ‘An Act to Amend the Public Authorities
and the Education Law..."' March 17, 1970,

senior and community college construction progra
mS» ay

nd, hopefully, a reduction

in administrative delays, Some of the Present tiers of
rs of

@pproval would have been

moved and administrati
e ve delays reduced, unfortunately, the bill was introduced

late In the session, was very complex in its drafting, and had sone controversial
provisions. It was not reported out of committee,

Efforts will be made this year by the City University to imporve the bill,
to submit it as early as possible, and to follow its Progress carefully. If
enacted In proper form, it could provide a basis for solving the serious financial
and procedural problems facing the University's capital construction program,

It should be noted that bonds sold under the provisions of the proposed
legislation would probably carry a higher interest rate than bonds sold under the
present arrangements, Bond counsel to the Dormitory Authority estimated that the
difference in interest rate would be in the vicinity of .5 percent. This would

add 6 to 7 percent to the cost of debt service, depending on prevailing interest

rates,

V. Other Possible Alternatives

If the bill is not passed, then alternatives have to be considered, Negative

ones would include concentrating on building new campuses, meaning that $100 million

in expanded facilities at existing campuses would be postponed, and that the new

id
campuses planned for York, Richmond and Baruch would also be postpone:

There are varying points of view on other alternatives for financing:

thods
1, The sale of bonds without a pledge of fees --- There are several mo

jin most instances at & highel
as is now the arrangenent:

r rate of interest, with=
by which bonds could be sold,

Out the pledging of fees for the debt service,

and Credit of the State or ci

ry court enforcable taxin

ty «- This type of bond, which

ae JEMLL IE atge g authority in case

Would require a referendum and would ca
most attractive offering

s in the bond market, State bonds

Of default, is one of the



eae

could be sold at something under 6 percent and City bonds at about 7 percent,
These could not be issued by the Dormitory Authority since it does not have

taxing authority,

b, "Promise to Pay'' by City and State -- This type of bonds, sometimes
termed '!general indebtedness bonds,'' could be sold by the Dormitory Authority
without the fee pledge, but at a higher rate of interest. It was estimated that
the interest rate on such bonds would be about 8 percent, meaning that the con=
struction program might cost an estimated additional $30 million,

c. A Special or Dedicated City Tax --- Municipal bonds specialists advise
that this would provide one of the most attractive backings for offerings in the
bond market. A tax that would be geared to the general upward trend of the economy
would, they believe, have the combined advantaged of attracting a good bond rate and
also providing added revenue for the City should it collect amounts in any given
year in excess of debt service obligations, A decent addition to the City sales tax,
for example, would yield about $40 million a year -= an amount sufficient to handle
the debt service on about $400 million,

2, Tuition Financing -- The imposition of a tuition charge for undergraduate

Students, with the proceeds used to pay debt service, is an alternative solution

with respect to the senior colleges, This is the method used to finance the Construc«

tion program of the State University,

Based on current undergraduate enrol Iment projections, by 1975 a $400 under-
graduate tuition would be generating $42.6 million, Depending on interest rates,
this would support between $438 million (at a9 percent interest rate) and $655
million (at a5 percent interest rate) for new construction, in addition to the
$350 to $550 million that could be financed under the present system, If interest
rates were to continue to rise, the new bonding capacity from tuition, plus the
capacity of the existing system could fall short of the total sum ultimately needed.

Moreover, a tulgion supported financing program would not solve the problem for the

-12-

comunity colleges Since the state community college tay Provides that tutti
at tuition ine

cone must be used for operating costs, That lay could Perhaps be amended, b
need, but an

anendnent which gives New York City's Community colleges a better capital financing

system than community colleges elsewhere in the state might be difficult to et
enacted,

One major advantage of imposing tuition, which has nothing directly to do with
capital financing, is that it would undercut a major argument which upstate legislators
and others have used in opposing increased support by the State of the City University's
operating costs. Thus, the imposition of tuition would at the same time provide
substantial additional amounts for capital construction and also remove what appears
to be a major obstacle to increased State support for operations. If substantial
state support did come about, this might provide sufficient relief to the City to

enable it to meet community col lege financing needs.
3. Increased City University Fees Offset by City Stipends to Needy Students --

