The State Higher Education Finance (SHEF) report is produced annually by the State Higher Education Executive Officers Association (SHEEO) to broaden understanding of the context and consequences of public policy decisions in each state that contribute to public higher education funding levels and funding distributions across states and nationally.

SHEF provides the earliest possible review of state and local support, tuition revenue, and enrollment trends for the most recently completed fiscal year.

Report Highlights

State and local government funding for higher education totaled $129.8 billion in fiscal year 2023. Twenty-eight states and Washington, D.C., used some portion of federal stimulus funding provided to state governments for higher education. Federal stimulus funding allocated by states to higher education totaled $1.7 billion in 2023, down 26.6% before inflation from 2022 and comprising 1.3% of total support. States contributed $116.4 billion (a 7.7% increase), and local governments in 32 states contributed $13.4 billion to higher education (a 5.6% increase).

three students

Full-Time Equivalent (FTE) Enrollment

There were 10.2 million FTE enrolled students in 2023. Net FTE enrollment declined 0.5% in 2023, a loss of 50,464 FTE students, marking the 12th straight year of enrollment declines following substantial enrollment increases during the Great Recession. Altogether, FTE enrollment has declined 12.1% from its peak in 2011.

Enrollment declined in 25 states between 2022 and 2023, ranging from 0.1% in Nebraska to 5.3% in Ohio.

In fiscal years 2021 and 2022, FTE enrollment declines hit two-year institutions harder than four-year institutions. This changed in 2023, as four-year public institutions had a larger year-over-year FTE enrollment decline than two-year institutions, with decreases of 0.6% and 0.3%, respectively.

Education Appropriations per FTE

In 2023, education appropriations per FTE increased 3.7% beyond inflation to $11,040. For the second time since the Great Recession, inflation-adjusted education appropriations per FTE were greater than pre-recession funding levels in 2008, by 6.7% or $697 per FTE. The increase in education appropriations per FTE can be attributed to three notable trends:

  1. Increasing state commitments to higher education funding.
  2. A sharp decline in FTE enrollment.
  3. Generous federal stimulus funding.

Education appropriations per FTE in 2023 ranged from $3,990 in New Hampshire to $22,590 in Illinois and $25,834 in Washington, D.C. Despite national-level increases, education appropriations per FTE declined in 20 states and Washington, D.C., from 2022 to 2023. Although national-level education appropriations have recovered to 2008 levels, many states continue funding higher education at a lower level than prior to the 2008 Great Recession. Twenty-five states have not yet recovered from the Great Recession (meaning their education appropriations per FTE in 2023 remain below 2008 levels).

From 2022 to 2023, inflation-adjusted state and local education appropriations increased 1.6% at two-year institutions, reaching $10,488 per FTE. At four-year institutions, education appropriations per FTE increased 4.2% from 2022 to 2023, reaching $10,238. Two-year public institutions received $6,325 per FTE in state general operating appropriations, 71.6% of the four-year general operating appropriation ($8,834). Local appropriations were 167.0 times higher at two-year institutions ($3,432) compared to four-year institutions ($21 per FTE). There were two-year local appropriations in 29 states, compared to only seven for four-year institutions. Total state and local support at two-year institutions was $10,488, 85.2% of the amount at four-year institutions ($12,314).

State Public Financial Aid per FTE

State public financial aid per FTE increased 2.5% from 2022 to 2023 and reached an all-time high of $1,050 per FTE enrolled student. These funds made up 9.5% of all education appropriations.

In 2023, 27 states had a year-over-year increase in financial aid per FTE. Public state financial aid ranged from $44 per FTE in Montana to over $3,000 per FTE in New Mexico ($3,444 per FTE) and Tennessee ($3,478 per FTE).

State financial aid awards averaged $656 at two-year institutions, an increase of 1.9% over 2022. At four-year institutions, state financial aid increased 2.8%, reaching $1,259. The majority of states (34) awarded more financial aid per FTE to students attending four-year institutions.

Net Tuition and Fee Revenue per FTE

Inflation-adjusted net tuition and fee revenue has increased substantially over time. Since 1980, tuition revenue per FTE at public institutions has increased 179.6%. These increases are primarily due to increases in tuition and fee rates and an increasing proportion of out-of-state, international, and graduate student enrollment. 

Recently, this trend has shifted, and tuition and fee revenue has declined in four of the last five years. Public institutions received $7,353 in net tuition and fee revenue per FTE in 2023, down 3.3% from 2022, which is the largest one-year decrease since 1980, the start of the SHEF dataset. Decreases in net tuition revenue are largely due to increases in state financial aid and minimal tuition rate growth (lower than the rate of inflation).

Net tuition and fee revenue per FTE ranges widely across the states due to variation in the mix of students paying different tuition rates, the level of state support and availability of state public financial aid, and whether institutions can freely raise their tuition rates. On the low end, net tuition and fee revenue was $2,461 per FTE in Florida. On the high end, net tuition and fee revenue was $19,338 in Delaware.

Net tuition and fee revenue per FTE declined in 36 states between 2022 and 2023. Despite these recent declines, since 1980, net tuition and fee revenue per FTE has increased in every state, and by more than 100% in 42 states. Net tuition and fee revenue at two-year institutions averaged $2,593 per FTE in 2023, down 6.6% from 2022. At four-year institutions, net tuition and fee revenue averaged $10,269 per FTE, down 2.7%, but still 4.0 times the average net tuition and fee revenue in the two-year sector.

Student with backpack

Total Education Revenue per FTE

Total education revenue increased 0.8% from 2022 to 2023, reaching an all-time high of $18,301 per FTE. A national-level record high total revenue does not indicate that all public institutions have more revenue than ever before. In fact, it is at an all-time high in only 13 states. Many institutions have not been able to increase tuition and fee revenue to offset declines in state funding and are not at an all-time high for total education revenue. This is particularly true for those most reliant on state funding and those with a more limited ability to raise tuition rates and attract out-of-state and international students.

As with other measures, total revenue varied widely by state. Total education revenue per FTE ranged from a low of $11,570 in Nevada to a high of $31,076 in Illinois. Total education revenue per FTE decreased in half of all states and Washington, D.C., from 2022 to 2023, and in two states (Alaska and Nevada) since 1980.

Two-year institutions had, on average, much less total revenue than four-year institutions. At two-year public institutions, total education revenue averaged $13,061 per FTE in 2023, down 0.1% from 2022. Total education revenue at four-year institutions averaged $20,373, a 0.6% increase from 2022. Thanks to collecting much higher tuition revenues, four-year institutions had, on average, 1.6 times the amount of total education revenue per FTE of two-year institutions.

Student Share

The student share has increased substantially over time due to declines in education appropriations and net tuition revenue increases. In 1980 (the earliest available data), the student share was 20.9%. In 2023, the U.S. average student share was 40.2%. This means that, on average, 40.2% of revenues at public institutions came from student tuition and fees. Excluding federal stimulus funding, the student share in 2023 was 40.5%. 

There is wide variation in the student share across states. In 2023, 21 states had a student share above 50%. From 2022 to 2023, student share decreased in 35 states. It is not yet clear how these trends will continue following the depletion of federal stimulus dollars, but these decreases in student share indicate that states are making efforts to address college affordability.

The student share is perhaps the most varied SHEF metric when comparing two- and four-year public institutions. At two-year institutions, the fiscal year 2023 student share was less than a quarter (19.9%); it was over half (50.4%) at four-year institutions. The four-year student share is greater than the two-year student share in all but three states: Florida, South Dakota, and Wyoming. This means that in those three states, students at two-year institutions are responsible for a greater portion of public institutional revenue than students attending four-year institutions.

Implications

Fiscal year 2023 continued to defy long-standing trends in higher education finance in the third year following an economic downturn. Instead of steep cuts in state funding and sharp growth in student enrollment and tuition revenue, as expected in the years following an economic recession, inflation-adjusted state and local education appropriations per FTE increased, and enrollment and tuition revenue per student decreased. This year marked the 11th straight year that state and local education appropriations increased, and only the second year in which education appropriations per student exceeded 2008 (pre Great Recession) levels — with and without federal stimulus funds. Although states allocated less federal stimulus funding directly to higher education compared to 2022, federal stimulus and relief funds continued to be helpful in 2023, supporting total state revenues, reducing budget strain, and providing more freedom for states to show commitment to higher education. However, these one-time funds are not a replacement for long-term state investments, as stimulus funds dry up. 

The COVID-19 pandemic altered the usual counter-cyclical enrollment trend where enrollment increases during and in the years immediately following economic recessions. Public institutions of higher education experienced a total enrollment decline of 6.1% (or 665,976 per FTE students) from 2020 to 2023. Additionally, net tuition and fee revenue did not increase enough to keep up with inflation any year in that same stretch of time following the brief recession in 2020. What is more, 2023 was the largest year-over-year decrease in net tuition and fee revenue in the SHEF dataset. In general, low growth in tuition rates, continued increases in state financial aid, and changes in enrollment patterns have contributed to recent declines. This continued decline in tuition revenue puts greater pressure on states not to cut funding to public higher education in the coming years. With a growing body of evidence demonstrating that resources matter for improving student success outcomes, state leaders will need to ensure their higher education institutions have an adequate level of funding to increase credential production and meet workforce needs.

The SHEF report broadly addresses the wide variation in how states fund public higher education. However, state-specific context is incredibly important when discussing higher education finance trends. States vary in their relative allocations to general operating, financial aid, and research. They also vary in their reliance on local support to fund community colleges, federal stimulus funding during the COVID-19 pandemic, and the total funding allocated to higher education on a per-student level. Additionally, there are always outliers in every trend. Public institutions in some states remain primarily publicly funded, but a growing proportion have become primarily reliant on student tuition and fee revenue over the last two decades. With the end of federal stimulus funding near, states have hard decisions to make, and choosing to support higher education is crucial for the continued success of public institutions. As states explore new or different ways to address college affordability, educational quality, and inequality in educational attainment, long-term, sustained investments are needed.

