The State of Higher Education Finance in Fiscal 2005 Takeshi Yanagiura State Higher Education Executive Officers David Wright Tennessee Higher Education Commission 2006 SAIR Conference Arlington, Virginia October 16, 2006
The State of Higher Education Finance in Fiscal 2005 Takeshi Yanagiura State Higher Education Executive Officers David Wright Tennessee Higher Education.
Dec 25, 2015
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The State of Higher Education Finance in Fiscal 2005
Takeshi YanagiuraState Higher Education Executive Officers
David WrightTennessee Higher Education Commission
2006 SAIR ConferenceArlington, VirginiaOctober 16, 2006
Higher education funding flows: An overview
Source: NCHEMS, www.higheredinfo.org
What is the SHEEO State Higher Education Finance (SHEF) study?
SHEEO’s annual State Higher Education Finance SHEEO’s annual State Higher Education Finance (SHEF) study is intended to help educators and (SHEF) study is intended to help educators and policy makers:policy makers: Understand the extent to which state resources for colleges and universities have kept pace with enrollment and cost increases;
Examine and compare how state higher education spending is allocated for different purposes;
Assess trends in how much students are paying for higher education;
Gain a perspective on the funding of their state’s higher education system in the context of other states; and
Assess the capacity of their state economy to generate revenues to support public priorities.
Why should institutional researchers care?
These data describe the fiscal environment in which we do our work.
Fiscal data not well understood or utilized.
GASB/FASB changes improved IPEDS finance data but made trend analyses more difficult.
Public higher education funding patterns are changing and could impact student attendance patterns, time-to-degree, etc.
In an environment of finite resources, policymakers are looking for ways to link inputs and outcomes.
Diverse perspectives on state higher education finance data
What SHEF contributes to the national What SHEF contributes to the national conversation:conversation: Annual, ongoing; continuous time series from FY 1980 forward;
Captures state tax and non-tax support (lottery revenue, lease income, earnings on state endowments);
Adds revenue from local government and student sources; and
Interstate comparisons “as valid as possible.”
Accounts for inflation and enrollment growth;
Sets aside special purpose appropriations for research, agriculture, and medicine; and
Adjusts interstate comparisons for differences in state cost of living and public system enrollment mix.
Higher Education Cost Adjustment (HECA):Higher Education Cost Adjustment (HECA):
Attempts to reflect provider “market basket” without being self-referent.
Components federally maintained and routinely updated; transparent, accessible.
Serves as a benchmark rather than descriptive measure of higher education cost inflation.
75% of the index is based on Employment Cost Index for white-collar workers (BLS).
25% based on GDP Implicit Price Deflator (BEA).
reflects general price inflation in total U.S. economy
current $ GDP / constant $ GDP
Goal: Comparisons “as valid as possible”
Enrollment Mix Index (EMI):Enrollment Mix Index (EMI):
Average instructional expenses per student vary by institution type.
Enrollments are distributed differently across states’ public HE systems.
The EMI adjusts operating revenues to account for both factors.
Average Instructional Expenses per FTE, Fiscal 2004
$12,920
$10,133
$8,949
$7,417
$9,511
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
Public ResearchExtensive
Public ResearchIntensive
Public Master I PublicAssociate
Public (all)
Goal: Comparisons “as valid as possible”
State Cost of Living Adjustment (COLA):State Cost of Living Adjustment (COLA):
Driven primarily by housing costs.
Adopted index developed by Berry et al (2003).
One value per state, ranging from 0.88 to 1.22.
Hawaii and Alaska were assigned the value of the next highest state (Massachusetts).
