Higher education funding drops while enrollments keep going up, new national report says

At a time when state budget cuts to Washington’s public higher education system have exceeded the national average, full-time equivalent (FTE) enrollment has been growing faster than the national average, a new report by a national organization of state higher education executives indicates.

Revenue from increased student tuition rates has offset some of the cuts in higher education appropriations in Washington, the report from the State Higher Education Executive Officers Association (SHEEO) shows. But total per-FTE funding, the sum of tuition and state support, has not kept pace with enrollment growth, the report indicates.

In Washington, total inflation-adjusted educational revenues per-FTE dropped more than 21 percent between 2006 and 2011—from $7,111 to $5,606.  Over the same period, FTE enrollment actually grew by nearly the same percentage—from 213,055 to 258,334.

Washington’s 21 percent drop in higher education appropriations over the five-year period significantly exceeded the national average decline of 12.5 percent, the report indicates.

An update to the state’s strategic master plan for higher education completed last year warned that continued state budget cuts will make it difficult if not impossible to accommodate increasing numbers of students at the state’s public institutions, raise degree production, and broadly increase educational attainment. The update outlines seven “next steps” for achieving the state goal of boosting educational attainment in Washington.

While improved efficiency in the higher education system can help ease the situation, increased enrollments in a time of reduced per student funding can make it harder for some students to get the classes they need to graduate. That in turn can further hamper the state’s efforts to increase degree production to meet workforce needs in future years.

SHEEO is a national association of chief executives of statewide governing boards and coordinating boards of postsecondary education. The new SHEEO report, “State Higher Education Finance 2011,” shows that Washington is hardly alone in efforts to meet the funding and enrollment challenge.

According to the report:

• Nationally, the number of student FTEs grew from 10.5 million in the 2007-08 academic year to 11.7 million in 2011.
• Inflation-adjusted educational revenues per student dropped 5.7 percent between 2008 and 2011 ($11,733 to 11,064).
• State and local support per student fell to $6,290 in 2011 dollars, the lowest level in the 25 years the SHEEO study has been conducted.
• Net tuition revenue per student reached $4,774 in 2011, an all-time high. Over the past 25 years, the percentage of educational revenues supported by tuition has climbed steadily from 23.2 percent in 1986 to 43.3 percent in 2011.

While higher education institutions have stretched to accommodate enrollment demand, there is evidence that rising tuition costs, inadequate financial aid and enrollment caps are starting to impact the higher education decisions of some students, said SHEEO President Paul Lingenfelter in a news release.

“While evidence of eroding educational quality is subtle and will be harder to find, such evidence will likely appear in the institutions where enrollment demand is high and resources are the most scarce,” Lingenfelter said.

While declines in per-student state funding have regularly recovered from past recessions, the current recovery may be much more difficult, Lingenfelter said.  “Parents, students, institutions, and states must make tough decisions about priorities—what investments are essential for a better future, and where can we and should we reduce spending on nonessentials in order to secure what is essential,” Lingenfelter said.