Executive Summary

1.

State funding for higher education is projected to decline in the next fiscal year. For more information about the expected impacts of the COVID-19 pandemic and economic recession on higher education funding, see the SHEEO analysis of early fiscal year 2021 funding.

2.

National Student Clearinghouse Research Center. (2021). Spring 2021 enrollment (as of Feb 11). https://nscresearchcenter.org/stay-informed/

3.

National Student Clearinghouse Research Center. (2021). Spring 2021 enrollment (as of Feb 11). https://nscresearchcenter.org/stay-informed/

4.

National Student Clearinghouse Research Center. (2021). High school benchmarks COVID-9 special analysis update & correction. https://nscresearchcenter.org/wp-content/uploads/2021_HSBenchmarksCovidReport.pdf

Sources and Uses of Funding

5.

National Association of State Budget Officers. (2020). State expenditure report: Fiscal years 2018-2020.
https://www.nasbo.org/reports-data/state-expenditure-report

6.

Unlike the SHEF data, NASBO expenditures exclude employer contributions to pensions and health benefits.

7.

Delaney, J., & Doyle, W. (2011). State spending on higher education: Testing the balance wheel over time.
Journal of Education Finance, 36(4). http://www.jstor.org/stable/23018116

8.

Federal stimulus funding is provided to state governments to stabilize state and local sources of revenue for higher education and includes funds from the American Recovery and Reinvestment Act (ARRA) during the Great Recession and the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020. The federal stimulus must be state-allocated and excludes aid provided directly to institutions.

9.

In Washington D.C., district taxes are considered state tax appropriations, not local support.

10.

Arizona Joint Budget Committee. (2018). Arizona community colleges general fund appropriations: FY 2010 through FY 2019. https://www.azleg.gov/jlbc/accgfapp.pdf

Distribution of Revenue

11.

It is important to note that the U.S. totals are not averages of state averages. For example, “U.S. total education appropriations per FTE” is the sum of all education appropriations divided by the sum of all net FTE across the 50 states. It is not the average of each of the 50 states’ individual per-FTE calculations.

12.

Net tuition revenue declines are generally due to increases in state-funded financial aid, declines in enrollment, and/or declines in the proportion of students paying higher rates of tuition, like out-of-state or international students.

13.

Delaney, J., & Doyle, W. (2011). State spending on higher education: Testing the balance wheel over time.
Journal of Education Finance, 36(4). http://www.jstor.org/stable/23018116

14.

The Great Recession led to dramatic changes in the way public institutions finance higher education. The 2019 SHEF Issue Brief on post-recession trends provides an analysis of how well states have recovered from the Great Recession. We consider the depth of cuts in state funding, recovery of total education revenue and the sources of that recovery, and state financial aid changes.

15.

For more information about the expected impacts of the COVID-19 pandemic and economic recession on higher education funding, see the SHEEO analysis of early fiscal year 2021 funding: https://sheeo.org/wp-content/uploads/2021/03/SHEEO_Analysis_FiscalYear2021_State_Funding.pdf.

16.

There are two differences in education appropriations between the state and sector levels. The state-level data include agency funding and federal stimulus funds, while sector-level data do not. In a few states, some uncategorizable state support and uncategorizable financial aid are not allocated to either sector.

17.

According to the National Center for Education Statistics, in fall 2020, an estimated 37% of two-year students (at both public and private institutions) attended full-time, compared to 75% at four-year institutions. Source: Table 303.70, https://nces.ed.gov/programs/digest/d19/tables/dt19_303.70.asp

18.

Trends in state-funded student financial aid for students attending public institutions differ substantially from trends in aid for students attending independent institutions. The composition of state financial aid has also changed over time. For more information, the 2019 SHEF Issue Brief on state financial aid explores trends over time in state financial aid to public and private institutions by state.

State Funding and Enrollment

19.

As the following sections will show, two-year and four-year public institutions have very different revenue structures and total revenues. As a result, when states differ in the proportion of their students attending each sector, their state-level data become more difficult to compare. The Enrollment Mix Index (EMI) adjustment used throughout the state-level metrics in this report attempts to correct for this variation in FTE enrollment. Sector-level data are not adjusted for EMI.