Two core components of the SHEF report are the sources and uses of state and local investments in higher education. This section presents data on the distribution of state and local funds at the national level over time and across states. Later sections examine trends over time using inflation-adjusted and per-student data.

In considering a state’s investment in higher education, SHEF includes all state and local revenue sources, including those from taxes, lottery receipts, mineral and resource extraction revenue, and state-funded endowments. SHEF also identifies the primary purposes or uses for which this public revenue is provided, including general institutional operating expenses, student financial assistance, agency funding, and support for centrally funded research, medical education, and extension programs. Higher education is the third largest single budget area in state support, representing 8.7% of total state spending and 9.2% of general fund expenditures in fiscal year 2023. Although state higher education expenditures as a share of general fund spending has remained constant since pre-pandemic levels in fiscal year 2019, spending on state higher education as a share of total state expenditures has declined by 1.5 percentage points since that time. 1 1National Association of State Budget Officers. (2023). State expenditure report: Fiscal years 2021-2023. www.nasbo.org/reports-data/state-expenditure-report VIEW ALL FOOTNOTES 2 2Unlike 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. VIEW ALL FOOTNOTES It is generally understood that state funding for higher education acts as a balance wheel during economic downturns, with funding reductions typically greater than those in other budget areas. 3 3Delaney, 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 VIEW ALL FOOTNOTES In part, states disproportionately reduce per-student funding to higher education due to the presumption that funding reductions can be partially offset with tuition revenue increases. During strong budget years, higher education typically sees increased appropriations in most states, both to make up for past cuts and to provide the funding necessary for public institutions to cover increasing costs due to inflation and changes in student enrollment.

Sources of State Funding

This section provides data and analysis of the sources of state and local government support for higher education over the last 15 years (2008-2023). The funding amounts in this section are not adjusted for inflation or enrollment.

1. National Trends

Table 1.1 shows that state and local government funding for higher education totaled $129.8 billion in fiscal year 2023, with almost $1.7 billion in federal stimulus funding. Federal stimulus funding in 2023 comprised 1.3% of total support, a decline of $609.3 million, down 26.6% from fiscal year 2022. 4 4Federal 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 used for capital projects and funds provided directly to institutions, such as the Higher Education Emergency Relief Fund (HEERF). VIEW ALL FOOTNOTES   States contributed $116.4 billion, and local governments in 32 states contributed $13.4 billion, representing increases of 7.7% and 5.6%, respectively. The largest funding source was state tax appropriations, which accounted for $106.1 billion or 81.7% of total funding, as shown in Figure 1.1. Non-tax support (mostly from state lotteries) increased 7.9% and totaled just under $5.4 billion. Non-appropriated support, state-funded endowments, and other sources of state funding contributed an additional $3.5 billion, an increase of 10.2% from 2022.

Table 1.1

Sources of State and Local Higher Education Funding in the U.S., FY 2008-2023 (Unadjusted Dollars, In Millions)

Source 2008 2013 2018 2021 2022 2023 2023 % Distribution
Federal Stimulus $0 $0 $0 $3,808 $2,291 $1,682 1.3%
Tax Appropriations $77,786 $69,876 $82,530 $90,029 $97,719 $106,087 81.7%
Non-Tax Support $2,393 $3,020 $3,970 $4,656 $4,988 $5,382 4.1%
Non-Appropriated Support $72 $92 $286 $282 $302 $301 0.2%
State-Funded Endowment Earnings $344 $498 $992 $1,423 $1,319 $1,414 1.1%
Other $225 $277 $1,512 $1,553 $1,600 $1,834 1.4%
Funds Not Available for Use $80 $72 $76 $551 $206 $318 0.2%
Total State Support $80,739 $73,691 $89,213 $101,198 $108,014 $116,382 89.7%
Local Tax Appropriations $8,148 $9,352 $10,760 $12,167 $12,698 $13,403 10.3%
Total State and Local Support $88,887 $83,043 $99,973 $113,365 $120,712 $129,785 100.0%
Total State and Local Support (No Stimulus) $88,887 $83,043 $99,973 $109,557 $118,421 $128,103 98.7%
Notes:
  1. 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 HEERF) and funding used for capital projects.
  2. Other includes multiyear appropriations from previous years and funds not classified in one of the other source categories.
  3. Funds not available for use include appropriations that were returned to the state, and portions of multiyear appropriations to be spread over other years.
  4. Total state and local support is the sum of federal stimulus funds, state and local tax appropriations, non-tax support, non-appropriated support, state-funded endowment earnings, and other state funds, net of any funds not available for use.
Source(s):
  • State Higher Education Executive Officers Association
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Figure 1.1

Distribution of State and Local Higher Education Funding Sources, U.S., FY 2008-2023


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Notes:
  1. In some cases, percentages may add up to more than 100 due to funds not available for use. Funds not available for use are appropriations that were returned to the state and portions of multiyear appropriations to be spread over other years.
  2. Tax appropriations are any appropriations from state government taxes to institutions for operations and other higher education activities.
  3. 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 HEERF) and funding used for capital projects.
  4. Local appropriations are the sum of tax appropriations from any government entity below the state level to public institutions for operating expenses. Local appropriations do not include grants from local nonprofit organizations such as chambers of commerce and charitable foundations.
  5. Non-tax support includes any appropriated non-tax state support set aside by the state for higher education. This may include, but is not limited to, allocations from lotteries (including lottery scholarships), tobacco settlements, casinos, or other gaming sources.
  6. In all years, state-funded endowment earnings and other sources accounted for 3% or less of total state and local funding for higher education. Other sources include non-appropriated funds, multiyear appropriations from previous years, and funds not classified in one of the other source categories.
Source(s):
  • State Higher Education Executive Officers Association

2. State Comparisons

Almost all states are heavily reliant on state tax appropriations to fund higher education, although the distribution of state and local higher education funding sources varies across the nation (see Table 1.2). In 2023, all states had the majority of higher education funding come from state tax appropriations. Four states (Delaware, Massachusetts, North Dakota, and Washington) relied on tax appropriations as their only major source of state and local funding for higher education. 

Arizona is the only state in which a large proportion (41.5%) of higher education funding came from local appropriations. Kansas, Michigan, and Texas were the only other states that relied on local appropriations for at least 20% of higher education funding. Eighteen states and Washington, D.C., received no local tax appropriations for higher education. 5 5In Washington D.C., district taxes are classified as state tax appropriations, not local support. VIEW ALL FOOTNOTES

Table 1.2

Sources of State and Local Higher Education Funding by State, FY 2023 (Unadjusted Dollars)