Goal: Comparisons “as valid as possible”
US
NEBHE
WICHEMHECSREB
WV VA
TX
TN
SC
OK
NC
MS
MD
LA
KY
GA
FL
DE
AR
AL
0.95
1.00
1.05
1.10
1.15
1.20
0.85 0.90 0.95 1.00 1.05 1.10 1.15 1.20
State Cost of Living Adjustment (US Avg. = 1.0)
En
rollm
ent
Mix
Ind
ex (
US
Avg
. = 1
.0)
COLA: below avgEMI: above avg
COLA: above avgEMI: above avg
COLA: below avgEMI : below avg
COLA: above avgEMI: below avg
State Cost of Living and Public Higher Education System Enrollment Mix Index Values
Source: SHEEO SHEF
Dollars per FTE are adjusted upward the most in states with an inexpensive enrollment mix and low cost of living (e.g., Arkansas). The reverse is true for states with a more expensive enrollment mix and high cost of living.
In some states, the two factors cancel each other (e.g., Virginia).
Southern states tend to have low cost of living and high system structure costs.
Goal: Comparisons “as valid as possible”
SHEF’s Core MeasuresSHEF’s Core Measures
Educational Appropriations = State tax and non-tax support plus local tax appropriations minus research, agricultural extension, and medical education.
Net Tuition Revenue = Gross assessments for tuition and mandatory fees minus institutional discounts & waivers and state-funded student financial aid.
Total Educational Revenues = Educational Appropriations plus Net Tuition.
Definitions
61.6%
32.1%
6.3%
Total: $105.9 Billion
Current status
Distribution of State, Local, and Net Tuition Revenue, U.S.Fiscal 2005
Net Tuition: $34.0 billion
State Support
(Tax & Non-Tax):
$65.3 billion
Source: SHEEO SHEF
State and local governments provided $72 billion for public and independent higher education in 2005.
An additional $34 billion in net tuition revenue brought to $105.9 billion the amount available from state, local, and student sources for higher education’s general operating expenses.
Local Taxes: $6.7 billion
Total Educational Revenues per FTE for the Nation, Regions, and SREB States, Fiscal Year 2005
Source: SHEEO SHEF
Total educational revenues per FTE (educational appropriations plus net tuition) averaged $9,196 in 2005.
Most Western states trail the national average on this measure, while New England and Midwest states tend to exceed it.
Variation in the Southern states is demonstrated by the fact that Delaware ranks 3rd nationally, while Florida ranks 49th.
Current status
7,519
9,060
9,823
10,508
7,290
12,970
9,196
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Del
awar
e
Ten
ness
ee
Sou
th C
arol
ina
Nor
th C
arol
ina
NE
BH
E
Mar
ylan
d
Ala
bam
a
MH
EC
Ken
tuck
y
Geo
rgia
Virg
inia
US
Tex
as
SR
EB
Mis
siss
ippi
Ark
ansa
s
Wes
t Virg
inia
Okl
ahom
a
Loui
sian
a
WIC
HE
Flo
rida
Source: SHEEO SHEF
The national average educational appropriation per FTE was $5,825 in 2005.
Regional averages cluster more tightly around the U.S. average on this measure than on net tuition.
North Carolina is the leading SREB state in the level of state & local support per student, ranking 4th nationally. West Virginia ranks 43rd.
Current status
7,893
4,536
5,5505,5635,8255,8885,984
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
No
rth
Ca
rolin
a
Ge
org
ia
Te
nne
sse
e
Te
xas
Ke
ntu
cky
NE
BH
E
SR
EB
US
So
uth
Ca
rolin
a
Lo
uis
ian
a
WIC
HE
MH
EC
Ark
an
sas
De
law
are
Mis
siss
ipp
i
Okl
ah
oma
Ala
ba
ma
Flo
rida
Virg
inia
Mar
yla
nd
We
st V
irgin
ia
Educational Appropriations per FTE for the Nation, Regions, and SREB States, Fiscal Year 2005
Source: SHEEO SHEF
The national average net tuition revenue per FTE was $3,371 in 2005.
Western states tend to trail the U.S. average on this measure, while New England and Midwestern states tend to exceed it.
There is a great deal of variability in the South: Delaware ranks 2nd nationally while Georgia ranks 48th.