20.

The low two-year enrollment in Nevada is due to the Carnegie Basic Classification, which lists all but one Nevada community college as a four-year institution.

21.

National Bureau of Economic Research. (2020). Determination of the February 2020 peak in U.S. economic activity. https://www.nber.org/news/business-cycle-dating-committee-announcement-june-8-2020

22.

In 2019, only nine states had reached pre-recession levels in education appropriations.

23.

See the State Spotlight on Illinois for additional information about this increase.

24.

Michigan reported $5.2 million in state public financial aid in 2020. However, their state financial aid programs also received $130.8 million in federal dollars from Temporary Assistance for Needy Families (TANF). Other states, like California, also use TANF for state financial aid programs; these funds are not included in SHEF education appropriations.

25.

Overall, 3% of state public financial aid was uncategorizable. Thirty-two states were able to classify all state public financial aid by sector and listed no uncategorizable aid. In six states, more than 5% of aid could not be classified by sector: West Virginia (12.2%), Maryland (13.4%), Colorado (13.7%), Pennsylvania, (19.7%), Michigan (20.9%), and Alabama (90.0%).

Net Tuition and Total Education Revenue

26.

Pennsylvania’s fiscal year 2020 net tuition revenue is an estimate and subject to change.

27.

State Higher Education Executive Officers Association. (2021). Investigating the impacts of state higher education appropriations and financial aid. Forthcoming.

28.

Florida Statutes. Title XLVIII. K-20 Education Code. Ch. 1009. Educational Scholarships, Fees, and Financial Assistance. (2020)
. http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=1000-1099/1009/1009.html

State Effort and Capacity to Fund Higher Education

1.

Tandberg, D.A., & Laderman, S.A. (2018). Evaluating state funding effort for higher education. MHEC Policy Brief. https://www.mhec.org/sites/default/files/resources/mhec_affordability_series6.pdf

2.

U.S. Department of the Treasury. (2002). Treasury methodology for estimating total taxable resources (TTR). https://home.treasury.gov/system/files/226/nmpubsum.pdf

3.

U.S. Department of the Treasury. (2002). Treasury methodology for estimating total taxable resources (TTR). https://home.treasury.gov/system/files/226/nmpubsum.pdf

4.

Russo, B. (2010). Is past prologue? Prospects for state and local sales tax bases. Applied Economics 42, 2261- 2274.

5.

For more information on the factors affecting state taxation and budget decisions, please see the SHEF issue brief on this topic Weeden, D.D. (2019). State higher education finance issue brief: State budget drivers: Slow revenue growth and increased expenditure completion. State Higher Education Executive Officers Association. https://shef.sheeo.org/wp-content/uploads/2020/04/SHEEO_SHEF_FY18_IB_Budget_Drivers.pdf

6.

Education appropriations measure state and local support for public higher education operating expenses and exclude research, hospitals, and medical education. Unlike in the main SHEF report, education appropriations per FTE in this report are not adjusted for enrollment mix or cost of living differences across states.

7.

James, F. J., & Wallis, A. (2004). Tax and spending limits in Colorado. Public Budgeting & Finance, 24(4), 16-33.

8.

Hindi, S. (2020, November 3). Colorado Prop 116 results: Voters approve state income tax cut. Denver Post. https://www.denverpost.com/2020/11/03/colorado-pop-116-results-income-tax/

9.

Higher education support includes federal stimulus funding from the American Recovery and Reinvestment Act (ARRA) allocated to higher education by states in the years during and following the Great Recession.

10.

Trostel, P.A., & Ronca, J.M. (2009). A simple unifying measure of state support for postsecondary education. Research in Higher Education, 50(3), 215-247.

11.

Higher education support is defined as state and local tax and non-tax support for public and independent higher education, including special purpose appropriations for research, agriculture and medical education.

12.

State Higher Education Executive Officers Association. (2021). Investigating the impacts of state higher education appropriations and financial aid. Forthcoming.