Recent Research: Public College Support Per Student Sinks to 25-year Low

At the same time civic and corporate leaders around the country are calling for more high school students to pursue a college education, and specifically science, technology and math degrees, the student's share of the cost for higher education is climbing to record highs. Despite an appropriations increase of 3.5 percent in fiscal year 2005, constant dollar per student state and local funding for public colleges and universities was at the lowest point in 25 years, according to State Higher Education Finance FY 2005, the annual study conducted by the association of State Higher Education Executive Officers (SHEEO). State and local support per full-time-equivalent student in public institutions was $5,833 in FY 05; the high point since 1980 was in fiscal 2001, when per student support was $7,121 in constant 2005 dollars.

Support per student decreased dramatically from 2001 to 2005 because enrollment grew by 14.3 percent and inflation grew by 14.2 percent, without corresponding increases in public funding. State and local support, essentially flat from 2001 to 2004, grew by 3.5 percent in 2005, but this increase was exceeded by the combined effects of continuing growth in enrollment (2.1 percent) and inflation (3.4 percent). Consequently, constant dollar state and local government support per student decreased 1.9 percent in 2005.

Between 2004 and 2005, average per student increases of 7.7 percent in net tuition offset the continuing slide in public funding. Total educational revenues (state and local support plus net tuition) grew by 0.2 percent, the first increase since 2001. Total educational funding, now at $9,212, is near the long-term average over the past 35 years, approximately the level of spending in 1991, but below peak funding ($10,100) achieved in the period, 1999 to 2001. Net tuition, however, now accounts for 36.7 percent of educational revenues, a new high. The student share of total revenues was 26.1 percent in 1991. State support for student assistance grew by 7.5 percent in 2005.

According to SHEEO President Paul Lingenfelter, "Projected increases in the college age population, the increasing economic importance of higher education, and survey data on student aspirations all suggest the demand for higher education will continue to increase. But an increasing share of the cost has been shifted to students and their families. If this trend continues both the American tradition of affordable higher education and student participation could well be threatened."

Total educational spending per student in public institutions (state and local revenues plus net tuition in constant 2005 dollars) fell 8.8 percent between 2001 and 2005, from $10,100 to $9,212. In the early 1990s, total spending was close to $9,200; it then grew to and remained at $10,100 from 1999 to 2001 before the subsequent decreases. ("Total educational spending" excludes research, agricultural extension services, and medical education, which together accounted for 13.5 percent of all state and local higher education spending in fiscal year 2005 and 14.2 percent in 2001.)

The decline in state support per student between 2001 and 2005 extends an historical pattern -- in recessions state revenues have fallen, higher education enrollments have grown and, for a variety of reasons, states often have cut funding for higher education more than funding for other activities. Current indicators suggest the historical pattern of recovery is recurring, although the ultimate extent of the recovery is far from certain in view of projections for additional enrollment growth and tight state budgets.

The full report, State Higher Education Finance FY 2005, is available at www.sheeo.org.

Links to this paper and more than 3,000 additional TBED-related research reports, strategic plans and other papers can be found at the Tech-based Economic Development (TBED) Resource Center, jointly developed by the Technology Administration and SSTI, at http://www.tbedresourcecenter.org/.