Differing Reports on College Spending by State Underscore the Haves and Have-Nots

Finance
Posted By Donna Fuscaldo on March 9, 2016 at 2:11 pm
Differing Reports on College Spending by State Underscore the Haves and Have-Nots

When it comes to state spending on higher education in 2016, it’s a tale of the haves and have-nots. Depending on which survey you reference states are either increasing or decreasing the expenditures earmarked for college. Take Grapevine, the publisher of data on state tax support for higher education since 1960. It found for the fiscal year 2015-2016, state spending increased by 4 percent for the third consecutive year.

While that’s a modest amount considering the cost of a college education increases 3.4 percent a year on average at state schools, it’s better than the findings from the recent Young Invincibles Student Impact Project 2016 State Report Cards. This report found between fiscal years 2008 through 2014 states cut per-student spending by 21 percent. For 2016, it gave 29 states a grade of D+ or worse.

On the surface, those two reports may seem contradictory, with one highlighting increases in spending and the other painting a dire picture, but it turns out it all depends on the individual state and their unique financial situations.

Some states are faring better than others

You can’t paint a broad picture when it comes to state spending on higher education. “Some states have made large gains in the economic recovery and put it back into higher ed. Slower to recover states have made less,” says Kevin Fudge, manager of Government Relations and Community Affairs at American Student Assistance. “It’s a national average. Some states are increasing funding and some states are not.”

Take Oregon for one example. The state is seeing above average growth and, according to Grapevine, state spending on higher education has increased 16 percent. Meanwhile, Grapevine found Arizona cut its spending the most by 14 percent. Arizona is being hit hard by healthcare costs and has been slashing aid for higher education for some time now.

According to Grapevine, of the 48 states reporting data, 39 experienced one-year increases in spending between FY15 and FY16 that ranged from 0.1 percent in Kentucky to 16.2 percent in Oregon. The remaining nine states reported decreases ranging from 0.1 percent in New Jersey to 14 percent in Arizona. That is similar to year-ago levels Grapevine found. Grapevine is waiting for Illinois and Pennsylvania to finalize their FY16 budgets.

States getting less help from the federal level

While a 4.1 percent increase isn’t something to cheer about, it does jive with longer term trends in federal aid. According to Grapevine, fifteen states said federal support for higher ed in FY16 was lower than the support in FY2011. Two states—Arizona and Louisiana–have fiscal support levels that are more than 20% below FY2011 funding. That’s an improvement from last year’s survey that found 25 states were operating with fiscal funding that was lower than five years earlier.

“This suggests an ongoing albeit slow recovery in many states from the losses experienced in the wake of the last recession,” said Grapevine in a press release revealing the data late last month. Echoing that, Young Invincibles said in its report that while many states are starting to reinvest in college in the past few years, only two states spend as much as they did before the great recession hit in 2008. Those states are Alaska and North Dakota.

Another thing impacting state funding for colleges and universities is the student loan picture and enrollment numbers. According to Fudge, a lot of the student loan debt is concentrated in the Northeast and less in the South. That debt impacts more than just the individual but also the local economy which, in turn, can affect state funding for things like college. During downturns, enrollment in colleges and universities tend to rise as more people go back to school in hopes of landing a job. But in an economic recovery, enrollment tends to decline. Today, unemployment is at an eight-year low of 4.9% and employees are seeing an increase in wages that is weighing on attendance at state colleges and universities.

Spending can clue would-be students in to the state of a school

State spending is going to depend on a lot of factors, but the level in which a state is spending on higher education can give would-be students a hint of what to expect at the school. That’s because states that are curbing or keeping spending at bay at a time when enrollments are declining have to find other areas to cut and that is usually in areas such as faculty and student support services. It could also mean infrastructure projects go undone exposing students to a crumbling campus. “We talk about so many things as a nation that we tend to lose focus on how it is affecting different regions,” says Fudge.

Donna Fuscaldo
Donna Fuscaldo is a freelance journalist hailing out of Long Island, New York. She has also written for Bankrate.com, Glassdoor.com, SigFig.com, FoxBusiness.com, Business Insider, Dow Jones Newswires and the Wall Street Journal.

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