State Higher Education Finance David Wright, SHEEO SHEEO/NCES Network Conference Washington, DC March 31, 2004

State Higher Education Finance

David Wright, SHEEO

SHEEO/NCES Network ConferenceWashington, DC

March 31, 2004

The SHEF StudyThe SHEF Study

Purpose of the Study

Understanding the Data

Analytical Issues

Discussion of Analytical Tools and Individual State Profiles

Study PurposeStudy Purpose

SHEF Can Help Policy Makers:

Understand the extent to which state resources for instruction have kept pace with enrollment and inflation

Examine and compare how state higher education spending is allocated for different purposes

Assess trends in the extent to which students and families are paying the cost of higher education

Study PurposeStudy Purpose

SHEF Can Help Policy Makers:

Evaluate allocation to higher education as a percentage of state and local tax revenues

Assess comparative strength of state’s economy and its capacity to generate tax revenues to support public priorities

STATE TAX APPROPRIATIONS PER STUDENTFiscal 1970-2003 (Constant 2003 Dollars Adjusted with CPI-U)

$5,500

$6,000

$6,500

$7,000

$7,500

$8,000

$8,500

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Finance data are from Grapevine and reflect appropriations of state tax funds for operating expenses of higher education.

FTE data are from IPEDS and reflect fall term enrollments at all levels (undergrad, grad, and first professional) in degree granting public 2 and 4 year institutions. Fall 2002 and 2003 estimated.

Understanding the DataUnderstanding the Data

ENROLLMENT AND STATE TAX APPROPRIATIONS PER STUDENTFiscal 1970-2003 (Constant 2003 Dollars Adjusted with CPI-U)

4,500,000

5,500,000

6,500,000

7,500,000

8,500,000

9,500,000

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Pu

bli

c F

TE

En

roll

me

nt

$5,500

$6,500

$7,500

$8,500

Sta

te T

ax

Ap

pro

pri

ati

on

s p

er

FT

E

Public FTE Enrollment

State Tax Appropriations per FTE



SHEF Similarities to “Grapevine”

Focus on state and local support

Focus on operational funding

Exclusion of self-supporting auxiliary enterprises

Inclusion of state funding for private institutions and agencies


SHEF Differences from “Grapevine”

“Nets out” support to private sector

Sets aside special purpose funding “Educational Appropriations” =

State plus Local less Research_Agr_Med

Captures net tuition revenue

Puts funding in context of enrollment

Adjusts for inflation and interstate differences


SHEF Core Data

FTE

State support

Tax and non-tax

Appropriated and non-appropriated

Local appropriations

Research, agricultural, and medical

Net tuition revenue

Analytical IssuesAnalytical Issues

Improving ComparisonsOver Time and Across States

Adjusting for Enrollment

Adjusting for Inflation

Adjusting Interstate Comparisons

Enrollment Mix

Cost of Living

FTE ENROLLMENT IN PUBLIC POSTSECONDARY INSTITUTIONS, BY STATEFiscal 2003

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

Cal

iforn

iaTe

xas

Flor

ida

New

Yor

kO

hio

Illin

ois

Mic

higa

nP

enns

ylva

nia

Nor

th C

arol

ina

Virg

inia

Was

hing

ton

Wis

cons

inN

ew J

erse

yG

eorg

iaIn

dian

aA

rizon

aU

.S. A

vgM

inne

sota

Ala

bam

aLo

uisi

ana

Mar

ylan

dTe

nnes

see

Col

orad

oM

isso

uri

Ken

tuck

y

Sou

th C

arol

ina

Mis

siss

ippi

Mas

sach

uset

tsO

klah

oma

Ore

gon

Iow

aU

tah

Kan

sas

Ark

ansa

sN

ew M

exic

oN

ebra

ska

Con

nect

icut

Wes

t Virg

inia

Nev

ada

Idah

oM

onta

na

Nor

th D

akot

aH

awai

iM

aine

Del

awar

e

Sou

th D

akot

a

New

Ham

pshi

reR

hode

Isla

ndW

yom

ing

Ver

mon

tA

lask

a

The Need to Adjust for Enrollment The Need to Adjust for Enrollment

FULL-TIME EQUIVALENT ENROLLMENTPercent Change by State, Fiscal 1991-2003

76.5%

-3.5%

18.9%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Rho

de Is

land

Mis

sour

iIll

inoi

sA

lask

aM

aryl

and

Kan

sas

Min

neso

taN

ebra

ska

Mic

higa

nA

laba

ma

New

Ham

pshi

re

Con

nect

icut

Pen

nsyl

vani

aW

isco

nsin

New

Yor

kM

aine

Mas

sach

uset

ts

Wes

t Virg

inia

Verm

ont

Ohi

oIo

wa

Wyo

min

gH

awai

iTe

nnes

see

Geo

rgia

Texa

sN

ew J

erse

yVi

rgin

iaC

olor

ado

U.S

.D

elaw

are

New

Mex

ico

Indi

ana

Okl

ahom

a

Nor

th D

akot

aK

entu

cky

Ore

gon

Mon

tana

Idah

oC

alifo

rnia

Sou

th C

arol

ina

Ariz

ona

Nor

th C

arol

ina

Flor

ida

Sou

th D

akot

aLo

uisi

ana

Mis

siss

ippi

Ark

ansa

s

Was

hing

ton

Uta

hN

evad

a

NOTE: FTE includes undergraduate, graduate, and first professional enrollment.

SOURCE: SHEEO State Higher Education Finance.