% Tax Appropriations % Non-Tax Support % Funds Not Available for Use (Subtracted) % Local Appropriations % Endowment, Non-Appropriated, and Other Sources % Federal Stimulus Total State and Local Support (Thousands)
Alabama 99.9% 0.0% 0.0% 0.1% 0.0% 0.0% $3,053,449
Alaska 101.8% 0.0% 2.1% 0.3% 0.0% 0.0% $320,673
Arizona 50.6% 0.2% 0.0% 41.5% 7.7% 0.0% $2,390,727
Arkansas 85.5% 10.8% 0.0% 3.5% 0.3% 0.0% $1,119,683
California 82.3% 2.1% 0.0% 15.6% 0.0% 0.0% $24,258,776
Colorado 89.6% 2.3% 0.0% 8.2% 0.0% 0.0% $1,431,553
Connecticut 82.9% 0.0% 0.0% 0.0% 0.0% 17.1% $1,936,307
Delaware 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% $275,700
Florida 72.9% 25.2% 0.0% 0.7% 1.1% 0.0% $6,192,271
Georgia 74.8% 17.4% 0.0% 0.0% 1.2% 6.5% $4,949,007
Hawaii 92.6% 1.0% 0.0% 0.0% 0.0% 6.4% $901,688
Idaho 81.5% 0.0% 0.0% 5.7% 3.3% 9.6% $698,912
Illinois 84.7% 0.0% 0.0% 14.9% 0.0% 0.4% $6,333,887
Indiana 99.4% 0.5% 0.0% 0.0% 0.0% 0.2% $1,915,994
Iowa 95.1% 0.0% 0.0% 4.4% 0.0% 0.4% $926,819
Kansas 74.1% 0.9% 0.0% 24.3% 0.0% 0.8% $1,331,941
Kentucky 70.2% 24.4% 0.0% 2.3% 0.9% 2.2% $1,518,777
Louisiana 98.0% 0.0% 0.0% 0.0% 1.5% 0.5% $1,479,000
Maine 94.5% 1.9% 0.0% 0.0% 0.3% 3.3% $390,424
Maryland 85.7% 0.3% 0.0% 14.0% 0.0% 0.0% $3,432,325
Massachusetts 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% $2,186,641
Michigan 82.4% 0.0% 8.0% 20.7% 0.0% 4.8% $3,144,448
Minnesota 99.8% 0.0% 0.2% 0.0% 0.5% 0.0% $1,762,276
Mississippi 93.9% 0.1% 0.0% 5.4% 0.1% 0.5% $1,214,005
Missouri 78.8% 10.5% 2.6% 12.2% 0.5% 0.5% $1,404,761
Montana 94.6% 0.0% 0.0% 3.4% 2.0% 0.0% $295,804
Nebraska 75.5% 3.1% 0.0% 18.4% 0.0% 3.0% $1,105,114
Nevada 80.8% 13.2% 0.0% 0.1% 0.0% 5.9% $793,051
New Hampshire 95.9% 2.3% 0.0% 0.0% 0.0% 1.8% $157,221
New Jersey 88.0% 4.3% 0.0% 7.7% 0.0% 0.0% $3,090,507
New Mexico 61.4% 22.3% 0.0% 10.6% 1.0% 4.7% $1,669,778
New York 84.3% 0.0% 0.0% 15.7% 0.0% 0.0% $7,461,481
North Carolina 93.5% 0.3% 0.4% 5.7% 0.2% 0.7% $5,563,322
North Dakota 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% $391,393
Ohio 91.4% 0.0% 0.0% 8.2% 0.0% 0.4% $2,686,436
Oklahoma 79.9% 3.2% 0.0% 5.5% 11.4% 0.0% $1,051,743
Oregon 83.4% 0.6% 0.0% 16.0% 0.0% 0.0% $1,375,462
Pennsylvania 85.5% 0.0% 0.0% 6.3% 0.0% 8.1% $2,392,797
Rhode Island 99.2% 0.0% 0.0% 0.0% 0.0% 0.8% $230,904
South Carolina 66.2% 28.1% 0.0% 5.7% 0.0% 0.0% $1,590,892
South Dakota 98.2% 1.3% 0.2% 0.0% 0.7% 0.0% $319,956
Tennessee 72.9% 16.5% 0.0% 0.0% 10.5% 0.0% $2,803,827
Texas 54.7% 0.6% 0.0% 21.0% 22.6% 1.1% $11,873,642
Utah 98.3% 0.5% 0.0% 0.0% 0.0% 1.2% $1,533,007
Vermont 83.2% 0.0% 0.0% 0.0% 0.0% 16.8% $154,279
Virginia 99.4% 0.0% 0.0% 0.6% 0.0% 0.0% $3,050,285
Washington 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% $2,614,648
West Virginia 90.2% 6.9% 0.0% 0.0% 0.0% 2.9% $555,216
Wisconsin 85.9% 0.0% 0.0% 12.8% 0.0% 1.3% $2,046,260
Wyoming 81.5% 0.0% 0.0% 11.1% 4.4% 3.0% $407,685
D.C. 74.9% 0.0% 0.0% 0.0% 23.2% 1.9% $136,580
U.S. 81.7% 4.1% 0.2% 10.3% 2.7% 1.3% $129,784,755
Notes:
  1. 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 HEERF) and funding used for capital projects.
  2. Total state and local support is the sum of federal stimulus funds, state and local tax appropriations, non-tax support, non-appropriated support, state-funded endowment earnings, and other state funds, net of any funds not available for use. Some states reported tax appropriations and non-tax support that total to more than 100% of total state support because those data elements include funds not available for use, which are reported in the fourth column.
  3. Funds not available for use include appropriations that were returned to the state, and portions of multiyear appropriations to be spread over other years.
  4. In addition to non-appropriated support and state-funded endowment earnings, other sources include multiyear appropriations from previous years and funds not classified in one of the other source categories.
  5. Fiscal year 2023 federal stimulus is estimated for Kentucky.
  6. In fiscal year 2023, Michigan created the Michigan Achievement Scholarship and deposited $250 million into the Post-Secondary Scholarship Fund to implement the new scholarship and start awarding students in fiscal year 2024.
Source(s):
  • State Higher Education Executive Officers Association
Figure 1.2

Percentage of State and Local Higher Education Funding from Local Appropriations by State, FY 2023


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Notes:
  1. Excludes states with no selected funding source.
  2. Total state and local support is the sum of federal stimulus funds, state and local tax appropriations, non-tax support, non-appropriated support, state-funded endowment earnings, and other state funds, net of any funds not available for use.
  3. Tax appropriations are any appropriations from state government taxes to institutions for operations and other higher education activities.
  4. Local appropriations are the sum of tax appropriations from any government entity below the state level to public institutions for operating expenses. Local appropriations do not include grants from local nonprofit organizations such as chambers of commerce and charitable foundations.
  5. Non-tax support includes any appropriated non-tax state support set aside by the state for higher education. This may include, but is not limited to, allocations from lotteries (including lottery scholarships), tobacco settlements, casinos, or other gaming sources.
Source(s):
  • State Higher Education Executive Officers Association

Several states with financial aid programs funded with lottery dollars, primarily located in the southern region of the U.S., were also less reliant on tax appropriations. Florida, Kentucky, New Mexico, and South Carolina relied on non-tax support for at least 20% of higher education funding. Meanwhile, 22 states and Washington, D.C., had no non-tax support.

Endowments, non-appropriated support, and other sources of state revenue made up 1% or less of higher education funding in all but 11 states and Washington, D.C. In Arizona, Oklahoma, Tennessee, Texas, and Washington, D.C., these revenue sources made up more than 5% of higher education support.

In 2023, federal stimulus funding provided to state governments was used for higher education in 28 states and Washington, D.C. Of these states, stimulus funds comprised less than 5% of total state and local support in 21 states and Washington, D.C. Connecticut and Vermont are the only states that relied on federal stimulus funding for more than 10% of higher education funding in 2023.

Two noteworthy trends have emerged as states have become less reliant on tax appropriations over time.

  • Many states are increasingly reliant on local appropriations. Over the last 15 years, the proportion of total higher education funding from local appropriations has increased in 23 states. In four states (Arizona, Kansas, Nebraska, and Texas), the proportion of total higher education funding derived from local appropriations has increased by at least 5 percentage points since 2008.

  • Similarly, 19 states had increases in non-tax appropriations from 2008 to 2023. In six states (Arkansas, Florida, Kentucky, Nevada, New Mexico, and South Carolina), five of which have sizable lottery-funded student financial aid programs, 6 6Brown, P. (2023). SHEF: FY 2022 Issue Brief: Analyzing Lottery Proceeds as an Aspect of State Support for Higher Education. https://shef.sheeo.org/wp-content/uploads/2024/04/SHEF-Lottery-Funding_FY22.pdf. VIEW ALL FOOTNOTES non-tax support as a proportion of total funding increased by more than 5 percentage points over the last 15 years.

Uses of State Funding

This section provides data and analysis of the uses of state and local government support for higher education over the last 15 years (2008-2023). As with the prior section, this section’s funding amounts are not adjusted for inflation or enrollment. However, unlike the prior section, federal stimulus funding is not included in the uses of state and local funding.

1. National Trends

Table 1.3 shows that, nationally, funds allocated to support general public operations at public institutions increased 8.5% in 2023 to $100.7 billion, representing 78.6% of state and local higher education funding. General public operations include funding directly used to support instruction at two- and four-year public institutions as well as funding to state higher education agencies.

Agency funding is the allocation of operating funds to state-level coordinating and governing bodies. 7 7These funds have always been included in general public operations but were not available as a breakout until 2019. VIEW ALL FOOTNOTES In 2023, states provided $1.5 billion in agency funding (1.2% of all general public operations).

Other uses of funding include:

  • Special purpose appropriations for research, agricultural extension programs, public health care services, and medical education (RAM) have increased 7.9% since 2022 to $13.2 billion — comprising 10.3% of total state and local support. 
  • State-funded student financial aid increased 5.8% to $13.4 billion — 10.5% of total support — from 2022 to 2023. In 2023, 80.2% of total student aid was allocated to students attending public institutions.
  • Operating support for independent (private) institutions increased 32.6% to $394.0 million, and support for non-credit and continuing education increased 9.3% to $400.0 million. Together, these uses of state and local funding constituted 0.6% of higher education funding.

Table 1.3

Uses of State and Local Higher Education Funding in the U.S., FY 2008-2023 (Unadjusted Dollars, In Millions)

Use 2008 2013 2018 2021 2022 2023 2023 % Distribution
General Public Operations $69,804 $63,881 $77,825 $85,160 $92,834 $100,677 78.6%
Agency Funding N/A N/A N/A $1,211 $1,542 $1,539 1.2%
Research - Agriculture - Medical (RAM) $10,718 $9,769 $10,880 $11,242 $12,245 $13,217 10.3%
State Public Financial Aid $5,321 $6,743 $8,385 $10,052 $10,127 $10,763 8.4%
Out-of-State Financial Aid $34 $42 $37 $39 $39 $41 0.0%
Independent Student Aid $2,443 $2,116 $2,273 $2,406 $2,493 $2,588 2.0%
Independent Operating Support $276 $179 $217 $252 $297 $394 0.3%
Non-Credit and Continuing Education $291 $313 $349 $374 $366 $400 0.3%
Total Student Financial Aid $7,798 $8,901 $10,702 $12,529 $12,679 $13,416 10.5%
Total Independent Support $2,719 $2,295 $2,489 $2,658 $2,790 $2,983 2.3%
Total State and Local Support (No Stimulus) $88,887 $83,043 $99,973 $109,557 $118,421 $128,103 100.0%
Notes:
  1. General public operations are any state and local support for public higher education institutions and agencies, excluding RAM, financial aid, and non-credit and continuing education. Federal stimulus funding is not included.
  2. Agency funding is included in general public operations, and is the allocation of operating funds to state-funded, state-level coordinating and governing bodies.
  3. RAM refers to the total appropriations intended for the direct operations of research, agriculture, public health care services, and medical schools.
  4. Total student financial aid is the sum of any state appropriated student financial aid for public, independent, and out-of-state institutions, excluding loans. Financial aid for students attending medical institutions is included in total student financial aid but excluded from all other student aid categories.
  5. Total independent support is the sum of state funds for private institutions (independent student aid and independent operating support).
  6. Total state and local support is the sum of 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.
Source(s):
  • State Higher Education Executive Officers Association

Overall, the uses of state and local higher education funding have remained relatively constant on a national level over time. Figure 1.3 shows that the biggest change in uses of higher education funding is the portion of funding allocated to public financial aid. Excluding stimulus funding, the proportion of state and local funding allocated to public financial aid increased 2.4 percentage points from 6.0% in 2008 to 8.4% in 2023, signifying a shift in the way states have chosen to invest in public higher education. Meanwhile, the portion allocated to general public operating increased by 0.06 percentage points over the last 15 years. However, financial aid to students attending independent or out-of-state institutions declined by just under one percentage point (0.7) over that same time frame and now accounts for just 2.1% of state and local support.

