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State Higher Education Finance
David Wright, SHEEO
SHEEO/NCES Network ConferenceWashington, DC
March 31, 2004
The SHEF StudyThe SHEF Study
Purpose of the Study
Understanding the Data
Analytical Issues
Discussion of Analytical Tools and Individual State Profiles
Study PurposeStudy Purpose
SHEF Can Help Policy Makers:
Understand the extent to which state resources for instruction have kept pace with enrollment and inflation
Examine and compare how state higher education spending is allocated for different purposes
Assess trends in the extent to which students and families are paying the cost of higher education
Study PurposeStudy Purpose
SHEF Can Help Policy Makers:
Evaluate allocation to higher education as a percentage of state and local tax revenues
Assess comparative strength of state’s economy and its capacity to generate tax revenues to support public priorities
STATE TAX APPROPRIATIONS PER STUDENTFiscal 1970-2003 (Constant 2003 Dollars Adjusted with CPI-U)
$5,500
$6,000
$6,500
$7,000
$7,500
$8,000
$8,500
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Finance data are from Grapevine and reflect appropriations of state tax funds for operating expenses of higher education.
FTE data are from IPEDS and reflect fall term enrollments at all levels (undergrad, grad, and first professional) in degree granting public 2 and 4 year institutions. Fall 2002 and 2003 estimated.
Understanding the DataUnderstanding the Data
ENROLLMENT AND STATE TAX APPROPRIATIONS PER STUDENTFiscal 1970-2003 (Constant 2003 Dollars Adjusted with CPI-U)
4,500,000
5,500,000
6,500,000
7,500,000
8,500,000
9,500,000
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Pu
bli
c F
TE
En
roll
me
nt
$5,500
$6,500
$7,500
$8,500
Sta
te T
ax
Ap
pro
pri
ati
on
s p
er
FT
E
Public FTE Enrollment
State Tax Appropriations per FTE
Understanding the DataUnderstanding the Data
Understanding the DataUnderstanding the Data
SHEF Similarities to “Grapevine”
Focus on state and local support
Focus on operational funding
Exclusion of self-supporting auxiliary enterprises
Inclusion of state funding for private institutions and agencies
Understanding the DataUnderstanding the Data
SHEF Differences from “Grapevine”
“Nets out” support to private sector
Sets aside special purpose funding “Educational Appropriations” =
State plus Local less Research_Agr_Med
Captures net tuition revenue
Puts funding in context of enrollment
Adjusts for inflation and interstate differences
Understanding the DataUnderstanding the Data
SHEF Core Data
FTE
State support
Tax and non-tax
Appropriated and non-appropriated
Local appropriations
Research, agricultural, and medical
Net tuition revenue
Analytical IssuesAnalytical Issues
Improving ComparisonsOver Time and Across States
Adjusting for Enrollment
Adjusting for Inflation
Adjusting Interstate Comparisons
Enrollment Mix
Cost of Living
FTE ENROLLMENT IN PUBLIC POSTSECONDARY INSTITUTIONS, BY STATEFiscal 2003
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
Cal
iforn
iaTe
xas
Flor
ida
New
Yor
kO
hio
Illin
ois
Mic
higa
nP
enns
ylva
nia
Nor
th C
arol
ina
Virg
inia
Was
hing
ton
Wis
cons
inN
ew J
erse
yG
eorg
iaIn
dian
