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Report Details State Higher Education Financing

July 28, 2004

Despite recent cuts in state funding to higher education, states have substantially increased funding over the past half-century to supplement a growing student population, according to a report released this month. The State Higher Education Finance (SHEF) report, released by the State Higher Education Executive Officers (SHEEO), details national trends and interstate comparisons of state financing to education.

U.S. House Republican education committee leaders cited the report as a dismissal of Democrats' claims that slashes in state funding are responsible for tuition and fee increases. According to a U.S. Newswire story, U.S. Representatives John Boehner and Howard P. "Buck" McKeon used the report findings to bolster some of their legislative proposals, which would hold colleges responsible for rising tuition prices.

In fact, the SHEF report indicates that national trends mask significant variations among states. For example, between 1991 and 2003, educational appropriations per FTE student (in constant dollars) increased 22.3 percent in Georgia, but declined 42.6 percent in South Carolina. Furthermore, across all states, budget shortfalls and enrollment growth have contributed to a net decrease of 7.3 percent in educational appropriations per FTE student, from $6,283 in 1991 to $5,823 in 2003.

States have struggled to keep pace with enrollment growth and inflation, especially during times of recession, according to the report. From 1970 to 2003, public higher education enrollments nearly doubled. Over the long term, state funding has kept pace with these increased enrollments and the Consumer Price Index. In the short term, however, economic downturns have resulted in rapidly increased enrollments while constrained state budgets have depressed state appropriations per FTE student. From a peak in 1988-89, appropriations per FTE dipped to a low in 1993, gradually recovered by 2000, only to dip again when recession coincided with enrollment increases in the past few years. Since 1970, however, state support to higher education has eventually rebounded following such downturns.

Despite the interstate variations, the SHEF report indicates a general nationwide pattern – overall growth in enrollment and in state financing to support higher education. The report is intended as a tool that policymakers and educators can use to address broad public policy questions and specific state data. SHEEO is an association of chief executive officers that serve statewide coordinating and governing boards of higher education.

The full report is available on the SHEEO Web site.