Financing Public Higher Education: Variation across States

E D U C A T I O N A N D T R A I N ING R E S E A R C H R E P O R T Financing Public Higher Education Variation across States Sandy Baum Martha Johnson November 2015 A B O U T T H E U R B A N I N S T I T U T E The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Copyright © November 2015. Urban Institute. Permission is granted for reproduction of this file, with attribution to the Urban Institute. Cover image courtesy of Shutterstock. Contents Acknowledgments iv Financing Public Higher Education: Variation across States 1 Variation in Income Levels across States 1 Variation in Tuition and Fees 2 Two-Year and Four-Year Institutions 2 Out-of-State and In-State Students 3 Variation in Funding Levels 4 Funding per Student 4 Funding by Personal Income 5 Explaining Variation in Funding 6 Variation in Enrollment Patterns 7 Student Migration 7 Two-Year and Four-Year Colleges 8 Instructional Expenditures 10 Student Aid 11 Funding, Tuition, and Instructional Expenditures 15 Conclusion 16 Appendix A 17 Notes 24 References 25 About the Authors 26 Statement of Independence 27 Acknowledgments This report was supported by funding from the Ford Foundation, the Bill & Melinda Gates Foundation, Lumina Foundation, and the Urban Institute. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. Funders do not determine our research findings or the insights and recommendations of our experts. Further information on the Urban Institute’s funding principles is available at www.urban.org/support. We are grateful to our funders, and to Kim Reuben, Matt Chingos, and Greg Acs at the Urban Institute, for their review and encouragement of this work. Financing Public Higher Education: Variation across States The issue of college affordability holds a prominent place on the agendas of Congress and the current administration and is an important topic for presidential candidates. Although state governments have historically taken primary responsibility for public higher education in the United States, it is increasingly clear that postsecondary access, quality, and success are national issues for which the federal government has some responsibility. As policymakers and others consider these issues from a national perspective, they should review state-level patterns in tuition, funding, and enrollment rather than just national averages, which obscure important differences across states. Some states fund their colleges and universities much more generously than others do. Higher-education systems have different structures, some consisting almost exclusively of four-year institutions and others including large community college systems. Tuition levels, grant aid provided to college students, and the proportion of students who stay in their home states for college vary widely across states. In this report, we examine patterns of public college pricing, funding, and enrollment across the nation, as well as instructional expenditures and student grant aid. Because most students remain in-state to take advantage of lower tuition, a clear view of cross-state variation is vital for understanding the nature and extent of barriers to college affordability and for developing policies to address those barriers. Variation in Income Levels across States To put college prices into context, it is helpful to start with a picture of family income levels across the nation. In 2013, when median income for a family of four was $80,356, it was $58,149 in Arkansas and $58,182 in Mississippi, and almost twice as high in Connecticut at $107,360. Median income for families of four was above $90,000 in 8 states (above $100,000 in 4), but below $70,000 in 16 states (see appendix A table A.1). These differences mean that the same college prices will have a varying effect on college affordability in different parts of the country. 2 F I N A N C I N G P U B L I C H I GH E R E D U C A T I O N : V A R I AT I O N A C R O S S S T A T E S Variation in Tuition and Fees In the 2014–15 academic year, when tuition and fees for in-state students averaged $9,139 at public four-year colleges and universities in the United States, Wyoming (with median income close to the national average) charged $4,646 and New Hampshire (with median income for families of four of over $90,000) charged $14,712. In 12 states, the published price for state residents was less than $7,000,