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State funding remains below historic levels as public colleges brace for a recession and expected budget cuts.

The impacts of COVID-19 on public higher education revenues and enrollment are unknown and potentially severe. Amidst this uncertainty, the SHEF report offers a comprehensive look at where states stand as they enter this complex funding environment.

In 2019, a 2.4% increase in per-student education appropriations marks the likely end of a seven-year recovery in higher education funding.

Nationally, public institutions in 2019 received an average of $8,196 in education appropriations per full-time equivalent (FTE) enrollment.

State funding has changed over time

After unprecedented cuts during the Great Recession, education appropriations per FTE today remain 8.7% below pre-recession levels.

As state funding declines, tuition and fees increasingly support public institutions

Net tuition revenue has grown consistently over time, reaching $75 billion or $6,902 per FTE in 2019.

These $164 billion in revenues serve 10.9 million FTE students

For the first time, in 2019, total education revenues reached $15,000 per FTE student.

Changes in enrollment are often counter-cyclical to trends in state funding

Enrollment increases rapidly during economic downturns. At the same time, state funding decreases and tuition rises at a faster rate.
Economic cycles explain many of the ups and downs we see over time.

State and local support comes from a variety of sources

Across the board, support is primarily made up of state tax appropriations. These funds are supplemented in 29 states with local appropriations. Many states also rely on non-tax sources (lottery, tobacco, and gaming revenues).

Higher education uses these state and local funds in a variety of ways

While the majority of state funding is used for general operations at public institutions, 11% goes to student financial aid and 10% is used for research, agriculture, and medical purposes.

Most state financial aid dollars go to students at public, in-state institutions

In 2018, 75% of state financial aid was allocated based on financial need

Unlike the rest of state support, financial aid has increased over the last two decades

In 2019, states provided $808 per FTE in financial aid, an all-time high.

Financial aid accounts for an ever-growing portion of education appropriations

Only 4.7% of state support was used for public financial aid at the height of per-student appropriations in 2001. This proportion increases dramatically during economic recessions.

Increases in financial aid mirror changes in the student share

During recessions, state funding declines and tuition revenues increase, placing a growing burden on students to fund public higher education. In 2019, 46% of total revenues came from tuition.

However, the student share differs greatly across the U.S.

Although student share varies across geographic regions, there are consistent trends over time.

In more than half of all states, tuition and fees have become the primary revenue source for public higher education

Although every state has different levels of state support and tuition revenue, over time, the student share has increased in all states.