In Higher Ed Finance, What Goes Up Must Come Down?

Nationally, state and local funding for higher education may be making a comeback. In fact, FY 2013 was the first year since 2009 when state and local funding per full-time equivalent student increased from the previous year, according to the State Higher Education Executive Officers Association’s annual report on state higher education finance. While 30 states increased funding per student, 20 did not. In New England, three increased funding per student, three did not. (See table below.)

The Center on Budget and Policy Priorities (CBPP) elaborates, noting that per-student higher education funding has a long way to go before reaching pre-recession levels in most states—and in every state in New England. CBPP estimates this to be true through FY 2014. Tough competition for state funds and, in some states, slow-growing revenue streams haven’t helped.

In New England, public higher education institutions are bearing the brunt of these budgetary woes. Vermont Technical College and the University of Maine System are among those who have recently announced to help balance budgets. Other institutions have implemented strategies to boost another revenue stream: tuition and fees.

But, New England institutions are moving away from traditional tuition and fee increases. Connecticut’s state universities and community colleges plan to incentivize student enrollment (and thus tuition revenue) by offering a free course to new students. And, as part of a focus to prepare more New Hampshire residents with 21st century skills, the Community College System of New Hampshire announced a 5% reduction in tuition charges for the 2014-15 academic year.

With the number of traditional college-aged students declining in the region, relying on tuition and fee revenue and layoffs to offset slow-to-recover levels of public support is only part of the story. Serving adult students and developing lower-cost pathways to a credential are among the many new strategies that higher education institutions must consider to deal with economic and demographic pressures that could otherwise make them unsustainable.

Monnica Chan is director of policy & research at NEBHE.