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 $120.7 billion in fiscal year 2022. All but 11 states used some portion of federal stimulus funding provided to state governments for higher education. 1 1Federal stimulus funding is included in education appropriations and total education revenue throughout this report. VIEW ALL FOOTNOTES Federal stimulus funding allocated by states to higher education totaled $2.5 billion in 2022, down 33.1% before inflation from last year and comprising 2.1% of total support. States contributed $108.1 billion (a 7.8% increase), and local governments in 32 states contributed $12.6 billion to higher education (a 5.3% increase).

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Full-Time Equivalent (FTE) Enrollment i i Net full-time equivalent (FTE) enrollment Full-time equivalent (FTE) enrollment converts student credit hours to full-time academic year students. FTE excludes medical students. VIEW ALL DATA DEFINITIONS

There were 10.3 million FTE enrolled students in 2022. Net FTE enrollment declined 2.5% in 2022, a loss of 266,338 FTE students, the second largest FTE decline on record after last year. 2022 marks the 11th straight year of enrollment declines following substantial enrollment increases during the Great Recession. Altogether, FTE enrollment has declined 11.6% from its peak in 2011, and remains just 0.4% above 2008 levels.

Enrollment declined in 41 states between 2021 and 2022. The largest enrollment declines, all above 6%, were in Alaska, Delaware, Missouri, and New York.

The recent enrollment decline is concentrated at two-year public institutions, which reported a net FTE enrollment decline of 9.8% from 2020 to 2022, reaching 3.88 million FTE, compared to only 2.9% at four-year institutions, reaching 6.43 million FTE. Two-year enrollment took a larger hit than four-year enrollment in 42 states.

Education Appropriations per FTE i i Education appropriations Education appropriations measure state and local support available for public higher education operating expenses and exclude research, hospitals, and medical education. State-level and sector-level education appropriations include federal stimulus funding. Sector-level education appropriations do not include agency funding. VIEW ALL DATA DEFINITIONS

In 2022, education appropriations increased 4.9% beyond inflation to $10,237. For the first time since the Great Recession, inflation-adjusted education appropriations per FTE were greater than pre-recession funding levels in 2008, by 3.1% or $304 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. 2 2Federal stimulus funding contributed to the increase in two ways. First, federal funds that protected state revenues and covered additional costs due to the COVID-19 pandemic and economic recession reduced the need to redirect funds from higher education to other budget areas during the pandemic. Second, federal funds given to states and used for higher education operations boosted operating education appropriations. VIEW ALL FOOTNOTES

Federal stimulus funding comprised 2.1% of total support ($241 per FTE) in 2022. Two-year institutions received $55 per FTE in federal stimulus for public operating in 2022, and four-year institutions received $169 per FTE in federal stimulus for public operating. Without federal stimulus funding directed by states to higher education and without the decline in FTE enrollment, inflation-adjusted education appropriations would have increased 3.6% from 2021 and 2.9% from 2020. Although national-level education appropriations have recovered to 2008 levels, the majority of states continue funding higher education at a lower level than prior to the Great Recession. Twenty-eight states have not yet recovered from the 2008 Great Recession.

In the last year, education appropriations increased 3.8% at two-year institutions, reaching $10,141 per FTE. At four-year institutions, education appropriations per FTE increased 4.0%, reaching $9,596. i i Sector-level education appropriations Education appropriations measure state and local support available for public higher education operating expenses and student financial aid, excluding research, hospitals, and medical education. Sector-level education appropriations includes any portion of federal stimulus funding allocated specifically to each sector and does not include agency funding. VIEW ALL DATA DEFINITIONS Total state and local support for public institutions, which includes research and medical funding for four-year institutions, was $10,141 at two-year institutions, 88.5% of the amount at four-year institutions ($11,464). i i Sector-level state and local support Sector-level state and local support is the sum of state and local operating appropriations, state financial aid, and state research, agricultural, or medical appropriations at public two- and four-year institutions. Sector-level state and local support includes any portion of federal stimulus funding allocated specifically to each sector and does not include agency funding. VIEW ALL DATA DEFINITIONS

State Public Financial Aid per FTE i i State public financial aid State public financial aid is any state appropriated student financial aid for public institutions, excluding loans and aid for students attending medical schools. VIEW ALL DATA DEFINITIONS

State public financial aid per FTE increased 2.0% from 2021 to 2022 and reached an all-time high of $990 per FTE enrolled student. These funds made up 9.7% of all education appropriations.

Financial aid per FTE increased in 29 states and Washington D.C., in the last year. In 2022, two states awarded less than $100 per FTE in state financial aid (Arizona and Montana); another four states awarded over $2,000 per FTE (Georgia, Louisiana, South Carolina, and Tennessee).

State financial aid awards averaged $562 at two-year institutions, an increase of 10.6% over 2021. At four-year institutions, state financial aid decreased 0.9%, reaching $1,216 (still 2.2 times the per-FTE allocation in the two-year sector). The majority of states (33) awarded more financial aid per FTE to students attending four-year institutions.

Net Tuition and Fee Revenue per FTE i i Net tuition and fee revenue Net tuition and fee revenue is the total amount of tuition and fees, minus state and institutional financial aid and medical tuition and fees. Net tuition is affected by changes in tuition rates as well as proportional differences in out-of-state, international, and graduate student enrollment. VIEW ALL DATA DEFINITIONS

Inflation-adjusted net tuition and fee revenue has increased substantially over time. Since 1980, tuition revenue per FTE at public institutions has increased 186.4%. Recently, this trend has shifted, and tuition and fee revenue has declined for three of the last four years. Public institutions received $7,244 in net tuition revenue in 2022, down 1.0% from 2021 and down 5.8% over the last five years. 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 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 revenue was less than $3,000 per FTE in California, Florida, and Nevada. On the high end, net tuition revenue was over $15,000 in Delaware, Michigan, and Vermont.

Net tuition revenue per FTE declined in 27 states and Washington, D.C., between 2021 and 2022. Despite these recent declines, since 1980, net tuition revenue per FTE has increased in every state and has increased by more than 100% in 44 states. Net tuition revenue at two-year institutions averaged $2,577 per FTE in 2022, down 7.4% from 2021. At four-year institutions, tuition revenue averaged $10,090 per FTE, down 0.2% in the last year, but still 3.9 times the average tuition in the two-year sector.

Total Education Revenue per FTE i i Total education revenue The sum of education appropriations and net tuition revenue, excluding any tuition revenue used for capital and debt service. Total education revenue includes federal stimulus funding at the state level but not the sector level. It measures the amount of revenue available to public institutions to support instruction (excluding medical students). VIEW ALL DATA DEFINITIONS

Total education revenue increased 2.4% from 2021 to 2022, reaching an all-time high of $17,393 per FTE. Record high total revenue does not indicate that all public institutions have more revenue than ever before. Following declines in state funding after the last two recessions, institutions varied widely in their ability to increase tuition revenue. Total education revenue is at an all-time high in only 11 states, and many institutions are not at an all-time high for total education revenue. This is particularly true for institutions most reliant on state funding and those with a limited ability to raise tuition rates and attract out-of-state students.

The increase in total education revenue since the start of the COVID-19 pandemic is explained by federal stimulus funding and the enrollment decline. Excluding federal stimulus funding, and if enrollment had held constant at 2020 levels, total education revenue per FTE would have declined 2.4% from 2020 to 2022.

As with other measures, total revenue varied widely by state. Total education revenue per FTE ranged from less than $11,000 per FTE in Nevada to over $25,000 in Connecticut, Delaware, Illinois, Michigan, and Washington, D.C. 

Two-year institutions had, on average, much less total revenue than four-year institutions. At two-year public institutions, total education revenue averaged $12,697 per FTE this year, up 1.3% from 2021. Total education revenue at four-year institutions averaged $19,556 in 2022, a 1.8% increase from 2021. Thanks to collecting much higher tuition revenues, four-year institutions had 1.54 times the amount of total revenue per FTE of two-year institutions.