Current status
1,957
3,173
7,457
1,636
3,371
4,2734,524
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
De
law
are
Mar
yla
nd
So
uth
Ca
rolin
a
Ala
ba
ma
Te
nne
sse
e
NE
BH
E
Virg
inia
MH
EC
We
st V
irgin
ia
Ke
ntu
cky
Mis
siss
ipp
i
US
Ark
an
sas
SR
EB
Te
xas
No
rth
Ca
rolin
a
Okl
ah
oma
Lo
uis
ian
a
Flo
rida
WIC
HE
Ge
org
ia
Net Tuition Revenue per FTE for the Nation, Regions, and SREB States, Fiscal Year 2005
Net Tuition as a Percentage of Total Educational Revenues for the Nation, Regions, and SREB States, Fiscal 2005
Source: SHEEO SHEF
Nationally, the average share of educational revenues represented by net tuition in 2005 was 36.7%.
Among SREB states, reliance on tuition as a major source of operating revenue ranged from 57% in Delaware to 17% in Georgia.
Current status
37%
26%
35%
57%
17%
43%43%
0%
10%
20%
30%
40%
50%
60%
70%
De
law
are
Mar
yla
nd
Ala
ba
ma
So
uth
Ca
rolin
a
Virg
inia
We
st V
irgin
ia
MH
EC
NE
BH
E
Te
nne
sse
e
Mis
siss
ipp
i
Ark
an
sas
Ke
ntu
cky
US
SR
EB
Okl
ah
oma
Te
xas
Lo
uis
ian
a
Flo
rida
No
rth
Ca
rolin
a
WIC
HE
Ge
org
ia
Net Tuition Increase Needed to Offset a 1% Decrease in State Government Support for Public Higher Education, by State, Fiscal
2005
Source: SHEEO SHEF
Notes: State dollars include Research-Ag-Med. Net tuition revenues are from all levels (undergraduate, graduate, first professional) except medical schools.
Higher education systems that rely heavily on state support are more vulnerable to decreases in appropriations.
Nationally, net tuition revenues would have needed to increase 3.0% on average to offset a one percent decrease in state support (based on 2005 SHEF data).
In the South, this ranged from 1.8% in Delaware to 6.4% in Georgia.
Current status
4.2%
2.5%
3.3%
2.4%
6.4%
1.8%
3.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Ge
org
ia
Lo
uis
ian
a
No
rth
Ca
rolin
a
WIC
HE
Flo
rida
Te
xas
Okl
ah
oma
Ark
an
sas
SR
EB
Mis
siss
ipp
i
US
Ke
ntu
cky
Te
nne
sse
e
We
st V
irgin
ia
MH
EC
Ala
ba
ma
NE
BH
E
So
uth
Ca
rolin
a
Virg
inia
Mar
yla
nd
De
law
are
From fiscal 2001 to 2005:From fiscal 2001 to 2005:
“The fiscal 2005 SHEF study documents a 5-year period when state funding for higher education failed to keep pace with normal inflation and extraordinary enrollment growth in the U.S., leaving per student state & local funding at their lowest levels nationally in 25 years.”
Recent trends
State & local appropriations for general educational expenses in public colleges and universities increased nominally but:
enrollments grew by 14.4% and
higher education costs grew by 13.9% as estimated by HECA.
In inflation-adjusted terms,
Educational appropriations per FTE decreased 18.2%, from $7,124 to $5,825;
Net tuition revenue per FTE increased 11.1%, from $2,983 to $3,371; and
Total educational revenues per FTE decreased 8.4%, from $10,106 to $9,196.
Future outlook
According to Grapevine, state tax appropriations for higher education, unadjusted for enrollment or inflation, were flat in fiscal 2004 but up 3.5% in 2005 and 6.0% in 2006.
Generally speaking, a nominal dollar increase of 5% to 6% is necessary to achieve a real-dollar increase (after adjustment for inflation and enrollment).
The FY 2006 outlook appears promising…The FY 2006 outlook appears promising…
State tax revenue increased 9.9% in the Apr-June quarter of 2006 compared to the same quarter the year before. Although this is the strongest nominal growth in the past year, it is below growth rates recorded in the same quarter of 2005 and 2004. (Rockefeller Inst., 9/2006)
Tax cuts, along with actions to increase spending and replenish reserve funds, enjoyed broad support. At the same time, cost pressures continue in Medicaid, elementary & secondary education, and other areas. Were states too aggressive in spending the tax collections windfall?
