The UT Board of Trustees passed Thursday afternoon a resolution approving a fiscal year 2012 budget that includes a 12-percent tuition increase.


For students at UT-Knoxville, it means an increase of $774 annually for in-state undergraduates.


In addition, students will pay $240 more in fees annually, including a $200 increase in the facility fee, which will fund money to better classrooms and laboratories.


In all, students will pay an additional $1,014 next year in tuition and fees.


"It's not popular to raise tuition, but if you look at what's happened to state appropriations, it's the only way to maintain our quality," UT President Joe DiPietro said.


Stimulus funding runs out at the end of the month, resulting in a $138.1 million reduction in state appropriations.
UT Board of Trustees Vice Chair Jim Murphy emphasized that raising tuition is not a move to raise revenue but to make back some of what was lost.


"We're raising tuition to try to get part of the cut back, and we're still cutting," Murphy said.


Murphy said there was no other option.


"I'm very uncomfortable raising tuition 12 percent," he said. "I don't think there's anybody in this room that, if they had a choice, would want to vote for tuition increase. I don't want to vote for a tuition increase, but the other side is, the other options are so much worse that I can't vote for those."


Even with the raise, many at the Board of Trustees meeting cited the availability of the HOPE Scholarship to help students afford UT tuition.


Chief Investment Officer and acting Chief Financial Officer Charles Peccolo likened the situation to paying the sticker price for a car. While the tuition might be raised to a certain figure, that is just the "sticker price."


"We're past the stimulus money, so we will be a much leaner, more focused institution by design," Peccolo said.
DiPietro said it is necessary to raise tuition for faculty startup, salary increases, academic promotions, academic reinvestment and other initatives.


Citing data on 2010 fall dependent, in-state freshmen by family income, he said the bottom quartile — or those households that make $45,643 annually or less — paid $0 in tuition on average. In fact, they got up to $4,955 back as excess finacial aid.


Meanwhile the top quartile — those households that made between $138,751 and about $1.3 million annually — paid $2,465 in tuition on average, still far from the total tuition cost.


"A large part of this is the lottery scholarship," DiPietro said. "The HOPE Scholarship helps a great deal on making our education even more affordable."


For the first time, this year, tuition fees have exceeded state appropriations, Peccolo said. But if not for stimulus funding, he estimated that would have happened two years ago.


Gov. Bill Haslam addressed the question of why the state is providing dwindling funds for the university.


"It's not discretionary, but (higher education funding) is probably the most vulnerable spot in the budget," Haslam said.
He said as health care costs rise, there is less money to provide for higher education, but he is encouraged by recent state funding and revenue.


"It is our strong hope that you won't see those kinds of cuts to higher education going forward, but everybody needs to understand that the pressure to the state's budget is from the health care side of the budget," Haslam said.