The Need to Adjust for Enrollment The Need to Adjust for Enrollment

Adjusting for InflationAdjusting for Inflation

Higher Education Cost Adjustment

Provider vs. consumer perspective

HECA attempts to reflect the provider “market basket” without being self-referent

Transparent, accessible, routinely updated

Serves as a benchmark rather than descriptive measure of HE cost inflation


Higher Education Cost Adjustment

75% of the index is based on BLS Employment Cost Index for white-collar workers.

25% of the index is based on BEA’s GDP Implicit Price Deflator.

current $ GDP / constant $ GDP

reflects general price inflation in total U.S. economy

COMPARISON OF THREE ALTERNATIVE HIGHER EDUCATION INFLATION INDICES

Fiscal 1991 - 2003

100

105

110

115

120

125

130

135

140

145

150

1990

-91

1991

-92

1992

-93

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99

99-2

000

2000

-01

2001

-02

2002

-03

HEPI

HECA

CPI-U


Interstate Comparison Adjustment #1Interstate Comparison Adjustment #1

Enrollment Mix Index (EMI)

Average instructional expenses per student vary by institution type

Enrollments are distributed differently across states’ public HE systems

The EMI adjusts operating revenues to account for both factors

Developing the EMIDeveloping the EMI

Average Instructional Costs per FTEFiscal 2001

$12,661

$10,315

$9,160

$7,688

$9,662

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

ResearchExtensive

ResearchIntensive

Masters I Assoc Overall

Source: IPEDS, Fall 2000 Enrollment and 2000-01 Finance.


Public System FTE Distributions for Selected States

Research

Extensive

Research Intensive

Masters

I & II

Bacc Assoc

North Carolina

20% 11% 25% 3% 41%

California 15% 2% 23% LT 1% 60%

Ohio 39% 23% 3% 3% 32%

U.S. 27% 8% 22% 3% 40%

Source: IPEDS Fall 2000 Enrollment for Sectors 1 and 4.


Public System Enrollment Mix Indexfor Selected States

0.98

0.92

1.08

1.00

0.80

0.85

0.90

0.95

1.00

1.05

1.10

N. Carolina California Ohio U.S.

Interstate Comparison Adjustment #2Interstate Comparison Adjustment #2

Cost of Living Adjustment (COLA)

State differences driven by housing cost

Adopted index developed by Berry et al (2000)

One value per state

Hawaii and Alaska assigned value of next highest state (Massachusetts)

Interstate ComparisonsInterstate Comparisons

Enrollment Mix and Cost of Living Adjustments for Selected States

EMI COLA Combined

Arkansas .98 .89 .87

Colorado 1.04 1.02 1.06

Oregon 1.02 .98 1.00

U.S. 1.00 1.00 1.00

Analytical ToolsAnalytical Tools

TOTAL EDUCATIONAL FUNDING PER FTE, BY STATE --CURRENT STANDING AND PERCENT CHANGE FISCAL 1991-2003(Fiscal 2003 Unadjusted for Public System Enrollment Mix or State Cost of Living)

MT

WV

IANY

WIMA

ME PA

NJHI

VT

NM

MN

GA

IN

MDKSTNIL

NEAL

TX

KYMO

MI

WY

RI

DE

CT

AK

OH

NHNCORVA

AZCOCA

SCWA

ND

UT

OKLA

ID

NV

SDU.S.

MS

FL

AR

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

-70% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70%

Percent Over/Under the U.S. Average in Fiscal 2003

Per

cen

t C

han

ge,

Fis

cal

1991

-200

3, i

n C

on

stan

t H

EC

A D

oll

ars

below average and decreasing

below average and increasing

above average and increasing

above average and decreasing


TOTAL EDUCATIONAL FUNDING PER FTE, BY STATE --CURRENT STANDING AND PERCENT CHANGE FISCAL 1991- 2003(Fiscal 2003 Adjusted for Public System Enrollment Mix and State Cost of Living)

NM

MI

RI

WY

AK

DE

CT

PAME

VT

NC

MNINMAU.S. WI IA

NY

GA

TNMD

AL

MOKY

WV

NEKS

IL

MT

SDOH

ORVAARAZ

CAOK

NV

HISC

LAMS

CO

ND

UT

NJ

WAID

NH

TX

FL

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

-70% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70%

Percent Over/Under the U.S. Average in Fiscal 2003

Per

cen

t C

han

ge,

Fis

cal

1991

-200

3, i

n C

on

stan

t H

EC

A D

oll

ars

below average and decreasing

below average and increasing

above average and increasing

above average and decreasing


PERCENT CHANGE FISCAL 1991-2003 IN THE TWO COMPONENTS OFTOTAL EDUCATIONAL FUNDING PER FTE, BY STATE

(Educational Appropriations per FTE and Net Tuition Revenue per FTE)

NJ

LA

MS ARWI

WA ND

AK

NHNV OK

PAAZ

NC

U.S.

CA

DE

UT

OHVA SD

IN

MA

WY

KY

MO

IL

WVNM

RIKSAL

FL CO

MT

HI

IA NY

MDMN

CTTN

TXOR

ID

SCVT

NE

MIGAME

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

120%

130%

140%

-50% -45% -40% -35% -30% -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30%Percent Change, Educational Appropriations per FTE

(Constant 2003 HECA Dollars)

Per

cen

t C

han

ge,

Net

Tu

itio

n p

er F

TE

(Co

nst

ant

2003

HE

CA

Do

llar

s)

appropriations UP,tuition DOWN

appropriations & tuition UPappropriations DOWN,tuition UP

appropriations & tuition DOWN

Comments/Questions?Comments/Questions?

Contact

David Wright

Senior Research Analyst

(303) 299-3677

[email protected]

Documents

State Higher Education Finance David Wright, SHEEO SHEEO/NCES Network Conference Washington, DC March 31, 2004