Executive Summary

1.

Federal stimulus funding is included in education appropriations and total education revenue throughout this report.

2.

Federal stimulus funding contributed to the increase in two ways. First, federal funds that protected state revenues and covered additional costs due to the COVID-19 pandemic and economic recession reduced the need to redirect funds from higher education to other budget areas during the pandemic. Second, federal funds given to states and used for higher education operations boosted operating education appropriations.

Sources and Uses of Funding

3.

 National Association of State Budget Officers. (2022). State expenditure report: Fiscal years 2020-2022. nasbo.org/reports-data/state-expenditure-report

4.

Unlike the SHEF data, NASBO expenditures exclude employer contributions to pensions and health benefits. NASBO defines state general funds as the majority fund for financing a state’s operations with revenues received from broad-based state taxes such as personal and corporate income tax and sales tax.

5.

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

6.

Federal stimulus funding is provided to state governments to stabilize state and local sources of revenue for higher education. It includes funds from the American Recovery and Reinvestment Act (ARRA) during the Great Recession, the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act, the 2020 Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, and the 2021 American Rescue Plan (ARP) during the COVID-19 pandemic. Federal stimulus must be state allocated and excludes aid provided directly to institutions such as the Higher Education Emergency Relief Fund (HEERF).

7.

This decrease was entirely due to a decline in endowment funds. In 2021, endowment funds increased by 75.4% over 2020, due entirely to a sizable increase in Texas. Despite a decrease in endowment returns since 2021, endowment funds remain 37.3% above 2020 levels.

8.

This is the first year since 2015 that Arizona’s local appropriations were not the top source for higher education funding. For more information, see the state spotlight on Arizona on page 15 of the FY 2020 SHEF report. State Higher Education Executive Officers Association. (2021). State higher education finance: FY 2020. shef.sheeo.org/wp-content/uploads/2021/05/SHEEO_SHEF_FY20_Report.pdf 

9.

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

10.

Five states (Colorado, Minnesota, New Hampshire, Vermont, and Wyoming) and Washington, D.C., relied on federal stimulus funds for more than 20% of education appropriations in fiscal year 2021.

11.

These funds have always been included in general public operations but were not available as a breakout until 2019.

12.

Rhode Island has not reported any RAM allocations since the start of the SHEF dataset.

13.

Ma, Jennifer and Matea Pender. (2022). Trends in college pricing and student aid 2022. College Board. research.collegeboard.org/media/pdf/trends-in-college-pricing-student-aid-2022.pdf

14.

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 FTEs across the 50 states. It is not the average of each of the 50 state’s individual per-FTE calculations.

Distribution of Revenue

15.

The funding levels and trends over time shown in the U.S. wave chart differ substantially by state.

16.

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

17.

National Bureau of Economic Research. (2021). Business cycle dating committee announcement July 19, 2021. nber.org/news/business-cycle-dating-committee-announcement-july-19-2021

18.

There are several differences in education appropriations between the state and sector levels. The state-level data include agency funding and all federal stimulus funding allocated to public institutions. The sector-level data exclude agency funding, and include only the federal stimulus funding allocated to two-year or four-year public operating. In a few states, some uncategorizable state support and uncategorizable financial aid could not be allocated to either sector.

19.

According to the National Center for Education Statistics, in fall 2021, an estimated 37% of two-year students (at both public and private institutions) attended full time, compared to 74% at four-year institutions. Source: Table 303.70, nces.ed.gov/programs/digest/d21/tables/dt21_303.70.asp.

20.

The funding levels and trends over time shown in the U.S. wave chart differ substantially by state.

21.

For more information about how states protected student affordability during the COVID-19 pandemic, see the SHEEO report, Effects of the COVID-19 pandemic on state tuition, fees, and financial assistance policies, at sheeo.org/project/tuition-and-fee-survey/.

 

22.

These data were compiled from the U.S. Department of Education, National Center for Education Statistics, 2007-08 National Postsecondary Student Aid Study (NPSAS:08) and the U.S. Department of Education, National Center for Education Statistics, 2011-12 National Postsecondary Student Aid Study (NPSAS:12).

State Funding and Enrollment

23.

National Student Clearinghouse Research Center. (2022). Fall 2022 enrollment (as of September 2022). nscresearchcenter.org/stay-informed/

24.

Federal stimulus funds protected education appropriations in two ways: States received federal stimulus funding for other priority budget areas, reducing the need to redirect higher education funds toward those areas, and states received targeted federal stimulus funding directly to higher education.

25.

In 2022, Illinois allocated a one-time payment of $250 million to the state’s prepaid tuition program. These funds will be disbursed over a span of years, rather than in 2022 alone.