Student Share i i Student share The student share is a measure of the proportion of total education revenues at public institutions coming from net tuition revenue. VIEW ALL DATA DEFINITIONS

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%. By 2001, the student share had already increased to 28.9%. In 2022, the U.S. average student share was 41.7%. This means that, on average, 41.7% of revenues at public institutions came from student tuition and fees. Excluding federal stimulus funding, the student share in 2022 was 42.2%. 

There is wide variation in the student share across states. In 2022, 23 states had a student share above 50%. From 2021 to 2022, student share decreased in 32 states and Washington, D.C. 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 dramatically different SHEF metric when comparing two- and four-year public institutions. At two-year institutions, the fiscal year 2022 student share was less than a quarter (20.3%); it was over half (51.6%) at four-year institutions.

Implications

Fiscal year 2022 defied long-standing trends in higher education finance in the second 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 10th straight year that state and local education appropriations increased, and the first 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 than in 2021, he increase in education appropriations can still partially be attributed to continued federal stimulus and relief funding coupled with the enrollment decline. Federal stimulus and relief funds have been helpful over the past three years, 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 will run out in the coming years. 

The COVID-19 pandemic altered the usual counter-cyclical enrollment trend where enrollment increases during and in the years immediately following economic recessions. Fiscal year 2022 marked the second largest single-year decline in public higher education enrollment on record (last year was the largest). Additionally, for three of the last four years, net tuition and fee revenue did not increase enough to keep up with inflation. The decline in net tuition revenue from 2021 to 2022 could be due to low growth in tuition rates, an increase in state financial aid, and a change in the proportion of students paying out-of-state and otherwise more expensive tuition rates. This continued decline in tuition revenue puts greater pressure on states not to cut funding to public higher education in the coming years. However, when federal stimulus funds run out, states will face difficult budgetary decisions, and higher education may face cuts in some states. 

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 higher education. 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. The student share decreased from 2021 to 2022, and for the first time since 2016, the student tuition and fees funding public higher education comprised less than 50% of total revenues in more than half of all states and Washington, D.C., even after excluding federal stimulus funding. As states are faced with fewer federal stimulus dollars amidst increasing concerns about student affordability and student loan debt, states must make conscious efforts to continue decreasing the portion of public higher education funded by students and families.

The trends detailed in the SHEF report reflect national and state averages, but there are almost always outliers in every trend. Even within states, there can be wide variation in the enrollment and revenue patterns at each institution. Since the start of the COVID-19 pandemic, largely due to declines in revenue from student tuition, eighteen states and Washington, D.C., experienced a decrease in total education revenues; and all states face the inevitable end to COVID-19 federal stimulus funding in the near future. As states explore new or different ways to address college affordability, educational quality, and inequality in educational attainment, long-term, sustained investments are needed. 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.

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 2022. Although state higher education expenditures as a share of general fund spending have remained constant since fiscal year 2019, spending on state higher education as a share of total state expenditures has declined by 1.3 percentage points since that time. 3 3 National Association of State Budget Officers. (2022). State expenditure report: Fiscal years 2020-2022. nasbo.org/reports-data/state-expenditure-report VIEW ALL FOOTNOTES 4 4Unlike 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. 5 5Delaney, J., & Doyle, W. (2011). State spending on higher education: Testing the balance wheel over time. Journal of Education Finance, 36(4). jstor.org/stable/23018116 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 (2007-2022). 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 $120.7 billion in fiscal year 2022, with more than $2.5 billion in federal stimulus funding. Federal stimulus funding in 2022 comprised 2.1% of total support, a decline of $1.2 billion, down 33.1% from fiscal year 2021. 6 6Federal stimulus funding is provided to state governments to stabilize state and local sources of revenue for higher education. It includes funds from the American Recovery and Reinvestment Act (ARRA) during the Great Recession, the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act, the 2020 Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, and the 2021 American Rescue Plan (ARP) during the COVID-19 pandemic. Federal stimulus must be state allocated and excludes aid provided directly to institutions such as the Higher Education Emergency Relief Fund (HEERF). VIEW ALL FOOTNOTES States contributed $108.1 billion, and local governments in 32 states contributed $12.6 billion, representing increases of 7.8% and 5.3%, respectively. The largest funding source was state tax appropriations, i i Tax appropriations Appropriations from state government taxes for public and private higher education institution and agency annual operating expenses, excluding capital outlay (for new construction or debt retirement) and revenue from auxiliary enterprises. VIEW ALL DATA DEFINITIONS which accounted for $99.5 billion or 82.4% of total funding, as shown in Figure 1.1. Non-tax support (mostly from state lotteries) i i Non-tax support 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. VIEW ALL DATA DEFINITIONS increased 5.8% and totaled just under $4.9 billion. Non-appropriated support, state-funded endowments, and other sources of state funding contributed nearly an additional $1.5 billion, a decline of 11.3% from 2021. 7 7This decrease was entirely due to a decline in endowment funds. In 2021, endowment funds increased by 75.4% over 2020, due entirely to a sizable increase in Texas. Despite a decrease in endowment returns since 2021, endowment funds remain 37.3% above 2020 levels. VIEW ALL FOOTNOTES

Table 1.1

Sources of State and Local Higher Education Funding in the U.S., FY 2007-2022 (Unadjusted Dollars, In Millions)

Source 2007 2012 2017 2020 2021 2022 2022 % Distribution
Federal Stimulus $0 $117 $0 $1,457 $3,752 $2,509 2.1%
Tax Appropriations $72,350 $68,870 $81,754 $89,871 $90,862 $99,493 82.4%
Non-Tax Support $2,321 $3,028 $3,460 $4,317 $4,586 $4,854 4.0%
Non-Appropriated Support $93 $99 $123 $166 $127 $130 0.1%
State-Funded Endowment Earnings $318 $471 $562 $659 $1,157 $905 0.7%
Other $206 $268 $268 $359 $350 $413 0.3%
Funds Not Available for Use $38 $107 $158 $204 $551 $198 0.2%
Total State Support $75,251 $72,747 $86,009 $96,626 $100,282 $108,107 89.5%
Local Tax Appropriations $7,413 $8,931 $10,286 $11,659 $11,998 $12,630 10.5%
Total State and Local Support $82,664 $81,677 $96,295 $108,284 $112,280 $120,737 100.0%
Total State and Local Support (No Stimulus) $82,664 $81,560 $96,295 $106,828 $108,528 $118,228 97.9%
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 2007-2022


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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 less than 1% 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. In 2022, three states (Alabama, Massachusetts, and Washington), relied on tax appropriations as their only major source of state and local funding for higher education. Comparatively, no states relied solely on tax appropriations as their major source of state and local funding in fiscal year 2021 due in large part to federal stimulus funding allocated by states to higher education. Additionally, the number of states relying on state tax appropriations for at least 75% of their funding in 2022 increased by one from 2021, rising from 40 to 41.

