Higher ed funding: A look at 2 surprising trends

"Fiscal year 2023 continued to defy long-standing trends in higher education finance in the third year following an economic downturn," a new report says.

Higher ed funding, particularly at the state level, is not going in the direction one might expect at public colleges and universities a few years after the economic turmoil of the COVID pandemic. And neither is enrollment, according to a new analysis that also examines appropriations through the lens of the Great Recession of 2008.

The 3.7% growth in funding per full-time student at public institutions in 2023 is just the second time inflation-adjusted education appropriations exceed pre-Great Recession levels since that slowdown strangled the U.S. economy, according to the latest “State Higher Education Finance Report” from the State Higher Education Executive Officers Association.

Public institutions received an average of $11,040 in education appropriations per full-time equivalent enrollment in 2023. A steep drop in federal stimulus was offset by state funding as enrollment continued a steady 12-year decline, the report explains.

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“Fiscal year 2023 continued to defy long-standing trends in higher education finance in the third year following an economic downturn,” the report says. “Instead of steep cuts in state funding and sharp growth in student enrollment and tuition revenue, as expected in the years following an economic recession, inflation-adjusted state and local education appropriations per FTE increased, and enrollment and tuition revenue per student decreased. ”

The 10.2 million full-time equivalent students in 2023 represented a 0.5% drop from 2022 and the 12th straight year of declines. FTE enrollment has fallen by 12.1% from its 2011 peak, the report attests. Consequently, tuition revenue also fell by the largest margin since 1980 after decades of growth:

  • Public institutions received $7,353 in net tuition and fee revenue per FTE in 2023, down 3.3% from 2022, which is the largest one-year decrease since 1980.
  • Total education revenue increased 0.8% from 2022 to 2023, reaching an all-time high of $18,301 per FTE.

However, that all-time high does not mean all public institutions have record revenue as tuition and fee increases at many colleges and universities have not matched drops in other funding sources.

“This continued decline in tuition revenue puts greater pressure on states not to cut funding to public higher education in the coming years,” the report concludes. “With a growing body of evidence demonstrating that resources matter for improving student success outcomes, state leaders will need to ensure their higher education institutions have an adequate level of funding to increase credential production and meet workforce needs.”

Matt Zalaznick
Matt Zalaznick
Matt Zalaznick is the managing editor of University Business and a life-long journalist. Prior to writing for University Business, he worked in daily news all over the country, from the NYC suburbs to the Rocky Mountains, Silicon Valley and the U.S. Virgin Islands. He's also in a band.

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