Funding Down, Tuition Up

State Cuts to Higher Education Threaten Quality and Affordability at Public Colleges 

This from the Center on Budget and Priorities:

Years of cuts in state funding for public colleges and universities have driven up tuition and harmed students’ educational experiences by forcing faculty reductions, fewer course offerings, and campus closings.  These choices have made college less affordable and less accessible for students who need degrees to succeed in today’s economy.

Years of cuts have made college less affordable and less accessible for students.Though some states have begun to restore some of the deep cuts in financial support for public two- and four-year colleges since the recession hit, their support remains far below previous levels.  In total, after adjusting for inflation, of the states that have enacted full higher education budgets for the current school year, funding for public two- and four-year colleges is $8.7 billion below what it was just prior to the recession.^[2]  

As states have slashed higher education funding, the price of attending public colleges has risen significantly faster than the growth in median income.  For the average student, increases in federal student aid and the availability of tax credits have not kept up, jeopardizing the ability of many to afford the college education that is key to their long-term financial success.

States that renew their commitment to a high-quality, affordable system of public higher education by increasing the revenue these schools receive will help build a stronger middle class and develop the entrepreneurs and skilled workers that are needed in the new century.

Figure 1

Of the states that have finalized their higher education budgets for the current school year, after adjusting for inflation:^[3]

• Forty-five states — all except Montana, North Dakota, Wisconsin, and Wyoming — are spending less per student in the 2015-16 school year than they did before the recession.^[4]
• States cut funding deeply after the recession hit.  The average state is spending $1,525, or 17 percent, less per student than before the recession.
• Per-student funding in eight states — Alabama, Arizona, Idaho, Kentucky, Louisiana, New Hampshire, Pennsylvania, and South Carolina — is down by more than 30 percent since the start of the recession.
• In 11 states, per-student funding fell over the last year.  Of these, three states — Arkansas, Kentucky, and Vermont — have cut per-student higher education funding for the last two consecutive years.
• In the last year, 38 states increased funding per student.  Per-student funding rose $275, or 4 percent, nationally.

Deep state funding cuts have had major consequences for public colleges and universities.  States (and to a lesser extent localities) provide roughly 54 percent of the costs of teaching and instruction at these schools.^[5]  Schools have made up the difference with tuition increases, cuts to educational or other services, or both.

Since the recession took hold, higher education institutions have:

• Increased tuition.  Public colleges and universities across the country have increased tuition to compensate for declining state funding and rising costs.  Annual published tuition at four-year public colleges has risen by $2,333, or 33 percent, since the 2007-08 school year.^[6]  In Arizona, published tuition at four-year schools is up nearly 90 percent, while in six other states — Alabama, California, Florida, Georgia, Hawaii, and Louisiana — published tuition is up more than 60 percent. 

These sharp tuition increases have accelerated longer-term trends of college becoming less affordable and costs shifting from states to students.  Over the last 20 years, the price of attending a four-year public college or university has grown significantly faster than the median income.^[7]  Although federal student aid and tax credits have risen, on average they have fallen short of covering the tuition increases.

• Diminished academic opportunities and student services.  Tuition increases have compensated for only part of the revenue loss resulting from state funding cuts.  Over the past several years, public colleges and universities have cut faculty positions, eliminated course offerings, closed campuses, and reduced student services, among other cuts.

A large and growing share of future jobs will require college-educated workers.^[8]  Sufficient public investment in higher education to keep quality high and tuition affordable, and to provide financial aid to students who need it most, would help states develop the skilled and diverse workforce they will need to compete for these jobs. 

Figure 2

Sufficient public investment can only occur, however, if policymakers make sound tax and budget decisions.  State revenues have improved significantly since the depths of the recession but are still only modestly above pre-recession levels.^[9]  To make college more affordable and increase access to higher education, many states need to supplement that revenue growth with new revenue to fully make up for years of severe cuts.

But just as the opportunity to invest is emerging, lawmakers in a number of states are jeopardizing it by entertaining tax cuts that in many cases would give the biggest breaks to the wealthiest taxpayers.  In recent years, states such as Wisconsin, Louisiana, and Arizona have enacted large-scale tax cuts that limit resources available for higher education.  And in Illinois and Pennsylvania ongoing attempts to find necessary resources after large tax cuts threaten current and future higher education funding.

States Have Reversed Some Funding Cuts, but They Must Do Much More

State and local tax revenue is a major source of support for public colleges and universities.  Unlike private institutions, which rely more heavily on charitable donations and large endowments to help fund instruction, public two- and four-year colleges typically rely heavily on state and local appropriations.  In 2015, state and local dollars constituted 54 percent of the funds these institutions used directly for teaching and instruction.^[10]

While states have begun to restore funding, resources are well below what they were in 2008 — 17 percent per student lower — even as state revenues have returned to pre-recession levels.  (See Figures 1 and 2.)  In the states that have finalized their higher education budgets for the current 2015-16 school year compared with the 2007-08 school year, when the recession hit, adjusted for inflation:

• State spending on higher education nationwide is down an average of $1,525 per student, or 17 percent.
• In only four states ― Montana, North Dakota, Wisconsin, and Wyoming ― is per-student funding now above its 2008 pre-recession levels.
• 25 states have cut funding per student by more than 20 percent.
• Eight states have cut funding per student by more than 30 percent.
• Arizona has cut funding by more than half.^[11]