As shown in Table 1.2, all states had the majority of higher education funding come from state tax appropriations in 2022. Arizona, Kansas, Michigan, New Mexico, and Texas were the only other states that relied on local appropriations i i Local support The sum of all tax appropriations from any government entity below the state level to public institutions for operating expenses. Excludes any grants from local nonprofit organizations such as chambers of commerce, charitable foundations, and other entities. VIEW ALL DATA DEFINITIONS for at least 20% of higher education funding. Figure 1.2 shows that Arizona is the only state in which nearly half (45.2%) of higher education funding came from local appropriations. 8 8This is the first year since 2015 that Arizona’s local appropriations were not the top source for higher education funding. For more information, see the state spotlight on Arizona on page 15 of the FY 2020 SHEF report. State Higher Education Executive Officers Association. (2021). State higher education finance: FY 2020. shef.sheeo.org/wp-content/uploads/2021/05/SHEEO_SHEF_FY20_Report.pdf  VIEW ALL FOOTNOTES Eighteen states and Washington, D.C., received no local tax appropriations for higher education. 9 9In 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 2022 (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 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% $1,989,124
Alaska 99.1% 0.0% 0.1% 0.3% 0.0% 0.7% $301,400
Arizona 46.5% 0.2% 0.0% 45.2% 8.0% 0.0% $2,121,373
Arkansas 86.7% 10.0% 0.0% 3.1% 0.2% 0.0% $1,119,860
California 82.1% 2.3% 0.0% 14.6% 0.0% 1.1% $23,705,073
Colorado 80.8% 2.7% 0.0% 9.4% 0.0% 7.1% $1,461,705
Connecticut 92.3% 0.0% 0.0% 0.0% 0.0% 7.7% $1,683,602
Delaware 87.6% 0.0% 0.0% 0.0% 0.0% 12.4% $303,191
Florida 74.7% 23.6% 0.0% 0.7% 0.7% 0.4% $5,894,825
Georgia 66.5% 17.2% 0.0% 0.0% 0.8% 15.5% $4,825,901
Hawaii 94.8% 1.2% 0.3% 0.0% 0.0% 4.3% $801,045
Idaho 88.5% 0.0% 0.0% 6.2% 3.3% 2.0% $601,166
Illinois 84.7% 0.0% 0.0% 14.6% 0.0% 0.7% $6,305,467
Indiana 97.8% 0.4% 0.0% 0.0% 0.0% 1.8% $1,918,679
Iowa 94.9% 0.0% 0.0% 4.4% 0.0% 0.7% $911,147
Kansas 73.7% 1.0% 0.0% 25.3% 0.0% 0.0% $1,224,436
Kentucky 74.7% 22.5% 0.0% 2.2% 0.3% 0.3% $1,300,507
Louisiana 97.2% 0.0% 0.0% 0.0% 1.6% 1.2% $1,375,896
Maine 94.8% 2.2% 0.0% 0.0% 0.5% 2.6% $342,783
Maryland 83.1% 0.3% 0.0% 16.5% 0.0% 0.0% $2,814,201
Massachusetts 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% $1,897,268
Michigan 79.9% 0.0% 0.0% 20.1% 0.0% 0.0% $3,087,732
Minnesota 97.7% 0.0% 0.0% 0.0% 0.3% 2.0% $1,792,858
Mississippi 92.7% 0.2% 0.0% 6.2% 0.1% 0.8% $1,057,095
Missouri 75.1% 10.0% 2.5% 14.7% 0.6% 2.1% $1,334,234
Montana 94.9% 0.0% 0.0% 3.5% 1.5% 0.0% $278,564
Nebraska 76.6% 3.1% 0.0% 18.5% 0.0% 1.8% $1,055,748
Nevada 81.9% 13.5% 0.0% 0.1% 0.0% 4.5% $774,217
New Hampshire 97.0% 0.0% 0.0% 0.0% 0.0% 3.0% $154,404
New Jersey 87.5% 4.6% 0.0% 7.9% 0.0% 0.0% $2,863,302
New Mexico 72.3% 5.8% 0.0% 20.1% 1.8% 0.0% $1,232,483
New York 84.6% 0.0% 0.0% 15.4% 0.0% 0.0% $7,065,204
North Carolina 92.9% 0.2% 0.2% 5.7% 0.3% 1.0% $5,196,960
North Dakota 99.9% 0.0% 0.0% 0.0% 0.0% 0.1% $391,868
Ohio 90.9% 0.0% 0.0% 8.1% 0.0% 0.9% $2,664,320
Oklahoma 79.1% 3.1% 0.0% 5.6% 12.3% 0.0% $989,811
Oregon 83.0% 0.6% 0.0% 15.8% 0.0% 0.6% $1,329,526
Pennsylvania 88.4% 0.0% 0.0% 6.9% 0.0% 4.7% $2,082,953
Rhode Island 99.8% 0.0% 0.0% 0.0% 0.0% 0.2% $222,291
South Carolina 61.3% 34.4% 3.3% 6.1% 0.0% 1.5% $1,450,188
South Dakota 97.7% 1.5% 0.0% 0.0% 0.8% 0.0% $269,197
Tennessee 80.0% 20.4% 4.5% 0.0% 4.2% 0.0% $2,296,689
Texas 66.1% 0.6% 0.0% 20.9% 8.1% 4.4% $10,574,337
Utah 98.3% 0.6% 0.0% 0.0% 0.0% 1.1% $1,351,621
Vermont 64.5% 0.0% 0.0% 0.0% 0.6% 34.8% $170,138
Virginia 95.4% 0.0% 0.0% 0.6% 0.0% 4.0% $2,774,123
Washington 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% $2,413,443
West Virginia 87.7% 6.8% 0.0% 0.0% 0.0% 5.6% $562,358
Wisconsin 85.5% 0.0% 0.0% 12.5% 0.0% 2.0% $2,014,152
Wyoming 83.3% 0.0% 0.0% 10.9% 5.2% 0.6% $388,554
D.C. 73.5% 0.0% 0.0% 0.0% 23.4% 3.1% $136,014
U.S. 82.4% 4.0% 0.2% 10.5% 1.2% 2.1% $120,737,020
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 2022 local appropriations are estimated for Illinois and Texas.
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 2022


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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. Fiscal year 2022 two-year local appropriations are estimates for Illinois and Texas.
  4. Tax appropriations are any appropriations from state government taxes to institutions for operations and other higher education activities.
  5. 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.
  6. 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 southern states with financial aid programs funded from lottery dollars were also less reliant on tax appropriations. Florida, Kentucky, South Carolina, and Tennessee relied on non-tax support for at least 20% of higher education funding. Meanwhile, 23 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 nine states and Washington, D.C. In Arizona, Oklahoma, Texas, Washington, D.C., and Wyoming, these revenue sources made up more than 5% of higher education support.

In 2022, federal stimulus funding provided to state governments was used for higher education in 39 states and Washington, D.C. Of these states, stimulus funds comprised less than 5% of total state and local support in 33 states and Washington, D.C. Vermont is the only state that relied on federal stimulus funding for more than 20% of higher education funding in 2022. 10 10Five states (Colorado, Minnesota, New Hampshire, Vermont, and Wyoming) and Washington, D.C., relied on federal stimulus funds for more than 20% of education appropriations in fiscal year 2021. VIEW ALL FOOTNOTES

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 24 states. In five states (Arizona, Kansas, Nebraska, New Mexico, and Texas), the proportion of total higher education funding derived from local appropriations has increased by at least 5 percentage points since 2007.

  • Similarly, 17 states had increases in non-tax appropriations from 2007 to 2022. In four southern states (Arkansas, Florida, Kentucky, and South Carolina), all with sizable lottery-funded student financial aid programs, 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 (2007-2022). 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 i i General public operations The portion of state and local support appropriated directly to public institutions for the purposes of general operations. VIEW ALL DATA DEFINITIONS at public institutions increased 9.4% in 2022 to $92.8 billion, representing 78.5% 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 i i Agency funding Agency funding is the operating funds allocated to state-funded, state-level coordinating and governing bodies excluding any pass-through funding to campuses or other entities. VIEW ALL DATA DEFINITIONS is the allocation of operating funds to state-funded, state-level coordinating and governing bodies. 11 11These funds have always been included in general public operations but were not available as a breakout until 2019. VIEW ALL FOOTNOTES In 2022, states provided $1.6 billion in agency funding (1.7% 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). i i Total RAM RAM is the portion of total state and local appropriations allocated for the direct operations of research, agriculture, public health care services, and medical schools. VIEW ALL DATA DEFINITIONS RAM funds have increased 10.5% since 2021 to $12.0 billion—comprising 10.1% of total state and local support.
  • State-funded student financial aid, i i Total state financial aid Total student financial aid is the sum of any state appropriated student financial aid for public, independent, and out-of-state institutions, excluding loans. Federal stimulus funds used for financial aid are not included. VIEW ALL DATA DEFINITIONS which increased 4.2% to $12.8 billion—10.8% of total support—from 2021 to 2022. In 2022, 80.0% of total student aid was allocated to students attending public institutions.
  • Operating support for independent (private) institutions, i i Independent (private) operating Sums of state support allocated to independent (private) institutions for operating expenses. VIEW ALL DATA DEFINITIONS which increased 17.8% to $297.0 million, and support for non-credit and continuing education, i i Non-credit State funding for students in continuing or adult education courses (non-credit) and non-credit extension courses which are not part of a regular program leading to a degree or certificate. VIEW ALL DATA DEFINITIONS which decreased 2.0% to $367.2 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 2007-2022 (Unadjusted Dollars, In Millions)

