Page 103 - Crisis in Higher Education

Understanding the Root Causes • 75

4.4 HOW DECLINING STATE SUPPORT FOR
PUBLIC UNIVERSITIES (ROOT CAUSE 2)
AFFECTS UNDERLYING PROBLEMS

A common way to examine states’ support for public, higher education
is to consider their contribution to revenue. One report claims that states
paid about two-thirds of the cost of undergraduate education in the early
1980s. Another report claims that the peak share for state and local
13
government was 60.3% in 1975. This report also claims that, with a few
exceptions, the state funding for higher education has declined dramati-
cally, down to 25% or less in many states. A report by the Pew Charitable
14
Trusts shows that in 2013 state support for public colleges and university
was only 21% of their revenue. These data may be confounded by the fact
15
that undergraduate enrollment grew by 73% from 1978 to 2014 because
an increasing portion of the U.S. population pursued advanced degrees. 12
Another way to look at state funding is per full-time equivalent (FTE)
students (five part-time students, each taking one 3-credit hour course in
the Fall semester and another in the Spring semester would be one FTE—
30 semester hours). Using this data point adjusts for increasing enroll-
ment. The Economic of Higher Education report prepared for President
Obama shows that state support per FTE declined from almost 60% of
revenue at state public, four-year institution in 1986 to slightly below 40%
in 2010. Regardless of which data are considered, it is clear that state sup-
1
port for higher education, as a percent of public university revenue or as
subsidy per FTE student, has declined significantly.
It can be argued that this decline in state support is not caused by states
spending too little, but by universities spending too much. Because uni-
versities overspend on administration and other things, they raise tuition
faster than the rate of inflation to compensate for the “perceived state
shortfall.” The point is this: If universities were better managed, their
6,16
costs would be lower and state support for public higher education would
be adequate.
In other words, state funding as a percent of public universities’ revenue
would not have declined if these institutions had properly controlled their
budgets and costs. State governments chose to push back on public uni-
versity spending by holding the line on their funding, but students, par-
ents, other family members, friends, and the federal government have not
pushed back, so tuition and fees continue to increase. It is time for states