New fund could help prevent future tuition jumps

The state could create a new fund dedicated to warding off large tuition increases if the General Assembly passes legislation Gov. Martin O'Malley proposed Monday.

The new fund, formally called the Tuition Stabilization Trust Account, would be a part of the Higher Education Investment Fund, which would become the state's first permanent source of funding for higher education under O'Malley's 2010 legislative agenda.

The fund, which draws a portion of the state's corporate income tax, theoretically works like a bank account. A specific portion of the trust would be available only to prevent spikes in tuition. It becomes flush with revenue during economic booms and is able to ward off devastating cuts when the economy enters a recession.

"We've done a good job in making college more affordable," O'Malley spokesman Shaun Adamec said. "But we need to do more to create the infrastructure to help keep tuition predictable and prevent spikes."

The tuition trust is intended is to keep college costs down. It attempts to prevent unpredictable tuition jumps by being able to supplement campuses with funds when there's not enough money in the state's normal budget to keep tuition increases low. The bill says tuition should not grow faster than the state's average family income over the previous three years.

Some higher education advocates were cautiously optimistic about the move.

"It's a laudable goal, and I applaud it, but we need to see how it pays out," university lobbyist Ross Stern said.

Del. John Bohanan (D-St. Mary's), who chaired a commission that recommended the tuition account, said the trust means future students won't "be hit with double-digit tuition increases," like other students across the nation are now. Tuition for schools in the University of California system, for example, is going up by a third.

"Sometimes, [students will] work their butts off first semester and not be able to come back second semester because the school hit them with an increase between semesters," Bohanan said. "This is designed to avoid those unforeseen hurdles."

But it's not yet clear how much money is needed for the trust to have an impact or how much of the overall fund will be set aside for tuition.

"Clearly you'd need tens of millions of dollars at least," said Sen. Jim Rosapepe (D-Anne Arundel and Prince George's), who represents College Park. "It'll take several years to build the fund up."

Rosapepe and Bohanan both also emphasized making the fund permanent was merely a "step in the right direction."

"For the long-term fix, we need mandated funding for the universities, and we need hard tuition cap," Rosapepe said.

Both were recommended by the Bohanan Commission two years ago, but the $700 million price tag scared off lawmakers, who have repeatedly been battling budget deficits.

Rosapepe is sponsoring a bill that would implement both for the second year in a row, but with a $2 billion gap this year, he concedes it has no chance of passage — even with half the senate signed on as co-sponsors. The future is a different story.

"I'm hopeful that as the economy and revenues improve, we can implement the rest of the commission's recommendations," Bohanan said.

The Higher Education Investment Fund was created by O'Malley earlier in his term but has never been on sound footing. It's scheduled to sunset this summer unless O'Malley's bill passes. While Stern warned that fiscally cautious lawmakers could be skeptical of the bill, others were confident.

"I think lawmakers will see this the way the governor does: as a way to keep college affordable for working families in Maryland," Adamec said.

"There's no reason it shouldn't pass this year," Rosapepe said. "The only reason to oppose this bill is if you want higher tuition."

robillard at umdbk dot com