Although this might be taken by some to be another name for the more prickly issue of
tuition, fees by definition are used for purposes other than to pay for the costs of

jon'' or " ities"
Instruction, If other means failed, a fee such as a "'construction' or "Facilit

fee could be imposed to provide for the funding deficit that exists under present

arrangements, The Mayor could make a commitment that no student in The City
The so-called "means

University would be required to pay more than hé is now paying.
believed,
test" that this seemingly require would not be as difficult as many have

‘sul
For example, the full fee could be imposed and reduced by
ded by many CUNY students, perhaps as many 85 7

bmission of family Ine

come data, Such data Is now provi

da,
percent, who seek loans and other financial al

VI, Administrative Streamlining

istra'
Although It is believed that a faster ednin
at would be provided by the pre

ucturing would be possible,

tive process would result from
oposed legislation,

the smaller Construction Fund Board th It is a

ive str
it can be argued that a stil! more effect



-43-

widely held view by City University officers involved in the construction program

that the university should have more of an opportunity to expedite reviews, decide

upon target occupancy dates, and guide the determination of capital expenditures,
A persuasive argunent was made for this type of increased university
responsibility in a report on the State University Construction Fund submitted to

the Governor by the Bell Conmisston.> Citing a need for "clarifying common

objectives, basic responsibilities and improving operational procedures," that

appear to be equally necessary for the City University Construction Fund, the Bell

Study made the following key recomendations:

1. "That at least two of the three trustees of the State University Construction

Fund be representatives of the University."

",..That the Chancellor of the University serve as chairman of the Construc-

tion Fund Board,"

-We
The Chancellor of the City University (chatrman) ; @ trustee appointed
by the Governor; a trustee appointed by the Mayor; a representative of the Board
of Higher Education; and the City and State Budget Directors (both ex officio)

One alteration in approval procedures that could expedite the construction
program would be to divide master plan approval into two Stages: one for design
of the facilities included in €ach campus master plan, and the second Stage for
final approval based on actual plans. This could have the effect of enabling a
possible head start on designg and also lessen the possibilities of delays due
to apprehension of funding availability,

A final vivid example of the effect of the delays undergone by the City
University capital construction program is evident in its comparison with the
State University construction program, The legislature has already appropriated
for SUNY construction in 1970-71 more than $460 million, The City University

expects to be able to commit no more than $20 million during the current year

"...That the Chancellor of the University be identified as the Interagency a= SE OE this For renovations:

Coordinator of the University's construction program and arbitrate differences ié:¥s. cbvious that: the ceptear ‘Construction ySgramipresenés:e.seFious
Hor the, Mayetonsey iadajnistrecten of the: progtans" problem and that steps must be taken in the immediate future to help solve it.
"..,That reviews and approvals by the Division of the Budget be incorporated

into the procedures early enough to provide the opportunity for the Budget

Office to exercise its control at the points in the process where major fiscal

|

policies are made,"*

The principles of these same recomendations could be considered as a means of
solving the confusion of roles that all the parties involved in the City University
capital construction program acknowledge has contributed to delays, There is no belief
that political agencies involved in the funding of the program should not be represents
ed, but they need not be in leading roles, If the principles of aligning construction
more closely to the City University were applied to the structure of the Construction

Fund Board, it might comprise the following:

Joseph M. Bell, Jr. (Chairman) et al "Report of the Tenporar ssi
. mporary Study Comn
to Review Procedures of the State Universi of University
. ‘sity NY and the State Uni



Appendix #7

Appendix 7

MEMBERS OF THE CITIZENS' COMMISSION
SEIS "COMMISSION

Robert F. Wagner - Attorney and former Mayor of New York City and former

Ambassador to Spain. At present a partner in Wagner, Quillinan and Tennant.

Previously Ambassador to Spain from 1968 to 1969; first Vice President

1967 New York State Constitutional Convention; Mayor of New York from 1953

to 1965; Borough President of Manhattan, 1949-1953; New York State Assemblyman,
1937-1942. Attended Yale University, Harvard School of Business Administration,

School of Internation Relations at Geneva, and Yale Law School.

