Dive Brief:

• State per-student spending on higher education is rebounding, though it is only halfway back to its pre-recession levels, according to a new report from the State Higher Education Executive Officers Association (SHEEO), which looks at changes in higher ed finance over the last decade at the state and national levels. Just nine states are back to pre-recession funding levels, while nine have had no recovery.
• Colleges have relied on tuition for a growing share of their revenue over the past decade, the report found. In 2018, however, net tuition revenue didn't rise, suggesting that colleges' reliance on this funding source may be leveling. Meanwhile, state and local appropriations were flat from 2017 to 2018, while federal appropriations grew an inflation-adjusted 0.2% year over year. Per-student appropriations to 22 states decreased during the period.
• A strong economy has full-time enrollment (FTE) 6% below 2011 levels, though it is 7.8% above 2008’s pre-recession figure. From 2017 to 2018, FTE fell 0.2% nationally, with decreases in 35 states and Washington, D.C. 

Dive Insight:

The flattening of tuition revenue suggests public colleges and universities are responding to market pressure on price growth, the SHEEO report notes. Still, "heavy reliance on tuition revenue has become the new norm for how state higher education system are funded," SHEEO President Robert Anderson said in a news release.

Some state budgets are proposing tuition freezes or limits on increases in exchange for more access to public funds. Colleges have also rolled out additional grant aid for low- and middle-income students, and some have even reset their tuition rates. 

Net tuition revenue per full-time student has increased 38.6% since 2008, growing its share from 35.8% of total higher ed revenue that year to 46.6% in 2018. (The report counts total higher ed revenue as the combination of net tuition and educational appropriations.) SHEEO projects this share will surpass 50% during the next economic recession, as the share of revenue students are responsible for tends to increase during contractions. Already, however, tuition accounted for more than half of total revenue in 27 states, including Vermont, New Hampshire and Delaware.

Although appropriations were largely flat nationwide, significant variation persists among states as they recover unevenly from the recession. From 2013 to 2018, total appropriations to public U.S. colleges and universities increased 15.2%, though the changes spanned a 19.8% decrease in Oklahoma and a 47.1% increase in Oregon.

Seven states saw higher ed appropriations decrease by 40% or more during the recession: Arizona, Florida, Idaho, New Hampshire, Oregon, Pennsylvania and South Carolina. Just two states — Illinois and North Dakota — did not see state funding decrease on a per-FTE level during that period. In 15 states, meanwhile, the higher ed budget has less revenue available for general operations today than it did a year ago.

Although total education revenue in 2018 experienced the least amount of change in nearly 40 years, higher ed funding is not necessarily stabilizing, the report suggests. Overall, total education revenue across U.S. higher ed increased 12.9% from 2013 to 2018, with 18 states posting above that mark and 32 states falling under it, of which two reported decreases for the period.

SHEEO's findings echo an analysis from Moody’s Investors Service earlier this year that evaluated states' varying reliance on state-level public funding. It found that Alaska, Illinois and Hawaii rely on state funding for more than 40% of their revenue while Vermont, New Hampshire and Pennsylvania each get less than 10% of their funds from the state.

The Moody's report suggests state funding concerns will remain a "high-profile policy issue" for public colleges, and that the strength of public support will remain largely tied to the health of the economy.