Recession, Retrenchment and RecoveryState Higher Education Funding & Student Financial AidSponsored by the Lumina Foundation for Education

SHEEOProfessional Development Workshop

August 16, 2006

$6,094

$5,721$5,702

$6,874

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Pu

bli

c F

TE

En

roll

men

t

$5,000

$5,500

$6,000

$6,500

$7,000

Ed

uca

tio

nal

Ap

pro

pri

atio

ns

per

FT

E

5M

6M

7M

8M

9M

10M = Recession

The Problem: National Trends since 1980

FTE enrollment in public institutions has grown by more than 40% since 1980.

Enrollment growth since 2001 has already outstripped that of each of the previous two decades.

+ 11.8%

+ 6.2%

+ 8.5%

Source: SHEEO SHEF

Educational Appropriations per FTE, U.S.,Fiscal 1980-2004, Constant 2004 Dollars Adjusted by SHEEO

HECA

The Opportunity

As the economy improves, it is now time to plan for the next

recession

Symposium on Financing of Higher Education April 2004

Project Goal

To identify and disseminate successful state-level strategies

and policy tools to protect student access to postsecondary education

Appropriations for higher education are affected by national recessions.

Total State Appropriations and Appropriations per Full-Time Equivalent Student 1979 to 2004 in 2004 Dollars

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

$60,000

$65,000

$70,000

79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04

Tota

l A

ppro

pri

ati

ons in m

illions

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Appro

pri

ati

ons p

er

FTE

Total State Appropriations Appropriations per FTE

Trend Appropriations per FTE Trend Total State Appropriations

Recession and Recovery

Recession Decease in Appropriations

per FTE

Recovery

1980-82 26 states 1.6 years

1990-91 38 states 3.4 years

2001 44 states ?

2001 Recession and Recovery

Number of States

Below 2001 approp/FTE

Recovered to 2001 Level

2001-2003 44 -

2004 45 1

2005 40 2

2006 30 12

Changes in Access Factors 1979 = 1

Public 4-year tuition

Aid per public FTE

Approps per public FTE

Income 30% tile

0.0

0.5

1.0

1.5

2.0

2.5

3.0

79 81 83 85 87 89 91 93 95 97 99 01 03

Public 4-year tuition Aid per public FTEApprops per public FTE Income 30%tile

Financial Access - the Balancing Act

Aid-to-tuition Ratio (higher is better)

Public Need-Based Aid per FTEWeighted Average Public Tuition

Access-Cost Indicator (lower is better)

Average Tuition & Fees – Aid per FTE30 Percentile Family Income

Aid-to-Tuition RatioSelected States

US Average

Illinois

Minnesota

Washington

Tennesee

North Carolina0%

5%

10%

15%

20%

25%

79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04

US Average I llinois MinnesotaWashington Tennesee North Carolina

Access-Cost IndicatorSelected States

US Average

Minnesota

North Carolina

I ndiana

Mass

0

5

10

15

20

79 81 83 85 87 89 91 93 95 97 99 01 03

US Average Minnesota North Carolina

Indiana Massachusetts

NASSGAP/SHEEO Survey

What impact has the recession of 2001 had on state higher education and student aid policies and priorities?

What strategies have states used to maintain financial access?

Which Higher Education Issues Have Become Priorities Since FY2001?

(by Annual Appropriations Change)

0

10

20

30

40

50

60

70

80

90

100

Work

forc

e Pre

p

Seam

less

Tra

nsitio

ns

Afford

abili

ty

Enroll.

Growth

Min

ority

Opportun.

Limit

Tuition In

crea

s.

Quality

of E

d.

Per

cen

tag

e

DecreaseFlatIncrease

Preliminary Analysis

What Are Your State’s Student Aid Priorities? (By Geographic Region)

0

10

20

30

40

50

60

70

80

Resourc

es fo

r Low-In

com

e

Helpin

g More

Stu

dents

New In

itiat

ive

Incr

easi

ng Max

Awar

d

College

Savin

gs

Coverin

g Tuiti

on Incr

ease

s

Expan

ding M

erit-

Based

Per

cen

tag

eM-HECNew EnglandSREBWICHE

Student Access Since FY2001

0 10 20 30 40 50 60 70 80 90 100

Enrollment Shifts fromHigher to Low-Cost

Increased SelectivityReduced Less Prepared

Increased Enrollment ofLow-Income

More Going Out-of-State

Education Viewed Moreas a Personal Benefit

Institutional Aid GrownFaster than State Aid

State Aid Increases KeptPace with Costs

More Starting atCommunity College

Students Expected toPay More

Percentage

UncertainDisagreeAgree

Selection of States

Primary Selection Criteria Access-Cost Indicator

Average Change 1979-2003 Post 2001 Recession Change

Aid-to-Tuition Ratio Average Change 1979-2003 Post 2001 Recession Change

Selection of States Secondary Selection Measures

Region Enrollment Size Participation Rates Population Educational Attainment Community College Enrollment Least Decrease in Appropriations per FTE

State Interviews

7 states 54 policymakers 30 questions

Successful Attributes

Arizona Kansas

Illinois Massachusetts North Carolina

TexasWashington

Defined Goals and Coherent Plan

Develop a populist master plan Work inside and outside the

capitol Repeat planning process every

4-5 years

Clear and Consistent Message

Define issues clearly in simple terms

Identify student need & what it will take to fund it

Articulate the future clearly Repeat the message over and

over

Student Aid Options That Meet State Goals

Articulate goals clearly Include students at public &

private institutions Focus on need-based aid, not

merit aid Concentrate on one primary

need-based aid program

Focus on Students

Be an advocate Hold low-income students

harmless on tuition increases Involve students in tuition

revenue spending decisions

Commitment to Access and Affordability

Strongly held values Constitutional or legislative

provisions Strong state and campus

leaders

Coordination

All sectors speak with a unified voice

Leadership by SHEEO and flagship president

Personalities or structure can cause this to happen

Develop Champions

Within the legislature Across party lines Among the general

public/business community Maximize every opportunity for

collaboration

Major Challenges Facing States

  Rapid Growth in Hispanic Student

Enrollment Financial and Geographic Access Balancing Tuition and Financial Aid Competition for Scarce Resources

Tuition Trends

Significant Increases Attempts to Deregulate Tuition Consideration of 4-Year Guarantees Tuition Set-Asides for SFA Increasing Reliance on the Tuition-

Payer than the Tax-Payer to fund higher education

Project Partners

National Association of State Student Grant and Aid Programs

State Higher Education Executive Officers

Center for the Study of Education Policy – Illinois State University