State support for public colleges continued to rise last year, surpassing pre-Great Recession levels for only the second year since 2008, according to the latest annual State Higher Education Finance report compiled by the State Higher Education Executive Officers Association. But this nominal good news obscures a more complicated story in the report’s data.
For every full-time student, states paid $11,040 on average nationwide in fiscal year 2023, a 3.7-percent increase above inflation from the previous year. That figure is 6.7-percent higher per full-time student, adjusted for inflation, than in fiscal year 2008.
But as Kelsey Kunkle, the report’s author, notes, the growth in state support came in part due to dwindling federal stimulus dollars and a downturn in enrollment. The former will continue to decrease, and the latter could have worrying long-term ramifications.
Of the $130 billion in total federal and state support for higher education in fiscal 2023, only about $1.7 billion was federal stimulus money, down from about $2.3 billion in fiscal year 2022. While support for public colleges still would have risen without federal dollars, pandemic-era stimulus funds will eventually cease to buoy institutions’ bottom lines.
The report also notes that the increase in per-student support derives, in part, from the fact that there are fewer students attending public colleges. Enrollment at community colleges has declined by nearly 12 percent since 2019, according to the report’s analysis, and at four-year public colleges by more than 3 percent. Enrollment at these institutions is now roughly flat with pre-recession levels. More state funding and fewer students contribute to a higher per-FTE support level.
Public colleges also took in less inflation-adjusted net tuition revenue in fiscal year 2023, according to the report’s analysis, falling by 3.3 percent from the previous year. Public colleges have been hampered in collecting net tuition revenue by increased state financial aid and states and institutions freezing tuition or holding increases to a minimum.
Of course, the overall national-level statistics in the report tell only one story. Each state faces different circumstances and different dynamics. But for the public colleges with the most precarious finances, modest increases to their state support may not be able to offset the potential negative consequences of flagging enrollment, anemic net-tuition revenue, and the end of federal-stimulus money. As the report states: “The continued decline in net tuition revenue puts greater pressure on states to not cut funding to public higher education in the coming years.”
