Shrinking funding for higher ed misunderstood; impacts reverberate

Decreasing state funding for higher education is having a negative effect on higher education in the New England states, according to research from the Federal Reserve Bank of Boston. The report comes on the heels of a recent survey from American Public Media (APM) and the Hechinger Report showed that most Americans are unaware that governmental funding for public colleges and universities has actually decreased over the past 10 years. Decreased funding has resulted in higher tuition, more student loan debt, fewer approved patent applications, and implications for the New England economy, the Fed report asserts.

Government funded grants and loans have not kept pace with increases in the price of tuition over the past 10 years, and 44 percent of poll respondents recognize that, according to the APM report. Another 22 percent believe that the grants and loans have kept up with tuition prices and 20 percent believe they have increased faster.

More than a quarter of respondents in the APM poll (27 percent) believed that government funding for public universities has increased and more than a third (34 percent) believe it has remained the same, although those results differ among demographic groups. At least one third of the respondents who identified as Democrats, had completed a bachelor’s degree, or had household incomes of at least $75,000 indicated they knew that government funding has declined over the past ten years. And men were more likely to believe that funding had increased (31 percent) than were women (24 percent).

The Federal Reserve research reveals effects of decreased state funding on higher education. For instance, it found that each dollar of reduced state appropriations leads, on average, to a 17-cent increase in net tuition and fees, and a 30-cent decrease in instructional expenditures at public doctoral institutions. The report suggests that such cuts have contributed to 21,388 fewer associate’s degrees granted by New England community colleges during the 2002-2012 period than would have been granted if state appropriations had remained at the same level as they had been in 2001.

“When the region’s public institutions grant fewer degrees, it becomes harder to address the demand by its employers for skilled workers,” the Fed report states. Such demand does not show signs of abating. For example, Connecticut’s manufacturers have said they face a shortage of 13,000 skilled workers and a new effort is underway to support the manufacturing industry there, which reportedly needs 25,000 to 35,000 skilled workers to meet the demands of the 21^st century.