Use 2007 2012 2017 2020 2021 2022 2022 % Distribution
General Public Operations $64,906 $62,502 $76,150 $83,600 $84,818 $92,824 78.5%
Agency Funding N/A N/A N/A $1,183 $1,219 $1,554 1.3%
Research - Agriculture - Medical (RAM) $9,829 $9,589 $10,082 $11,114 $10,842 $11,984 10.1%
State Public Financial Aid $4,910 $6,584 $7,206 $9,122 $9,767 $10,205 8.6%
Out-of-State Financial Aid $38 $42 $37 $38 $39 $40 0.0%
Independent Student Aid $2,399 $2,341 $2,213 $2,329 $2,403 $2,486 2.1%
Independent Operating Support $291 $183 $217 $228 $252 $297 0.3%
Non-Credit and Continuing Education $290 $320 $383 $376 $375 $367 0.3%
Total Student Financial Aid $7,347 $8,966 $9,464 $11,509 $12,241 $12,756 10.8%
Total Independent Support $2,690 $2,524 $2,430 $2,557 $2,655 $2,783 2.4%
Total State and Local Support (No Stimulus) $82,664 $81,560 $96,295 $106,828 $108,528 $118,228 100.0%
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, i i State public financial aid State public financial aid is any state appropriated student financial aid for public institutions, excluding loans and aid for students attending medical schools. VIEW ALL DATA DEFINITIONS Excluding stimulus funding, the proportion of state and local funding allocated to financial aid increased from 5.9% in 2007 to 8.6% in 2022 (2.7 percentage points), signifying a shift in the way states have chosen to invest in public higher education. Meanwhile, the portion allocated to general public operating decreased by 0.01 percentage point over the last 15 years. However, financial aid to students attending independent or out-of-state institutions declined by just under one percentage point (0.8) 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 2007-2022


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Notes:
  1. 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.
  2. 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.
  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 2022. Twenty-one states allocated at least 80% of funding to public institutions’ general operations budgets, with Rhode Island (92.9%) and Michigan (91.9%) allocating at least 90%. On the low end, four states (Louisiana, South Carolina, Tennessee, and West Virginia) allocated less than 60%. Overall, the proportion of funding allocated to general public operations decreased in a total of 36 states since 2007.

Forty-six states reported agency funding in fiscal year 2022. Agency allocations ranged from 0.02% of all support in Montana to 14.3% in Idaho, and accounted for less than 1% of all support in 27 of those states. Four states (Alaska, Maine, Michigan, and Vermont) and Washington, D.C., reported no agency funding. 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) 12 12Rhode 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 31 states and Washington, D.C., allocated at least 10% of funding to these areas in 2022, with Mississippi and West Virginia allocating more than 25% of total funding to RAM.

Figure 1.4

Percentage of State and Local Higher Education Funding Used for Research - Agriculture - Medical (RAM) by State, FY 2022


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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 0.6% in Montana to 32.7% in South Carolina. Arizona, Hawaii, and Montana were the only states that allocated less than 2% of funding to student financial aid. Of those states, Montana had the fourth lowest in-state, four-year tuition and fee rate while Arizona and Hawaii were above the national average in 2022. 13 13Ma, Jennifer and Matea Pender. (2022). Trends in college pricing and student aid 2022. College Board. research.collegeboard.org/media/pdf/trends-in-college-pricing-student-aid-2022.pdf VIEW ALL FOOTNOTES Five states (Georgia, Kentucky, Louisiana, South Carolina, and Tennessee) allocated at least 20% of state and local funding to financial aid. From 2007 to 2022, 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 (private) institutions is generally one of the smallest allocations of state and local funding. While 46 states provided funding to independent institutions, only five states (Iowa, Kentucky, New Jersey, Pennsylvania, and South Carolina) gave more than 5% of funding to these institutions in 2022. In most states, funding for independent institutions was predominantly allocated to student financial aid rather than institutional operating appropriations. Of the 46 states, 12 allocated some portion of funding to support independent (private) operating. Only two states, Alabama (66.8%) and Maryland (82.6%), 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 2022 (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 75.5% 0.9% 19.6% 3.2% 1.4% $1,989,124
Alaska 87.2% 0.0% 6.7% 5.8% 0.4% $299,300
Arizona 87.0% 0.1% 11.9% 1.1% 0.0% $2,121,373
Arkansas 68.2% 0.3% 20.3% 11.5% 1.2% $1,119,860
California 84.8% 0.1% 5.2% 10.0% 1.0% $23,455,073
Colorado 70.8% 0.5% 11.8% 17.4% 0.8% $1,357,955
Connecticut 76.6% 1.8% 21.3% 2.1% 0.4% $1,554,102
Delaware 89.7% 0.1% 3.7% 6.6% 0.1% $265,718
Florida 72.9% 0.2% 8.5% 17.9% 4.1% $5,873,195
Georgia 68.5% 4.4% 10.2% 20.7% 2.2% $4,080,004
Hawaii 82.0% 9.5% 16.6% 1.3% 0.0% $766,614
Idaho 85.9% 14.3% 10.3% 3.8% 0.9% $589,383
Illinois 88.8% 5.6% 3.1% 7.3% 2.8% $6,262,412
Indiana 67.9% 0.6% 14.4% 17.7% 4.8% $1,884,254
Iowa 77.2% 0.1% 13.3% 9.5% 5.6% $904,398
Kansas 77.3% 0.4% 17.7% 4.9% 1.1% $1,224,436
Kentucky 66.3% 0.6% 9.8% 22.4% 6.6% $1,296,057
Louisiana 50.2% 5.6% 22.9% 26.9% 1.8% $1,359,266
Maine 81.2% 0.0% 11.4% 7.3% 1.0% $334,022
Maryland 81.4% 0.2% 11.5% 4.0% 3.8% $2,814,201
Massachusetts 88.7% 0.7% 3.2% 7.8% 2.6% $1,896,491
Michigan 91.9% 0.0% 5.5% 2.6% 0.3% $3,087,732
Minnesota 76.3% 3.5% 11.6% 11.9% 4.1% $1,757,858
Mississippi 68.3% 1.3% 27.4% 4.4% 0.4% $1,048,595
Missouri 88.0% 0.2% 0.4% 11.6% 2.2% $1,306,234
Montana 84.7% 0.0% 14.7% 0.6% 0.0% $278,447
Nebraska 77.3% 0.1% 20.2% 2.5% 0.4% $1,037,248
Nevada 72.9% 3.1% 12.9% 14.2% 0.0% $739,493
New Hampshire 87.2% 0.3% 8.9% 4.0% 1.1% $149,710
New Jersey 70.7% 0.1% 10.8% 18.3% 5.1% $2,863,302
New Mexico 85.8% 0.4% 11.5% 2.1% 0.0% $1,232,043
New York 83.2% 0.8% 4.3% 12.0% 3.8% $7,065,204
North Carolina 79.1% 1.8% 10.8% 7.3% 4.4% $5,143,100
North Dakota 70.2% 6.7% 23.5% 5.7% 1.6% $391,393
Ohio 83.4% 0.8% 9.1% 6.3% 2.0% $2,639,148
Oklahoma 75.4% 0.8% 13.8% 10.8% 1.3% $989,811
Oregon 78.3% 1.4% 9.9% 8.0% 0.6% $1,321,867
Pennsylvania 75.4% 0.2% 4.3% 18.6% 8.4% $1,984,942
Rhode Island 92.9% 0.9% 0.0% 7.1% 0.7% $221,771
South Carolina 53.4% 1.7% 12.8% 32.7% 8.6% $1,429,094
South Dakota 78.2% 9.1% 17.4% 4.4% 0.6% $269,178
Tennessee 58.4% 1.8% 16.3% 25.3% 4.6% $2,296,689
Texas 72.7% 0.4% 21.0% 6.3% 0.9% $10,112,467
Utah 88.2% 1.5% 8.2% 3.2% 0.4% $1,336,213
Vermont 63.4% 0.0% 17.8% 18.8% 4.5% $110,876
Virginia 72.6% 0.4% 9.7% 16.1% 4.1% $2,663,123
Washington 76.4% 1.3% 4.7% 18.8% 2.9% $2,413,443
West Virginia 56.5% 1.9% 25.4% 16.6% 1.4% $531,057
Wisconsin 82.7% 5.8% 9.9% 7.0% 1.8% $1,974,759
Wyoming 80.1% 0.8% 11.0% 8.7% 0.0% $386,265
D.C. 75.8% 0.0% 21.1% 3.1% 0.0% $131,796
U.S. 78.5% 1.3% 10.1% 10.8% 2.4% $118,228,300
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. Vermont’s state financial aid is estimated for fiscal year 2022.
Source(s):
  • State Higher Education Executive Officers Association

