State support for higher education increased in 2016, not counting Illinois

It’s impossible to examine state higher education finances in 2016 without separating the collapse in Illinois from a more nuanced picture across the rest of the country.

State and local support for higher education in Illinois plunged as the state’s lawmakers and governor were unable to reach a budget agreement and instead passed severely pared-down stopgap funding. Educational appropriations per full-time equivalent student in the state skidded 80 percent year over year, from $10,986 to $2,196. Enrollment in public institutions dropped by 11 percent, or 46,000 students.

That situation proved to be enough of an outlier that it weighed down several key markers in the 2016 State Higher Education Finance report from the State Higher Education Executive Officers association, which is being released today. The report annually offers an in-depth look at the breakdown of state and local funding, tuition revenue, enrollment, and degree completion across public higher education, a sector that enrolls roughly three-quarters of students in U.S. postsecondary education.

Include Illinois in the report’s key markers, and overall public support for higher education fell by 1.8 percent per full-time equivalent student in 2016, to $6,954, according to the report. Exclude Illinois, and overall support increased by 3.2 percent, to $7,116.

A 3.2 percent increase would have represented the fourth straight year of greater per-student public support for higher education across the country. However, it would not have matched the 5.2 percent increase reported last year.

“Our data is made up of so many different states,” said Sophia Laderman, SHEEO data analyst and the report’s primary author. “Without Illinois, we’re seeing an increase in appropriations per student, after adjusting for inflation. But it’s smaller than in the previous year.”

Breaking down the nationwide average shows significant variation between states, likely driven by localized economic and political conditions. Support for public higher education declined in 17 states in 2016, including Illinois. Support rose in 33 states. Oregon posted the largest increase in a state, of 14.6 percent. Oklahoma posted the largest decrease outside of Illinois, 12.6 percent.

Support fell by more in two other jurisdictions the report incorporates — it fell by 42 percent in the District of Columbia and 17.6 percent in Puerto Rico.

The year before, in 2015, support fell in only 10 states. It rose in 40. The increase in the number of states cutting support per full-time equivalent indicates they could be dedicating more money to other priorities like health-care costs and pensions. It could also signal more financial pressures for colleges and universities. That in turn could lead to higher tuition at public institutions.

Yet public colleges and universities posted their lowest increase in tuition revenue in years in 2016. Net tuition revenue per full-time equivalent rose by 2.1 percent at public institutions across the country, including Illinois, from $6,176 to $6,305.

“You see some institutions in some states basically have frozen tuition,” said George Pernsteiner, president of SHEEO. “Some have actually rolled it back, but I think most institutions in most states are now much more cognizant of the affordability problems that their students are encountering and much more reluctant to push for big tuition increases.”

Still, tuition took on increasing importance in public institutions’ budgets. The share of total educational revenue represented by tuition increased to 47.8 percent in 2016, up from 46.8 percent in 2015. It climbed near an all-time high of 48 percent recorded in 2013. Excluding Illinois, tuition income would have been 47.2 percent of educational revenues.

The increasing reliance on tuition is likely due to several factors beyond the situation in Illinois. Notably, enrollment in community colleges has fallen in the years since the recession. That shifted the overall student body to be more heavily enrolled in higher-tuition four-year colleges and universities.

The SHEEO report’s authors noted that more and more states are relying heavily on tuition revenue, though. A handful of large states that heavily subsidize public institutions, like California and New York, pull down the U.S. average for tuition as a percentage of educational revenue. A total of 31 states relied on net tuition for a higher-than-average percentage of total educational revenue in 2016. Just two years ago, only 28 states did so.

A future U.S. recession or economic shock will likely push the country past the point where net tuition accounts for half of U.S. educational revenue, said Andy Carlson, SHEEO principal policy analyst. Many individual states are already past that point, he said.

“Probably during the next official downturn, the U.S. number will hit 50 percent,” Carlson said. “But the reality is t