……but higher education the most discretionary but higher education the most discretionary aspect of state budgeting:aspect of state budgeting:
The chart illustrates a recurring national pattern of recession, retrenchment, and recovery.
The divergence of the red and blue lines indicates an increasing reliance on tuition as a revenue source for operating expenses.
The latest “wave” of state and local government support peaked in 2001, and we are currently in the bottom of a trough.
United States Public Postsecondary Enrollment, Educational Appropriations per FTE, and Total Educational Revenues per FTE, Fiscal 1980-2005
$6,309
$6,934$7,117
$5,825
$7,976
$9,196
$10,079
$9,246
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
10.5
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Pu
blic
FT
E E
nro
llmen
t (i
n m
illio
ns)
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
$11,000
Do
llars
per
FT
E
FTE EdApprops/FTE TotEdRevs/FTE
National Recession
Long-term U.S. trends
+ 6.2%
+ 8.5%
Educational Appropriations and Net Tuition Revenue per FTE Fiscal 1980-2005, in Constant 2005 Dollars
+ 14.8%
Note: State and local government support excludes research, agricultural, and medical.Source: SHEEO SHEF
FTE enrollment in public institutions has grown by 44% since 1980.
Enrollment growth since 2001 has already outstripped that of each of the previous two decades.
$5,905
2.0
2.2
2.4
2.6
2.8
3.0
3.2
3.4
3.6
3.8
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Pu
bli
c F
TE
En
roll
me
nt
$4,000
$4,500
$5,000
$5,500
$6,000
$6,500
$7,000
$7,500
Ed
uc
atio
nal
Ap
pro
pri
ati
on
s p
er
FT
E
Public FTE Enrollment (millions)
Educational Appropriations per FTE (constant $)
Recession
Long-term regional trends
In the SREB states, FTE enrollment in public institutions has grown by 64% since 1980.
The South exhibits the same pattern of economic recession, retrenchment, and recovery that is observed nationally.+9.0%
+ 14.6%
Educational Appropriations per FTE for the SREB StatesFiscal 1980-2005, Constant 2005 Dollars
+ 18.7%
Note: State and local government support, excluding research, agricultural, and medical.Source: SHEEO SHEF
Long-term regional trends
Each region generally mirrors the national trend in per student operating appropriations from state and local governments.
Educational Appropriations per FTE, by RegionFiscal 1980-2005, Constant 2005 Dollars
$5,000
$5,500
$6,000
$6,500
$7,000
$7,500
$8,000
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
Pu
bli
c F
TE
En
roll
me
nt
US MHEC NEBHE
SREB WICHE
Recession
Source: SHEEO SHEF
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000
$13,000
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
Pu
bli
c F
TE
En
roll
me
nt
US MHEC NEBHE
SREB WICHE
Recession
Long-term regional trends
Total Educational Revenues per FTE, by RegionFiscal 1980-2005, Constant 2005 Dollars
Source: SHEEO SHEF
When net tuition is added to state and local government support, New England and Midwestern states historically have exceeded the U.S. average total educational revenues per FTE, while Western states have operated with less.
Net Tuition as a Percentage of Total Educational Revenues, by Region, Fiscal 1980-2005
Source: SHEEO SHEF
Long-term regional trends
Nationally, the average share of educational revenues represented by net tuition in 2005 was 36.7%, approximately a 10 point increase since 1991.
New England and Midwestern states tended to exceed the national average on this measure, while Western states were beneath it.
20.9%
36.7%
25.0%
43.5%
24.4%
43.1%
21.0%
35.8%
13.6%
26.0%
10%
15%
20%
25%
30%
35%
40%
45%
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Pu
bli
c F
TE
En
roll
me
nt
US MHEC NEBHE
SREB WICHE
Recession
Full-Time Equivalent Enrollment, Percent Change by State, Fiscal 2001-2005
Source: SHEEO SHEF
Nationally, enrollments in public institutions increased 13.6% from 2001 to 2005.
