Are states investing less in universities? New study finds college investment steady    

A new study analyzed 40 years of state higher education investment data

A new analysis of public university funding data is poking holes in decades-long conventional wisdom which posits that states have routinely and regularly divested from public institutions of higher education.

The study, conducted and published by the Texas Public Policy Foundation, used four decades of publicly available state investment data to find that, on average, states have maintained or slightly increased investment in their universities. Investment typically dipped during hard economic times and rebounded to exceed previous levels when the economy bounced back.

“The story over time is that not only do we recover from those recessions, but in the years where we don’t have an economic boom or bust, we’re increasing funding in those years,” Andrew Gillen, lead researchers and author of the study, said.

Gillen’s work looked at trends in both state funding and tuition revenue streams for public universities from 1980 to 2019. The rising cost of college is well documented and expected – Gillen found that tuition has increased “at a rate of between $126 to $143 per student per year,” according to the study.

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“The story over time is that not only do we recover from those recessions, but in the years where we don’t have an economic boom or bust, we’re increasing funding in those years."

— Andrew Gillen, Texas Public Policy Foundation

The more surprising of Gillen’s findings is that “inflation-adjusted state funding has typically increased by $12 to $48 per student per year.”

The study, published by the Texas Public Policy Foundation, differs from other analyses based on the same data because it measures state investment against inflation, which shows an increase. The data is typically parsed by university costs, which almost always shows inadequate state funding.

Gillen said measuring investment by university costs is an unfair metric because schools will always increase spending if given the opportunity. Growing expenses for universities have increasingly fallen on students to shoulder – primarily through public and private loans. According to Department of Education data, total student debt ballooned to nearly $1.6 trillion in 2019, a high water mark by any metric.

“We can’t hope to keep tuition down by just giving schools more money, because they’re going to raise tuition anyways."

— Andrew Gillen, Texas Public Policy Foundation

“We can’t hope to keep tuition down by just giving schools more money, because they’re going to raise tuition anyways,” Gillen said.

On average, Gillen found that states appear most comfortable providing about $7,500 per student per year in investment. That amount is a far cry from the current cost of public universities, but Gillen said quality education can be provided for about that much. He cited community colleges and some state universities as examples of schools doing more with less.

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“There’s a ton of schools that are doing it,” Gillen said. “It’s clearly possible to deliver an adequate education for that amount.”

Gillen credited the steady rise in the cost of college to an academic arms race that has seen amenities, regional campuses and administrative budgets grow alongside tuition rates.

“Overall, the true story as we see it is that over time funding has declined on a per student level. The declines really occur because higher education funding is so tied to the economic cycle.”

— Sophia Laderman, State Higher Education Executive Officers Association

While the increase in the cost of higher education is undeniable, some take issue with Gillen’s analysis based on inflation. Sophia Laderman, a senior policy analyst at the State Higher Education Executive Officers Association (SHEEO), said other analyses often contradict Gillen’s claims of sustained state investment.

“Overall, the true story as we see it is that over time funding has declined on a per student level,” Laderman told Fox News. “The declines really occur because higher education funding is so tied to the economic cycle.”

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Annually, SHEEO conducts studies of the same data Gillen used in his research. They analyze the data in a number of different ways and through multiple inflation indices. Gillen used the Consumer Price Index (CPI), a broad inflation index, while Laderman cites the Higher Education Cost Adjustment (HECA), a college-specific measurement.

The primary difference in their analyses is that CPI shows a modest increase in per student investment in the best years, and HECA often shows a decline in per student investment over time. Laderman said HECA more heavily weighs staff and faculty costs in investment analysis.

“The main advice I’d have for universities, is that given the relative stability of state funding over time, you shouldn’t count on the state’s vastly increasing or decreasing the amount of support you provide,” Gillen said.

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The one thing both Gillen and Laderman agree on is the need for state investment into college and the uncertainty facing the industry in a pandemic year. Higher education experts of all stripes are struggling to forecast enrollment and investment.

“This year, who knows what is going to happen,” Laderman said. “It’s really unfortunate. The reason we publicly fund higher education in this country is to give everyone equal opportunity. If we continue down the path of declining state investment and increasing tuition, we run the risk of failing to meet that public purpose.”