Reviewing a Decade of College Spending
Last month the Delta Cost Project released its annual report on college spending, Trends in College Spending 1999-2009: Where Does the Money Come From? Where Does It Go? What Does It Buy? Examining the decade between 1999 and 2009 the report paints a bleak picture of the current state of higher education spending with very small but notable improvements in specific areas.
In general, the report finds that revenues are down and spending (overall and per student) reflects that decline. Recession-related state budget cuts meant deep cuts to educational appropriations. As a result, schools in every sector of the industry raised tuitions (in some cases significantly) in an attempt to make up that difference. American Recovery and Reinvestment Act (ARRA) funds may alleviate some pressure in the future but because most institutions did not begin receiving those funds until the last part of 2009, the impact of that funding source is not fully captured in the report.
Some of the most striking statistics are related to community colleges. In 2009 alone, community colleges were educating more than 6.5 million students, accounting for approximately one-third of all the nation’s college students. Though shouldering a large portion of the burden of educating the nation’s college students, community colleges also saw the largest funding declines during the decade.
The authors point out that “nationwide public appropriations for higher education never completely rebounded from the 2001 recession, and the 2008 recession is proving to be more serious and longer lasting.” This decline in appropriations has trickled down to have a direct impact on the student. In an attempt to make up the lost appropriations, most colleges and universities increased tuition consistently over the decade. Unfortunately for the student, however, most such increases failed to make up the entire difference in lost appropriations and did not equate to an increase in spending per student. On average, increases in tuition revenues made up for only about half of lost appropriations except for at public community colleges where tuition increases accounted for less than half of the difference.
The findings outlined in Trends in College Spending are particularly salient in the current economic environment. As the report’s authors note, when compared to the 2001 recession, “…the 2008 recession is proving to be more serious and longer lasting.” Even though the recession was identified as “over” in mid-2009, the economy has clearly not rebounded and unemployment remains significant (9.1% as of last month). According to Mark Kantrowitz, publisher of FinAid.org, “the average increase in annual college enrollment during a recession is 567,400 (4.5% of total college enrollment), compared with 150,800 (1.2% of total college enrollment) between recessions.” Between 2008 and 2009, as reported in the Trends in College Spending report, enrollments in US colleges and universities increased by more than 860,000 students, “nearly a 5 percent increase since 2008 and the single largest one-year increase since the mid-1970s.”
One of the only positive trends found in the data is related to educational productivity. In 2002, colleges and universities began providing data on undergraduate credit hours per degree. The analysis done for the Delta Cost Project report show that colleges and universities are using credits earned more effectively, reducing total credits to be taken to earn a degree. The authors note that more effective use of credit hours earned has “translat[ed] into a ‘savings’ of nearly a half a semester’s worth of credits.” This is a very positive finding especially when one considers the increase in tuition rates across the board and decrease in spending per student.
As the authors point out, the ramifications of the “Great Recession” of 2008 are still being felt and will continue to reverberate through the industry for at least the next several years. President Obama, however, has stated that it is his hope and intention that America regains its standing as number one in the world for number of college graduates. In considering the policy implications of the study’s findings, the authors note that even with the improvements in instructional efficiency, much more needs to be done if the nation is to achieve the President’s goals. The report notes that reaching such an ambitious goal (the United States currently ranks 12th in the world), “will require improvements in educational performance at every level of the educational pipeline, from high school graduation to college completion, averaging 4 percent per year. The gains in degree/certificate completion reported here are close to 1 percent per year, and by themselves are not enough to meet the attainment goals…”