North Dakota tuition waiver audit shows millions waived for out-of-state students

N.D. legislators see amount as 'substantial,' surprising

FARGO -- In the 2013-14 school year, North Dakota State University waived $5.6 million in tuition for out-of-state students, a figure that's up from $3.3 million five years ago and is more than twice what the University of North Dakota waived for nonresidents.

These numbers were news to members of the Legislative Audit and Fiscal Review Committee, which requested the performance audit of the university system's tuition waivers.

"We're all a little bit surprised with, you know, the dollars that are going with regards to out-of-state tuition," said committee chairman Rep. Gary Kreidt, R-New Salem. "I don't think anybody's ever really received that information before. I thought it was rather substantial, as well as I think everybody else did."

The committee received the almost 90-page report at its meeting two weeks ago. Due to the report's length, the group has postponed discussion until its next meeting, likely in June.

"If the committee is satisfied with the information they received from those institutions and they accept the report, that will probably be the conclusion of that," Kreidt said. If not, the group will investigate further.

More waivers, more revenue

The audit's release has been a long time coming. The committee first requested it in 2012, but it was not completed due to employee turnover in the state auditor's office. Committee members made the request again in 2014, and the now-completed report covers all 11 institutions for the four academic years from fall 2010 to spring 2014.

In that time, NDSU waived about $69 million in tuition and UND waived about $37 million. The next-highest amount waived was about $7 million at Dickinson State University.

Waivers are not the same as discounts, which typically appear as decreased tuition for students from neighboring states. Waivers can be given to groups such as National Guard members and employees, and at institutions' discretion, often to graduate students or international students.

International students received half of the waivers at NDSU in the four years that were studied, while out-of-state students received 27 percent and in-state students received 23 percent. The largest growth was in waivers for out-of-state students, to $5.6 million from $3.3 million.

At UND, in-state students received the largest piece, 44 percent, while 26 percent went to out-of-state and 30 percent to international.

Legislators' concerns

Historically, legislators have taken issue with waivers for out-of-state students, and some continue to do so.

"It's a nice way to populate your school and have the taxpayers pick up what should be paid for by the student," said Rep. Bob Skarphol, R-Tioga, who made the initial request for the audit in 2012. "Why is it to my advantage as a taxpayer to subsidize that out-of-state student?"

NDSU Provost Beth Ingram said students from other states and countries fill the needs of the state's workforce and add diversity to the campus.

Also, many students wouldn't have come to NDSU without waivers, and then the university wouldn't have earned any revenue from them, she said. She noted that NDSU waives more tuition than other state schools, but also makes the most.

In 2013-14, the average amount waived for an undergraduate with a waiver at NDSU was 46 percent, meaning they were still paying more than half of the cost of tuition.

Most of NDSU's waivers go to graduate students, though, and the average amount waived that year for them was 95 percent.

Skarphol also took issue with how much graduate tuition was covered by NDSU compared to UND. NDSU waived 70 percent of graduate tuition in 2013-14, while UND waived 29 percent.

"Is that appropriate? I guess I don't see that one school should be be waiving (70), and the other is waving (29)," he said.

Ingram said it's common practice to use waivers to attract talented graduate students.

"Graduate students are very sensitive to the packages you offer them, and you have to be competitive with other research institutions," she said.

Changes in store

Among other suggestions, the performance audit recommended that the state Board of Higher Education clearly define waivers versus discounts, establish policies for common waiver types and limit the number of waivers an institution can award.

"Our limited review of information identified certain waivers granted appeared to be in noncompliance with the SBHE intent for providing a waiver," the report read. "For example, UND established a 'give-away' promotion available for students attending an athletic event on campus."

The report references a board policy that says institutions can award waivers to promote cultural diversity, promote graduate enrollment or for other purposes consistent with the school's mission.

As a result, the board will be establishing common definitions, creating a template to assist campuses with documenting waiver provisions, studying waiver criteria and approving a compliance plan, all by the end of this calendar year.

Interim Chancellor Larry Skogen said the system has had a task force looking at tuition waivers for three years, "and my guess is that all of this is going to come nicely together now."

Skogen said the change will be in line with the board's new strategic plan, which includes the goal "to maximize the strengths of a unified system."