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Public Funding for Higher Education Declines 8 Percent from FY08 to FY13

April 30, 2014

The economic recession that began in 2008 has led to dramatically reduced state and local government revenue support of public colleges and universities, according to the FY13 edition of the State Higher Education Finance Report (SHEF). Over the past five fiscal years, state and local appropriations for higher education fell by 8 percent, from $88.8 billion to $81.6 billion. This decline in public support occurred at the same time as total full-time equivalent (FTE) enrollment at public two- and four-year colleges rose from 10.3 million to 11.3 million. However, total enrollment fell 2.4 percent from fall 2011 to fall 2012. When adjusted for inflation, state and local government appropriations for higher education fell from $7,924 per FTE in FY08 to $6,105 in FY13.

The annual SHEF report, produced by the State Higher Education Executive Officers (SHEEO), is based on data collected on all state and local revenues used to support higher education, including state and local tax dollars, lottery receipts, earnings from state-funded higher education endowments, and other sources. The SHEF report also identifies how institutions used these public revenues, including general institutional operating expenses, student financial assistance, and support for centrally-funded research, medical education, and extension programs.

According to the SHEF report, of the $81.6 billion in state and local support during FY13, the vast majority (76.5 percent) was allocated to the general operating expenses of public higher education, while special purpose or restricted state appropriations for research, agricultural extension, and medical education accounted for another 12.2 percent. About 7.9 percent of the funds were used for state and local government financial aid programs for students attending public institutions (up from 5.6 percent in 2008), and the remaining 3.4 percent was used for other expenses, such as financial aid for students attending four- and two-year private nonprofit institutions; college and university additional operating expenses, and non-credit and continuing education expenditures.

Increase in Net Tuition Revenue

While the share of state and local government funds devoted to financial assistance for students is up, net tuition revenue (total revenue minus financial aid expenditures) rose sharply as a percentage of total funding. In FY13, net tuition as a percentage of total educational revenue per FTE reached 47.5 percent, compared with 32.4 percent in 2008. This finding suggests that public institutions raised student tuition and fee charges in part to make up for declines in support from state and local governments.

A copy of the report is posted on the SHEEO Web site.

Contact

Ken Redd
Director, Research and Policy Analysis
202.861.2527
E-mail