College Spending in a Turbulent Decade
January 9, 2013
The Delta Cost Project released a new report, "College Spending in a Turbulent Decade," in December 2012. With data from 2000 to 2010, the report reflects on some positive growth in the early part of the 2000's for higher education institutions and paints a gloomy outlook beyond 2010.
Data from the report show that public four-year institutions experienced a 2 percent decline in funding for academics (tuition and state and local appropriations combined) from 2009 to 2010, while revenues from other areas such as contracts, grants, and auxiliary enterprises grew. Despite this revenue growth, the funds from these other areas are usually not available for general instruction.
In FY10 alone, public colleges saw cuts to state and local appropriations, averaging between 9 and 13 percent for pubic research, master's, and bachelor's institutions. Community colleges experienced a one-year drop of 15 percent. The general public's disinvestment in public higher education during the later part of the decade concluded in the lowest per-student state and local funding during that time period. While revenue from appropriations fell, net tuition revenue at these public colleges increased over the decade. The inverse relationship to state and local appropriations shows that the once $3,000-5,000 per full time equivalent (FTE) student gap in revenue in 2000 has closed dramatically; now only a $500 gap remains between the revenue types at public four-year institutions.
The report identifies student services, academic and instructional support, operations and maintenance, research, and auxiliary operations as areas other than academic instruction that are expenses for institutions. The report also compares institutions based on their education and related spending (E&R) rather than education and general spending (E&G), excludes spending on auxiliaries, hospitals and other operations, and focuses entirely on spending related to academics.
In 2010, both public and private four-year institutions saw between a 1 and 2 percent drop in E&R spending. The reduction in spending on academic functions brought public and private four-year institutions back to the levels of E&R spending seen in 2007 and 2008. Community colleges saw two consecutive years (2009 and 2010) of cuts to spending on academics, bringing the E&R spending to the lowest point in the 2010 decade.
Degree productivity (total number of degrees awarded per 100 FTE students) on average fell slightly or was flat from 2009 to 2010 for both sectors of institutions; public bachelor's and community colleges produced one fewer degree per 100 FTE in 2010 than in 2009. However, when the actual number of degrees produced is considered, public four-year institutions and community colleges had the highest growth rates in the last half of the decade, growing by 3 percent and 8 percent respectively.
Because of falling E&R spending and increases in the sheer number of degrees and certificates produced in 2010, the report found that cost per degree/completion declined from 2009 at nearly all public and private institutions (with the exception of public bachelor's) but still cost more to produce than in 2005 or 2000.
"College Spending in a Turbulent Decade" is available for download from the Delta Cost Project's web site.
Natalie Pullaro Davis
Manager, Research and Policy Analysis
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