The University of South Alabama and the independent foundation that supports it together hold roughly $459 million in assets, yet that wealth has done nothing to slow a string of tuition increases that now stretches to four consecutive years, according to university financial officers in Mobile.
The university’s own endowment stands at nearly $140 million, while the separately governed USA Foundation reports total net assets north of $319 million. On paper, that combined figure sounds like more than enough to cushion students from repeated cost hikes. In practice, neither pool of money was ever built to serve that purpose, and school leaders say tapping it to offset tuition simply isn’t how the funds are structured to work.
University trustees approved another tuition increase earlier this summer, marking the fourth straight year of hikes and pushing the cumulative increase since 2008 to roughly 40 percent. The timing has fueled questions from students and parents about why a school sitting on nearly half a billion dollars in assets can’t find room to hold the line on costs.
According to USA’s vice president for financial affairs, the answer comes down to donor intent. The university’s endowment, established in 2000 under the direct oversight of the Board of Trustees, was built almost entirely from gifts earmarked for specific purposes — endowed scholarships, named professorships, or particular academic programs. Only a small slice of what the university receives arrives as unrestricted money that can be freely applied to general operating costs such as keeping tuition flat.
The university’s finance officer noted that if a donor specifically asked that a large gift be used to prevent a tuition increase, the university would honor that request. But donors overwhelmingly prefer their contributions fund long-term priorities like buildings or scholarships rather than offsetting a single year’s operating budget.
Leadership at the USA Foundation offered a similar explanation. The foundation, a legally separate entity from the university, exists to support specific university activities — including its hospital system, faculty salaries, and scholarship programs — rather than to backstop the institution’s general finances. Foundation officials describe the goal as sustaining programs indefinitely rather than solving any single year’s budget gap.
The university’s endowment traces its roots to a leadership shake-up in the late 1990s, when USA’s founding president stepped down amid scrutiny over how the university had handled certain federal Medicaid reimbursement funds tied to its hospital system. More than $135 million connected to those disproportionate-share payments were transferred to the foundation beginning in 1989, laying the groundwork for the fund structure still in place today.
University officials say the restricted nature of both funds means future tuition decisions will likely continue to hinge on state appropriations, enrollment, and operating costs rather than on the size of USA’s overall asset base.