ERIC EJ836357: Current Funds: Public Higher Education Finance in New England

2009·0.24 MB·English

by  ERIC

F O R U M: H I G H E R E D F I N A N C E
Current Funds
Public higher education finance in New England
PAUL E. LINGENFELTER
New Englanders have been well- New England and the Nation for state and local funding occurred
served by the region’s higher While the federal government provides near 2001, when per-student support
education legacy. They tend to important support for research and reached $7,595 (in 2007 dollars), $7,931
be better-educated and more prosperous student assistance, state and local govern- for New England. (For national
than the rest of the nation, and the ments are the predominant funding comparisons, New England data are
cultural life in their cities and towns sources for public higher education. adjusted downward to reflect the
is exceptionally rich. But New England For states, policies and decisions about region’s higher cost of living.) By 2004
dares not rest on its laurels. The growing postsecondary financing are made in and 2005, as enrollment and inflation
demand for even greater levels of the context of economic conditions, grew much faster than increases in public
tax structures, political culture and
educational attainment in the 21st funding, state and local funding per
competing budgetary priorities. The
century requires a re-examination of student fell to approach the lowest levels
New England heritage reflects a system
public policies for postsecondary of the past 25 years. In 2006 and 2007,
designed primarily to educate high-
education finance. appropriations began a recovery in the
performing students in selective
Higher education in New England United States, but constant dollar per-
institutions. While this heritage has
is still shaped fundamentally by a student state support has not returned
served the region and nation well, a
heritage of strong private institutions to the 2000 and 2001 levels. Nationally,
stronger commitment to public higher
rooted in the colonial era. In 1870, the 2007 appropriations per student are
education will be required to meet the
563 American colleges and universities demand for more widespread educational 7.7% below 2002 appropriations. In
were predominantly private and enrolled attainment in the 21st century. New New England, the decreases range
52,000 students (0.1% of the nation’s England has struggled to build and fully from 18% in Rhode Island to 8% in
population). Seventy years later, 1,700 appreciate an effective public system to Massachusetts, all deeper decreases
institutions enrolled 1.5 million students serve an academically diverse population. than the U.S. average.
(1.1% of the population), a ten-fold As shown in Figure 1, the state and local The growth of tuition during reces-
increase as public-sector enrollment commitment to higher education is often sions to offset declining state support
and spending exceeded the private substantially below the U.S. average is well-documented. In constant dollars,
sector for the first time in U.S. history. on the usual indicators. net tuition per full-time equivalent (FTE)
By 1980, public community college Figure 2 illustrates public appro- student grew 110% nationally over the
development had increased the number priations per student in New England past 25 years; in New England constant
of institutions to 3,150, educating from 1982 through 2007. The pattern dollar net tuition per FTE grew 125%.
11.6 million students (5.1% of the of decline in recessions, followed by At $5,592, net tuition in New England
U.S. population), of whom more than recovery, is similar to the national is 45% higher than the U.S. average
75% attended public institutions. In experience. Nationally, the high point of $3,845.
2005, the public sector still accounted
for 75% of the 17.5 million students Figure 1: State and Local Government Higher Education Funding, FY 2007
enrolled in 4,200 U.S. institutions. Support per
Although New England experienced Percentage $1,000 of Percentage
similar institutional and enrollment Support per of U.S. Personal of U.S.
expansion, its public-to-private enroll- Capita Average Income Average
ment ratio stands in stark contrast
Connecticut $264 95% $4.87 68%
to the nation. Of its current total
Maine 197 71% 5.85 81%
enrollment, 48% is in private institutions,
compared with 25% nationally. Coupled Massachusetts 199 72% 4.06 57%
with slower, later growth of the public New Hampshire 94 34% 2.27 32%
sector, the predominance of private
Rhode Island 186 67% 4.70 65%
postsecondary education has influenced
Vermont 136 49% 3.70 51%
appropriations, tuition and financial
aid policy in the region. United States $277 100% $7.19 100%
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F O R U M: H I G H E R E D F I N A N C E
of public resources, nor can one dem-
Figure 2: Educational Appropriations and Total Educational Revenue
onstrate a clear connection between
per FTE, New England, FY 1982 to 2007
spending and outcomes; the “right
amount” always has been determined
$14,000
through judgment and negotiation.
$12,000 The only way to get improved
performance is to spend more money.
$10,000
This mindset annoys policymakers
$8,000 and business leaders who are forced
Dollars
to increase productivity despite tight-
per FTE
$6,000 ened financial bottom lines. These
stakeholders argue that increasing
$4,000
financial support to education historically
has increased costs without producing
$2,000
better results.
$019821983198419851986198719881989199019911992199319941995199619971998199920002001200220032004200520062007 We can get the results we need
without spending more money.
Educational Net Tuition
Appropriations per FTE Revenue per FTE Some well-intentioned advocates
Note: Constant 2007 dollars adjusted by SHEEO Higher Education Cost Adjustment, in the accountability movement argue
Enrollment Mix Index, and Cost of Living Adjustment. Source for Figures 1 and 2: SHEEO SHEF
that additional investment in post-
Despite above-average tuition, While international comparisons may secondary education is completely