This section explores 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 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. 14 14It is important to note that the U.S. totals are not averages of state averages. For example, “U.S. total education appropriations per FTE” is the sum of all education appropriations divided by the sum of all net FTEs across the 50 states. It is not the average of each of the 50 state’s individual per-FTE calculations. 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:

Higher Education Cost Adjustment (HECA) i i Higher Education Cost Adjustment (HECA) HECA estimates inflation in the costs paid by colleges and universities. HECA adjusts for inflation from the state perspective. VIEW ALL DATA DEFINITIONS
adjusts for inflation over time.

Cost of Living Index (COLI) i i Cost of Living Index (COLI) COLI is calculated based on the weighted average of county-level data collected by the Council for Community and Economic Research. VIEW ALL DATA DEFINITIONS
accounts for cost of living differences among the states.

Enrollment Mix Index (EMI) i i Enrollment Mix Index (EMI) EMI adjusts for differences in the distribution of enrollment by sector in each state compared to the national enrollment distribution. VIEW ALL DATA DEFINITIONS
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 i i Net full-time equivalent (FTE) enrollment Full-time equivalent (FTE) enrollment converts student credit hours to full-time academic year students. FTE excludes medical students. VIEW ALL DATA DEFINITIONS 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 i i Education appropriations Education appropriations measure state and local support available for public higher education operating expenses and exclude research, hospitals, and medical education. State-level and sector-level education appropriations include federal stimulus funding. Sector-level education appropriations do not include agency funding. VIEW ALL DATA DEFINITIONS increased 7.4% over 2021. Both subcomponents of education appropriations also increased, 4.5% for state public financial aid and 9.4% for general public operations. Net tuition revenue i i Net tuition and fee revenue Net tuition and fee revenue is the total amount of tuition and fees, minus state and institutional financial aid and medical tuition and fees. Net tuition is affected by changes in tuition rates as well as proportional differences in out-of-state, international, and graduate student enrollment. VIEW ALL DATA DEFINITIONS  increased 1.4%.

The middle section of Table 2.1 shows that the Higher Education Cost Adjustment (HECA), a measure of inflation in service industries, increased 5.1% from 2021 to 2022. After applying HECA and therefore removing any increases due to inflation, state public financial aid decreased 0.6%, while general public operations increased 4.1%, and net tuition revenue decreased 3.5%.

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 2021 to 2022, enrollment declined 2.5%, or 266,338 FTE students. Following the decline from fiscal year 2020 to 2021 (3.2%, or 346,534 FTE students), this is the second largest enrollment decrease since the beginning of the SHEF dataset in 1980, in both percentage and total number. After adjusting for both inflation and enrollment, we see that education appropriations increased 4.9% (financial aid increased 2.0%, general public operations increased 6.8%), while net tuition revenue decreased 1.0%, and total education revenue i i Total education revenue The sum of education appropriations and net tuition revenue, excluding any tuition revenue used for capital and debt service. Total education revenue includes federal stimulus funding at the state level but not the sector level. It measures the amount of revenue available to public institutions to support instruction (excluding medical students). VIEW ALL DATA DEFINITIONS increased 2.4%.

Since the SHEF dataset began in 1980, net tuition revenue per FTE has only declined five times: in 2000 (2.7%), 2001 (1.2%), 2019 (3.2%), 2021 (2.5%), and now (1.0%). The decline in 2022 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, and 2022. Excluding federal stimulus funding, inflation-adjusted education appropriations per FTE increased 6.3%, and total education revenue increased 3.1%. 

Measurement Note: Federal Stimulus Funding
The SHEF report includes federal stimulus funding allocated to states for higher education to stabilize state and local sources of funding for higher education and provide additional resources during the COVID-19 pandemic in fiscal years 2020, 2021, and 2022. 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 1980-2022

1980 2001 2012 2017 2021 2022 % Change Since 2021 % Change Since 2017 % Change Since 2012 % Change Since 2001 % Change Since 1980
Current Unadjusted Dollars (Millions)
State Public Financial Aid N/A $2,834 $6,584 $7,206 $9,767 $10,205 4.5% 41.6% 55.0% 260.1% N/A
General Public Operations N/A $53,298 $62,502 $76,150 $84,818 $92,824 9.4% 21.9% 48.5% 74.2% N/A
Education Appropriations $16,134 $56,118 $69,203 $83,363 $98,210 $105,515 7.4% 26.6% 52.5% 88.0% 554.0%
Net Tuition Revenue $4,264 $22,816 $59,234 $73,818 $73,644 $74,665 1.4% 1.1% 26.1% 227.2% 1651.1%
Total Education Revenue $20,398 $78,823 $127,737 $156,424 $170,911 $179,265 4.9% 14.6% 40.3% 127.4% 778.8%
Constant Inflation Adjusted Dollars (Millions)
HECA 0.2460 0.5891 0.7893 0.8680 0.9515 1.0000 5.1% 15.2% 26.7% 69.8% 306.5%
State Public Financial Aid N/A $4,811 $8,342 $8,302 $10,265 $10,205 -0.6% 22.9% 22.3% 112.1% N/A
General Public Operations N/A $90,477 $79,191 $87,729 $89,144 $92,824 4.1% 5.8% 17.2% 2.6% N/A
Education Appropriations $65,590 $95,264 $87,682 $96,039 $103,219 $105,515 2.2% 9.9% 20.3% 10.8% 60.9%
Net Tuition Revenue $17,334 $38,732 $75,050 $85,041 $77,400 $74,665 -3.5% -12.2% -0.5% 92.8% 330.7%
Total Education Revenue $82,924 $133,807 $161,846 $180,208 $179,628 $179,265 -0.2% -0.5% 10.8% 34.0% 116.2%
Constant Inflation Adjusted Dollars (per FTE)
FTE Enrollment 6,852,242 8,709,255 11,521,192 11,057,294 10,573,262 10,306,924 -2.5% -6.8% -10.5% 18.3% 50.4%
State Public Financial Aid N/A $552 $724 $751 $971 $990 2.0% 31.9% 36.8% 79.3% N/A
General Public Operations N/A $10,389 $6,874 $7,934 $8,431 $9,006 6.8% 13.5% 31.0% -13.3% N/A
Education Appropriations $9,572 $10,938 $7,610 $8,686 $9,762 $10,237 4.9% 17.9% 34.5% -6.4% 6.9%
Net Tuition Revenue $2,530 $4,447 $6,514 $7,691 $7,320 $7,244 -1.0% -5.8% 11.2% 62.9% 186.4%
Total Education Revenue $12,102 $15,364 $14,048 $16,298 $16,989 $17,393 2.4% 6.7% 23.8% 13.2% 43.7%
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. i i Sector Sector is determined at the institution level using the Carnegie Basic Classification. Baccalaureate/Associate's Colleges and "less-than-two-year" degree-granting institutions not assigned a Carnegie classification are considered two-year institutions. VIEW ALL DATA DEFINITIONS Currently, only data for 2019 through 2022 are available. 

