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New Report Documents Continuing Declines in State Higher Education Support

February 26, 2009

In FY 2008, state and local governments appropriated about $85 billion to support public four-year and two-year colleges, an increase of roughly 3 percent over the amount spent a year earlier. However, according to a new report from the State Higher Education Executive Officers (SHEEO), state and local higher education appropriations are still below the levels that were appropriated a decade ago, and some states plan to reduce funding even further due to the continuing economic crisis.

The SHEEO report, "State Higher Education Finance, Early Release FY 2008," found that the FY 2008 increase in state and local government support for public colleges and universities slightly outpaced the combined increase in enrollment (2.2 percent) and inflation (2.9 percent). After accounting for enrollment growth and inflation, per-student educational appropriations for public higher education institutions grew to $7,044, an increase of 0.6 percent in constant dollars above the previous year.

However, over the past ten years, FTE expenditures for public higher education have actually declined by 6.8 percent. At the same time, college students and their families have paid an increasing share of the cost of public higher education. Net tuition revenue (total tuition and fee payments minus state and institutional financial aid, tuition waivers, and discounts) per FTE grew 19.7 percent over the past ten years. Net tuition now accounts for 36.2 percent of total revenue collected by public institutions (compared with 30.6 percent in FY 1998).

The current economic crisis will likely continue the decline in state and local support of public higher education and increase tuition and fee charges paid by students more rapidly. In FY 2009, total state and local higher education appropriations are estimated to have grown just 1 percent. But after the appropriation estimates were collected, at least 15 states enacted mid-year reductions in their original higher education appropriations, thus very likely leading to an overall decline in state higher education funding. Further, eight states have already announced that they plan to make further reductions in their higher education budgets in FY 2010. These appropriation cutbacks could make it very difficult for many students and their families to afford higher education.

The NACUBO staff resource for this report is Ken Redd