Figure 1.3

Distribution of State and Local Higher Education Funding Uses, U.S., FY 2008-2023


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Notes:
  1. In all years, other uses accounted for less than 1% of total state and local funding for higher education. Other uses include funding for non-credit and independent operating.
  2. Total state and local support is the sum of 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.
  3. General public operations are any state and local support for public higher education institutions and agencies, excluding RAM, financial aid, and non-credit and continuing education. Federal stimulus funding is not included.
  4. RAM refers to the total appropriations intended for the direct operations of research, agriculture, public health care services, and medical schools.
  5. Other financial aid includes any state appropriated student financial aid to students attending independent (private) or out-of-state institutions.
  6. State public financial aid is any state appropriated student financial aid for public institutions, excluding loans and aid for students attending medical schools. For many states, it includes aid for both tuition costs and living expenses. In several states, financial aid may include unawarded funds that were reverted back to the state.
Source(s):
  • State Higher Education Executive Officers Association

2. State Comparisons

Across the states, there is significant variation in the uses of state and local funding for higher education. All states allocated at least half of all funding to general public operations in fiscal year 2023. Louisiana (53.7%) allocated the least amount of funding to public institutions’ general operations budgets, while Rhode Island (92.9%) allocated the most. Overall, the proportion of funding allocated to general public operations decreased in a total of 32 states since 2008.

Forty-six states reported agency funding in fiscal year 2023. Agency allocations ranged from 0.02% of all support in Montana to 15.7% in South Dakota, and accounted for less than 1% of all support in 27 of those states. States may not have agency funding if they do not have a statewide board for higher education (like in Michigan), or if systems of institutions allocate their own funding for system-level agency operations from their general budgets (as in Maine).

All but one state (Rhode Island) 8 8Rhode Island has not reported any RAM allocations since the start of the SHEF dataset. VIEW ALL FOOTNOTES provided state and local support for direct operations of research, agriculture, public health care services, and medical schools (RAM). Figure 1.4 shows that in 2023, RAM ranged from 3.0% in Illinois to 25.5% in Mississippi.

Figure 1.4

Percentage of State and Local Higher Education Funding Used for Research - Agriculture - Medical (RAM) by State, FY 2023


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Notes:
  1. Excludes states with no selected funding use.
  2. Total state and local support is the sum of 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.
  3. General public operations are any state and local support for public higher education institutions and agencies, excluding RAM, financial aid, and non-credit and continuing education. Federal stimulus funding is not included.
  4. RAM refers to the total appropriations intended for the direct operations of research, agriculture, public health care services, and medical schools.
  5. Total student financial aid is the sum of any state appropriated student financial aid for public, independent, and out-of-state institutions, excluding loans.
Source(s):
  • State Higher Education Executive Officers Association

The proportion of state and local support allocated to student financial aid ranged from 0.5% in Montana to 30.3% in South Carolina. Hawai`i was the only other state that allocated less than 1% of funding to student financial aid. Kentucky, Louisiana, South Carolina, and Tennessee all allocated at least 20% of state and local funding to financial aid. From 2008 to 2023, the proportion of total state and local support appropriated to student financial aid increased in 40 states.

As seen in Table 1.4, support for independent institutions is generally one of the smallest allocations of state and local funding. In 2023, 45 states provided funding to independent institutions, ranging from 0.01% in New Mexico to 8.6% in Pennsylvania. In most states, funding for independent institutions was predominantly allocated to student financial aid rather than institutional operating appropriations. Fourteen states allocated some portion of funding to support independent (private) operating. Of those states, only two, Alabama (84.3%) and Maryland (84.9%), allocated more than 50% of their support for independent institutions toward institutional operating.

Table 1.4

Uses of State and Local Higher Education Funding by State, FY 2023 (Unadjusted Dollars)

% General Public Operations % Agency Funding % Research - Agriculture - Medical (RAM) % Total Student Financial Aid % Total Independent Support Total State and Local Support (No Stimulus, in Thousands)
Alabama 82.3% 0.6% 13.2% 2.2% 2.3% $3,053,449
Alaska 87.9% 0.0% 6.9% 5.3% 0.6% $320,673
Arizona 86.3% 0.1% 11.2% 2.5% 0.0% $2,390,727
Arkansas 69.5% 0.3% 20.1% 10.3% 1.1% $1,119,683
California 85.0% 0.1% 5.8% 9.2% 0.9% $24,258,776
Colorado 69.3% 0.5% 12.4% 18.3% 0.8% $1,431,553
Connecticut 76.1% 1.9% 21.7% 2.2% 0.0% $1,605,807
Delaware 89.1% 0.1% 3.7% 7.2% 0.1% $275,700
Florida 74.5% 0.2% 8.2% 16.3% 3.5% $6,192,271
Georgia 69.0% 3.7% 11.5% 18.8% 2.0% $4,625,059
Hawaii 83.1% 8.8% 16.0% 1.0% 0.0% $844,156
Idaho 85.9% 13.5% 10.3% 3.9% 0.9% $632,151
Illinois 86.7% 1.8% 3.0% 9.3% 3.8% $6,306,980
Indiana 68.7% 0.6% 14.5% 16.7% 4.4% $1,912,685
Iowa 77.0% 0.1% 13.2% 9.8% 5.6% $922,653
Kansas 78.8% 0.4% 16.3% 4.9% 1.2% $1,321,941
Kentucky 61.7% 1.0% 12.2% 24.9% 7.2% $1,484,756
Louisiana 53.7% 10.4% 23.1% 23.2% 1.7% $1,472,122
Maine 77.1% 0.0% 10.7% 12.2% 1.4% $377,561
Maryland 82.1% 0.9% 10.8% 3.6% 4.1% $3,432,325
Massachusetts 88.1% 0.6% 3.1% 8.5% 2.8% $2,186,641
Michigan 91.6% 0.0% 6.0% 2.5% 0.5% $2,993,248
Minnesota 76.1% 3.6% 11.7% 12.2% 4.2% $1,762,276
Mississippi 70.4% 1.3% 25.5% 4.1% 0.3% $1,208,005
Missouri 73.1% 0.2% 14.7% 12.3% 2.4% $1,397,562
Montana 84.8% 0.0% 14.7% 0.5% 0.0% $295,804
Nebraska 77.1% 0.1% 20.3% 2.6% 0.5% $1,072,464
Nevada 73.1% 3.1% 12.9% 14.0% 0.0% $746,559
New Hampshire 84.8% 0.3% 9.1% 6.1% 1.1% $154,412
New Jersey 72.1% 0.1% 9.9% 17.7% 4.5% $3,090,507
New Mexico 74.2% 0.3% 10.3% 14.9% 0.0% $1,591,418
New York 84.8% 0.9% 4.2% 10.5% 3.3% $7,461,481
North Carolina 77.2% 1.3% 10.7% 9.0% 5.5% $5,523,574
North Dakota 70.2% 6.8% 23.5% 5.7% 1.6% $391,393
Ohio 83.2% 0.8% 9.1% 6.6% 2.3% $2,676,190
Oklahoma 75.7% 0.9% 13.3% 11.0% 1.1% $1,051,743
Oregon 76.5% 1.4% 10.2% 9.6% 0.7% $1,375,462
Pennsylvania 75.5% 0.2% 4.1% 18.9% 8.6% $2,197,944
Rhode Island 92.9% 0.9% 0.0% 7.1% 0.7% $229,117
South Carolina 55.3% 1.9% 13.8% 30.3% 7.8% $1,590,892
South Dakota 82.2% 15.7% 15.4% 2.4% 0.5% $319,956
Tennessee 64.8% 4.6% 14.4% 20.6% 2.0% $2,803,827
Texas 74.6% 0.3% 19.9% 5.4% 0.8% $11,739,100
Utah 88.8% 1.0% 8.1% 2.7% 0.2% $1,514,707
Vermont 64.9% 0.0% 15.8% 19.1% 5.1% $128,315
Virginia 72.6% 0.4% 10.0% 15.8% 4.2% $3,050,285
Washington 77.9% 1.3% 4.7% 17.4% 2.7% $2,614,648
West Virginia 57.4% 1.8% 24.7% 16.4% 1.4% $539,074
Wisconsin 82.7% 5.7% 9.9% 7.0% 1.8% $2,019,871
Wyoming 82.8% 0.9% 10.2% 6.8% 0.0% $395,521
D.C. 76.4% 0.0% 21.0% 2.6% 0.0% $133,951
U.S. 78.6% 1.2% 10.3% 10.5% 2.3% $128,103,026
Notes:
  1. Percentages do not add up to 100 because (a) this table does not include funds allocated to non-credit and continuing education, and (b) state financial aid to independent institutions is included in both total student financial aid and total independent support.
  2. General public operations are any state and local support for public higher education institutions and agencies, excluding RAM, financial aid, and non-credit and continuing education. Federal stimulus funding is not included.
  3. Total student financial aid is the sum of any state appropriated student financial aid for public, independent, and out-of-state institutions, excluding loans. Financial aid for students attending medical institutions is included in total student financial aid.
  4. Total independent support is the sum of state funds for private institutions (independent student aid and independent operating support).
  5. Total state and local support is the sum of 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.
  6. Fiscal year 2023 total student financial aid includes estimates for Pennsylvania.
  7. In California, state funds used for nontuition financial aid are estimated and classified as uncategorizable state support, which is included in state-level general public operating. See the California State Spotlight for more details.
Source(s):
  • State Higher Education Executive Officers Association

This section explores historical trends in the distribution and levels of the two primary revenue sources for public institutions of higher education: state and local funding and student tuition and fee revenue. From this section forward, the SHEF report highlights trends in higher education revenue and enrollment for public institutions only.