Within the SREB region, these increases ranged from 26.2% growth in Florida to 5.5% growth in Delaware.
Shorter-term regional trends: Enrollment
Note: Georgia, SREB, and US data does not include GA Department of Technical & Adult Education institutions
16.4%
12.9%
11.6%
13.6%
26.2%
5.5%
11.9%
0%
5%
10%
15%
20%
25%
30%
Flo
rida
Geo
rgia
Ken
tuck
y
Tex
as
SR
EB
Mis
siss
ippi
Nor
th C
arol
ina
Ark
ansa
s
US
NE
BH
E
Okl
ahom
a
Wes
t Virg
inia
Mar
ylan
d
WIC
HE
MH
EC
Virg
inia
Sou
th C
arol
ina
Ala
bam
a
Loui
sian
a
Ten
ness
ee
Del
awar
e
Educational Appropriations per FTE, Percent Change by State,
Fiscal 2001-2005, Constant 2005 Dollars
Source: SHEEO SHEF
Nationally, educational appropriations per FTE in public institutions declined by an average of 18.0% from 2001 to 2005.
Regionally, these changes ranged from 6.5% growth in Tennessee to a 29.3% decrease in Maryland.
-13.9%
-18.0%-16.5%
-18.0%
-29.3%
6.5%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
Ten
nes
see
Lou
isia
na
Sou
th C
arol
ina
Del
awar
e
Ala
bam
a
Ark
ansa
s
Tex
as
Nor
th E
ast
Sta
tes
Nor
th C
arol
ina
Sou
the
rn S
tate
s
Wes
ern
Sta
tes
US
Geo
rgia
Wes
t Vir
gini
a
Mid
wes
t Sta
tes
Mis
siss
ippi
Flo
rida
Okl
ahom
a
Virg
inia
Ken
tuck
y
Mar
yla
nd
Note: Georgia, SREB, and US data does not include GA Department of Technical & Adult Education institutions
Shorter-term regional trends: Ed approps
Net Tuition Revenue per FTE, Percent Change by State, Fiscal 2001-2005, Constant 2005 Dollars
Source: SHEEO SHEF
Nationally, net tuition per FTE increased by an average of 13.5% from 2001 to 2005, and in the South, all but three states experienced increases.
Decreases in net tuition revenue may be associated with institutional discounting, increases in the state financial aid program, or student migration to lower-cost institutions.
2.8%
22.7%25.9%
7.5%
13.5%
-38.0%
44.4%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Sou
th C
arol
ina
Virg
inia
Okl
ahom
a
Ark
ansa
s
Ten
ness
ee
Nor
th C
arol
ina
Mis
siss
ippi
WIC
HE
MH
EC
Wes
t Virg
inia
Mar
ylan
d
Ala
bam
a
US
NE
BH
E
Loui
sian
a
SR
EB
Del
awar
e
Ken
tuck
y
Flo
rida
Tex
as
Geo
rgia
Shorter-term regional trends: Net tuition
Total Educational Revenues per FTE, Percent Change by State, Fiscal 2001-2005
Source: SHEEO SHEF
When aggregated nationally, total educational revenues per FTE have decreased by 8.7% since 2005, ranging in the South from a 15% increase in Tennessee to a 22% decrease in Georgia.
Note: GA's data does not include Department of Technical & Adult Education institutions
-12.5%
-5.8%
-9.8%
-7.1%-8.7%
-22.4%
14.8%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Ten
ness
ee
Sou
th C
arol
ina
Ark
ansa
s
Ala
bam
a
Loui
sian
a
Del
awar
e
Virg
inia
NE
BH
E
Wes
t Virg
inia
MH
EC
Nor
th C
arol
ina
Mar
ylan
d
US
WIC
HE
Mis
siss
ippi
SR
EB
Okl
ahom
a
Tex
as
Ken
tuck
y
Flo
rida
Geo
rgia
Shorter-term regional trends: Total ed revenues
Percent Change by State in Enrollment and in Educational Appropriations per FTE, Fiscal 1991-2005
Source: SHEEO SHEF
Plotting the SHEF data along two dimensions can bring state fiscal policy findings and trends into sharper relief.
