State support for higher ed ticked up 2.9% in fiscal 2020, report finds

by Joseph K. Clark

Dive Brief:

  • According to an annual report from the State Higher Education Executive Officers Association, despite eight years of state funding increases, higher education institutions had historically low state support heading into the pandemic-induced recession.
  • State appropriations per full-time-equivalent student increased 2.9% in fiscal 2020 when adjusted for inflation, including $428 million in federal relief funding, SHEEO found.
  • But the organization’s early estimates show funding for public colleges is expected to decline in most states in fiscal 2021.

Dive Insight:

Higher ed appropriations per FTE student increased in 41 states and Washington, D.C., in fiscal 2020. Despite a steady increase in state support, inflation-adjusted budgets are still 6% below levels seen in 2008.

States have been recovering at different rates. Eighteen states had higher ed appropriations in 2020 at or above their 2008 levels, up from nine the year before.

But in 12 states, public support for colleges lags the amount they had during the Great Recession by at least 20%. That includes Arizona, where appropriations have dropped nearly 43% since 2008, and Oklahoma, where they have fallen almost 39%.

higher ed

The current economic downturn risks undoing some of the progress states have made in funding public colleges, the SHEEO report argued. However, federal coronavirus relief helped states maintain their higher ed support in fiscal 2021, according to a March report from Illinois State University’s Center for the Study of Education Policy.

Appropriations in SHEEO’s report include $428 million in federal relief funding, which makes up 0.4% of the $108 billion states gave to higher education in fiscal 2020. Although the money has helped buoy college budgets, the authors warn that federal aid should not replace long-term state investments in public schools.

States have continued to bump up their support for financial aid, the SHEEO report found. State financial aid per FTE grew 7% yearly in fiscal 2020. It has increased in all but three years since 2001.

However, the increase in aid pushed down net tuition revenue for public institutions, which saw a 1% year-over-year decline in 2020. But even after accounting for financial aid’s effects, net tuition revenue hasn’t kept up with inflation.

States should also allocate more money directly to public institutions, said Sophia Laderman, a senior policy analyst at SHEEO and a report co-author. “States have been perfect about increasing financial aid,” Laderman said. “But we know that state funding for institutions directly increases their revenue.”

Aid increases have coincided with public colleges relying more heavily on tuition income. Net tuition revenue has increased the share of public colleges’ total education revenue, growing from 21% in 1980 to 44% in 2020.

Enrollment challenges have also continued. FTE enrollment fell 0.6% at public colleges, the ninth-straight year of declines. These decreases were concentrated at community colleges, which reported a 1.9% loss.

The pandemic compounded enrollment woes at public two-year schools. Last fall, their headcount dropped 10%, and those trends continued into the spring term, according to data from the National Student Clearinghouse.

Related Posts