In unadjusted dollars, between 2021 and 2022, total education appropriations increased 3.1% at two-year institutions and 4.8% at four-year institutions. Sector-level education appropriations consist of state public financial aid, i i Sector-level state public financial aid State public financial aid consists of state scholarships or other state financial aid for students attending public two- and four-year institutions, reported separately. State public financial aid that cannot be allocated by sector is reported as “uncategorizable.” VIEW ALL DATA DEFINITIONS state public operating appropriations, i i Sector-level state public operating State operating appropriations are a measure of state support directly allocated to public two- and four-year institutions. State operating excludes federal stimulus, local appropriations, agency funding, research, hospitals, and medical education, and student financial aid. VIEW ALL DATA DEFINITIONS and local appropriations. State public financial aid increased 12.5% at two-year institutions but only 2.0% at four-year institutions. State public operating appropriations increased 8.2% at two-year institutions and 9.9% at four-year institutions. Local appropriations, which primarily support community colleges, increased 5.4% (or $638 million) at two-year institutions and decreased 4.4% (or $5.6 million) at four-year institutions. This decrease was largely driven by declines in Arkansas (100.0%) and South Carolina (68.0%). Four-year institutions also receive research, agriculture, and medical (RAM) appropriations, which increased 10.5% from 2021.

The sector-level data show that, in unadjusted dollars, net tuition and fee revenue decreased 5.8% at two-year institutions. Comparatively, unadjusted net tuition and fee revenue increased 2.7% at four-year institutions. Note that this difference is largely due to the greater enrollment decline in the two-year sector.

The second section of Table 2.1A shows that from 2021 to 2022, higher education inflation was 5.1%. After adjusting for inflation, all components of state support to two-year institutions increased, with the largest increase in state public financial aid (7.0%). At four-year institutions, state public financial aid and local appropriations decreased (by 2.9% and 9.0%, respectively), while state public operating (4.5%) and RAM (5.2%) increased after adjusting for inflation. 

These differences are partially, but not entirely, explained by differing enrollment trends across the sectors. Net FTE enrollment declined 3.2% at two-year institutions compared to 2.1% 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 $54 (10.6%) at two-year institutions, and for the first time since the start of sector-level data collection (2019), state public financial aid decreased $11 (0.9%) per FTE at four-year institutions.
  • State public operating per FTE increased $378 (6.4%) at two-year institutions and $519 (6.8%) at four-year institutions.
  • Local appropriations per FTE increased $113 (3.6%) at two-year institutions and decreased just over $1 (or 7.1%) at four-year institutions.
  • Research, agricultural extension, and medical appropriations only available to four-year institutions increased by $128 (7.4%) per FTE.
  • Total state and local support per FTE increased by $374 (3.8%) at two-year institutions and $499 (4.5%) at four-year institutions.
  • Net tuition revenue per FTE declined by $206 (7.4%) at two-year institutions and $25 (0.2%) at four-year institutions.
  • Total education revenue per FTE increased $169 (1.3%) at two-year institutions and $354 (1.8%) 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 2019-2022

Two-Year Four-Year
2019 2021 2022 % Change Since 2021 % Change Since 2019 2019 2021 2022 % Change Since 2021 % Change Since 2019
Current Unadjusted Dollars (Millions)
State Public Financial Aid $1,881 $1,937 $2,179 12.5% 15.8% $6,492 $7,665 $7,820 2.0% 20.5%
State Public Operating $20,987 $22,567 $24,414 8.2% 16.3% $46,582 $47,940 $52,672 9.9% 13.1%
Local Appropriations $11,106 $11,869 $12,507 5.4% 12.6% $126 $129 $123 -4.4% -2.4%
RAM $0 $0 $0 N/A N/A $10,393 $10,842 $11,984 10.5% 15.3%
State and Local Support $33,974 $37,234 $39,315 5.6% 15.7% $63,615 $68,511 $73,712 7.6% 15.9%
Education Appropriations $33,974 $37,234 $39,315 5.6% 15.7% $53,200 $57,636 $61,703 7.1% 16.0%
Net Tuition Revenue $11,535 $10,610 $9,992 -5.8% -13.4% $63,525 $63,199 $64,879 2.7% 2.1%
Total Education Revenue $45,416 $47,758 $49,225 3.1% 8.4% $115,915 $119,973 $125,745 4.8% 8.5%
Constant Inflation Adjusted Dollars (Millions)
HECA 0.9093 0.9515 1.0000 5.1% 10.0% 0.9093 0.9515 1.0000 5.1% 10.0%
State Public Financial Aid $2,069 $2,036 $2,179 7.0% 5.3% $7,139 $8,056 $7,820 -2.9% 9.5%
State Public Operating $23,079 $23,718 $24,414 2.9% 5.8% $51,226 $50,386 $52,672 4.5% 2.8%
Local Appropriations $12,214 $12,475 $12,507 0.3% 2.4% $139 $135 $123 -9.0% -11.2%
RAM $0 $0 $0 N/A N/A $11,430 $11,395 $11,984 5.2% 4.9%
State and Local Support $37,362 $39,133 $39,315 0.5% 5.2% $69,958 $72,005 $73,712 2.4% 5.4%
Education Appropriations $37,362 $39,133 $39,315 0.5% 5.2% $58,504 $60,576 $61,703 1.9% 5.5%
Net Tuition Revenue $12,685 $11,151 $9,992 -10.4% -21.2% $69,858 $66,422 $64,879 -2.3% -7.1%
Total Education Revenue $49,944 $50,194 $49,225 -1.9% -1.4% $127,472 $126,093 $125,745 -0.3% -1.4%
Constant Inflation Adjusted Dollars (per FTE)
FTE Enrollment 4,388,978 4,006,438 3,876,804 -3.2% -11.7% 6,598,714 6,566,825 6,430,119 -2.1% -2.6%
State Public Financial Aid $471 $508 $562 10.6% 19.2% $1,082 $1,227 $1,216 -0.9% 12.4%
State Public Operating $5,258 $5,920 $6,297 6.4% 19.8% $7,763 $7,673 $8,191 6.8% 5.5%
Local Appropriations $2,783 $3,114 $3,226 3.6% 15.9% $21 $21 $19 -7.1% -8.9%
RAM $0 $0 $0 N/A N/A $1,732 $1,735 $1,864 7.4% 7.6%
State and Local Support $8,513 $9,767 $10,141 3.8% 19.1% $10,602 $10,965 $11,464 4.5% 8.1%
Education Appropriations $8,513 $9,767 $10,141 3.8% 19.1% $8,866 $9,225 $9,596 4.0% 8.2%
Net Tuition Revenue $2,890 $2,783 $2,577 -7.4% -10.8% $10,587 $10,115 $10,090 -0.2% -4.7%
Total Education Revenue $11,379 $12,528 $12,697 1.3% 11.6% $19,318 $19,201 $19,556 1.8% 1.2%
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 1997 to 2022. 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 i i Net full-time equivalent (FTE) enrollment Full-time equivalent (FTE) enrollment converts student credit hours to full-time academic year students. FTE excludes medical students. VIEW ALL DATA DEFINITIONS over the last 25 years, which has broadly increased over time from 6.85 million in 1980 to 10.3 million in 2022. 15 15The 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. Instead of an increase from fiscal year 2020 to 2021, enrollment dropped 3.2%, the largest decline on record. In 2022, enrollment continued to decline in public institutions, dropping by another 2.5% for a total of 10,306,924 FTE students. This means FTE enrollment in 2022 was down 11.6% from the peak in 2011, and only 0.4% above 2008 levels.

