STATE HIGHER EDUCATION FINANCE
State funding remains below historic levels as public colleges brace for a recession and expected budget cuts.
The impacts of COVID-19 on public higher education revenues and enrollment are unknown and potentially severe. Amidst this uncertainty, the SHEF report offers a comprehensive look at where states stand as they enter this complex funding environment.
In 2019, a 2.4% increase in per-student education appropriations marks the likely end of a seven-year recovery in higher education funding.
Nationally, public institutions in 2019 received an average of $8,196 in education appropriations per full-time equivalent (FTE) enrollment. i Education appropriations are state and local support available for public higher education operating expenses and exclude research, hospitals, and medical education. Full-time equivalent (FTE) enrollment converts student credit hours to full-time academic year students. FTE excludes medical students. VIEW ALL DATA DEFINITIONS
State funding has changed over time
After unprecedented cuts during the Great Recession, education appropriations per FTE today remain 8.7% below pre-recession levels.
As state funding declines, tuition and fees increasingly support public institutions
Net tuition revenue i Net tuition revenue Net tuition revenue is the total amount of tuition and fees, minus state and institutional financial aid and medical tuition and fees. Net tuition is affected by changes in tuition rates as well as proportional differences in out-of-state, international, and graduate student enrollment. VIEW ALL DATA DEFINITIONS has grown consistently over time, reaching $75 billion or $6,902 per FTE in 2019.
These $164 billion in revenues serve 10.9 million FTE students
Changes in enrollment are often counter-cyclical to trends in state funding
Enrollment increases rapidly during economic downturns. At the same time, state funding decreases and tuition rises at a faster rate.
Economic cycles explain many of the ups and downs we see over time.
State and local support comes from a variety of sources
Across the board, support is primarily made up of state tax appropriations. These funds are supplemented in 29 states with local appropriations. Many states also rely on non-tax sources (lottery, tobacco, and gaming revenues).
Higher education uses these state and local funds in a variety of ways
While the majority of state funding is used for general operations at public institutions, 11% goes to student financial aid and 10% is used for research, agriculture, and medical purposes.
Most state financial aid dollars go to students at public, in-state institutions
In 2018, 75% of state financial aid was allocated based on financial need. 1 https://www.nassgapsurvey.com/survey_reports/2017-2018-49th.pdf National Association of State Student Grant Aid Programs. (2019). Annual survey report on state-sponsored student financial aid. VIEW ALL FOOTNOTES
Unlike the rest of state support, financial aid has increased over the last two decades
In 2019, states provided $808 per FTE in public financial aid, i State public financial aid State public financial aid is any state appropriated student financial aid for public institutions, excluding loans. These funds are included in education appropriations. VIEW ALL DATA DEFINITIONS an all-time high.
Financial aid accounts for an ever-growing portion of education appropriations
Only 4.7% of state support was used for public financial aid at the height of per-student appropriations in 2001. This proportion increases dramatically during economic recessions.
Increases in financial aid mirror changes in the student share
During recessions, state funding declines and tuition revenues increase, placing a growing burden on students to fund public higher education. In 2019, 46% of total revenues came from tuition. i Student share The student share is a measure of the proportion of total education revenues at public institutions coming from net tuition revenue. VIEW ALL DATA DEFINITIONS
However, the student share differs greatly across the U.S.
Although student share varies across geographic regions, there are consistent trends over time.
In more than half of all states, tuition and fees have become the primary revenue source for public higher education
Although every state has different levels of state support and tuition revenue, over time, the student share has increased in all states.