Higher education routinely takes a back seat to K-12 education and Medicaid in state general fund budgets, the portion financed primarily by taxes. State legislatures have argued that public colleges have the capacity to absorb funding cuts because they have separate budgets, reserves and revenue streams, the report said.
Public higher education is perceived as a flexible budget item and has suffered relative to other state priorities, including corrections. Funding for prisons has grown 141 percent between 1986 and 2013, but funding has only crept up 5.6 percent for public colleges and universities, according to the report.
There has been a seismic shift in the way public colleges are funded in just the last 26 years. In 1989, tuition made up a quarter of the total education revenue at state universities. By last year, those dollars accounted for 47.1 percent of the money schools need to educate students, according to the State Higher Education Executive Officers Association (SHEEO).
Although states began dialing back their higher education spending a decade ago, the collapse of the financial markets in 2008 led to deeper cuts. State general fund budgets were rocked by the recession, and legislatures responded by slashing higher education funding by 23 percent per student, according to the Center on Budget and Policy Priorities, a think tank.
At the same time, there was an influx of people enrolling in college, placing added pressure on already stretched school budgets. The number of students enrolled in public colleges rose by 20 percent from the 2002-2003 school year to 2011-2012, according to a recent Government Accountability Office report.
In the face of declining state dollars and soaring enrollment, universities raised tuition to make up for the funding shortfall. The sticker price at public colleges has increased an average 28 percent above the rate of inflation since the 2007-2008 school year, according to the budget think tank. The trouble is that federal grants and other aid have not kept pace with the cost of going to school.
Coming out of the recession, states began slowly spending more money on higher education, though not as much as they did before the financial markets crashed. State and local governments spent an average $6,552 per student in 2014, a 5.4 percent increase from the prior year, but 13 percent less than five years ago, according to SHEEO.
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