Several derived metrics are analyzed throughout the report, first at the U.S. level and then across states and sectors. 9 9It is important to note that the U.S. level data 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. VIEW ALL FOOTNOTES These metrics are net full-time equivalent (FTE) enrollment, general public operations, state public financial aid, education appropriations, net tuition and fee revenue, total education revenue, and student share. Each metric is defined in Table 2.1 and explained in more detail in the sections that follow.

SHEF’s analytic methods are designed to make basic data about higher education finance as comparable as possible across states and over time. Finance metrics are provided on a per-student basis (using net FTE enrollment) and are modified using three adjustments: 10 10These adjustments are described in more detail on the data definitions page of the SHEF website (https://shef.sheeo.org/data-definitions/). VIEW ALL FOOTNOTES

Higher Education Cost Adjustment (HECA)
adjusts for inflation over time.

Cost of Living Index (COLI)
accounts for cost of living differences among the states.

Enrollment Mix Index (EMI)
adjusts for differences in the mix of enrollments across institutions resulting in different costs across the states (e.g., at community colleges or more expensive research institutions).

1. National Trends

Table 2.1 shows the effects of FTE enrollment and inflation on the SHEF metrics. The progression shown in this table is a starting point for understanding the national story of public higher education funding from state and local sources, tuition and fee revenue from students and families, and enrollment over time. Note that the state adjustments (COLI and EMI) do not impact the U.S. average.

The first section of Table 2.1 shows that in unadjusted dollars (without adjusting for inflation or enrollment), education appropriations increased 7.5% over 2022. Both subcomponents of education appropriations also increased, 6.3% for state public financial aid and 8.4% for general public operations. Net tuition and fee revenue (tuition and fees net of state and institutional aid and medical tuition) increased 0.2%.

The middle section of Table 2.1 shows that the Higher Education Cost Adjustment (HECA), a measure of inflation in service industries, increased 4.2% from 2022 to 2023. After applying HECA and therefore removing any increases due to inflation, state public financial aid increased 2.0%, while general public operations increased 4.1%, and net tuition and fee revenue decreased 3.8%.

The changes described above may be misleading if not contextualized with changes in net FTE enrollment, shown in the final section of Table 2.1. From 2022 to 2023, enrollment declined 0.5%, or 50,464 FTE students. After adjusting for both inflation and enrollment, we see that education appropriations increased 3.7% (financial aid increased 2.5%, general public operations increased 4.6%), while net tuition and fee revenue decreased 3.3%, and total education revenue increased 0.8%.

Since the SHEF dataset began in 1980, net tuition revenue per FTE has only declined six times: in 2000 (2.7%), 2001 (0.9%), 2019 (3.2%), 2021 (2.5%), 2022 (0.9%), and 2023 (3.3%). The decline in 2023, the largest yet, is partially, but not entirely, explained by state public financial aid increases, which are removed from net tuition revenue. 

Education appropriations and total education revenue described here and reported in Table 2.1 include federal stimulus funding in fiscal years 2020, 2021, 2022, and 2023. Excluding federal stimulus funding, inflation-adjusted education appropriations per FTE increased 4.4%, and total education revenue increased 1.1%.

Measurement Note: Federal Stimulus Funding
The SHEF report includes federal stimulus funding allocated to states to stabilize state and local sources of funding for higher education and to provide additional resources during the COVID-19 pandemic in fiscal years 2020, 2021, 2022, and 2023. Federal stimulus included in the SHEF report includes any state-allocated Governor’s Emergency Education Relief Funds (GEERF), Coronavirus Relief Funds (CRF), or State and Local Fiscal Recovery Funds, and excludes aid provided directly to institutions (such as Higher Education Emergency Relief Funds). Federal stimulus funds used for public capital projects are also excluded. Federal stimulus funds were generally reported in the year(s) in which they were expended. State- and sector-level state and local support, education appropriations, and total education revenue include federal stimulus funding. Federal stimulus funding for private institution operations is excluded from education appropriations and total education revenue. Federal stimulus is not included in state public financial aid, general public operations, or state public operating.

Table 2.1

Impact of Inflation and Enrollment on SHEF Metrics, U.S., FY 1980-2023

1980 2001 2013 2018 2022 2023 % Change Since 2022 % Change Since 2018 % Change Since 2013 % Change Since 2001 % Change Since 1980
Current Unadjusted Dollars (Millions)
State Public Financial Aid N/A $2,843 $6,743 $8,385 $10,127 $10,763 6.3% 28.4% 59.6% 278.6% N/A
General Public Operations N/A $53,289 $63,881 $77,825 $92,834 $100,677 8.4% 29.4% 57.6% 88.9% N/A
Education Appropriations $16,134 $56,118 $70,625 $86,218 $105,234 $113,106 7.5% 31.2% 60.2% 101.5% 601.0%
Net Tuition Revenue $4,264 $22,896 $63,333 $76,388 $75,150 $75,331 0.2% -1.4% 18.9% 229.0% 1666.8%
Total Education Revenue $20,398 $78,903 $133,199 $161,752 $179,469 $187,500 4.5% 15.9% 40.8% 137.6% 819.2%
Constant Inflation Adjusted Dollars (Millions)
HECA 0.2367 0.5662 0.7722 0.8528 0.9597 1.0000 4.2% 17.3% 29.5% 76.6% 322.6%
State Public Financial Aid N/A $5,021 $8,733 $9,832 $10,553 $10,763 2.0% 9.5% 23.2% 114.3% N/A
General Public Operations N/A $94,119 $82,730 $91,262 $96,737 $100,677 4.1% 10.3% 21.7% 7.0% N/A
Education Appropriations $68,176 $99,116 $91,463 $101,104 $109,658 $113,106 3.1% 11.9% 23.7% 14.1% 65.9%
Net Tuition Revenue $18,017 $40,439 $82,020 $89,577 $78,309 $75,331 -3.8% -15.9% -8.2% 86.3% 318.1%
Total Education Revenue $86,194 $139,358 $172,501 $189,681 $187,013 $187,500 0.3% -1.1% 8.7% 34.5% 117.5%
Constant Inflation Adjusted Dollars (per FTE)
FTE Enrollment 6,852,242 8,709,255 11,320,722 11,035,287 10,295,774 10,245,310 -0.5% -7.2% -9.5% 17.6% 49.5%
State Public Financial Aid N/A $577 $771 $891 $1,025 $1,050 2.5% 17.9% 36.2% 82.2% N/A
General Public Operations N/A $10,807 $7,308 $8,270 $9,396 $9,827 4.6% 18.8% 34.5% -9.1% N/A
Education Appropriations $9,949 $11,381 $8,079 $9,162 $10,651 $11,040 3.7% 20.5% 36.6% -3.0% 11.0%
Net Tuition Revenue $2,629 $4,643 $7,245 $8,117 $7,606 $7,353 -3.3% -9.4% 1.5% 58.4% 179.6%
Total Education Revenue $12,579 $16,001 $15,238 $17,189 $18,164 $18,301 0.8% 6.5% 20.1% 14.4% 45.5%
Notes:
  1. Full-time equivalent enrollment converts student credit hours to full-time, academic year students, but excludes medical students.
  2. State public financial aid is the part of education appropriations used for student financial aid at public institutions, excluding loans and aid for students attending medical schools.
  3. General public operations are any state and local support for public higher education institutions and agencies, excluding RAM, financial aid, and non-credit and continuing education. Federal stimulus funding is not included.
  4. Education appropriations are a measure of state and local support available for public higher education operating expenses and student financial aid, excluding appropriations for research, hospitals, and medical education. Education appropriations include federal stimulus funding.
  5. Net tuition revenue is calculated by taking the gross amount of tuition and fees, less state and institutional financial aid, tuition waivers or discounts, and medical student tuition and fees.
  6. Total education revenue is the sum of education appropriations and net tuition, excluding net tuition revenue used for capital debt service. Total education revenue includes federal stimulus funding.
  7. The years 1980 and 2001 are included in this table because they are the starting points of the historical SHEF dataset and modern SHEF data collection, respectively.
  8. The Higher Education Cost Adjustment (HECA) estimates inflation in the costs paid by colleges and universities. HECA adjusts for inflation from the state perspective.
Source(s):
  • State Higher Education Executive Officers Association

2. Sector Trends

Modeled after the previous section, Table 2.1A shows the impacts of inflation and enrollment on sector-level revenue at public institutions beginning in 2019. 

Sector-level education appropriations consist of state public financial aid, state public operating appropriations, and local appropriations. In unadjusted dollars, between 2022 and 2023, total education appropriations increased 5.6% at two-year institutions and 7.9% at four-year institutions. Four-year institutions also receive research, agriculture, and medical (RAM) appropriations, which increased 7.9% from 2022.

In unadjusted dollars, net tuition and fee revenue decreased 2.9% at two-year institutions. Comparatively, unadjusted net tuition and fee revenue increased 0.8% at four-year institutions.

The second section of Table 2.1A shows that from 2022 to 2023, higher education inflation was 4.2%. After adjusting for inflation, all components of state support to two-year institutions increased between 1.0% to 1.6%. At four-year institutions, all components of state support increased 2.2% to 4.4% after adjusting for inflation, with the largest increase in state public operating. 

