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In recent years, much has been written about the persistent and ongoing decline in state taxpayer support of higher education. Simultaneously, we have watched a poorly conceived federal program of vouchers and student loans ensnare aspiring college youth in an unforgiving and boundless indebtedness that now exceeds $1.6 trillion and burdens generation upon generation.
Of late, several organizations have produced a raft of studies that endeavor to derail investment in public education while lauding the virtues of for-profit and private education. Such studies have produced an avalanche of questionable statistics, all to the effect that public institutions do not warrant greater public taxpayer investment.
One such recent study by Andrew Gillen of the Texas Public Policy Foundation, “The Myth of State Disinvestment in Higher Education,” disparages reports of degeneration in state funding, maintaining that no real decline has occurred over the previous decades. The report claims that any alleged decrease in public investment in higher education is more perceived than real. This particular study argues against more such investment in higher education and bases its conclusions on the vagaries of the Consumer Price Index of Urban Areas.
The uncertainty of those numbers is multiplied by the problems inherent in using urban market baskets, which are questionable when applied to the whole of higher education institutions in the country. Such measurements should be based upon more representative national metrics that incorporate nonurban markets, as well. There are further concerns when using the CPI-U as an inflationary measure for higher education goods and services. Inflation generally affects the goods and services of colleges and universities much more than others in the CPI or CPI-U. That is why the Higher Education Price Index was created decades ago as a more accurate measure for colleges and universities.
This misleading document concludes that declines in state funding of public higher education have not resulted in increased college student debt or higher tuition and fees. But studies conducted and published by the State Higher Education Executive Officers, the Center on Budget and Policy Priorities and various other organizations have disproven those findings.
One of the most reliable sources that has documented a clear decline in state funding, paralleling the rise of student tuition and debt, is “The Race to the Bottom: State Fiscal Support for Higher Education: FY 1961 to FY 2019” by Tom Mortenson, published by the Pell Institute for the Study of Opportunity in Higher Education. Mortenson shows that the state “investment effort,” or state fiscal support for higher education per $1,000 of taxpayers’ personal income, has fallen about 50 percent since 1981. He further finds that declines in state investment tax effort for higher education across all states have been the rule rather than the exception since the early 1980s. Mortenson concludes that, if the present trend continues, state investment tax effort will reach zero by the year 2057 for the nation, with Alaska, Colorado and Arizona leading this disinvestment trend.
Data derived from the National Income and Products Account of the U.S. Bureau of Economic Analysis corroborates Mortenson’s study. That federal agency, in confirming Mortenson’s calculations, predicts a continuing and substantial reduction in state fiscal support for higher education in the future. This downward spiral will continue unless state and federal governments link efforts to induce and incentivize greater government investment in higher education.
Despite the recent increase in state student aid, which accounts for only about 15 percent of appropriations to public colleges and universities, the overall picture of state support for colleges and universities continues to be bleak. The federal government should take a much more proactive role in quelling this more than 30-year trend by identifying matching funds for investments made by state government into public higher education institutions, much like our nation currently handles highways and health care. Perhaps the most successful example of this type of effort occurred In 1972, when the State Student Incentive Grant, a new federal matching program designed to encourage states to create state student aid programs or increase funding to existing ones, was created. SSIG’s federal matching funds proved extremely effective and encouraged 20 states to adopt such aid programs within four years of its creation.
Federal-state partnerships, which incentivize states to maintain or raise their current level of higher education support in order to receive additional federal funding, are not new. The Morrill Act of 1862, which created land-grant universities, is perhaps the best-known example. The federal government gave land to every state in the nation in exchange for the creation of new public colleges and universities. The benefit to both parties was apparent: more college-trained engineers, agricultural scientists and military experts would help spur each state’s economy and also keep the country secure and competitive.
In 2007, Higher Education Act reauthorization efforts developed a similar federal leverage provision, which was later added into the American Recovery and Reinvestment Act. This provision allowed states to use stimulus funds only if they didn’t cut their higher education budgets below 2006 state funding levels. Only a few months after the act passed through Congress, many states cut their higher education budgets to the very edge of where federal penalties would apply -- some within mere dollars.
In the future, it would be very helpful for public policy think tanks to not disregard a state’s fiscal capacity or tax effort analysis as a legitimate means to comparatively assess a state or nation’s commitment to education. In this case, this study inaccurately attempts to let our states off the hook for what the vast majority of higher education finance studies have shown time and time again: that the primary culprit for increases in student cost and indebtedness among our nation’s public higher education students is a decrease in state commitment and investment.