The blue bars show change over time in education appropriations i i Education appropriations Education appropriations measure state and local support available for public higher education operating expenses and exclude research, hospitals, and medical education. State-level and sector-level education appropriations include federal stimulus funding. Sector-level education appropriations do not include agency funding. VIEW ALL DATA DEFINITIONS per FTE enrolled 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 2020, the start of the COVID-19 pandemic, federal stimulus funding for public institutions accounted for 1.5% of total education appropriations ($136 per FTE). In 2021, this proportion increased to 3.7% ($360 per FTE) but declined in 2022, making up 2.4% of total education appropriations ($241 per FTE).

At the start of the SHEF dataset in 1980, states provided, on average, $9,572 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 $11,046 per FTE. Since that peak, however, education appropriations have declined, down 7.3% ($809 per FTE) in the span of 22 years.

The downward trend in education appropriations has not been linear. Funding reached a record low of $7,610 per FTE in 2012 following declines during the Great Recession. Since that time, appropriations have increased for 10 consecutive years. In 2022, education appropriations increased 4.87% beyond inflation ($475 per FTE) to $10,237. This represents the second largest increase in state funding, with the largest having been in fiscal year 2021 (4.92%). 

Overall, appropriations have increased 34.5%, or $2,627 per FTE, since the low point in 2012. For the first time, inflation-adjusted education appropriations per FTE exceeded pre-recession 2008 levels in 2022. After 10 years of increases, 2022 education appropriations were above 2008 levels by 3.1%, or $304 per FTE. This increase in education appropriations can be attributed to three notable trends:

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

Despite increases in state support, inflation adjusted general public operations per FTE i i General public operations The portion of state and local support appropriated directly to public institutions for the purposes of general operations. VIEW ALL DATA DEFINITIONS have not yet recovered from the Great Recession.

The green bars in Figure 2.1 show net tuition revenue i i Net tuition and fee revenue Net tuition and fee revenue is the total amount of tuition and fees, minus state and institutional financial aid and medical tuition and fees. Net tuition is affected by changes in tuition rates as well as proportional differences in out-of-state, international, and graduate student enrollment. VIEW ALL DATA DEFINITIONS per FTE over time. Net tuition revenue measures tuition and fee revenue at public institutions, excluding state and institutional financial aid. Unlike education appropriations, until very recently, net tuition has increased steadily over time, with an average annual net increase of 2.6% above inflation since 1980. 

However, after reaching an all-time high in 2018 ($7,745 per FTE), tuition revenue per FTE has decreased for three of the last four years: 3.2% in 2019, 2.5% in 2021, and 1.0% in 2022. Although tuition revenue did not decline in 2020, it increased by only $12 per FTE student. Notably, this is only the second time period in which there have been declines in net tuition revenue per FTE since the SHEF dataset began in 1980. Prior to 2019, the only times net tuition revenue per FTE declined were fiscal years 2000 and 2001, two years immediately preceding an economic recession. In 2022, public institutions received, on average, $7,244 per FTE in net tuition revenue. 

The total of the bars in the wave chart shows the approximate total education revenue i i Total education revenue The sum of education appropriations and net tuition revenue, excluding any tuition revenue used for capital and debt service. Total education revenue includes federal stimulus funding at the state level but not the sector level. It measures the amount of revenue available to public institutions to support instruction (excluding medical students). VIEW ALL DATA DEFINITIONS available to public institutions on a per-student level. Total education revenue combines the two primary funding sources for public higher education—education appropriations and net tuition. In 2022, total education revenue increased 2.4% to $17,393 per FTE, an all-time high.

Figure 2.1

Public FTE Enrollment, Education Appropriations per FTE, and Net Tuition Revenue per FTE, U.S., FY 1997-2022 (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 2022 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. 16 16Delaney, J., & Doyle, W. (2011). State spending on higher education: Testing the balance wheel over time. Journal of Education Finance, 36(4). jstor.org/stable/23018116 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 percentage change over the course of the economic recession and recovery. With each recession until the most recent one in 2020, state support declines 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. 17 17National Bureau of Economic Research. (2021). Business cycle dating committee announcement July 19, 2021. nber.org/news/business-cycle-dating-committee-announcement-july-19-2021 VIEW ALL FOOTNOTES  Following a 4.9% year-over-year increase in 2021, education appropriations increased a total of 9.8% in the two years following the brief economic downturn (the short straight line in Figure 2.2). This was thanks in large part to federal stimulus funding that helped fill state budget shortfalls, 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 6.3% per FTE from 2021, and 9.0% 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 3.6% from 2021 and 2.9% from 2020.

Figure 2.2

Cumulative Annual Percent Change in Public Education Appropriations per FTE Following Economic Recessions, U.S., FY 1980-2022 (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 2022 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 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 2022. States range widely in their total revenue (the sum of the blue and green bars)  and the distribution of revenue that comprises that total. For example, Nevada had the lowest total revenue per FTE, but 74.2% of total revenue came from state funding. Louisiana had similar total revenue, and only 55.7% of funding came from education appropriations. At the other end of the spectrum, Connecticut, Delaware, Washington, D.C., and Illinois had the highest total revenues, yet they vary greatly in where they get those funds. The state provided 29.3% of total revenue in Delaware compared to 57.1% in Connecticut, 71.7% in Illinois, and 88.3% in Washington, D.C. 

Figure 2.3

Education Appropriations and Net Tuition Revenue per FTE by State, FY 2022


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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. Fiscal year 2022 net tuition and fee revenue are estimates for Arkansas and Pennsylvania and include estimated two-year net tuition and fee revenue for Massachusetts and Texas. Education appropriations for Illinois and Texas include estimated local appropriations. Net FTE enrollment is estimated for Arkansas.
  5. Constant 2022 dollars adjusted by the Higher Education Cost Adjustment (HECA).
  6. Adjusted to account for interstate differences using the Enrollment Mix Index (EMI).
  7. 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 2022 (Adjusted)