Net FTE enrollment declined 0.3% at two-year institutions and 0.6% at four-year institutions. After considering changes in net FTE enrollment in the third section of the table, we see that in constant inflation-adjusted dollars per FTE enrollment:

  • State public financial aid per FTE increased by $12 (1.9%) at two-year institutions, and $35 (2.8%) per FTE at four-year institutions.
  • State public operating per FTE increased $83 (1.3%) at two-year institutions and $427 (5.1%) at four-year institutions.
  • Local appropriations per FTE increased $53 (1.6%) at two-year institutions and just under $1 (2.9%) at four-year institutions.
  • Research, agricultural extension, and medical appropriations only available to four-year institutions increased by $84 (4.2%) per FTE.
  • Total state and local support per FTE increased by $167 (1.6%) at two-year institutions and $497 (4.2%) at four-year institutions.
  • Net tuition revenue per FTE declined by $183 (6.6%) at two-year institutions and $285 (2.7%) at four-year institutions.
  • Total education revenue per FTE decreased $16 (0.1%) at two-year institutions, but increased $129 (0.6%) at four-year institutions.

Additional analysis of sector-level trends on these metrics can be found throughout the remainder of the SHEF report.

Table 2.1A

Impact of Inflation and Enrollment on SHEF Metrics by Sector, U.S., FY 2019-2023

Two-Year Four-Year
2019 2022 2023 % Change Since 2022 % Change Since 2019 2019 2022 2023 % Change Since 2022 % Change Since 2019
Current Unadjusted Dollars (Millions)
State Public Financial Aid $2,401 $2,398 $2,538 5.9% 5.7% $6,371 $7,540 $8,029 6.5% 26.0%
State Public Operating $20,189 $23,224 $24,455 5.3% 21.1% $46,241 $51,782 $56,346 8.8% 21.9%
Local Appropriations $11,118 $12,575 $13,272 5.5% 19.4% $126 $123 $131 6.6% 4.0%
RAM $0 $0 $0 N/A N/A $10,894 $12,245 $13,217 7.9% 21.3%
State and Local Support $33,708 $38,405 $40,556 5.6% 20.3% $63,654 $72,787 $78,546 7.9% 23.4%
Education Appropriations $33,708 $38,405 $40,556 5.6% 20.3% $52,738 $60,523 $65,306 7.9% 23.8%
Net Tuition Revenue $11,779 $10,327 $10,025 -2.9% -14.9% $63,602 $65,012 $65,502 0.8% 3.0%
Total Education Revenue $45,393 $48,654 $50,503 3.8% 11.3% $115,531 $124,694 $129,948 4.2% 12.5%
Constant Inflation Adjusted Dollars (Millions)
HECA 0.8723 0.9597 1.0000 4.2% 14.6% 0.8723 0.9597 1.0000 4.2% 14.6%
State Public Financial Aid $2,753 $2,498 $2,538 1.6% -7.8% $7,303 $7,857 $8,029 2.2% 9.9%
State Public Operating $23,143 $24,201 $24,455 1.1% 5.7% $53,009 $53,959 $56,346 4.4% 6.3%
Local Appropriations $12,745 $13,104 $13,272 1.3% 4.1% $144 $128 $131 2.3% -9.3%
RAM $0 $0 $0 N/A N/A $12,488 $12,760 $13,217 3.6% 5.8%
State and Local Support $38,642 $40,020 $40,556 1.3% 5.0% $72,970 $75,847 $78,546 3.6% 7.6%
Education Appropriations $38,642 $40,020 $40,556 1.3% 5.0% $60,456 $63,067 $65,306 3.5% 8.0%
Net Tuition Revenue $13,503 $10,761 $10,025 -6.8% -25.8% $72,911 $67,745 $65,502 -3.3% -10.2%
Total Education Revenue $52,037 $50,700 $50,503 -0.4% -2.9% $132,440 $129,936 $129,948 0.0% -1.9%
Constant Inflation Adjusted Dollars (per FTE)
FTE Enrollment 4,378,860 3,877,177 3,866,780 -0.3% -11.7% 6,593,952 6,418,597 6,378,529 -0.6% -3.3%
State Public Financial Aid $629 $644 $656 1.9% 4.4% $1,108 $1,224 $1,259 2.8% 13.7%
State Public Operating $5,285 $6,242 $6,325 1.3% 19.7% $8,039 $8,407 $8,834 5.1% 9.9%
Local Appropriations $2,911 $3,380 $3,432 1.6% 17.9% $22 $20 $21 2.9% -6.2%
RAM $0 $0 $0 N/A N/A $1,894 $1,988 $2,072 4.2% 9.4%
State and Local Support $8,825 $10,322 $10,488 1.6% 18.9% $11,066 $11,817 $12,314 4.2% 11.3%
Education Appropriations $8,825 $10,322 $10,488 1.6% 18.9% $9,168 $9,826 $10,238 4.2% 11.7%
Net Tuition Revenue $3,084 $2,776 $2,593 -6.6% -15.9% $11,057 $10,555 $10,269 -2.7% -7.1%
Total Education Revenue $11,884 $13,076 $13,061 -0.1% 9.9% $20,085 $20,244 $20,373 0.6% 1.4%
Notes:
  1. State public financial aid is any state appropriated student financial aid for public institutions, excluding loans and aid for students attending medical schools. For many states, it includes aid for both tuition costs and living expenses.
  2. State public operating appropriations are a measure of state support directly allocated to public two- and four-year institutions. State public operating excludes local appropriations, agency funding, RAM, and student financial aid.
  3. Local appropriations are any local government taxes allocated directly to institutions for operating expenses.
  4. RAM refers to the total appropriations intended for the direct operations of research, agriculture, public health care services, and medical schools.
  5. Education appropriations are a measure of state and local support available for public higher education operating expenses and student financial aid, excluding appropriations for research, hospitals, and medical education. Sector-level education appropriations include any portion of federal stimulus funding allocated specifically to each sector but exclude state agency funding.
  6. Net tuition revenue is calculated by taking the gross amount of tuition and fees, less state and institutional financial aid, tuition waivers or discounts, and medical student tuition and fees.
  7. Total education revenue is the sum of education appropriations and net tuition, excluding net tuition revenue used for capital debt service. Sector-level total education revenue includes any portion of federal stimulus funding allocated specifically to each sector.
  8. The year 2019 is included in this table because it is the starting point of the sector-level SHEF dataset.
  9. Sector is determined at the institution level using the Carnegie Basic Classification (https://carnegieclassifications.acenet.edu/). Baccalaureate/Associate's Colleges and "less-than-two-year" degree-granting institutions not assigned a Carnegie classification are considered two-year institutions.
  10. The Higher Education Cost Adjustment (HECA) estimates inflation in the costs paid by colleges and universities. HECA adjusts for inflation from the state perspective.
Source(s):
  • State Higher Education Executive Officers Association

Education Appropriations and Tuition Revenue

The historical data in Figure 2.1 (the wave chart) demonstrate the economic cycle’s impact on public higher education revenue from 1998 to 2023. From this point forward, all dollar figures in the SHEF report are adjusted for inflation and net FTE enrollment.

1. National Trends

The red line in the wave chart shows FTE enrollment over the last 25 years, which has broadly increased over time from 6.85 million in 1980 to 10.2 million in 2023. 11 11The funding levels and trends over time shown in the U.S. wave chart differ substantially by state. VIEW ALL FOOTNOTES Historically, enrollment increased sharply during economic recessions and would level off or decline during economic recoveries. This pattern held during the Great Recession as enrollment increased sharply from 2008 through 2011, and then slowly declined for most of the next decade as state economies recovered. However, the COVID-19 pandemic and ensuing economic recession in 2020 altered the traditional counter-cyclical enrollment trend with the largest year-over-year decline on record (3.3%) in 2021. In 2023, enrollment continued to decline in public institutions, dropping by another 0.5% for a total of 10,245,310 FTE students. This means FTE enrollment in 2023 was down 12.1% from the peak in 2011, and 0.2% below 2008 levels.

The total of the blue and green bars in the wave chart combines the two primary funding sources for public higher education — education appropriations and net tuition. The blue bars show change over time in education appropriations per FTE student. State education appropriations are made up of general operating funds for public institutions, state public financial aid, and state agency funding. The bars make the shape of a wave over time because per-student education appropriations generally fluctuate with the economic cycle. Education appropriations also include federal stimulus funding during the last two economic recessions.

In 1980, states provided, on average, $9,949 per FTE in inflation-adjusted education appropriations to public institutions. From there, funding for higher education changed in response to the economic cycle, declining during economic recessions but overall growing (on a per-FTE basis) during the next two decades. In fiscal year 2000, education appropriations reached a high of $11,492 per FTE. Since that peak, however, education appropriations have declined, down 3.9% ($452 per FTE) in the span of 23 years.

Overall, appropriations have increased for 11 consecutive years. In 2023, inflation-adjusted education appropriations were 6.7%, or $697 per FTE, above 2008 levels. This increase in education appropriations can be attributed to three notable trends: 

  1. Increasing state commitments to higher education funding.
  2. A sharp decline in FTE enrollment.
  3. Federal stimulus funding given to states to protect their revenues and support additional costs due to the COVID-19 pandemic and economic recession.  

The green bars in Figure 2.1 show net tuition and fee revenue per FTE over time. Net tuition and fee revenue measures tuition and fee revenue at public institutions, excluding state and institutional financial aid. Unlike education appropriations, until very recently, net tuition and fee revenue has increased steadily over time, with an average annual net increase of 2.5% above inflation since 1980. These increases are primarily due to increases in tuition and fee rates and an increasing proportion of out-of-state, international, and graduate student enrollment. 

In 2023, public institutions received, on average, $7,353 per FTE in net tuition and fee revenue. After reaching an all-time high in 2018 ($8,117 per FTE), net tuition and fee revenue per FTE has decreased in four of the last five years: 3.2% in 2019, 2.5% in 2021, 0.9% in 2022, and 3.3% in 2023. Notably, 2023 is the largest decline in net tuition and revenue per FTE since the SHEF dataset began in 1980. Recent net tuition and fee revenue declines have been due, at least in part, to flat tuition rates, continued increases in state support and financial aid, and changes in enrollment patterns. Prior to 2019, the only times net tuition and fee revenue per FTE declined were fiscal years 2000 and 2001, two years immediately preceding an economic recession.

