The Federal-State Higher Education Partnership: Lessons from Other Federal-State Partnerships

Kristin D. Conklin and Sandy Baum May 2017 Federal and state governments share some goals for higher education policy, including making high- quality education available to a wide range of students. But largely because of differing priorities and competing demands for resources, federal and state policies do not always work well together. As the federal role in funding higher education grows over time, questions arise about whether this role should involve more than just putting dollars in the hands of students. Federal funding does not have to mean federal control or a uniform national policy. But to further national goals for postsecondary opportunity and attainment, in addition to providing funds to students, the federal government could partner with state governments to support and influence their efforts to provide quality, affordable public higher education. Experiences in other areas of public policy provide lessons for a successful partnership. Federal funding and standards can establish strong norms and can improve equity in higher education. But states must have flexibility and considerable autonomy to facilitate a productive partnership. States establish, fund, and regulate public colleges and universities to provide postsecondary education for state residents. Federal policy focuses on access and affordability for individual students—particularly low-income students—through portable financial aid, primarily grants, loans, and tax credits.1 The system could be strengthened by a more thoughtful approach to the roles different levels of government play and how they can complement each other. After discussing the rationale for federal-state partnerships, this brief examines federal-state partnerships in transportation, health care, and elementary and secondary education in search of lessons for higher education. ED U C A T I O N P O L I C Y P R O GR A M The Federal-State Higher Education Partnership Lessons from Other Federal-State Partnerships 2 F E D E R A L-S T A T E H I G H E R E D U C A T I O N P A R T N E R S HIP: P A R T N E R S H I P L E S S O N S Current Patterns Most state and local funds go directly to public colleges and universities, and most federal funds go to individual students to use wherever they enroll. In 1999–2000, federal grant aid for students combined with education tax credits was equal to 25 percent of total state funding for higher education. By 2014–15, these federal programs contributed 80 percent as much as state funding. If federal loans and work-study aid are also included, total federal aid went from 80 percent of the level of state funding in 1999–2000 to 184 percent in 2014–15 (table 1). TABLE 1 Federal Student Aid and State and Local Appropriations for Public Higher Education, 1999–2000 to 2014–15 Millions of 2015 dollars Fiscal year Federal Student Aid State support for public higher education State and local support for public higher education Federal grants and tax credits and deductions/ state support Federal grants and tax credits and deductions/ state and local support Federal student aid/ state and local support Federal grant aid Federal tax credits and deductions Federal work-study Federal loans 2000 $13,609 $5,937 $1,217 $46,875 $77,288 $84,292 25% 23% 80% 2001 $14,462 $5,816 $1,285 $47,408 $79,914 $87,078 25% 23% 79% 2002 $17,437 $6,227 $1,349 $50,331 $81,313 $89,156 29% 27% 85% 2003 $20,008 $6,969 $1,333 $56,782 $78,636 $86,796 34% 31% 98% 2004 $21,687 $7,506 $1,298 $64,250 $75,606 $83,965 39% 35% 113% 2005 $22,054 $7,724 $1,252 $68,907 $76,724 $84,832 39% 35% 118% 2006 $21,034 $7,814 $1,202 $70,626 $79,134 $87,305 36% 33% 115% 2007 $21,100 $7,721 $1,142 $71,775 $83,489 $91,876 35% 31% 111% 2008 $23,055 $7,650 $1,116 $78,648 $85,905 $94,810 36% 32% 117% 2009 $26,487 $11,623 $1,057 $93,772 $81,996 $91,274 46% 42% 146% 2010 $45,011 $18,191 $1,078 $110,868 $76,457 $85,836 83% 74% 204% 2011 $53,169 $21,689 $1,067 $116,256 $76,850 $86,211 97% 87% 223% 2012 $48,169 $20,543 $1,027 $113,068 $71,106 $80,121 97% 86% 228% 2013 $47,664 $18,435 $1,005 $107,012 $70,525 $79,869 94% 83% 218% 2014 $46,461 $18,477 $1,002 $103,525 $74,302 $83,662 87% 78% 203% 2015 $45,150 $18,255 $983 $97,785 $78,971 $88,046 80% 72% 184% Sources: “SHEF—State Higher Education Finance FY15,” State Higher Education Executive Officers Association, accessed March 24, 2017, http://www.sheeo.org/projects/shef-fy15; and Sandy Baum, Jennifer Ma, Matea Pender, and Meredith Welch, Trends in Student Aid 2016 (New York: College Board, 2016), table 1. Note: Support includes federal financial aid to students in all sectors of higher education. States also provide $3 billion annual to independent institutions (not displayed here). The recent increased role of the federal government in financing higher education was not planned. Rather, state funding levels have not kept up with enrollment growth and tuition prices have risen rapidly. The states have responded to fiscal pressures, i