The Slow Climb

State spending on higher education rises nationally, and 30 states see growth over the year before -- but per-student spending is still well below 2008 level.

April 21, 2014

State and local support for higher education is crawling out of the hole of the recession, according to a report released today by the State Higher Education Executive Officers.

Three states spent more in fiscal year 2013 than in fiscal year 2008 – and without the help of federal stimulus money. A full 30 states increased their spending since last year.

Nationally, spending per full-time-equivalent student is $6,105, still below the $7,924 mark in 2008. All told, state and local governments spent $81.6 billion on higher education in the last budget year, which ran from July 2012 to the end of June 2013 in most states.

But the increases in some states seem likely to continue, which means the “slow climb up is now beginning,” said SHEEO President George Pernsteiner.

One-year change in state and local spending per full-time student from 2012-13
Source: State Higher Education Executive Officers


“There is a slow recovery nationwide in state and local support for higher education, but that is like the national recovery, it is not uniform across the country, so some states are up and some states are still down,” he said. “But some states are up, and the data from next year are likely to show an even greater recovery.”

Five year change in state and local spending per full-time student from 2008-13
Source: State Higher Education Executive Officers

The recovery certainly is uneven and the national uptick in spending may do little good to educators and students in states that are lagging. The three states that are spending more now than they were five years ago -- Wyoming, North Dakota and Illinois – are not great poster children for a rebound in some ways. Wyoming and North Dakota are both small states, and Illinois’s increase is the result of a cash infusion to its underfunded retirement system for public employees.

Still, the road ahead seems good, for the most part. An earlier report, which examined the budgets for the 2014 budget year, found a full 40 states had increased their higher ed spending.

The report again shows, in broad strokes, how students are being asked to pick up the tab following an economic collapse caused by the unwise financial decisions of their elders and the alien accounting of Wall Street. About 47 cents of every public college dollar is now coming – one way or another, now or later – from tuition charges, rather than from government support.

“Coming out of each recession, the share students were paying was higher than ever before going into the recession,” Pernsteiner said.

After the recession in the early 1980s, 23 percent of public college money came from students. After the recession in the early 1990s, 31 percent came from students. After the recession in the early 2000s, 35 percent came from students. Now, it’s 47 percent.

Much of the growth in spending actually came from local governments. The report’s authors said this is likely because local governments – which generally fund community colleges rather than four-year institutions – get their money mostly from property taxes as opposed to income, sales or business taxes. Property tax revenue remains strong compared to other taxes.

Still, local revenue is only a small portion of overall higher ed spending: In 2013, states put in $72.4 billion, while local governments spent $9.2 billion.

There has also been some growth in nontax state government revenue from various kinds of gambling, including lotteries. Such revenue increased to $2.9 billion in 2013 from $2.2 billion in 2008.

Private colleges, which often get money from state financial aid programs, have seen that public sector generosity decline. In 2008, for instance, private colleges were getting a $2.8 billion subsidy from governments. In 2013, they received some $300 million less. In California, for instance, a state grant has remained frozen for students going to California’s four-year public colleges, where tuition fees are frozen, but the maximum payout to students attending privates is decreasing.

While states have been increasing tuition in recent years, they have also upped the amount of financial aid they provide to students.

Nationally, financial aid spending by states is now at $6.8 billion, up from $5 billion in 2008, although, the report notes, 15 states have made cuts to their aid programs during the same period.

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