State Budgets and the High Costs of Higher Education
Higher education like many areas of state spending has experienced funding erosion in the “new normal” budget environment. However, many of the budgeting problems for higher education are unique; because unlike most state goods and services, higher education has multiple sources of revenue, which means state funding tends to be less consistent. For years, institutions of higher learning and state appropriators have solved higher education budgeting and financing problems by shifting costs from state appropriations to the individual and by cross-subsidizing educational costs across academic disciplines and student groups.
There are potential consequences from strategies that require analysis. They include asking questions 1) through increased tuition dollars, are students paying a disproportionate share of the rise in costs; 2) in terms of states’ operating budgets, is the share of state dollars going toward higher education flat-lining or decreasing, particularly in times of resource constraint; 3) could institutions of higher learning focus more on cost reductions or restructuring; 4) are students who pay the full price of their education, effectively subsidizing those students who receive discounted tuition and if so, is that a problem? State budget officers will have a chance to discuss how these issues unfold across the states, and will also hear from national experts on higher education finance.
The post-stimulus budget environment and the President’s recent commitment to college affordability continue to make state funding for higher education highly visible. However, in a budget environment with pent-up demand for state goods and services, higher education spending trends of the past are not likely to return. In many instances, state finance officials are looking to realign budgeting practices for higher education to improve outcomes and performance. More informed budget decision making with regards to higher education can occur if there is; a) greater financing transparency; b) enhanced communication between state budget analysts and education officials; c) institutional commitment to structural costs; d) direct linkages between state financing practices and tuition revenues and cost structures; e) more consensus on the role of higher education in individual state economies and society, and; f) connection between spending measures and performance. Participants of the 2012 NASBO convening on Higher Education Finance will be addressing these issues and more.
The National Association of State Budget Officers (NASBO) has received a grant from the Bill and Melinda Gates Foundation to support budget officer analysis and discussion on the future of state funding for higher education. NASBO will convene a day-long summit on April 19th in which more than 30 state budget directors and higher education budget officers will have the opportunity to discuss ─ from their perspective ─ a range of issues in higher education finance; including the development of practical strategies to move state financing of higher education towards increased efficiency, accountability and results. The convening will include presentations by Jane Wellman, founding Director of the Delta Cost Project, and Russell Gould, Regent for the University of California Board of Regents and former Director of Finance for the California Department of Finance.
The goal of the meeting will be to have a significant discussion about states and future financing issues involving higher education. From the discussion we want to: further identify the challenges state governments face by providing financial assistance to institutions of higher education, develop practical solutions for performance measurement improvements in higher education, prioritize the changes state governments would like to see occur among institutions within their state, and have a serious discussion of the actions that need to take place to lead to recommendations for improvements.