Reciprocity: is inequality good policy?

by Joel Sawyer

Brian Malzer assumed he would have a financial advantage over students attending the University from out of state. After all, the third-year environmental engineering student grew up two blocks away from the school’s St. Paul campus and was assured in-state tuition.
But much to his surprise, Malzer found that his perceived advantage was actually a disadvantage. After registering for courses last year, he realized he had been paying substantially higher tuition costs than his roommate from Wisconsin, a fact that galled him to no end.
“I don’t think it’s exactly fair,” he said. “I think everybody who gets reciprocity should pay the same as Minnesota students.”
Equal tuition for in-state and out-of-state students might be the principle behind reciprocity, but it’s not always the practice. According to the Minnesota Higher Education Services Office, Minnesota residents pay about $1,200 a year more for undergraduate tuition and about $600 a year more for graduate school tuition at the University than their Wisconsin counterparts.
The reason for the disparity is a 1973 Minnesota-Wisconsin reciprocity agreement that allows students to pay their home state’s tuition if they want to attend a school in the neighboring state.
“I assumed that (a Wisconsin student) paid the same price that a Minnesota student pays,” said mortuary science student Mandy Lohmann of Red Wing. “I didn’t realize they were getting a better deal then we are.”
The Minnesota State Higher Education Services Office has tuition reciprocity agreements with North Dakota, South Dakota, Wisconsin and Manitoba. Limited reciprocity agreements with Iowa and several other Midwest states also exist.
Although these agreements ultimately must be approved by the Board of Regents and the governing board of the Minnesota State Colleges and Universities system, they are largely determined without University input.
At the University, students from the Dakotas and Manitoba pay the Minnesota resident rate. Several other outlying states pay 150 percent of the Minnesota rate.
Wisconsin students pay the University of Wisconsin–Madison rate if they attend the University, a rate about 20 percent lower than the University’s.
In return for allowing Wisconsin students a discount, Minnesota students pay the higher Twin Cities campus rate if they want to attend UW–Madison.
Reciprocity agreements with these states were enacted to increase educational opportunities for students in the region and to provide Minnesota’s post-secondary institutions with a larger pool of students, said Phil Lewenstein, director of communications and legislation for the higher education services office.
In 1995, 10,179 Minnesota residents attended schools in Wisconsin; 8,184 Wisconsin students attended schools in Minnesota.
“The bottom line is that (reciprocity) increases access and choice,” Lewenstein said.
Reciprocity agreements certainly do increase choice for the region’s students, saving them out-of-state tuition costs, but Minnesota’s agreement with Wisconsin appears to be inequitable, punishing Minnesota residents and the University to provide greater access to out-of-state students.
In addition to paying more in tuition at the University, Minnesota residents pay a small surcharge of about 1 percent of their tuition. This surcharge helps offset the University’s losses of $3.9 million a year for discounted tuition to Wisconsin students.
The surcharge isn’t nearly enough to defray the tuition subsidy, though. The University receives about $1.3 million a year from the Legislature to help make up the difference.
But that allocation doesn’t completely cover the University’s expenses, and the school “eats the rest,” said Tom Gilson, senior analyst for the office of planning and analysis.
Gilson said although the tuition disparity seems unfair, some University officials don’t see it as a big issue.
“Some view (reciprocity with Wisconsin) as not a problem, but as a benefit,” he said.
The number of Wisconsin residents attending the University has increased significantly over the last several years, leading some to speculate that reciprocity may be a key.
In 1995, 3,725 Wisconsin students attended the Twin Cities campus. This fall the number increased to 4,190.
“(Reciprocity) is one of the main reasons I came here,” said College of Architecture junior Amy Bluhm, a Waukesha, Wis., native. “I feel bad about (the tuition disparity), but that’s the way it worked out.”
Gilson said that if tuition were raised for Wisconsin students to make up for the disparity, the increase could create “I presume a number of those students would choose not to come here,” he said.
Gilson also noted that it might be difficult to find Minnesota students to fill the place of better qualified Wisconsin students, who might not come to the University if tuition were raised.
“There aren’t 4,000 students (in Minnesota) that we could replace (Wisconsin) students with,” he said.
Director of Admissions Wayne Sigler said he didn’t necessarily agree with that assessment.
“That’s hard to answer with any precision,” he said.
Marvin Marshak, senior vice president for Academic Affairs, said the school’s reputation, not reciprocity, is the key to increased enrollment by Wisconsin natives.
“In recent years, because the University has improved its undergraduate programs, we’re getting to a situation where more Wisconsin students are wanting to come to Minnesota than vice versa,” he said.
That opinion was echoed by Bluhm’s roommate Amanda Keltz, a Madison, Wis., native.
“(Reciprocity) is a nice benefit, but it’s not the reason I chose to come here.”
Keltz, a junior sociology student, said the University’s programs, the chance to get away from home and the cosmopolitan surroundigs were the reasons she came to the school.
“I love the Cities,” she said.
The Tuition Gap
When the first open-border tuition reciprocity agreement between Minnesota and Wisconsin was signed in 1973, tuition levels at the flagship institutions in both states were roughly equivalent.
For years the Minnesota-Wisconsin agreement seemed to suit both states, even though Minnesota paid Wisconsin several million dollars each year in compensation.
The compensation was paid because more Minnesota students were taking advantage of reciprocity than were Wisconsin students, and Wisconsin was losing money on the agreement.
But when Minnesota tuition increases began to outpace Wisconsin’s in the ’90s, that began to change. “Less growth in (state) appropriations has forced (tuition) rates up,” said Gilson.
This led to a widening tuition gap between the two states, and more students have been coming to Minnesota to take advantage of discounted tuition for the state’s schools.
That increase in students has resulted in a shift from Minnesota paying compensation to Wisconsin to Wisconsin paying Minnesota. Last year, for the first time since reciprocity agreements between the two states were signed, Wisconsin reimbursed Minnesota $500,000.
Winds of Change
The current reciprocity agreement between Minnesota and Wisconsin expires July 1, 1998. Officials from both states are currently negotiating a new agreement, which could be finalized next month, that seeks to narrow the tuition gap disparity and alleviate payments by either state.
“There’s no question; I’m confident an agreement will be worked out,” said Val Olson, executive secretary of the Wisconsin Higher Educational Aids Board.
Olson couldn’t say what the new agreement would look like, fearing that revealing any information might jeopardize negotiations. But she did say the agreement needs to be changed.
“The current agreement is not working for Wisconsin,” she said. “Many more Wisconsin students are crossing the border than (Minnesota students) are coming here.”
Olson wouldn’t say tuition reciprocity has caused the increase, however.
Although negotiations are still taking place, and nothing can be confirmed, it seems certain the tuition gap will be narrowed, with Wisconsin students paying more than they currently do.
A proposed 6.5 percent increase in tuition for the Wisconsin university system could help take care of the disparity if passed by the Wisconsin Legislature in July.
Another way to bridge the gap would be to simply increase the amount Wisconsin students pay for schooling in Minnesota.
One option under discussion is increasing tuition for Wisconsin students by 25 percent of the difference between the two states’ tuition for the 1998-99 academic year. The rates would be further narrowed in ensuing years by reducing the difference even more.
But University administrators are wary of moving too quickly with the tuition change, fearing a loss of Wisconsin students.
“We’re concerned about doing too much,” Marshak said. “What we ought to do is implement the 25 percent proposal, but then let it stay that way for a couple of years until we can see what has happened before we take another jump,” he added.