aA
rizon
aU
.S. A
vgM
inne
sota
Ala
bam
aLo
uisi
ana
Mar
ylan
dTe
nnes
see
Col
orad
oM
isso
uri
Ken
tuck
y
Sou
th C
arol
ina
Mis
siss
ippi
Mas
sach
uset
tsO
klah
oma
Ore
gon
Iow
aU
tah
Kan
sas
Ark
ansa
sN
ew M
exic
oN
ebra
ska
Con
nect
icut
Wes
t Virg
inia
Nev
ada
Idah
oM
onta
na
Nor
th D
akot
aH
awai
iM
aine
Del
awar
e
Sou
th D
akot
a
New
Ham
pshi
reR
hode
Isla
ndW
yom
ing
Ver
mon
tA
lask
a
The Need to Adjust for Enrollment The Need to Adjust for Enrollment
FULL-TIME EQUIVALENT ENROLLMENTPercent Change by State, Fiscal 1991-2003
76.5%
-3.5%
18.9%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Rho
de Is
land
Mis
sour
iIll
inoi
sA
lask
aM
aryl
and
Kan
sas
Min
neso
taN
ebra
ska
Mic
higa
nA
laba
ma
New
Ham
pshi
re
Con
nect
icut
Pen
nsyl
vani
aW
isco
nsin
New
Yor
kM
aine
Mas
sach
uset
ts
Wes
t Virg
inia
Verm
ont
Ohi
oIo
wa
Wyo
min
gH
awai
iTe
nnes
see
Geo
rgia
Texa
sN
ew J
erse
yVi
rgin
iaC
olor
ado
U.S
.D
elaw
are
New
Mex
ico
Indi
ana
Okl
ahom
a
Nor
th D
akot
aK
entu
cky
Ore
gon
Mon
tana
Idah
oC
alifo
rnia
Sou
th C
arol
ina
Ariz
ona
Nor
th C
arol
ina
Flor
ida
Sou
th D
akot
aLo
uisi
ana
Mis
siss
ippi
Ark
ansa
s
Was
hing
ton
Uta
hN
evad
a
NOTE: FTE includes undergraduate, graduate, and first professional enrollment.
SOURCE: SHEEO State Higher Education Finance.
The Need to Adjust for Enrollment The Need to Adjust for Enrollment
Adjusting for InflationAdjusting for Inflation
Higher Education Cost Adjustment
Provider vs. consumer perspective
HECA attempts to reflect the provider “market basket” without being self-referent
Transparent, accessible, routinely updated
Serves as a benchmark rather than descriptive measure of HE cost inflation
Adjusting for InflationAdjusting for Inflation
Higher Education Cost Adjustment
75% of the index is based on BLS Employment Cost Index for white-collar workers.
25% of the index is based on BEA’s GDP Implicit Price Deflator.
current $ GDP / constant $ GDP
reflects general price inflation in total U.S. economy
COMPARISON OF THREE ALTERNATIVE HIGHER EDUCATION INFLATION INDICES
Fiscal 1991 - 2003
100
105
110
115
120
125
130
135
140
145
150
1990
-91
1991
-92
1992
-93
1993
-94
1994
-95
1995
-96
1996
-97
1997
-98
1998
-99
99-2
000
2000
-01
2001
-02
2002
-03
HEPI
HECA
CPI-U
Adjusting for InflationAdjusting for Inflation
Interstate Comparison Adjustment #1Interstate Comparison Adjustment #1
Enrollment Mix Index (EMI)
Average instructional expenses per student vary by institution type
Enrollments are distributed differently across states’ public HE systems
The EMI adjusts operating revenues to account for both factors
Developing the EMIDeveloping the EMI
Average Instructional Costs per FTEFiscal 2001
$12,661
$10,315
$9,160
$7,688
$9,662
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
ResearchExtensive
ResearchIntensive
Masters I Assoc Overall
Source: IPEDS, Fall 2000 Enrollment and 2000-01 Finance.
Developing the EMIDeveloping the EMI
Public System FTE Distributions for Selected States
Research
Extensive
Research Intensive
Masters
I & II
Bacc Assoc
North Carolina
20% 11% 25% 3% 41%
California 15% 2% 23% LT 1% 60%
Ohio 39% 23% 3% 3% 32%
U.S. 27% 8% 22% 3% 40%
Source: IPEDS Fall 2000 Enrollment for Sectors 1 and 4.
