Home Current Events Who Tracks the States’ Support for Higher Education?
Who Tracks the States’ Support for Higher Education?

Who Tracks the States’ Support for Higher Education?

0

In a year when the COVID-19 pandemic attracts much of the attention of the press, the press release about the State Higher Education Finance FY 2019 Report issued by the State Higher Education Executive Officers Association (SHEEO) on May 5, 2020, probably escaped the attention of many in the higher education sector. However, as states address the complexity of balancing the budget in a year when revenues and expenses have been disrupted, it’s worthwhile reviewing the report.

The Report begins on a high note. In 2019, state and local funding for all higher education reached $100 billion for the first time.

State tax and non-tax appropriations accounted for 88 percent of the funding, with local tax appropriations contributing 11 percent. Approximately 78 percent of the funding went to general operations; 10 percent went to research, agricultural extension programs, and medical schools; 8.5 percent was allocated to student financial aid at public institutions; and less than 3 percent supported private institutions, mostly through student financial aid.

The 2019 SHEF report highlights the following findings:

  • Education appropriations increased 2.4 percent or $195 per Full-Time Equivalent (FTE) in 2019, marking the seventh straight year of increases.
  • Education appropriations remained 8.7 percent below pre-recession levels in 2008, and states have only recovered two-thirds of the total decline during the Great Recession.
  • State public financial aid increased 4.0 percent, reaching an all-time high of $808 per FTE.
  • For the first time since the Great Recession, the U.S. had a decline in net tuition revenue (due to the increase in state financial aid), although the decrease was only .1 percent or $6 per FTE.
  • Total education revenues increased 1.3 percent per FTE, surpassing $15,000 per FTE for the first time.
  • Despite the recent funding increase, in more than half of all states, the majority of total education revenues still comes from student tuition.
  • There were just under 11 million FTE-enrolled students in 2019.
  • FTE enrollment ranged from less than 17,000 in Alaska to 1.56 million in California.
  • 2019 is the eighth straight year of FTE enrollment declines following substantial increases during the Great Recession. Annual enrollment declines have been less than .5 percent for the last three years.
  • Twenty states had very stable enrollment from 2018 to 2019, with annual changes of less than 1 percent. In the past 10 years, almost half of all states have faced enrollment declines.
  • Nationally, public institutions received an average of $8,196 in education appropriations per FTE.
  • From 2018 to 2019, appropriations increased in 38 states and Washington, D.C. Across the states, appropriations ranged from less than $3,000 in New Hampshire and Vermont to almost $19,000 in Wyoming.
  • Education appropriations remain 8.7 percent below pre-recession levels. Only seven states have fully recovered.
  • State public financial aid per FTE increased 4.0 percent from 2018 to 2019 and reached an all-time high of $808 per FTE.
  • Across the U.S., state financial aid for students attending public institutions has increased 34.1 percent per FTE since the Great Recession.
  • State public financial aid in 2019 ranged from under $100 per FTE in five states to over $2,000 per FTE in Louisiana and Tennessee.
  • Public institutions averaged $6,902 in net tuition revenue from in-state and out-of-state students in 2019.
  • Net tuition revenue declined for the first time this year since 2008.
  • Nationally, net tuition revenue is up 7.6 percent in the last five years, and 37.7 percent since 2009.
  • Net tuition revenue per FTE varied by state, from below $3,000 per FTE in California and Florida to nearly $17,000 in Delaware.
  • Of the 25 states with net tuition revenue increases, only four had increases higher than 3 percent (Connecticut, Oklahoma, Pennsylvania, and Wyoming).
  • Net tuition revenue is the total amount of tuition and fees, minus state and institutional financial aid, tuition waivers or discounts, and medical student tuition and fees.
  • Total education revenues increased for the seventh straight year, reaching $15,018 per FTE. This trend does not hold for all institutions or states.
  • Total education revenues range from a low of $10,262 in Florida to almost $23,000 in Wyoming.
  • Total revenues increased in 36 states and the Washington, DC office from 2018 to 2019. In the last five years, total revenues have only decreased in 5 states: Indiana, Mississippi, Missouri, New Hampshire, and North Dakota.
  • Since 1980, the student share has increased from 20.9 percent to 46 percent in 2019.
  • Student share generally rises during economic recessions and levels off during economic recoveries.
  • In over half of all states, tuition revenue comprises more than 50% of total revenues. Three states had a student share above 75 percent in 2019 (Delaware, New Hampshire, and Vermont). Conversely, three states have a student share of less than 25 percent (California, New Mexico, and Wyoming).
  • It is not clear what will happen to public institution revenues and student affordability if states continue to use higher education as a budgetary pressure release valve during the next recession.
  • Higher education support is the third largest budget area of state spending. The proportion of general funds allocated to higher education has declined over time from 12.9 percent in 1995 to 9.6 percent in 2019. During economic downturns, state funding for higher education generally exceeds reductions in other budget areas. Generally, states disproportionately reduce per-student funding to higher education due to the presumption that funding reductions can be partially offset with tuition revenue increases.
  • States have only recovered about two-thirds (63.5 percent) of the total decline seen during the Great Recession.
  • Tuition revenue per FTE decreased by .09 percent from $6,908 to $6,902 in 2019. The two prior decreases immediately preceded economic recessions.
  • Education appropriations and net tuition comprise the total funding for public higher education. In 2019, total revenues increased to $15,018 per FTE, surpassing $15,000 for the first time in the SHEF database.
  • The student share of net tuition revenue has increased from 21 percent to 46 percent in 2019. The student share will likely pass 50 percent during the next recession.
  • Student share is highest in the Midwest and Northeast. The South tracks closely to the U.S. average, and the West has the lowest student share of any region.
  • With 1.55 million FTE-enrolled students, California comprises 15 percent of U.S. FTE enrollment. Changes in California can drive the U.S. total.
  • In 2019, the average public institution received nearly $800 less in education appropriations per student than in 2008.
  • Total education revenue remains below pre-recession levels in 16 states.

