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Report: Colleges’ Reliance on Tuition Revenue Growing

Colleges and universities experienced a 1.8 percent decrease in funding at the state and local level in 2016 — part of a downward trend that has led students and families to shoulder a larger portion of the cost of higher education, a new report released Thursday shows.

Dr. Raymond C. ScheppachDr. Raymond C. Scheppach

The report — produced by the State Higher Education Executive Officers Association and titled “State Higher Education Finance” — states total state and local appropriations topped $90 billion, down slightly from the previous year, although more money went to student financial aid.

The report suggests things would not have been so bad and that state and local support would have actually increased by 3.2 percent were it not for Illinois, which the report notes cut its support by a “staggering 80 percent.”

However, one higher education finance expert says Illinois should not be blamed for the overall trend because there will always be an outlier or several outliers that drive the numbers down.

“You’re always going to have an Illinois or a group of states that make significant cuts,” said Dr. Raymond C. Scheppach, a professor of public policy at the University of Virginia and project director of the recently disbanded National Commission on Financing 21st Century Higher Education.

“You saw this in Wisconsin or other states before that,” Scheppach said. “I’m one who believes you’re going to continue to have several outlier states because of budget problems. It’s Illinois today. Tomorrow it could be New York or Texas. It’s a fact of life.”

Thomas L. Harnisch, director of state relations and policy analysis at the American Association of State Colleges and Universities, called the situation in Illinois “alarming.”

“The longstanding budget impasse in Springfield is taking a heavy toll on the state’s public colleges and universities and will have substantial negative consequences for the state’s economy for years to come,” Harnisch said.

Harnisch said that, while the report may show a modest uptick in funding if Illinois were not included, reasons remain to be concerned about the current state of public higher education funding.

“In the current legislative cycle, lawmakers in states throughout the country have proposed substantial budget cuts for public institutions of higher education,” Harnisch said. “If lawmakers approve these budget cuts, it will roll back recent progress on state funding, leading to higher tuition prices and debased educational opportunities.”

The SHEEO report released Thursday was not all doom and gloom. In fact, it contained some potentially positive findings.

For instance, it notes that colleges and universities have continued to increase the percentage of their students who receive a degree in a given year, having reached a new high of 26.3 per 100 students in 2015 — the latest year for which data is available.

The report states that this statistic is up 20 percent since SHEEO started tracking it in 2005.

“This increase in the overall performance of public colleges and universities is substantial, and deserves recognition,” the report states.

On a more granular level, the report notes that, between 2014 and 2015, completions increased:

  • 3.6 percent for certificates
  • 3.2 percent for associate
  • 2 percent for bachelor’s
  • 1.4 percent for master’s
  • 1.5 percent for doctorates

At the same time, however, full-time enrollment at public institutions decreased 1 percent, the report states. The report suggests caution in making too much of the completion figures.

“Greater focus on student success at the state and institution levels may be correlated with the increased rate of completions per FTE,” the report states, using the acronym for full-time equivalent. “However, because reductions in FTE include all students, these reductions may not be represented in completion data for several years.”

Despite increases in production, families and students are shouldering more of the costs, the report states, in noting that tuition rose by an average of 2.1 percent per student in inflation adjusted terms.

“This is the slowest year-over-year increase since 2009,” the report states. “The overall decline in public funding (largely occasioned by Illinois’ 80 percent reduction in state and local support) and this net increase in tuition led to tuition comprising 47.8 percent of the revenue needed to support education, up from 46.8 percent the prior year and close to the all-time high of 48 percent in 2013.”

Without Illinois, the report states, tuition would have comprised 47.2 percent.

“As the report indicates, however, the overall per-student funding levels are in a downward trajectory, with funding levels in 45 states below pre-recession levels,” observed Harnisch.

The report indicates that average appropriation support per student in 2016 stood at $6,954, whereas in the pre-recession level in fiscal 2008, it was significantly higher at $8,380 per student.

“Nationally, per-student funding remains far below pre-recession levels,” Harnisch said. “This has led to higher tuition prices, increased student debt, and hinders the ability of public colleges and universities to provide high-quality educational environments.”

Scheppach suggested federal block grants to incentivize increased production and reduced costs as a potential solution.

Such grants should require states to have “maintenance of effort in real terms,” which means increasing spending by 1 or 2 percent per year.

“That would help maintain the state support but also provide additional federal support and would go to schools that increase graduation rates the fastest,” Scheppach said. “Universities and colleges have to get more serious about increasing graduation rates and holding down costs.”

Jamaal Abdul-Alim can be reached at [email protected] or follow him on Twitter @dcwriter360.

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