Here, data points on the vertical axis represent public higher education enrollment growth from 1991-2005. The horizontal axis shows each state’s percent change in educational appropriations per student over the same period.
Putting the pieces together
Of the 9 SREB states with above average enrollment growth from 1991 to 2005, only Georgia and Louisiana maintained educational appropriations per student on a constant dollar basis for the period.
Both states implemented statewide, lottery-funded merit scholarship programs in the 1990s.
Note: Georgia's data included Department of Technical & Adult Education institutions for the first time in FY05
US
WICHE
NEBHE
MHEC
SREB
WV
VA
TX
TN
SC
OK
NC
MS
MD
LA
KY
GA
FL
DE
AR
AL
0%
10%
20%
30%
40%
50%
60%
70%
-30% -20% -10% 0% 10%
Percent Change in Educational Appropriations per FTE, FY 1991-2005
Per
cent
Cha
nge
in F
TE
Enr
ollm
ent,
FY
199
1-20
05
Notes: 1) Figures are adjusted for inflation, public system enrollment mix, and state cost of living.2) Funding and FTE data are for public non-medical students only.
% CHANGE: above avgCURRENT: below avg
% CHANGE: below avgCURRENT: below avg
% CHANGE: below avgCURRENT: above avg
% CHANGE: above avgCURRENT: above avg
US
WICHE
NEBHE
MHEC SREB
WV
VA
TX
TN
SC
OK
NC
MS MD
LA
KY
GA
FL
DE
AR
AL
-30%
-20%
-10%
0%
10%
20%
30%
40%
0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6
Total Educational Revenues per FTE, Indexed to the U.S. Average in FY 2005
Per
cent
Cha
nge,
Tot
al E
duca
tiona
l Rev
enue
s pe
r F
TE
, F
Y 1
991-
2005
Notes: 1) Figures are adjusted for inflation, public system enrollment mix, and state cost of living.2) Funding and FTE data are for public non-medical students only.
% CHANGE: above avgCURRENT: below avg
% CHANGE: below avgCURRENT: below avg
% CHANGE: below avgCURRENT: above avg
% CHANGE: above avgCURRENT: above avg
Total Educational Revenues per FTE by State: Percent Change and Current Standing Relative to U.S.
Average
Source: SHEEO SHEF
The next two-dimensional analysis allows states to assess total educational revenues per FTE relative to the national average currently (on the horizontal axis) and over time (on the vertical).
The three states in the upper left quadrant lag the U.S. average but have been catching up. The three states in the lower right quadrant, exceed the national average but have lost ground.Note: Georgia's data included Department of Technical & Adult Education institutions for the first time
in FY05
Putting the pieces together
Percent Change by State in Educational Appropriationsand Net Tuition Revenues per FTE, Fiscal 1991-2005
Source: SHEEO SHEF
This figure shows each state’s rate of change in the two components of total educational revenues per student – educational appropriations and net tuition – relative to the national average.
States in the upper right quadrant have exceeded the national average on both dimensions.
Note: Georgia's data included Department of Technical & Adult Education institutions for the first time in FY05
AL
AR
DE
FL
GA
KY
LA
MD
MS
NC
OKSC
TN
TX
VA WV
SREB MHEC
NEBHE
WICHE US
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
-30% -25% -20% -15% -10% -5% 0% 5% 10%
Percent Change in Educational Appropriations per FTE
Per
cent
Cha
nge
in N
et T
uitio
n R
even
ues
per
FT
E
Notes: 1) Figures are adjusted for inflation, public system enrollment mix, and state cost of living.2) Funding and FTE data are for public non-medical students only.