Developing the EMIDeveloping the EMI
Public System Enrollment Mix Indexfor Selected States
0.98
0.92
1.08
1.00
0.80
0.85
0.90
0.95
1.00
1.05
1.10
N. Carolina California Ohio U.S.
Interstate Comparison Adjustment #2Interstate Comparison Adjustment #2
Cost of Living Adjustment (COLA)
State differences driven by housing cost
Adopted index developed by Berry et al (2000)
One value per state
Hawaii and Alaska assigned value of next highest state (Massachusetts)
Interstate ComparisonsInterstate Comparisons
Enrollment Mix and Cost of Living Adjustments for Selected States
EMI COLA Combined
Arkansas .98 .89 .87
Colorado 1.04 1.02 1.06
Oregon 1.02 .98 1.00
U.S. 1.00 1.00 1.00
Analytical ToolsAnalytical Tools
TOTAL EDUCATIONAL FUNDING PER FTE, BY STATE --CURRENT STANDING AND PERCENT CHANGE FISCAL 1991-2003(Fiscal 2003 Unadjusted for Public System Enrollment Mix or State Cost of Living)
MT
WV
IANY
WIMA
ME PA
NJHI
VT
NM
MN
GA
IN
MDKSTNIL
NEAL
TX
KYMO
MI
WY
RI
DE
CT
AK
OH
NHNCORVA
AZCOCA
SCWA
ND
UT
OKLA
ID
NV
SDU.S.
MS
FL
AR
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
-70% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70%
Percent Over/Under the U.S. Average in Fiscal 2003
Per
cen
t C
han
ge,
Fis
cal
1991
-200
3, i
n C
on
stan
t H
EC
A D
oll
ars
below average and decreasing
below average and increasing
above average and increasing
above average and decreasing
Analytical ToolsAnalytical Tools
TOTAL EDUCATIONAL FUNDING PER FTE, BY STATE --CURRENT STANDING AND PERCENT CHANGE FISCAL 1991- 2003(Fiscal 2003 Adjusted for Public System Enrollment Mix and State Cost of Living)
NM
MI
RI
WY
AK
DE
CT
PAME
VT
NC
MNINMAU.S. WI IA
NY
GA
TNMD
AL
MOKY
WV
NEKS
IL
MT
SDOH
ORVAARAZ
CAOK
NV
HISC
LAMS
CO
ND
UT
NJ
WAID
NH
TX
FL
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
-70% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70%
Percent Over/Under the U.S. Average in Fiscal 2003
Per
cen
t C
han
ge,
Fis
cal
1991
-200
3, i
n C
on
stan
t H
EC
A D
oll
ars
below average and decreasing
below average and increasing
above average and increasing
above average and decreasing
Analytical ToolsAnalytical Tools
PERCENT CHANGE FISCAL 1991-2003 IN THE TWO COMPONENTS OFTOTAL EDUCATIONAL FUNDING PER FTE, BY STATE
(Educational Appropriations per FTE and Net Tuition Revenue per FTE)
NJ
LA
MS ARWI
WA ND
AK
NHNV OK
PAAZ
NC
U.S.
CA
DE
UT
OHVA SD
IN
MA
WY
KY
MO
IL
WVNM
RIKSAL
FL CO
MT
HI
IA NY
MDMN
CTTN
TXOR
ID
SCVT
NE
MIGAME
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%
140%
-50% -45% -40% -35% -30% -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30%Percent Change, Educational Appropriations per FTE
(Constant 2003 HECA Dollars)
Per
cen
t C
han
ge,
Net
Tu
itio
n p
er F
TE
(Co
nst
ant
2003
HE
CA
Do
llar
s)
appropriations UP,tuition DOWN
appropriations & tuition UPappropriations DOWN,tuition UP
appropriations & tuition DOWN
Comments/Questions?Comments/Questions?
Contact
David Wright
Senior Research Analyst
(303) 299-3677