Before the Fall

State and local support for higher education grew 5.7 percent during the last fiscal year -- just before the economy fell apart.
August 24, 2009

It may seem the distant past now, but there was actually a recovery going on in state and local support for higher education until the economy tanked last fall.

The State Higher Education Executive Officers on Friday released its annual study on higher education financing, finding that in the 2008 fiscal year, which in most places ended just before the economic mess became fully visible, state and local funding for higher education reached $89.2 billion, a 5.7 percent increase over 2007, in current dollars.

Those figures marked the third year of a recovery in state and local support for higher education following the 25-year low in per student public funding that occurred in 2005, when state and local support totaled $72.6 billion. That recovery was almost certainly lost in most states by the current recession and its impact on government support.

While there was a recovery in actual dollars, the period was also one in which enrollments were increasing -- 7.5 percent across the board over the last five years (predating the recent, economy-related enrollment spikes). SHEEO found that, after adjusting for enrollment increases and inflation, the increase in per-student appropriations was only 0.6 percent from 2007 to 2008. This suggests (and is no surprise to public higher education leaders) that there wasn't much of any cushion to fall back on when the cuts of the last year started.

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Paul Lingenfelter, president of SHEEO, said that even though the recession shows signs of ending (according to the economists), "full recovery will take several years. When federal stimulus funds are gone, the budget holes in states could well grow even deeper."

In terms of tuition, the study found that constant dollar net tuition per full-time enrollment increased by 1.7 percent between 2007 and 2008, about the same as in the previous year. Nine states (Delaware, Iowa, Maine, Michigan, Minnesota, Pennsylvania, Rhode Island, South Carolina and Vermont) had more revenue for higher education -- despite below average appropriations -- because of above average tuition increases. The opposite was true in Arkansas, California, Idaho, Illinois, Louisiana, Nevada and New Mexico.

The following table shows state and local support and how it was used, in current dollars in millions, over the last six years.

Sources and Use of State and Local Funds for Higher Education, Current Dollars in Millions

  2003 2004 2005 2006 2007 2008
Source of Funds            
--State $64,427 $63,552 $65,972 $70,992 $76,961 $81,138
--Local $6,374 $6,675 $6,656 $6,969 $7,313 $8,043
--Total $70,801 $70,227 $72,628 $77,961 $84,274 $89,181
Use of Funds            
--Research $9,462 $9,324 $9,456 $9,670 $10,406 $11,234
--Student aid (public institutions) $3,252 $3,631 $4,029 $4,471 $4,827 $5,186
--Out-of-state student aid $31 $33 $35 $36 $38 $35
--Student aid (private institutions) $1,925 $1,969 $2,026 $2,105 $2,260 $2,308
--Aid to private institutions $266 $267 $259 $264 $287 $295
--Operating support at public institutions $55,864 $55,003 $56,823 $61,415 $66,456 $70,124


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