Robert A. Bernhard - Investment banker and philanthropist. Currently partner
in Lehman Brothers. President, New York Urban League; member of the Executive
Committee of the New York State Welfare Conference; affiliated with New York
Urban Coalition and the Governor's Steering Committee on Social Problems; serves
on the boards of various philanthropies. Graduate of Williams College and the

Harvard Business School.

Jobn T. Burnell - Leader in the fields of labor, civil rights and manpower
development. Director, New York City Central Labor Council's Civil Rights
Committee; Area Manpower Representative, Human Resources Development Institute,
AFL-CIO; Labor Representative to Coalition - JOBS; Vice President, Community
Council of Greater New York; Chairman, Labor Advisory Committee of American
Red Cross of Greater New York; board member and officer of various educational,

civil rights, and public service orgenizations. Educated at City College,

Columbia University, Cornell University and the New School of Social Work.



2
Dr. John V. Connorton - Former Deputy Mayor end an expert in management anq

Executive Vice President (previously Executive

delivery of public services.
Director) of the Greater New York Hospital Association; Deputy Mayor - City

Administrator (1965-1966); Deputy City Administrator and Executive Officer

of the Mayor's Management Cabinet under Mayor Wagner; Executive Director of

the Committee on Health, Housing and Social Services of the 1967 New York
State Constitutional Convention; Consultant in administrative matters and

community relations for industrial, governmental, educational, philantropic,

health and welfare organizations. B.A., M.A., Ph.D., and J.D. from Fordhan.

Chairman of Thomas

Thomas J. Deegan, Jr. - Expert in business management.

J. Deegan Co., Inc., providing management and advice to corporations; previously
Vice President of the Chesapeake & Ohio Railway, and of the Alleghany
Corporation; Vice Chairman and Director, Interpublic Incorporated; Director

and Trustee of numerous civic and charitable organizations; Catholic Layman of
the Year 1965. A.B. Fordham University; honorary degrees from the University

of Tampa, LIU, and Fordham.

Mrs. Sylvia Deutsch - Prominent member of educational and other civic organize-
tions. Former Vice President of United Parents Associations; Currently
legislative Chairman, UPA; Co-Director of the Proportional Representation
Educational Project; Queens Regional Director American Jewish Congress; Educational

Consultant to Metropolitan Council of American Jewish Congress. A founder and
member of the Ad Hoc Committee for the City University} B.A. Brooklyn College.

Currently a M.A. candidate at Brooklyn College.

B. Bernard Greidinger - Accountant and an expert in financial and busi:
rr ness

management. Presently Senior Partner, Greidinger, Hoffberg & Oberfest

Certified Public Accountant; Professor of Accounting, New York University

Graduate School of Business Administration. Formerly consultant to theState
Department, to various officials within the Defense Department, to the City
and State of New York, to professional sccounting groups, and to institutions
in Israel and Nigeria on financial matters and on the organization of schools
of business administration; Chief of Financial Operations for United National
Relief and Rehabilitation Administration (represented Director General at
inception of International Refugee Organization). Author of various books

and articles. B.B.A., City College of New York; M.S. and Ph.D., Columbia

University.

Preston L. Lambert - Community and business leader. Presently Executive
Director, Brooklyn Local Economic Development Corporation. Member of National
Board of Directors of Interracial Council of Business Opportunities Executive
Committee; Executive Board, St. Mary's Hospital; Board of Directors, Brooklyn
Arts and Sciences Trustee; Black Economic Development Council, Small Business
Administration. President of United Cee Dee. Attended Brooklyn Law School

and graduate of Long Island University.



Trude W. Lesh - Authority on education and social welfare programs. Executive

Member of the

Director, Citizen's Committee for Children of New York, Inc.3

Advisory Panel on Education of the New York State Bar Association. Previously

member of the Council Against Poverty and Chairman of its Education Committee;

Secretary of the Human Rights Division of the United Nations. Trustee and

board member of various philanthropies. Ph.D. University of Freiburg.

