State Budgets, in Context

In our headline-driven, Twitter-obsessed world, the short-term outlook often trumps consideration of long-term trends, and the simple frequently obscures the complicated. That doesn't mean that the short-term and simple are wrong, or even less correct, necessarily, than the complex and long term. It's just that examining one without the other usually results in incomplete understanding.

Take the topic of state funding of higher education. The dominant meme in many analyses and discussions is that states have steadily reduced their spending on public higher education over the last 30 years, and that the significant budget deficits most states now face are likely to exacerbate the "disinvestment" in public colleges and universities. One need look only at the headlines from the last few days -- threats of more gutted academic programs in Nevada, a proposed massive budget cut in Pennsylvania -- to get that message. (The major annual report on state funds for higher education, published jointly by Illinois State University's Center for the Study of Education Policy and the State Higher Education Executive Officers in January, showed a second consecutive dip in state spending on higher education in 2010.)

A careful, more contextual review of state financing of higher education, however, shows that "when people say the states are divesting, that's just flat-out wrong," says Paul E. Lingenfelter, president of the State Higher Education Executive Officers. Before public college leaders and faculty members call for Lingenfelter's head, he's not suggesting that the picture for public colleges is pretty, or that the institutions have anywhere enough money to do the job(s) their states are asking them to do.

But what SHEEO's annual State Higher Education Finance report, released Tuesday, shows is not that states are so much pulling back on financial support for higher education, but that they are failing to keep up with rapidly expanding enrollments, and that lawmakers and public institutions have increasingly raised the price of tuition on students to cover the gap.

Lingenfelter acknowledges that for faculty members and administrators at public colleges, there is hardly a difference between the two perspectives: the assertion that states are withdrawing from public higher education, and what he describes as the reality that they are "struggling and in some cases failing to keep pace with demand." The end result is often the same: less money for salaries, programs, etc., and required cutbacks in those and other budget lines.

But the distinction does matter, Lingenfelter suggests. True disinvestment would signal that state leaders don't care about higher education or are letting it slide willingly, and that's both incorrect and a message that does not serve higher education well, he says. (It also gives critics of higher education latitude to argue that public college advocates are misrepresenting the facts.)

The reality, Lingenfelter argues, is that burgeoning Medicaid and other costs are sapping states' ability to keep pace with exploding student demand. Even the increased tuition charged to students isn't allowing the states to keep pace, Lingenfelter says. "We've got to figure out a way to provide a quality education to more students."

The SHEEO report makes it clear that public colleges are straining to do that. In a series of tables and charts (two of which can be seen below), the data show that overall state and local government expenditures on higher education operating expenses have (the last two years aside) risen sharply in recent decades (from $29 billion in 1985 to $42.1 billion in 1995, $69.2 billion in 2005, and $88.9 billion by 2008).

But the situation looks very different when examined per full-time enrolled student. Enrollments at public colleges and universities have surged, with full-time equivalent enrollment rising from 7.2 million in 1985 to 11.6 million in 2010 -- that last figure up 6.3 percent from 2009, 14.6 percent from 2005, and 35 percent from 2000. As a result, state appropriations per student are down, and at a 25-year low. The 2010 national average of $6,454 per student is down 7.2 percent from 2009, and is 3.1 percent lower than in 2005. While there is enormous variation in the trends in per-student spending, as seen in the table below, 30 of the 50 states showed a decline in appropriations per full-time equivalent student over five years.

State Appropriations for Higher Education per Full-Time Equivalent Student

With their spending per student constrained, many public colleges (often with the support if not urging of legislators) have increasingly turned to students to help meet the costs of serving the rising enrollments, as seen in the table below.

Net Tuition Per Full-Time Equivalent Student, by State