Enrollment Growth Amid Recession Creates Long-Term Challenges for States

A new analysis of state financing and enrollment trends in higher education highlights the challenges the nation’s colleges will face even after the economy has fully recovered.

The analysis, released on Thursday by the State Higher Education Executive Officers association, concludes that states will have a harder time restoring spending on higher education after this downturn than they have in past recessions. Per-student state appropriations have generally recovered after past recessions, but the current economic situation presents greater hurdles, the group says in its seventh annual State Higher Education Finance report.

A major complicating factor this time around, says the report, is that enrollments continue to increase at a decent pace, while the effects of budget cuts put institutions further behind. Nationally, full-time enrollment grew by 3.4 percent from 2007-8 to 2008-9, while total state appropriations for higher education increased by less than 1 percent for that period.

"The big story is that the demand for higher education is outstripping the ability of states to finance it," said Paul E. Lingenfelter, president of the state officers’ association.

2 Recessions Take Their Toll
From 1984 to 2009, full-time enrollment at two- and four-year colleges increased by nearly 47 percent, to more than 10.8-million students. Per-student state appropriations for higher education have remained relatively stable during that time, increasing by a little less than 5 percent, after adjusting for inflation, to $6,931.

Despite the growth in spending over that period, the 2009 level of per-student appropriations is 13 percent below the $7,961 that states were providing to colleges in 2001, when higher education budgets were at a high point, the report says.

But the recession that began in 2001 forced states to make severe cuts in higher-education budgets.

Because those cuts had not been fully restored when the current downturn began, states and colleges will be starting from further behind when state economies begin to recover, Mr. Lingenfelter said.

And even though states are using nearly $40-billion in federal stimulus money to offset cuts to education, many states will have used up that money by the end of this fiscal year, which occurs in June for most states. State tax revenues, in contrast, are not expected to recover until the 2012 budget cycle.

THE CHRONICLE OF HIGHER EDUCATION