Hon. Jacob Lutsky - Attorney, Judge, and expert in government operations. Judge
of the Family Court of the State of New York for the City of New York; previously
Assistant New York City Corporation Counsel and legal aid to Mayors O'Dwyer,
Impelliteri, and Wagner; numerous special appointments to advise New York City
and State on fiscal and government operations problems; recipient of Public

Service Award from New York City in 1964 and from Civil Service Leader in 1965.

A.B., Cornell University; L.L. B., Cornell Law School.

James P. Murphy - Banker end prominent participant in public service programs.
Vice President, Chemical Bank, with special responsibility for New York City
and State governmental relations; Member, Advisory Board to the Department of
Mental Health and Mental Retardation Services of New York City; Delegate to
1967 New York Constitutional Convention, where he was Chairman, Subcommittee
on Structure of State Education Administration. Officer and director of
various charitable and public service oranizations. B.A. Manhattan College;

L.L.B. Fordham Lew School.

Hon, Emilio Nunez ~ Judge and eminent member of the New York Spanish-speaking
community. Currently Associate Justice of the New York Supreme Court, Appellate
Division, First Department. Previously Justice in the Supreme Court, First
Department, by election (1962-69) and by designation of the Appellate Division
(1958-62). Prior to 1958 he served as a Justice of the City Court (1956-58)
and the Court of Special Sessions (1952-56), and as City Magistrate (1951-52).
Judge Nunez is the first Spanish speaking Judge in the history of New York City

and was the first of this ethnic group to hold each of the aforementioned offices.

David Starr - Newspaper editor and officer in community welfare and education
programs. Editor of the Long Island Press; Director of the Nassau County
Health and Welfare Council; Trustee of the Nassau Community College of the
State University of New York (1959-1966); Trustee of the United Fund of Long
Island; President, New York State Associated Press Association (1960-1961).

B.A. Queens College.

Dr. Francisco Trilla ~ Physician and leading member of community organizations.
In private practice since 1957 and member of the Arthritis Clinic, Greenpoint
Hospital; a Director of Puerto Rican Forum and ASPIRA; Overseer of Center for

New York City Affairs, New School for Social Research. B.S., Puerto Rico;

M.D. Marquette University.

Gus Tyler - Labor leader, educator, and author. Assistant President, International
Ladies’ Garment Worker's Union; Director ILGWU Departments of Education, Politics,

and Training; Fellow at Brandeis University; Secretary-Treasurer and member,

Board of Trustees, National Center for Education in Politics. Author of numerous

books and articles on labor and politics. Member and director of additional

educational, political, and charitable organizations.



lector I. Vasquez - Community Leader and authority on manpower and economic

He . q
development. Presently Executive Director, Puerto Rican Forum, Inc.; Director,

New York Urban Coalition; Formerly Member, New York City Board of Education;

Assistant Executive Director of Skill Advancement, Inc.; Director of Research

and Planning New York Small Business Development Center, Inc.; Director of

Economic Research, Puerto Rican Economic Development agency. Member of various

professional, civic and cultural organizations. B.B.A. University of Miami,

M.A. American University.

Rev. M. Moran Weston - Prominent clergyman and leader of housing and economic

development projects. Rector of Saint Philip's Episcopal Church; President

of three non-profit corporations sponsoring lower end middle income housing and
recreational and health facilities; Director and former President of Carver
Federal Savings & Loan Association; Visiting Professor of History, Department
of Afro-American Studies - State University of New York; Director of numerous
civic and welfare organizations. Ph.D. Columbia University; D.D. Virginia

Theological Seminary, Member of the Board of Trustees ~ Columbia University.

Louis E. Yavner, Esquire - Attorney and expert in government operations. Chairman,

Citizens' Union Committee on Education; Deputy President, Council of the City
of New York (1951-1953); Director, Education Manager, Study for Mayors Committee
(1950-1951); Special Counsel to New York State Temporary Rent Commission (1948-
1949), and to Senate Committee to Invéstigate Organized Crime (1950-1951); City
Commissioner of Investigation (1945). Member of professional and educational

orgenizations and author of studies on school and government management.

f a

Citizen’ 4 Ci

wD
the 3835

of New York

Future of aie City University C5

col

NAME AND ADDRESS

|_CARD NO.