State Higher Education Appropriations Reflect Recessions

November 14, 2006

Recessions in the national economy between 1979 and 2004 had a ripple effect on state economies, higher education appropriations, and financial access to college, according to the new report "Recession, Retrenchment, and Recovery." Conducted by the Illinois State University Center for the Study of Education Policy, the study on which the report is based analyzed 25 years of trends in state higher education appropriations. In addition, state higher education organizations were surveyed as to how the 2001 recession, which researchers concluded had the most far-reaching impacts, affected higher education appropriations, tuition and fees at public institutions, and need-based student financial aid programs. Interviews were also conducted with government leaders in seven states—Arizona, Illinois, Kansas, Massachusetts, North Carolina, Texas, and Washington—to identify policies and strategies that worked in maintaining financial access.

The findings identify the following overall consequences of the recessions for higher education:

Appropriations by FTE in the U.S. declined by 2 percent following the 1980 recession, 5 percent after the 1990-91 recession, and 8.6 percent after the 2001 recession.
Appropriations per FTE declined in 26 states following the 1980 recession, in 38 states after the 1990-91 recession, and in 44 states after the 2001 recession.
The aid-to-tuition ratios declined 17.3 percent after the 1980 recession, 2.3 percent after the 1990-91 recession, and 3.4 percent following the 2001 recession.

The study also suggests that after the 2001 recession state priorities shifted away from higher education and student financial aid to other concerns, such as workforce preparation and economic development. According to responding states, higher education began to be perceived as more of a personal benefit rather than a public contribution. Furthermore, state responses implied that student aid went to traditional college-aged students as opposed to adult learners, with more emphasis placed on merit as a criterion for eligibility.

For further analysis, state strategies, and recommendations, see the full report.