Tuition % CHANGE: above avg
Approps % change: below avg
Tuition % CHANGE: above avg
Approps % change: above avg
Tuition % CHANGE: below avg
Approps % change: above avg
Tuition % CHANGE: below avg
Approps % change: below avg
Putting the pieces together
Net Tuition Revenue per FTE and Total State Student Grant Aid per FTE, Fiscal 2005
Sources: SHEEO SHEF
States that rely heavily on net tuition revenues might also try to fund a balanced state financial aid program.
In this figure, the horizontal axis shows FY05 net tuition revenue per FTE for each state. The vertical axis shows FY05 state-funded financial aid per FTE. States in the upper right quadrant exceed the U.S. average on both.
Percent Change by State in Educational Appropriations and Net Tuition Revenues per FTE, Fiscal 1991-2005
AL
ARDE
FL
GA
KY
LA
MDMS
NC
OK
SC
TN
TX
VA
WV
SREB
MHEC
NEBHE
WICHE
US
0
200
400
600
800
1,000
1,200
1,400
- 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000
FY 2005 Net Tuition Revenue per FTE
FY
200
5 T
uitio
n A
id p
er F
TE
Notes: 1) Figures are adjusted for inflation, public system enrollment mix, and state cost of living.2) Funding and FTE data are for public non-medical students only.
% CHANGE: above avgCURRENT: below avg
% CHANGE: below avgCURRENT: below avg
% CHANGE: below avgCURRENT: above avg
% CHANGE: above avgCURRENT: above avg
Putting the pieces together
AL
AR
DE
FLGA
KY
LA
MD
MS
NC
OK
SC
TN
TX
VA
WV
SREB
USMHEC NEBHE
WICHE
0.6
0.7
0.8
0.9
1.0
1.1
1.2
0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7
Total Taxable Resources Index (US Avg = 1.0)
Eff
ecti
ve
Tax
Ra
te I
nd
ex
(US
Avg
= 1
.0)
STATE WEALTH: below avgEFFECTIVE TAX RATE: above avg
STATE WEALTH: above avgEFFECTIVE TAX RATE: above avg
STATE WEALTH: below avgEFFECTIVE TAX RATE: below avg
STATE WEALTH: above avgEFFECTIVE TAX RATE: below avg
Perspectives on taxes and state support of higher educationTaxable Resources and Effective Tax Rate Indexed to the U.S.
Average,by State, Fiscal 2003
Source: SHEEO SHEF
States whose effective tax rate exceeds the national average are plotted above the horizontal axis, and states with above average wealth (total taxable resources per capita) are plotted to the right of the vertical line.
Shaded states have actual tax revenues per capita within +/-5% of the national average.
The South:The South:
Has outpaced all geographic regions in public higher education enrollment growth since the turn of the century.
Mirrors the national recurring patterns of (1) recession, retrenchment, and recovery, amid (2) increasing reliance on tuition as a revenue stream.
Achieves roughly the national average of operating resources per student…
…only it does so with slightly higher-than-average levels of state & local government support and lower-than-average levels of tuition revenue per student.
This relative non-reliance on government support as a source of operating revenue makes some states’ public higher education systems susceptible to state budget cuts.
States with statewide merit scholarship programs are the only ones that have managed to keep ahead of enrollment growth and inflation.
Perhaps the lesson of the previous point is that in the future, new funding for higher education will be predicated on initiatives that “make sense” and demonstrate tangible benefit to legislatures and the public. Funding enrollment growth and quality enhancements for their own sake is not a given.
Summary
Wrong ideas about state higher education Wrong ideas about state higher education spending:spending: There is a “right” amount
The only way to get better results is to spend more money
We can get the results we need without spending more money
Conclusion
Right questions about state higher education Right questions about state higher education spending:spending: What do we need from higher education?
What will it take, given our circumstances, to obtain and sustain such a system?
What can we do better with the money we have?
What do we need that justifies additional funds?
REPORTS & PRESENTATIONS:www.sheeo.org
DATA:www.higheredinfo.org
CONTACT:[email protected]
Takeshi Yanagiura,Data Analyst
(303) 541-1610
FY 2005
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