26.

Unlike state-level education appropriations, sector-level education appropriations exclude agency funding and include only the portion of federal stimulus funding known to be allocated for two-year or four-year public operating purposes. In a handful of states, some uncategorizable state support and uncategorizable financial aid are not allocated to either sector and are excluded from the sector-level data.

27.

A large portion of education appropriations in Illinois are not available for operations at public institutions. Additionally, Illinois received a one-time payment of $250 million for the state’s prepaid tuition program that will be disbursed over a span of years. See the Illinois state spotlight to learn more.

28.

A large portion of education appropriations in Illinois are not available for operations at public institutions. Additionally, Illinois received a one-time payment of $250 million for the state’s prepaid tuition program that will be disbursed over a span of years. See the Illinois state spotlight to learn more.

29.

The top four-year sector year-over-year increases in 2021 were Vermont (70.9%), Wyoming (46.4%), and New Hampshire (42.1%).

30.

Some states, like California and Michigan, also use federal Temporary Assistance for Needy Families (TANF) allocations for state financial aid programs; these funds are not included in SHEF education appropriations. Michigan’s TANF allocations for state financial aid represent a large portion of the state’s total financial aid allocations.

31.

See State Spotlight: Michigan for more information.

32.

Overall, 2.0% of state public financial aid was uncategorizable. Thirty-seven states and Washington, D.C., were able to classify all state public financial aid by sector and listed no uncategorizable aid. In seven states, more than 5% of aid could not be classified by sector: Minnesota (5.9%), Alabama (10.6%), Michigan (12.3%), Texas (12.5%), Ohio (14.4%), Colorado (14.6%), and Pennsylvania (20.9%).

Net Tuition and Total Education Revenue

33.

State Higher Education Executive Officers Association. (2021). Investigating the impacts of state higher education appropriations and financial aid. sheeo.org/wp-content/uploads/2021/05/SHEEO_ImpactAppropationsFinancialAid.pdf

34.

A large portion of education appropriations in Illinois are not available for operations at public institutions. Additionally, Illinois received a one-time payment of $250 million for the state’s prepaid tuition program that will be disbursed over a span of years. See the Illinois state spotlight to learn more.

35.

A large portion of education appropriations in Illinois are not available for operations at public institutions. Additionally, Illinois received a one-time payment of $250 million for the state’s prepaid tuition program that will be disbursed over a span of years. See the Illinois state spotlight to learn more.

36.

A large portion of education appropriations in Illinois are not available for operations at public institutions. Additionally, Illinois received a one-time payment of $250 million for the state’s prepaid tuition program that will be disbursed over a span of years. See the Illinois state spotlight to learn more.

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)

3.

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

4.

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. 

5.

Total taxable resources per capita are inflated to 2020 dollars using Consumer Price Index (CPI-U).

6.

Actual tax revenue per capita is inflated to 2020 dollars using Consumer Price Index (CPI-U).

7.

Higher education support refers to the sum of state tax appropriations, non-tax support, local appropriations, non-appropriated support, state-funded endowment earnings, and other state funds, net of any funds not available for use. Federal stimulus funding is not included.

8.

Higher education support refers to the sum of state tax appropriations, non-tax support, local appropriations, non-appropriated support, state-funded endowment earnings, and other state funds, net of any funds not available for use. Federal stimulus funding is not included.

9.

Higher education support refers to the sum of state tax appropriations, non-tax support, local appropriations, non-appropriated support, state-funded endowment earnings, and other state funds, net of any funds not available for use. Federal stimulus funding is not included.

10.

Higher education support per capita is adjusted for inflation using the 2021 Consumer Price Index (CPI-U). 

12.

In Illinois, a large portion of education appropriations (which constitute most of the state’s total education revenue) are not available for operations at public institutions. A SHEF Issue Brief on Illinois from the 2018 SHEF report provides more detail on the funding situation in Illinois over time.

13.

Higher education support refers to the sum of state tax appropriations, non-tax support, local appropriations, non-appropriated support, state-funded endowment earnings, and other state funds, net of any funds not available for use. Federal stimulus funding is is not included.

14.

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.

15.

Data are adjusted for inflation using the 2021 Consumer Price Index (CPI-U).

16.

Student FTE enrollment also increased 54.3% from 1980 to 2021.

17.

State Higher Education Executive Officers Association. (2021). Investigating the impacts of state higher education appropriations and financial aid. https://sheeo.org/wpcontent/uploads/2021/05/SHEEO_ImpactAppropationsFinancialAid.pdf