State support for higher ed ticked up 2.9% in fiscal 2020, report finds

by Emma


Dive Brief: 

  • Despite eight years of state funding increases, higher education institutions had historically low state support heading into the pandemic-induced recession, according to an annual report from the State Higher Education Executive Officers Association. 

  • State appropriations per full-time-equivalent student increased 2.9% in fiscal 2020 when adjusted for inflation and including $428 million in federal relief funding, SHEEO found. 

  • But the organization’s early estimates show funding for public colleges is expected to decline in most states in fiscal 2021. 

Dive Insight: 

Higher ed appropriations per FTE student increased in 41 states and Washington, D.C. in fiscal 2020. Despite a steady increase in state support, inflation-adjusted appropriations are still 6% below levels seen in 2008. 

States have been recovering at different rates. Eighteen states had higher ed appropriations in 2020 that were at or above their 2008 levels, up from nine the year before. 

But in 12 states, public support for colleges lags the amount they had during the Great Recession by at least 20%. That includes Arizona, where appropriations have dropped nearly 43% since 2008, and Oklahoma, where they have fallen almost 39%. 

The current economic downturn risks undoing some of the progress states have made in funding public colleges, the SHEEO report argued. However, federal coronavirus relief helped states maintain their higher ed support in fiscal 2021, according to a separate report from Illinois State University’s Center for the Study of Education Policy in March. 

Appropriations in SHEEO’s report include $428 million in federal relief funding, which makes up 0.4% of $108 billion states gave to higher education in fiscal 2020. Although the money has helped buoy college budgets, the authors warn that federal aid should not replace long-term state investments into public schools.

States have continued to bump up their support for financial aid, the SHEEO report found. State financial aid per FTE grew 7% year over year in fiscal 2020. It has increased in all but three years since 2001. 

However, the increase in aid pushed down net tuition revenue for public institutions, which saw a 1% year-over-year decline in 2020. But even after accounting for financial aid’s effects, net tuition revenue hasn’t kept up with inflation, the report noted. 

States should also allocate more money to go directly to public institutions, said Sophia Laderman, a senior policy analyst at SHEEO and a co-author of the report. “States have been really good about increasing financial aid,” Laderman said. “But we know that state funding for institutions is really what directly increases their revenue.” 

Aid increases have coincided with public colleges relying more heavily on tuition income. Net tuition revenue has made up an increasing share of public colleges’ total education revenue, growing from 21% in 1980 to 44% in 2020. 

Enrollment challenges have also continued. FTE enrollment fell 0.6% at public colleges, the ninth-straight year of declines. These decreases were concentrated at community colleges, which reported a 1.9% loss. 

The pandemic compounded enrollment woes at public two-year schools. Last fall, their headcount dropped 10%, and those trends continued into the spring term, according to data from the National Student Clearinghouse.



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