New England states collectively mislead due to differences in what is unnecessary; all that is required is
provide below-average tuition aid. included in postsecondary expenditures more discipline. This view would be
Massachusetts, the state that gives
States must now educate a larger proportion of their
the most aid per student in the region
($496), is just slightly above the U.S. populations to cope with a less clear threat — the loss
average ($467). Three of the six New
of competitiveness in the global economy.
England states rank in the top 10 for
student debt at public institutions: (auxiliary enterprises and independent more persuasive if the world economy
New Hampshire (3rd), Maine (7th), functions such as athletics and medical did not require a quantum leap in
and Vermont (9th). When considering care are more salient in the United educational attainment; marginal
both public and private four-year States), it is difficult to argue the United change will not do.
institutions, five of the six New States under-invests in higher education. Policymakers and educators will make
England states rank in the top 12 An important factor in the size of more progress if they redirect their
for debt burden. U.S. expenditures is the practice of attention to three fundamental questions:
As the nation and the region enter spending considerably more at the
What does the public need from
another recession, the effects of institutions disproportionately enrolling
higher education?
appropriations, tuition, and student academically gifted and financially
The central issue is the need for
assistance policies on higher education prosperous students.
more educational attainment. In the
opportunity and student debt will Since generous spending is associated
1960s, the nation and states addressed
become more profound. closely with quality in higher education,
the need to educate the baby boom by
the association of money with quality
How Much Public Spending? dramatically increasing investment in
complicates public discussion about
While total postsecondary education postsecondary education. Gaining con-
finance. In public dialogue, three
spending in the United States is about sensus on this investment was easy:
misguided ideas appear frequently:
2.6% of gross domestic product (a larger the number of 18-to-24-year-olds was
There is a “right amount”; we can
proportion than any other country), increasing rapidly, and Sputnik had been
create the perfect formula.
public investment in U.S. postsecondary launched into space. Today, consensus
education is roughly in line with other The search for a perfect formula is harder to achieve as educational
developed countries. Higher levels of has generated endless debate and needs have shifted and become more
private spending (both higher tuition mind-numbing data analysis. Financial complex. States must now educate a
costs and revenues from endowments policy is fundamentally about pri- larger proportion of their populations
and private giving) account for the margin orities, investment, management and (a more difficult task) to cope with
of difference between the United States politics — not formulas. Higher edu- a less clear threat — the loss of com-
and other advanced nations. cation is not entitled to a fixed share petitiveness in the global economy.
THE NEW ENGLAND JOURNAL OF HIGHER EDUCATION WINTER 2009 23
F O R U M: H I G H E R E D F I N A N C E
Despite the greater complexity of the Institutional priorities and the incentives more than any other region of the
issues, the basic dynamics remain the of state budget processes will have more country, faces the risk that a growing
same: when there is consensus about impact on effectiveness than any fea- number of its residents may not be
goals and priorities, investment will follow. sible amount of incremental funding. prepared for a lifetime of learning and
adaptation in the global marketplace.
What can higher education do Where can strategic investments
Elementary and secondary schools
better with its current funding? generate the needed results?
must help more students prepare for
This is the key to progress. The Marginal dollars still matter; money success in college and the workplace.
public has deep faith in the value of motivates action. People with ambitious, Colleges and universities must increase
education, persistently expressed in shared objectives are willing to pay for student participation, retention and
public polls, political rhetoric and the results. Strategic investments are essential completion rates. Recognizing the
recurring pattern of recovery in fund- for achieving widespread educational importance of educational attainment
ing postsecondary education. But too attainment; policymakers and post- to New England’s future, policymakers
many in the public lack confidence that
additional investment will generate
The most important financial issue in postsecondary education
the needed results.
Currently available resources are is the use of existing funds, not incremental dollars.
greater and far more important than any
“new money” that might be obtained secondary leaders need to agree on the must make strategic investments to
in the foreseeable future. Additional agenda. The reallocation of existing ensure that New Englanders have the
spending is unlikely to produce better resources to address public priorities educational resources necessary for
outcomes in higher education unless will help build public support for success in the 21st century.
there are changes in the way resources well-targeted incremental resources.
are allocated and the manner in which New England’s “best-educated” Paul E. Lingenfelter is president
teaching and learning are approached. citizens can compete in any market, of the national association of
The most important financial issue in and their college participation and State Higher Education Executive
postsecondary education is the use of attainment rates are generally well Officers, based in Boulder, Colo.
existing funds, not incremental dollars. above average. Yet New England, perhaps Email: [email protected].
24 NEW ENGLAND BOARD OF HIGHER EDUCATION