State Funding For Public Higher Education Increased 4.5% In 2021

Overall state funding for public higher education increased by 4.5% in Fiscal Year 2021 (July 1, 2020 – June 30, 2021). The finding, reported today in a report entitled, “State Higher Education Finance,” by the State Higher Education Executive Officers Association (SHEEO), comes as something of a surprise in light of the negative economic impact of the coronavirus pandemic and a 3% decrease in enrolled full-time equivalent (FTE) students during 2021.

That enrollment decline is equal to a loss of 323,952 students, which the report notes is the largest decline in net FTEs since at least 1980. The drop was much steeper in the community college sector (-6.1%) than at four-year institutions -.9%).

The report also notes that “state funding typically fluctuates with the economic cycle. In the year after each previous recession since 1980, education appropriations per FTE enrollment declined. ”However, in 2021, for the first time, this trend did not continue: Inflation-adjusted education appropriations increased $ 400 per FTE student at public colleges and universities last year, reaching a national average of $ 9,327 per student.

This is the ninth straight year of increases, and it’s the largest single-year increase since 2014. Appropriations were up in fiscal year 2021 in 40 states and Washington.

The increases are generally due to three factors, according to the report: 1) greater state commitments to higher education funding. 2) a pronounced decline in FTE enrollment, and 3) significant federal stimulus funding.

State appropriations were buoyed by several pulses of federal stimulus and relief funding that states were given during the pandemic. Two-year public institutions received $ 214 per FTE in the federal stimulus for public operations in 2021, and four-year institutions received $ 288 per FTE.

All but five states (Alabama, Nevada, New York, Oklahoma, and West Virginia) allocated some of their federal stimulus funds directly to higher education. Five states (Colorado, Minnesota, New Hampshire, Vermont, and Wyoming) and Washington, DC, relied on federal stimulus funding for more than 20% of higher education support.

Without these federal funds, the report found that education appropriations for FTE students would have increased just 2.0% from 2020 to 2021.

State Financial Aid

State public financial aid per FTE student increased more sharply that institutional appropriations, rising 8.8% in 2021 compared to the year before, and hitting an all-time high of $ 921 per FTE. These funds comprised 9.9% of all education appropriations, the largest proportion since these data were first collected in 2001.

Financial aid per FTE student increased in 31 states in 2021. The least generous states (Arizona, Michigan, Montana, and New Hampshire) awarded less than $ 100 per FTE student in state financial aid. The most generous states – awarding over $ 2,000 per FTE – were Georgia, Louisiana, South Carolina, and Tennessee.

State financial aid averaged $ 510 per FTE student attending a two-year institution, less than half of what the average student at four-year colleges received ($ 1,138).

Tuition Revenue

Net tuition revenue is the total amount of tuition and fees received by public institutions, minus state and institutional financial aid and medical tuition and fees.

Public institutions received and average of $ 6,723 in net tuition revenue from in-state and out-of-state students in 2021. That amount was a decrease of 3.2% ($ 224) from the prior year, and it was the second largest decline in net tuition revenue per FTE since 1980.

Net tuition revenue per FTE decreased in roughly three-quarters of the states in 2021. In 2021, Florida had the lowest net tuition revenue per FTE ($ 2,301) while Delaware had the highest ($ 16,517).

Net tuition revenue per FTE student decreased 1.7% at two-year institutions and 4.8% at four-year institutions.

Total Higher Education Revenue

Total public higher education revenue per full-time student (the sum of education appropriations and net tuition and fee revenue, excluding tuition that’s used for capital debt service) increased 1.1% in 2021, reaching an all-time high of $ 15,959 per FTE student. Four-year schools received an average of $ 18,021 in total education revenue per FTE; two-year institutions received $ 11,928 per FTE.

However, without the federal stimulus funding for higher education, total education revenue would have declined 0.3% in 2021.

The findings generally came as welcome news to higher ed officials.

SHEEO President Robert E. Anderson said, “Increases in state support for higher education demonstrate a growing commitment in many states to fund their public systems of higher education … We know that many of these investments have been made possible by federal stimulus funding, and while federal stimulus funds serve an important purpose in stabilizing state revenues, they should not be considered a replacement for long-term state investments. States must continue to prioritize higher education in the years ahead to ensure that institutions are able to serve our students. ”

Nonetheless, despite the surprisingly positive findings contained in the report, concerns about future support linger for several reasons. First, student enrollments continue to sink, with no clear end in sight for that trend. Second even with the recent increases, ten states still saw funding declines this year, and 29 states have yet to reach funding levels seen prior to the Great Recession. Third, worries about a possible recession are increasing, and inflation has currently soured beyond 8%. All those factors raise doubts as to whether public higher education’s relatively good financial news of 2021 can be sustained.

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“Generous federal stimulus funding protected state revenues and directly supported higher education, reducing states’ need to cut funding during the pandemic and short economic recession,” a SHEEO news release states. “However, sharp declines in student enrollment and net tuition and fee revenue signal continued upheaval for public higher education revenues.”

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