Annual SHEEO Report Sheds Light on State of State Higher Education Finance

Title: State Higher Education Finance Report – Fiscal Year 2021

Authors: Sophia Laderman and Kelsey Kunkle  

Source: State Higher Education Executive Officers Association (SHEEO)

The State Higher Education Executive Officers Association (SHEEO) recently released its annual State Higher Education Finance Report for fiscal year 2021. SHEEO’s stated purpose of this report is to “broaden understanding of the context and consequences of public policy decisions in each state that contribute to public higher education funding levels and funding distributions across states and nationally.”

The report includes myriad information on sources and uses of state funding, distribution of revenue sources for public higher education, state funding and enrollment, and net tuition and total educational revenue. It ends with implications moving forward and places the data collected in this year’s report in context of the economic challenges and increased federal funding provided through COVID-19 pandemic relief efforts.

Some highlights of this year’s report include:

• Total state and local funding for higher education hit $113.2 billion dollars in fiscal year 2021. A total of $3.7 billion, or 3.2 percent of overall funding, came from federal stimulus dollars related to COVID-19.
  
• All states except Alabama, Nevada, New York, Oklahoma, and West Virginia used some portion of federal stimulus funds provided to state governments for higher education.
  
• Five states–Colorado, Minnesota, New Hampshire, Vermont, and Wyoming–along with Washington, D.C., used more than 20 percent of federal stimulus funding for higher education.
  
• In general, state and local funding for higher education went to general operations (78.1 percent), with around 10 percent supporting research or extension programs. Approximately nine percent was used for student financial aid at public institutions.
  
• The report noted a net FTE (full-time equivalent) enrollment decline of three percent, the largest FTE decline on record. Notably, this is the 10th year of recurring enrollment declines following increased enrollment during the Great Recession.
  
• Even with the recession caused by the COVID-19 pandemic, educational appropriations per FTE increased 4.5 percent in the last year, against historical data of other recessions. The report attributes this change to increasing state commitments to higher education, declines in FTE enrollment, and the impact of federal stimulus funding during the fiscal year.
  
• Overall, the student share (proportion of revenue that comes from net tuition and fees) rose to 43 percent, with 20 states having student shares above the 50 percent mark.

The authors identify several implications, noting that states were able to support higher education during the early pandemic recession due to federal support. They point out that many states will face difficult budgetary decisions when federal stimulus dollars run out and urge states to make long-term, sustained investments to promote educational quality and student affordability to reduce inequality.

To read the full report, please click here.

—Ben Cecil