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Perspectives on Higher Education Finance

Perspectives on Higher Education Finance . State of Louisiana Higher Education Governance Commission September 28, 2010 Jeffrey Stanley Associate Vice President State Higher Education Executive Officers. Composition of total state expenditures in U.S. by function, fiscal 1987 - 2008.

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Perspectives on Higher Education Finance

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  1. Perspectives on Higher Education Finance State of Louisiana Higher Education Governance Commission September 28, 2010 Jeffrey Stanley Associate Vice President State Higher Education Executive Officers

  2. Composition of total state expenditures in U.S. by function, fiscal 1987 - 2008 Source:National Association of State Budget Officers, 2008 State Expenditure Report.

  3. State general fund expenditures in U.S.,fiscal 1990 & 2008 Source:National Association of State Budget Officers, 1990 & 2008 State Expenditure Report.

  4. New Hampshire Massachusetts South Carolina North Carolina United States South Dakota Pennsylvania North Dakota West Virginia Rhode Island New Mexico Washington Connecticut New Jersey Tennessee Mississippi Minnesota Wisconsin Oklahoma New York Louisiana Nebraska Delaware California Arkansas Kentucky Maryland Colorado Michigan Alabama Montana Vermont Missouri Georgia Nevada Arizona Kansas Oregon Virginia Indiana Hawaii Alaska Florida Texas Illinois Maine Idaho Utah Iowa Ohio Projected state and local budget deficits as a percent of revenues, 2013 Source: NCHEMS; Don Boyd (Rockefeller Institute of Government), 2005.

  5. Effects of national recessions on higher education • Postsecondary enrollments increase, then stabilize • State funding falls, then struggles to keep pace with enrollment growth • Tuition-derived revenues increase dramatically and ratchet up • New “equilibrium” achieved, with wide variations across states

  6. State/local funding for public higher education • $88.5 billion in state and local funding for public higher education (includes stimulus funds) in 2010 (near 2008 levels) • Public higher education enrollments have grown 35% since 2000, most rapid ten-year growth rate since 1970 • Recession and enrollment surge led to nearly 18% decrease, 2001-2005 • Modest recovery following 2005 “low-point” stalled in 2008 • In current dollars, net tuition per FTE grew by 4.8 percent between 2009 and 2010, while total educational revenues per FTE (state and local support plus net tuition) declined by 1.9 percent. Source: SHEEO, State Higher Education Finance FY2010, SSDB.

  7. Public FTE enrollment and education appropriations per FTE, U.S., fiscal 1985-2010 Note:Net tuition revenue used for capital debt service are included in the above figures. Constant 2009 dollars adjusted by SHEEO Higher Education Cost Adjustment (HECA). Source: SHEEO, State Higher Education Finance FY2010, SSDB.

  8. Public FTE enrollment and education appropriations per FTE, Louisiana, fiscal 1985-2010 Source: SHEEO, State Higher Education Finance FY2010, SSDB.

  9. Net tuition as a percent of public higher education total education revenue, U.S., fiscal 1985-2010 Note: Net tuition revenue used for capital debt service is included in net tuition revenue, but excluded from total educational revenue in calculating the above figures. Source: SHEEO, State Higher Education Finance FY2010, SSDB.

  10. State budget cycles Source: SHEEO, State Budgeting for Higher Education in the United States (as reported for FY 2007), June 2009.

  11. State budgeting approach for higher education Source: SHEEO, State Budgeting for Higher Education in the United States (as reported for FY 2007), June 2009.

  12. State funding for higher education – comparing funding requests to legislative appropriations Source: SHEEO, State Budgeting for Higher Education in the United States (as reported for FY 2007), June 2009.

  13. The really big challenges • Increase substantially numbers of postsecondary degrees/certificates • Ensure low income students are not left behind • Align P-16 standards, assessments and data • Programs/policies serving adult learners • Reengineering programs and institutions to focus on core teaching and learning outcomes • Ensure quality of learning and better student outcomes • Improve system-wide productivity and return on public investments

  14. Changing policy questions for financing higher education Mid 20th century questions: • Who Pays? • Who Benefits? • Who Should Pay? 21st Century question: • What prices, what financial aid, what levels of public support are required to achieve world class educational attainment?

  15. Focusing the conversation…(from Paul Lingenfelter) Wrong ideas about money… There is a “right” amount We can develop a completely fair and perfect allocation formula The only way to get better results is spend more money We can get the results we need without spending more money Right questions about money… • What do we need from higher education – now and in the future? • What can we do better with the money already available? • Where can strategic investments change the course and improve the effectiveness of higher education?

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