Figure 2.1

Public FTE Enrollment, Education Appropriations per FTE, and Net Tuition Revenue per FTE, U.S., FY 1998-2023 (Constant Dollars)


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Notes:
  1. Education appropriations are a measure of state and local support available for public higher education operating expenses and student financial aid, excluding appropriations for research, hospitals, and medical education. Education appropriations include federal stimulus funding.
  2. Net tuition revenue is calculated by taking the gross amount of tuition and fees, less state and institutional financial aid, tuition waivers or discounts, and medical student tuition and fees.
  3. Full-time equivalent enrollment converts student credit hours to full-time, academic year students, but excludes medical students.
  4. Constant 2023 dollars adjusted by the Higher Education Cost Adjustment (HECA).
  5. Adjusted to account for interstate differences using the Enrollment Mix Index (EMI).
  6. Adjusted to account for interstate differences using the Cost of Living Index (COLI). The COLI is not a measure of inflation over time.
Source(s):
  • State Higher Education Executive Officers Association

Economic recessions profoundly impact state funding for higher education. Higher education is viewed as a discretionary item in state budgets and, traditionally, has been disproportionately cut compared to other state budget areas during economic downturns. 12 12Delaney, 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 VIEW ALL FOOTNOTES This trend changed following the brief economic downturn in 2020. Figure 2.2 provides a more detailed look at the impact of economic recessions on state higher education appropriations. 

In Figure 2.2, we begin each recessionary period at zero and track the cumulative percent change over the course of the economic recession and recovery. With each recession until the most recent one in 2020, declines in state support per FTE grew steeper and recoveries became slower and incomplete. However, the trend of education appropriations declining immediately following an economic recession reversed in 2021, after there was no decline following the COVID-19 pandemic-induced short economic recession in 2020. 13 13National 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 VIEW ALL FOOTNOTES In the three years following the brief economic downturn, education appropriations per FTE had a cumulative annual increase of 12.2% (the short straight line in Figure 2.2). This was thanks in large part to federal stimulus funding that helped fill state budget shortfalls from 2020 to 2023, reducing the need to defer funding from higher education to other budget areas. The federal government also provided specific funds to states to use for education, which many states allocated, in part, to higher education. See Measurement Note: Federal Stimulus Funding for more information. 

Without federal stimulus funding states allocated to higher education, funding would have increased 12.7% from 2020. In addition to federal stimulus funds reducing the need for states to defer state dollars from higher education to other budget areas, these sizable increases are in part due to continued FTE enrollment declines which have not followed previous recessions. Still, had FTE enrollment held constant and federal stimulus funding not come through for states, inflation-adjusted education appropriations would have increased 5.8% from 2020.

Figure 2.2

Cumulative Annual Percent Change in Public Education Appropriations per FTE Following Economic Recessions, U.S., FY 1980-2023 (Constant Dollars)


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Notes:
  1. Cumulative annual percent change calculated since the start of each recession (1980, 1990, 2001, 2008, and 2020).
  2. Education appropriations are a measure of state and local support available for public higher education operating expenses and student financial aid, excluding appropriations for research, hospitals, and medical education. Education appropriations include federal stimulus funding.
  3. Full-time equivalent enrollment converts student credit hours to full-time, academic year students, but excludes medical students.
  4. Constant 2023 dollars adjusted by the Higher Education Cost Adjustment (HECA).
Source(s):
  • State Higher Education Executive Officers Association

2. State Comparisons

Education appropriations and net tuition and fee revenue per FTE vary considerably by state. Figure 2.3 provides an expanded view of the Figure 2.1 wave chart for all states in fiscal year 2023. States range widely in their total amount and distribution of revenue derived from education appropriations and net tuition and fees. For example, Nevada had the lowest combined revenue per FTE, but 74.2% came from state funding. Louisiana had a similar total combined revenue, but 55.8% of funding came from education appropriations. At the other end of the spectrum, Illinois and Alabama had among the highest combined revenues. However, in Illinois, 71.7% of the total came from education appropriations, whereas that proportion was 49.1% in Alabama.

Figure 2.3

Education Appropriations and Net Tuition Revenue per FTE by State, FY 2023


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Notes:
  1. Education appropriations are a measure of state and local support available for public higher education operating expenses and student financial aid, excluding appropriations for research, hospitals, and medical education. Education appropriations include federal stimulus funding.
  2. Net tuition revenue is calculated by taking the gross amount of tuition and fees, less state and institutional financial aid, tuition waivers or discounts, and medical student tuition and fees.
  3. The U.S. calculation does not include the District of Columbia.
  4. In fiscal year 2023 FTE enrollment is estimated for Arkansas, Oklahoma, and Pennsylvania; federal stimulus is estimated for Kentucky; net tuition and fee revenue is estimated for Arkansas, Kentucky, Oklahoma, and Pennsylvania.
  5. Each year, approximately one-third of education appropriations in Illinois go toward the state’s retirement pension system. See the Illinois State Spotlight for more details.
  6. Constant 2023 dollars adjusted by the Higher Education Cost Adjustment (HECA).
  7. Adjusted to account for interstate differences using the Enrollment Mix Index (EMI).
  8. Adjusted to account for interstate differences using the Cost of Living Index (COLI). The COLI is not a measure of inflation over time.
Source(s):
  • State Higher Education Executive Officers Association
Table 2.2

Public FTE Enrollment, Education Appropriations per FTE, and Net Tuition Revenue per FTE by State, FY 2023 (Adjusted)

State FTE Enrollment Education Appropriations Net Tuition Revenue Total Education Revenue
Alabama 197,404 $14,549 $15,062 $28,692
Alaska 12,075 $20,160 $5,140 $25,300
Arizona 304,993 $7,103 $9,769 $16,419
Arkansas 103,606 $9,859 $8,036 $16,846
California 1,547,861 $11,801 $2,717 $14,518
Colorado 175,969 $6,603 $12,123 $18,726
Connecticut 89,305 $14,862 $9,067 $23,929
Delaware 36,134 $6,816 $19,338 $25,937
Florida 560,982 $10,029 $2,461 $12,490
Georgia 348,477 $13,911 $5,309 $19,220
Hawaii 31,880 $16,672 $4,846 $21,378
Idaho 54,261 $12,655 $8,912 $21,056
Illinois 278,539 $22,590 $8,896 $31,076
Indiana 238,175 $7,201 $11,768 $18,717
Iowa 115,113 $6,981 $11,319 $18,299
Kansas 118,924 $9,859 $7,344 $17,098
Kentucky 135,356 $10,236 $9,472 $19,441
Louisiana 159,036 $7,628 $6,034 $13,662
Maine 32,293 $9,453 $6,122 $15,575
Maryland 215,977 $11,452 $8,028 $19,480
Massachusetts 139,082 $11,972 $5,636 $17,608
Michigan 324,705 $10,490 $16,644 $27,134
Minnesota 159,023 $9,746 $10,637 $20,355
Mississippi 117,296 $9,159 $8,787 $17,945
Missouri 143,401 $9,688 $8,838 $18,526
Montana 33,811 $7,213 $7,878 $15,091
Nebraska 71,228 $13,046 $7,034 $19,765
Nevada 73,956 $8,590 $2,980 $11,570
New Hampshire 30,009 $3,990 $9,961 $13,951
New Jersey 242,280 $9,635 $7,671 $17,306
New Mexico 73,111 $21,953 $3,395 $25,348
New York 445,675 $14,816 $6,457 $21,272
North Carolina 393,774 $12,961 $5,301 $18,262
North Dakota 32,160 $8,813 $10,326 $19,139
Ohio 349,053 $7,669 $10,404 $18,073
Oklahoma 119,478 $8,500 $9,738 $18,238
Oregon 123,725 $8,412 $9,704 $18,115
Pennsylvania 291,659 $7,327 $11,264 $18,592
Rhode Island 28,491 $6,900 $9,991 $16,891
South Carolina 170,214 $7,728 $11,143 $18,203
South Dakota 30,736 $9,644 $9,745 $18,599
Tennessee 175,744 $15,422 $7,181 $22,316
Texas 1,006,957 $10,335 $7,985 $18,320
Utah 129,100 $10,956 $7,139 $18,094
Vermont 19,290 $5,649 $16,728 $21,705
Virginia 289,778 $9,112 $9,134 $18,152
Washington 201,544 $11,233 $6,690 $17,924
West Virginia 57,662 $7,654 $8,314 $14,788
Wisconsin 195,141 $9,814 $7,922 $17,736
Wyoming 20,867 $18,531 $4,308 $22,801
D.C. 2,894 $25,834 $4,115 $29,949
U.S. 10,245,310 $11,040 $7,353 $18,301
Notes:
  1. Full-time equivalent enrollment converts student credit hours to full-time, academic year students, but excludes medical students.
  2. Education appropriations are a measure of state and local support available for public higher education operating expenses and student financial aid, excluding appropriations for research, hospitals, and medical education. Education appropriations include federal stimulus funding.
  3. Net tuition revenue is calculated by taking the gross amount of tuition and fees, less state and institutional financial aid, tuition waivers or discounts, and medical student tuition and fees.
  4. Total education revenue is the sum of education appropriations and net tuition, excluding net tuition revenue used for capital debt service. Total education revenue includes federal stimulus funding.
  5. The U.S. calculation does not include the District of Columbia.
  6. In fiscal year 2023, FTE enrollment is estimated for Arkansas, Oklahoma, and Pennsylvania; federal stimulus is estimated for Kentucky; net tuition and fee revenue is estimated for Arkansas, Kentucky, Oklahoma, and Pennsylvania.
  7. Each year, approximately one-third of education appropriations in Illinois go toward the state’s retirement pension system. See the Illinois State Spotlight for more details.
  8. Adjustment factors to arrive at constant dollar figures include Cost of Living Index (COLI) and Enrollment Mix Index (EMI). The COLI is not a measure of inflation over time.
Source(s):
  • State Higher Education Executive Officers Association

State Spotlight : Illinois

IL

Education appropriations per FTE in Illinois continue to be an outlier at roughly twice the U.S. average and 46.7% above 2000 levels (the U.S. high point). The significant increase in appropriations over the last decade is driven largely by the state’s efforts to address its historically underfunded state retirement pension system. Another recent contributing factor is a one-time payment of $250 million for the state’s prepaid tuition program that was appropriated in FY 2022 and is being disbursed over a span of years.  

