For the first time, state funding to public colleges exceeds per-student funding levels seen prior to the Great Recession

The latest State Higher Education Finance (SHEF) report finds that in 2022, public higher education appropriations increased 4.9% beyond inflation, surpassing pre-recession per-student funding levels for the first time since 2008. The SHEF report also finds that fiscal year 2022 saw the second largest public FTE enrollment decline since the start of the SHEF dataset in 1980, and tuition revenue continued to decline.

After a short recession in 2020 due to the COVID-19 pandemic, historical patterns following economic recessions reversed in 2021 and 2022. Instead of the typical decrease in state funding following a recession, education appropriations increased for the 10th straight year, rising $932 per full-time equivalent (FTE) from 2020 to 2022. Inflation-adjusted education appropriations per FTE were greater than pre-recession funding levels in 2008, by 3.1% or $304 per FTE. The increase in education appropriations per FTE can be attributed to three notable trends:  increasing state commitments to higher education funding, a sharp decline in FTE enrollment, and generous federal stimulus funding.[1]

Additional findings from this year’s report include:

  • Public FTE enrollment has now declined for 11 straight years to 10.31 million in 2022, down 2.5% since 2021, and down 11.6% from an enrollment peak in 2011. Public institutions have lost almost all the additional FTE enrollment they gained following the Great Recession, and in 2022, FTE enrollment was just 0.4% higher than in 2008. The two-year sector generally had larger enrollment declines across states, taking a larger hit than four-year enrollment in 31 states.
  • State and local government funding for higher education totaled $120.7 billion in fiscal year 2022, including more than $2.5 billion (2.1%) in federal stimulus funding. Inflation-adjusted federal stimulus funding for higher education declined $1.4 billion or 36.4% from fiscal year 2021. Two-year institutions received $55 per FTE in federal stimulus for public operating in 2022, while four-year institutions received $169 per FTE.
  • Education appropriations increased 3.8% at two-year institutions and 4.0% at four-year institutions. Without federal stimulus funding directed by states to higher education and without the decline in FTE enrollment, inflation-adjusted education appropriations still would have increased 3.6% from 2021 and 2.9% from 2020. Although national-level education appropriations have recovered to 2008 levels, 28 states continue funding higher education at a lower level than prior to the Great Recession.
  • State public financial aid per FTE increased 2.0% from 2021 to 2022 and reached an all-time high of $990 per FTE enrolled student. These funds made up 9.7% of all education appropriations. Financial aid per FTE increased in 29 states and Washington, D.C., in the last year. More than twice the amount of state financial aid was awarded to students attending four-year institutions than students at two-year institutions.
  • Inflation-adjusted net tuition revenue decreased 1.0% in 2022 and has declined 5.8% in the last five years. Public institutions received $7,244 per FTE in net tuition and fee revenue in 2022. Public institutions in more than half of all states collected less tuition revenue than they did five years ago. Decreases in net tuition revenue are largely due to increases in state financial aid and minimal tuition rate growth (lower than the rate of inflation). Declines in the last year were significantly worse in the two-year sector: Net tuition revenue per FTE declined 7.4% at two- year institutions and only 0.2% at four-year institutions. Despite recent declines, since 1980, net tuition revenue per FTE has increased in every state and has increased by more than 100% in 44 states.
  • Total education revenue increased 2.4% from 2021 to 2022, reaching an all-time high of $17,393 per FTE. However, total education revenue is at an all-time high in only 11 states, and many institutions are not at an all-time high for total education revenue. Additionally, the increase in total education revenue since the start of the COVID-19 pandemic is explained by federal stimulus funding and the enrollment decline. Excluding federal stimulus funding, and if enrollment had held constant at 2020 levels, total education revenue per FTE would have declined 2.4% from 2020 to 2022. 
  • The student share decreased from 43.1% in 2021 to 41.7% in 2022, and for the first time since 2016, the student tuition and fees funding public higher education comprised less than 50% of total revenues in more than half of all states and Washington, D.C., even after excluding federal stimulus funding. Continued increases in education appropriations and declines in net tuition revenue have reduced the proportion of total revenue financed by students. As states are faced with fewer federal stimulus dollars amidst increasing concerns about student affordability and student loan debt, states must make conscious efforts to continue decreasing the portion of public higher education funded by students and families.

As these findings demonstrate, fiscal year 2022 defied several long-term trends in higher education finance and showed growth in education appropriations. The continued decline in net tuition revenue puts greater pressure on states to not cut funding to public higher education in the coming years. When federal stimulus funds run out, states will face difficult budgetary decisions, and higher education may face cuts in some states.

SHEEO President Robert E. Anderson shared, “We’re pleased to see additional increases in state support for higher education, demonstrating a commitment in many states to fund their public institutions. While we see per-student funding levels come back to pre-Great Recession levels, there is still a long way to go in helping students access and succeed in higher education. The student share continues to draw concerns, and we hope these data help states see areas of improvement and continued opportunities of support for students.”

The SHEF report broadly addresses the wide variation in how states fund public higher education. However, state-specific context is incredibly important when discussing higher education finance trends. “The trends detailed in the SHEF report reflect national and state averages, but there are almost always outliers in every trend. Even within states, there can be wide variation in the enrollment and revenue patterns at each institution,” said Kelsey Kunkle, policy analyst at SHEEO and primary author of the report. “We know that state funding and institutional revenue impact student outcomes, and the negative impacts of low and unequal institutional revenues disproportionately affect students of color and low-income students.”

The full SHEF report paints a more complete picture of differences in public higher education finance across states.

Explore the SHEF website to read the full report and customize the interactive data visualizations. The SHEF website also includes individual state profiles, an additional report on state effort and capacity to fund higher education, and data resources exploring additional higher education finance topics like student residency, performance-based funding, and capital appropriations.

 

About SHEEO

The State Higher Education Executive Officers Association (SHEEO) serves the executives of statewide governing, policy, and coordinating boards of postsecondary education and their staffs. Founded in 1954, SHEEO promotes an environment that values higher education and its role in ensuring the equitable education of all Americans, regardless of race/ethnicity, gender, or socioeconomic factors. Together with its members, SHEEO aims to achieve this vision by equipping state higher education executive officers and their staffs with the tools to effectively advance the value of higher education, promoting public policies and academic practices that enable all Americans to achieve success in the 21st century, and serving as an advocate for state higher education leadership. For more information, visit sheeo.org.

Media Contact

Jessica Duren, Strategic Communications Director, jduren@sheeo.org


[1] Federal stimulus funding allocated to states due to the COVID-19 pandemic is included in education appropriations and total education revenue throughout the SHEF report. Federal stimulus funding contributed to the education appropriations increase in two ways. First, federal funds that protected state revenues and covered additional costs due to the COVID-19 pandemic and economic recession reduced the need to redirect funds from higher education to other budget areas during the pandemic. Second, federal funds given to states and used for higher education operations boosted education operating appropriations.