President's Blog

When public funding of higher education dwindles, where does the money go?

With Kirk Heffelmire

If you’re interested in the funding of state universities and the rising cost of tuition, I recommend you have a look at this recent report from the American Academy of Arts and Sciences.

Between 1990 and 2014 the share of state expenditures dedicated to higher education has declined from 14.6 percent to 9.4 percent. When adjusted for inflation, state support per full-time equivalent student for higher education in 2014 was nearly 30 percent below the level of support in 2000.

In total, inflation-adjusted dollars, state expenditures for higher education grew only 5.6 percent between 1986 and 2013. By comparison, elementary and secondary education grew by 69 percent and spending on corrections grew by 141 percent over this same period.

States face competing demands for resources such as Medicaid, elementary and secondary education, underfunded pension plans, and aging infrastructure. From 1990 to 2014, the share of state budgets devoted to Medicaid doubled from 9.5 percent to 19.1 percent. During FY2013 there were 11 states that spent a greater share of their budget on corrections than on higher education (Virginia was not on that list).

As I noted here, states often use higher education as a flexible budget item because universities can use tuition to offset state funding declines. However, this policy choice transfers the financial burden of higher education to students and their families, which hinders broad access to higher education.