In 2018, 35.7% of all education appropriations in Illinois went to its state retirement pension system. This share grew to 36.8% in 2023. Of the $2.15 billion in pension payments in 2023, 78.1% was used for past unfunded liabilities, not current employees. This means that even after considering additional funding from local governments, over one quarter (28.7%) of all education appropriations in Illinois are now spent on past pension obligations and are not available for use in 2023. This translates to $6,492 per FTE student, more than the entire per-FTE appropriations in New Hampshire and Vermont.

A SHEF Issue Brief on Illinois from the 2018 SHEF report provides more detail on the funding situation in Illinois over time.

3. Sector Comparisons

Public higher education revenues vary considerably across public two-year and four-year institutions. Figure 2.4 shows higher education revenues for public two-year and four-year institutions separately beginning in 2019.

As shown in Figure 2.4, education appropriations at four-year public institutions were slightly above those at two-year public institutions in 2019 ($9,168 per FTE and $8,825 per FTE, respectively). That trend reversed in 2021 and has continued with education appropriations at two-year institutions exceeding those at four-year institutions by $250 per FTE in 2023. 14 14There 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. VIEW ALL FOOTNOTES In large part, the difference in education appropriations per FTE between two- and four-year public institutions is because SHEF data reported here include local appropriations, which primarily support two-year institutions ($3,432 per FTE compared to $21 at four-year institutions), but do not include research, agricultural extension, and medical funding (RAM), of which an additional $2,072 per FTE was exclusively appropriated to four-year institutions in 2023. In addition, SHEF metrics use FTE enrollment rather than student headcount, and two-year institutions have a far greater proportion of part-time students. 15 15According to the National Center for Education Statistics, in fall 2022, an estimated 37% of two-year students (at both public and private institutions) attended full time, compared to 73% at four-year institutions. Source: Table 303.70, nces.ed.gov/programs/digest/d22/tables/dt22_303.70.asp. VIEW ALL FOOTNOTES

Education appropriations per FTE throughout the report include federal stimulus funding. In 2023, two-year institutions received $75 per FTE in federal stimulus for public operating, and four-year institutions received $125 per FTE.

Unlike education appropriations, net tuition and fee revenue is very different at two- and four-year institutions. On average, two-year institutions received $2,593 in net tuition revenue per FTE, or 25.2% of the average net tuition revenue per FTE at four-year institutions ($10,269). As a result, public four-year institutions have, on average, much higher total revenues with which to educate students than two-year institutions.

Figure 2.4

Public Education Appropriations and Net Tuition Revenue per FTE by Sector, U.S., FY 2019-2023 (Constant Dollars)


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Notes:
  1. Education appropriations are a measure of state and local support available for public higher education operating expenses and student financial aid, excluding appropriations for research, hospitals, and medical education. Sector-level education appropriations include any portion of federal stimulus funding allocated specifically to each sector, but exclude state agency funding.
  2. Net tuition revenue is calculated by taking the gross amount of tuition and fees, less state and institutional financial aid, tuition waivers or discounts, and medical student tuition and fees.
  3. Full-time equivalent enrollment converts student credit hours to full-time, academic year students, but excludes medical students.
  4. Sector is determined at the institution level using the Carnegie Basic Classification (https://carnegieclassifications.acenet.edu/). Baccalaureate/Associate's Colleges and "less-than-two-year" degree-granting institutions not assigned a Carnegie classification are considered two-year institutions.
  5. Constant 2023 dollars adjusted by the Higher Education Cost Adjustment (HECA).
  6. Adjusted to account for interstate differences using the Cost of Living Index (COLI). The COLI is not a measure of inflation over time.
Source(s):
  • State Higher Education Executive Officers Association

Education appropriations shown in the above sections include funding for institutions (general public operations) as well as funding for student financial aid. The following section explores the proportion of education appropriations allocated to student financial aid.

Financial Aid Share

States allocate financial aid to students attending both public (80.2%) and private (19.3%) institutions. A small portion of financial aid (0.3%) is allocated to students attending out-of-state institutions. SHEF focuses specifically on state funding for public institutions, and financial aid to independent and out-of-state institutions is excluded from education appropriations. 16 16Trends 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 (shef.sheeo.org/wp-content/uploads/2020/04/SHEEO_SHEF_FY19_IB_Financial_Aid.pdf) on state financial aid explores trends over time in state financial aid to public and private institutions by state. VIEW ALL FOOTNOTES This section examines inflation-adjusted state financial aid for students attending public, in-state institutions.

Figure 2.5 shows the change in state financial aid for students at public institutions over time. Unlike the rest of education appropriations, state public financial aid has increased consistently over time.

  • State financial aid to public institutions has increased 82.2%, from $577 in 2001 (when these data were first collected) to $1,050 in 2023. 
  • Following the short recession in 2020, public aid as a portion of all education appropriations peaked at 10.2% in 2021, double that of 2001. Since, public aid as a portion of all education appropriations has decreased for two consecutive years, down to 9.5% in 2023. 17 17For 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/wp-content/uploads/2023/04/COVID19-Tuition-and-Fee-Survey.pdf. VIEW ALL FOOTNOTES
Figure 2.5

Public Higher Education State Financial Aid per FTE and as a Percentage of Education Appropriations, U.S., FY 2001-2023(Constant Dollars)


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Notes:
  1. State public financial aid is any state appropriated student financial aid for public institutions, excluding loans and aid for students attending medical schools. For many states, includes aid both for tuition costs and living expenses.
  2. Financial aid data are not available prior to 2001. Over time, states have shifted from reporting appropriated student financial aid to reporting actual/awarded student financial aid (see measurement note). Any such updates are made to all historical data for each state.
  3. Education appropriations are a measure of state and local support available for public higher education operating expenses and student financial aid, excluding appropriations for research, hospitals, and medical education. Education appropriations include federal stimulus funding.
  4. Constant 2023 dollars adjusted by the Higher Education Cost Adjustment (HECA).
  5. Adjusted to account for interstate differences using the Enrollment Mix Index (EMI).
  6. Adjusted to account for interstate differences using the Cost of Living Index (COLI). The COLI is not a measure of inflation over time.
Source(s):
  • State Higher Education Executive Officers Association

Despite increasing state allocations to student financial aid over the last several decades, student contributions to higher education revenues have increased over time. However, in recent years, growth in education appropriations and occasional declines in net tuition revenues have resulted in small decreases in institutional reliance on student tuition dollars. In the next section, we examine the student contribution to higher education, or the student share.

Student Share

Figure 2.6 provides a comprehensive look at the reliance on net tuition and fees as a revenue source for public institutions — also known as the student share. The student share shows the proportion of total education revenue that comes from net tuition and fees. Net tuition and fee revenue excludes state and institutional financial aid but does not exclude federal financial aid or loans.

There has been a substantial shift of responsibility for financing public higher education toward net tuition and fee revenue (from 20.9% to 40.2%) since 1980. Historically, student share has increased most rapidly during periods of economic recession, shifting more of higher education costs to students and families. The student share grew rapidly during the Great Recession, increasing from 35.8% in 2008 to an all-time high of 47.5% in 2013. During this time, students and their families turned to federal aid to cushion their growing share of higher education costs. 

When the economy stabilizes, the student share also stabilizes and, as in recent years, decreases. Since the 2013 high point, the student share has decreased in eight of the last 10 years, totaling a decline of 7.3 percentage points to 40.2% in 2023. The student share declined 4.6 percentage points since 2020, with the largest and second largest decreases ever observed in the SHEF dataset having occurred in 2021 (1.8 percentage points) and 2023 (1.7 percentage points). Decreases in student share occur when growth in education appropriations outpaces growth in net tuition revenue. Recent decreases in student share were due to declines in FTE enrollment and net tuition revenue, as well as continued federal stimulus funding given to states. This downward trend in the student share may change in upcoming years as federal stimulus funding is depleted and FTE enrollment levels out. 

There are regional differences in the student share, but the overall trend of sharp increases during past economic recessions holds across each region. Since the student share high point in 2013 (47.5%), the student share declined in each region: 9.1 percentage points in the West, 8.9 in the Northeast, 5.7 in the South, and 4.0 in the Midwest. Historically and today, the student share is highest in the Midwest and Northeast, while the South tracks closely to the U.S. average, and the West has the lowest regional student share (Figure 2.6).

Figure 2.6

Net Tuition as a Percentage of Total Education Revenue, U.S., FY 1980-2023


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Notes:
  1. The student share is a measure of the proportion of total education revenue at public institutions coming from net tuition revenue. Net tuition revenue used for capital debt service is included in net tuition revenue, but excluded from total education revenue in calculating the above figures. Total education revenue includes federal stimulus funding.
  2. Regional averages are based on the U.S. Census designation.
Source(s):
  • State Higher Education Executive Officers Association

Throughout the rest of the SHEF report, we more closely examine current and long-term U.S., state, and sector-level trends in each individual component of state funding, enrollment, net tuition, and total revenue.

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