College Funding In Context: Understanding The Difference In Higher Education Appropriations Across The States

Access to a post-secondary education is a vital aspect of the American dream, allowing for equality of opportunity and a stable pathway to the middle class for all who are willing to work for it regardless of their background or socioeconomic status.  Higher education not only improves the prospects for the employment and earnings of individuals, but has benefits that feed back into communities and society as a whole, including increases in civic participation and productivity, and preparedness for success in the global economy.  Our shared commitment to these values is reflected in the growing numbers of Americans who are turning to higher education as a means to enhance their lives and in the increasing diversity of enrollment at colleges and universities across the country.  But even as the need for some post-secondary training has become more important to our shared prosperity, states have reduced their investment in higher education.

State appropriations have historically been the most important source of funding for higher education, but over the past two decades that support has waned.  Between 1990 and 2010, real appropriations per full-time equivalent student (FTE) declined by 26.1 percent, putting funding today at its lowest level since 1990.  As real state spending per full time student decreased, institutions made up the difference by raising the price of attendance, shifting costs that were once a social investment onto students and their families instead.  Over the same 20 year period, tuition costs have increased by 112 percent at 4-year public universities and by 71 percent at 2-year colleges.   In many cases states attempted to mitigate the burgeoning cost of attendance by expanding financial aid programs, but the increasing reliance on merit-based aid means that assistance often fails to reach those low-income households who need it most.  As tuition costs grew by 112 percent between 1990 and 2010, the median household income stagnated, growing by just 2.1 percent.  With rising tuition and stagnating incomes, students and their families are taking on record levels of debt in order to pay for the opportunity to attend a college or university.  In 2011, the total student debt held by American households outstripped credit card debt for the first time, a burden of more than $1 trillion.

Recessions put even more pressure on the higher education system by causing a shortfall in state revenues that tightens budgets and makes state investments more tenuous.  These budgetary pressures can affect appropriations for years after the recession ends, and over the past generation the length of time that it has taken higher education funding to return to normalcy following a recession has increased.  In 2010—three years after the onset of the Great Recession—state appropriations for higher education were still 5 percent lower than their levels before the recession began, even though enrollment had jumped more than 19 percent due to the combination of young people entering higher education and unemployed workers seeking to build new skills.  This state disinvestment slows college completion, increases household debt, and undermines the social benefits of an educated citizenry that can be critical to a recovering state economy that depends on educated workers.

Yet some states have managed to retain their commitment to higher education despite three recessions over the past two decades and increasing pressures on state budgets from competing programs with growing costs.  This report investigates the circumstances behind those budgetary decisions, matching performance in higher education appropriations to economic, political, and cultural factors that influence the level of state funding.  We distinguish key trends across states that result in reductions to appropriations, providing a ranking of states by their funding performance after accounting for the most significant obstacles to budgeting for higher education.  In addition, case studies of four states—Minnesota, Pennsylvania, Louisiana, and Colorado—look beyond the broad commonalities to understand decisions about state appropriations in context.  The results of this study identify the most important considerations for policy makers in determining state appropriations and provide insights for advocates aiming to restore higher education as a top priority in state budgets.

Click here to continue reading.

—David Weerts, Thomas Sanford, and Leah Reinert.

Connect With Us

Author Information