State FTE Enrollment Education Appropriations Net Tuition Revenue Total Education Revenue
Alabama 191,445 $8,867 $14,642 $22,546
Alaska 12,440 $18,436 $5,252 $23,688
Arizona 309,160 $6,127 $8,913 $14,615
Arkansas 105,752 $9,596 $7,203 $15,785
California 1,584,060 $11,694 $2,539 $14,233
Colorado 175,533 $6,711 $11,512 $18,223
Connecticut 75,381 $14,827 $11,145 $25,971
Delaware 33,946 $7,473 $18,262 $25,533
Florida 567,049 $9,178 $2,466 $11,644
Georgia 348,450 $13,640 $5,308 $18,948
Hawaii 32,620 $14,097 $4,699 $18,667
Idaho 53,976 $11,009 $9,065 $19,552
Illinois 280,511 $22,970 $9,433 $32,022
Indiana 235,412 $7,004 $11,299 $18,040
Iowa 115,604 $6,641 $10,607 $17,248
Kansas 119,978 $8,749 $7,236 $15,820
Kentucky 133,629 $9,022 $9,725 $18,502
Louisiana 158,195 $7,224 $5,756 $12,980
Maine 32,111 $8,938 $7,341 $16,279
Maryland 208,380 $9,759 $8,047 $17,806
Massachusetts 138,528 $10,513 $5,589 $16,102
Michigan 332,190 $9,909 $15,596 $25,505
Minnesota 162,546 $9,802 $10,370 $20,144
Mississippi 119,101 $7,507 $8,438 $15,945
Missouri 136,953 $11,376 $8,497 $19,873
Montana 33,685 $6,709 $7,298 $14,008
Nebraska 71,335 $12,207 $6,929 $18,834
Nevada 74,078 $8,022 $2,793 $10,815
New Hampshire 30,874 $3,699 $9,629 $13,328
New Jersey 238,339 $8,965 $7,969 $16,934
New Mexico 70,189 $16,600 $6,707 $23,307
New York 455,844 $13,897 $6,224 $20,121
North Carolina 390,900 $12,513 $5,412 $17,925
North Dakota 31,822 $9,409 $10,847 $20,256
Ohio 368,517 $7,214 $9,708 $16,921
Oklahoma 120,966 $7,670 $9,072 $16,743
Oregon 124,310 $8,068 $9,261 $17,329
Pennsylvania 299,671 $6,090 $11,149 $17,239
Rhode Island 28,742 $6,729 $10,458 $17,186
South Carolina 166,231 $7,150 $10,889 $17,421
South Dakota 30,645 $8,003 $9,103 $16,313
Tennessee 173,240 $12,354 $7,255 $19,313
Texas 1,014,462 $9,084 $8,401 $17,486
Utah 128,774 $9,750 $7,175 $16,924
Vermont 19,633 $6,363 $15,674 $21,358
Virginia 288,995 $8,283 $8,936 $17,127
Washington 207,919 $10,154 $6,386 $16,540
West Virginia 58,865 $7,299 $8,235 $14,648
Wisconsin 194,947 $9,510 $7,469 $16,978
Wyoming 20,991 $18,140 $3,832 $21,919
D.C. 2,758 $27,187 $3,617 $30,804
U.S. 10,306,924 $10,237 $7,244 $17,393
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. Fiscal year 2022 includes net tuition and fee revenue estimates for Arkansas, Massachusetts, Pennsylvania, and Texas, and FTE enrollment estimates for Arkansas.
  7. 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 more than twice the U.S. average and 52.5% 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, and by a one-time payment of $250 million for the state’s prepaid tuition program that will be disbursed over a span of years.

In 2017, 33.8% of all education appropriations in Illinois went to their state retirement pension system. This share grew to 37.0% in 2021 and dropped slightly to 35.8% in 2022. Of the $2.1 billion in pension payments in 2022, 77.7% were used for past unfunded liabilities, not current employees. This means that even after considering additional funding from local governments, over one quarter (27.8%) of all education appropriations in Illinois were spent on past pension obligations and were not available for use in 2022. This translates to $6,390 per FTE student, more than the entire per-FTE appropriation in New Hampshire, and within $1,000 of the per-FTE appropriation in nine other states.

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. Currently, only data from 2019 through 2022 are available.

As shown in Figure 2.4, 2022 education appropriations i i Sector-level education appropriations Education appropriations measure state and local support available for public higher education operating expenses and student financial aid, excluding research, hospitals, and medical education. Sector-level education appropriations includes any portion of federal stimulus funding allocated specifically to each sector and does not include agency funding. VIEW ALL DATA DEFINITIONS at two-year public institutions are slightly above the per-FTE levels at four-year institutions ($10,141 and $9,596, respectively). 18 18There 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 ($3,226 per FTE compared to $19 at four-year institutions), but do not include research, agricultural extension, and medical funding (RAM), of which an additional $1,864 per FTE was exclusively appropriated to four-year institutions in 2022. In addition, SHEF metrics use FTE enrollment rather than student headcount, and two-year institutions have a far greater proportion of part-time students. 19 19According to the National Center for Education Statistics, in fall 2021, an estimated 37% of two-year students (at both public and private institutions) attended full time, compared to 74% at four-year institutions. Source: Table 303.70, nces.ed.gov/programs/digest/d21/tables/dt21_303.70.asp. VIEW ALL FOOTNOTES

Education appropriations per FTE throughout the report include federal stimulus funding. Two-year institutions received $55 per FTE in federal stimulus for public operating in 2022, and four-year institutions received $169 per FTE in federal stimulus for public operating.

Unlike education appropriations, net tuition revenue is very different at two- and four-year institutions. On average, two-year institutions received $2,577 in net tuition revenue per FTE, or 25.5% of the average net tuition revenue per FTE at four-year institutions ($10,090). 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 2019-2022 (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. Fiscal year 2022 sector-level net tuition and fee revenue are estimates for Arkansas and Pennsylvania. Two-year net tuition and fee revenue is estimated for Massachusetts and Texas. Education appropriations for Illinois and Texas include estimated local appropriations. Sector-level net FTE enrollment is estimated for Arkansas.
  5. Constant 2022 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 (80.0%) and private (19.5%) 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. 20 20Trends in state-funded student financial aid for students attending public institutions differ substantially from trends in aid for students attending independent institutions. The composition of state financial aid has also changed over time. For more information, the 2019 SHEF Issue Brief on state financial aid explores trends over time in state financial aid to public and private institutions by state. VIEW ALL FOOTNOTES This section examines 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.

  • On a per-FTE basis and after adjusting for inflation, state financial aid to public institutions has increased 79.3%, from $552 in 2001 (when these data were first collected) to $990 in 2022. State aid increased 2.0% from 2021.
  • SHEF data show that states primarily protect financial aid during economic downturns. During the worst years of the Great Recession, from 2008 to 2012, aid per FTE increased 4.4% despite rapidly increasing enrollment, while the rest of education appropriations declined. As a result, the financial aid allocation increased from 7.0% to 9.5% of all education appropriations. 
  • Following the short recession in 2020, public aid grew from 9.7% to 9.9% of all education appropriations in 2021. In 2022, public aid as a portion of education appropriations returned to 9.7% in 2022, still up 5.0% from 2001. 21 21For more information about how states protected student affordability during the COVID-19 pandemic, see the SHEEO report, Effects of the COVID-19 pandemic on state tuition, fees, and financial assistance policies, at sheeo.org/project/tuition-and-fee-survey/.   VIEW ALL FOOTNOTES  
Figure 2.5

Public Higher Education State Financial Aid per FTE and as a Percentage of Education Appropriations, U.S., FY 2001-2022 (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 2022 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 as a revenue source for public institutions—also known as the student share. i i Student share The student share is a measure of the proportion of total education revenues at public institutions coming from net tuition revenue. VIEW ALL DATA DEFINITIONS 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 revenue (from 20.9% to 41.7%) 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. From 2008 to 2012, the proportion of students attending public institutions using federal Pell Grant aid increased from 23.3% to 37.9%. Of greater concern, the percentage of students using federal loans increased from 23.8% to 30.1% during that time. 22 22These data were compiled from the U.S. Department of Education, National Center for Education Statistics, 2007-08 National Postsecondary Student Aid Study (NPSAS:08) and the U.S. Department of Education, National Center for Education Statistics, 2011-12 National Postsecondary Student Aid Study (NPSAS:12). VIEW ALL FOOTNOTES  

When the economy stabilizes, the student share also stabilizes and, as in recent years, decreases. Since the 2013 high point, the student share has declined 5.9 percentage points to 41.7% in 2022. From 2021 to 2022, the student share declined 1.4 percentage points, the third largest decrease ever observed in the SHEF dataset. Decreases in student share occur when growth in education appropriations outpaces growth in net tuition revenue. In 2022, the decrease in student share was due to declines in FTE enrollment and net tuition revenue, as well as continued federal stimulus funding given to states, whether directly allocated to higher education or used to cushion state budgets, which reduced the need for states to defer funds to other budget areas. 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. Additionally, from 2021 to 2022, the student share declined in each region: 2.2 percentage points in the Northeast, 1.5 in the South, 1.3 in the West, and 0.4 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 1980-2022


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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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