State and local funding for public colleges up 18% from pre-pandemic levels, SHEEO says

Dive Brief:

• State and local funding for public colleges increased 0.8% above inflation in fiscal 2024, reaching $11,683 per full-time equivalent student, according to a report released Wednesday by the State Higher Education Executive Officers Association. 
• Total state and local appropriations reached $139.1 billion, though that figure includes more than $624.1 million in federal stimulus funding directed by the states. While this funding has been “cushioning state budgets, allowing states to continue supporting higher education,” it has also been declining, the report noted.
• The gradual depletion of stimulus money portends tougher times ahead. “States may face difficult budgetary decisions” as federal money runs out, SHEEO said in a news release.

Dive Insight:

Last fiscal year, funding from state and local governments hit levels 17.9% above those seen in pre-pandemic times. And more good news from the report: Between fiscal years 2023 and 2024, FTE enrollment rose from 10.1 million students to 10.4 million, marking the first enrollment increase after 12 years of declines, according to SHEEO.

Now for the bad news: Fiscal 2024 saw the largest decline in tuition revenue per FTE student since 1980, the first year in SHEEO’s State Higher Education Finance data set. 

Net tuition and fee revenue per FTE at public institutions averaged $7,510, down 3.7% from 2023 when adjusted for inflation. The figure has declined for five of the past six years after decades of tuition revenue increases due to rising tuition prices as well as shares of out-of-state, international and graduate enrollment. 

Even the enrollment increases come with a caveat — 2024 headcounts are still down 10.8% from their peak in 2011. These historically lower levels are weighing on tuition revenue, keeping prices flat against inflation. Given the tough demographic landscape for colleges going forward, further enrollment increases will likely be hard won. 

Looking more closely at spending, state and local appropriations per FTE decreased 3.3% at two-year institutions but increased 1.8% at four-year institutions, the report noted. 

Without federal stimulus funding directed by states to higher education, inflation-adjusted education appropriations still would have increased 1.8% from 2023. 

The report also noted that 22 states’ appropriations to higher education remain below Great Recession levels, chief among them being Arizona (40.3% below 2008 levels), Iowa (29.9% below) and Delaware (29.8% below).

“With uncertainty on the horizon for federal and state budgets alike, we know states will be under greater pressure to fund higher education,” SHEEO President Robert Anderson said in a statement. “While each state is facing its own unique circumstances, we hope lawmakers will continue to view public higher education as an investment in their state’s future workforce.”