In many ways, Fiscal Year 2019 was a good year for public education, with net tuition revenues decreasing for the first time since 2008. However, the primary reason for the decrease was an increase overall in financial aid funding, which is a subtraction from gross tuition revenue.

With students and their families contributing 46 percent of the net tuition nationwide, the states’ budget woes caused by the COVID-19 pandemic will undoubtedly impact higher education funding. As the authors of the report write, the next recession will likely tip the majority of the contribution to the students and their families.

Perhaps there’s a silver lining in this pandemic in that states and their institutions will look at the power of scale when operating online. It may be one of the few ways to lower costs in the long run.

Comments

comments

Wally Boston Dr. Wallace E. Boston was appointed President and Chief Executive Officer of American Public University System (APUS) and its parent company, American Public Education, Inc. (APEI) in July 2004. He joined APUS as its Executive Vice President and Chief Financial Officer in 2002. In July 2016, he retired as APUS president and continued as CEO of APEI. In September 2017, he was reappointed APUS president after the resignation of Dr. Karan Powell. In September 2019, Angela Selden was named CEO of APEI, succeeding Dr. Boston who will remain APUS president until his planned retirement in June 2020. Dr. Boston guided APUS through its successful initial accreditation with the Higher Learning Commission of the North Central Association in 2006 and ten-year reaccreditation in 2011. In November 2007, he led APEI to an initial public offering on the NASDAQ Exchange. During his tenure, APUS grew to over 100,000 students, 200 degree and certificate programs, and approximately 90,000 alumni. In addition to his service as a board member of APUS and APEI, Dr. Boston is a member of the Board of Advisors of the National Institute for Learning Outcomes Assessment (NILOA), a member of the Board of Overseers of the University of Pennsylvania’s Graduate School of Education, a board member of the Presidents’ Forum, and a board member of Hondros College of Nursing and Fidelis, Inc. He has authored and co-authored papers on the topic of online post-secondary student retention, and is a frequent speaker on the impact of technology on higher education. Dr. Boston is a past Treasurer of the Board of Trustees of the McDonogh School, a private K-12 school in Baltimore. In his career prior to APEI and APUS, Dr. Boston served as either CFO, COO, or CEO of Meridian Healthcare, Manor Healthcare, Neighborcare Pharmacies, and Sun Healthcare Group. Dr. Boston is a Certified Public Accountant, Certified Management Accountant, and Chartered Global Management Accountant. He earned an A.B. degree in History from Duke University, an MBA in Marketing and Accounting from Tulane University’s Freeman School of Business Administration, and a Doctorate in Higher Education Management from the University of Pennsylvania’s Graduate School of Education. In 2008, the Board of Trustees of APUS awarded him a Doctorate in Business Administration, honoris causa, and, in April 2017, also bestowed him with the title President Emeritus. Dr. Boston lives in Owings Mills, MD with his wife Sharon and their two daughters.

LEAVE YOUR COMMENT

Your email address will not be published. Required fields are marked *