Footnotes

Executive Summary

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

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

National Association of State Budget Officers. (2021). State expenditure report: Fiscal years 2019-2021. www.nasbo.org/reports-data/state-expenditure-report

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.

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

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).

See the State Spotlight on Colorado for more information.

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

Indiana allocated 19.997% of state and local support to funding student financial aid, which rounds to 20.0% in Table 1.4.

Distribution of Revenue

10.

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 states’ individual per-FTE calculations.

11.

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

12.

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

13.

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

14.

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.

15.

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.

16.

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.

17.

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

18.

National Student Clearinghouse Research Center. (2021). Fall 2021 enrollment (as of October 21). nscresearchcenter.org/stay-informed/

19.

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.

20.

Louisiana higher education institutions were appropriated $96.7 million of Coronavirus Relief Funds (CRF) from the CARES Act in fiscal year 2020. These funds were utilized by higher education in fiscal year 2021 to alleviate a $121 million dollar state general fund reduction. Along with $3.3 million of additional CRF funds for use in fiscal year 2021, higher education received a true operating reduction of $21 million. In fiscal year 2022, the full state general fund reduction was restored.

21.

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.

22.

A large portion of education appropriations in Illinois are not available for operations at public institutions. See the Illinois state spotlight to learn more.

23.

Some states, like California and Michigan, also use federal 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. See the State Spotlight on Michigan for more information.

24.

Overall, 2.5% of state public financial aid was uncategorizable. Twenty-nine 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: Ohio (6.7%), Michigan (8.6%), Washington (10.2%), Colorado (14.2%), Pennsylvania (20.9%), Rhode Island (33.6%), and Alabama (45.3%).

25.

These percentages were calculated using the sum of two-year, four-year, and uncategorizable public financial aid.

Net Tuition and Total Education Revenue

26.

Data for Washington, D.C., are not available prior to 2011.

27.

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

28.

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. See the Illinois state spotlight to learn more.

29.

Washington, D.C., had high total education revenue in 2021 due to $15,801 per FTE in federal stimulus funding.

30.

A large portion of education appropriations in Illinois are not available for operations at public institutions. See the Illinois state spotlight to learn more.

State Effort and Capacity to Fund Higher Education

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

U.S. Department of the Treasury. (2002). Treasury methodology for estimating total taxable resources (TTR).

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

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.

Total taxable resources per capita are inflated to 2019 dollars using Consumer Price Index (CPI-U).

Actual tax revenue per capita is inflated to 2019 dollars using Consumer Price Index (CPI-U).

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 excluded.

10.

Higher education support per capita is adjusted for inflation using the 2020 Consumer Price Index (CPI-U).

11.

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.

12.

13.

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.

14.

Data are adjusted for inflation using the 2020 Consumer Price Index (CPI-U) in these calculations of change over time in personal income and higher education support per capita.

15.

Student FTE enrollment also increased 59.4% from 1980 to 2020.

16.

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

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