What Disinvestment Looks Like

From Minnesota Alumni Magazine Fall 2015

As state funding drops, students and families pay more.

By Meleah Maynard

State support for higher education in the United States has declined steadily and dramatically during the past 25 years. When measured per student, state spending on instruction at public colleges is at its lowest since 1980 (adjusted for inflation), according to data from the State Higher Education Executive Officers (SHEEO). Thomas Mortenson, an analyst with the Pell Institute for the Study of Opportunity in Higher Education, projects that if current trends continue, state spending on colleges will eventually cease. The date in Minnesota, according Mortenson’s data, is 2037.

While it used to be common for states to pay two-thirds or more of tuition costs, students and families now foot most of the bill. In Minnesota in 2012, according to data from SHEEO, the total cost of educating a full-time-equivalent student per year was $12,753; the state paid $4,817 and the student paid $7,936. In almost half the states, students pay a larger share of the costs of a public education than the states do.

University of Minnesota Associate Professor David Weerts, director of the University of Minnesota’s Jandris Center for Innovative Higher Education in the department of organizational leadership, policy, and development, was one of three authors of the 2012 report, College Funding In Context: Understanding the Difference in Higher Education Appropriations Across the States. The result of a 20-year longitudinal study supported by the New York City–based public policy center, Demos, the report noted that the amount states spent per full-time-equivalent student dropped by 26.1 percent between 1990 and 2010.

Minnesota’s cuts to higher education since 1999 have been deeper than the national average (see chart), but Minnesota offers higher amounts of aid than some other states do. “We have a more thoughtful way of providing student aid through the design for shared responsibility,” Weerts explains. “Tuition is high, but so is the amount of state grant funding that’s available, though the programs have not kept up with the cost of college, which has created the gap we’re seeing now.” Currently, a University of Minnesota graduate who incurs student debt while earning a bachelor’s degree leaves with an average debt of $16,500.

Weerts sums up the situation: “Over the last 30 years, state funding for colleges and universities has not kept pace with the rising costs of educating students or the ability of states to fund higher education. Students and their families are filling in the gap through tuition, which has resulted in higher debt. This especially impacts middle-class families.”

The disinvestment trend is not likely to change. Though it used to be common for state support to rebound in the wake of a decrease, SHEEO’s 2014 annual report describes a “new normal” that expects students and their families to continue to pay increasingly more in order to complete a postsecondary education. The new normal also, the report says, expects schools and colleges to find ways to increase productivity and to absorb reductions in state support while increasing degree production without compromising quality. University of Minnesota Chief Financial Officer Richard Pfutzenreuter attributes a good share of the state funding decline to shifts in spending to pay for other things, particularly health and human services. (For example, 1 in 10 state dollars went to Medic aid in 1987, according to the National Association of State Budget Officers. By 2012, close to 1 in 4 did.)

In 1997, Pfutzenreuter notes, the U’s general fund appropriation from the state was equivalent to 5.26 percent of the state budget. In 2017, based on legislation passed early this summer, the University’s share will be 2.93 percent. If the U’s appropriation was at the same percentage it used to be, it would be about $1.1 billion instead of $626 million, he says.

In addition to decreases in state funding, Pfutzenreuter says improvements to the quality of education at the University have contributed to tuition increases and associated student debt. Since 1997, as the academic profile of the U has risen, so has the graduation rate. “Are we thrilled about the changes? Yes,” he says. “But do I wish tuition wasn’t $12,060 this past year? Yes. Still, when you think about the quality, it’s a darn good deal.”

Minnesota in Context

“Minnesota exemplifies a state trying to hang onto its legacy of support for higher education as economic challenges and political divides influence future investment in its public colleges and universities. Minnesota has benefited from many factors that have kept higher education a priority for state residents, but the tension between the rich heritage of access and the shifting prerogatives of influential governors makes funding outcomes uncertain . . .

“Minnesota’s high tuition/high aid strategy has maintained educational opportunity through turbulent economic and political times. It is also politically expedient, relying on the notion of shared responsibility and potentially benefiting all qualified students.

f2015_disinvestmentchart

“Minnesota’s knowledge-based economy also keeps higher education access a priority for the state. The early infrastructure supporting education in Minnesota yielded dividends, creating a culture that values and supports education as a public good. Yet despite these important assets, keeping higher education a funding priority in Minnesota will be a challenge. With political and economic pressures working to undermine state support, Minnesota may slide from a position of stronger than expected funding for higher education to eventually falling behind.”

f2015_disinvestmentchart2

Excerpted from College Funding In Context: Understanding the Difference in Higher Education Appropriations Across the States, coauthored by University of Minnesota Associate Professor David Weerts

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MINNESOTA ALUMNI MAGAZINE, Fall2015

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