Dan: Emma Whitford is a reporter at Inside Higher Ed, and she covers governance, leadership, and business at colleges and universities across the country. She’s a graduate of St. Olaf College and previously worked at Politico as a digital producer. You can follow her on Twitter @Whitford_Emma. Emma, welcome to the podcast.
Emma: Thanks for having me.
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Dan: I’m delighted that you’re here. I read with tremendous interest your article in Inside Higher Ed, entitled “Public Higher Ed Funding Still has Not Recovered From the 2008 Recession.” That’s a mouthful, but when you read the article there’s a tremendous amount of information there, and in fact, the article is a really wonderful long view of funding and higher education. And at the time I thought, oh my gosh, we have to have her on the podcast. So I’m delighted you’re here. You’re reporting found that spending on public education is lower now than it was in 2001. So how steep has the decline been and what’s caused it?
Emma: So my article was based on a report by the State Higher Education Executive Officers Association; it’s their State Higher Education Finance Report, which they put out every year. And one of the biggest findings in this year’s report is that state higher education funding nationwide really hasn’t recovered from the 2008 recession; it’s actually 18% lower than it was at the 2001 tech bust, and it’s almost 9% below where it was before the 2008 recession. So things have fluctuated a bit between then; funding levels are higher in 2019 than they were at their low in 2012, for example, but they still aren’t as high as they were in the 1990s. And I think it’s difficult to say exactly what’s causing that decline, but the report shows a clear drop in funding right after each recession. And it’s generally well-known that higher education funding is one of the first budget items to face cuts when state legislatures are working to reduce spending. So what’s interesting here, and concerning for some colleges, is that even though funding levels are slowly increasing, they’re not going to recover to the same point that they were before the cuts were made. And all the while full-time student enrollment at public colleges is going up. So colleges have less state appropriations to spend per student than they did in the 1990s.
Dan: When you talk about them not recovering and that they’ve gone down since 2001, could we just address the issue of inflation? So if they’ve gone down 18% since 2001, is that adjusted for inflation or not?
Emma: It is, actually – all of the numbers in this report have been adjusted for inflation.
Dan: My goodness, that is considerable. Your report described a fascinating and sobering pattern, which you’ve just referred to, which is that with every recession funding for higher ed has steeper declines and shallower recoveries. How many recessions exhibited this characteristic? All of them, some of them?
Emma: This year’s report looks at funding levels dating back to 1994. So that includes two recessions – one after the 2000 dotcom bubble and the great recession in 2008. I’m not sure what happened before those two, but both of those recessions exhibited the same characteristics, of cuts in higher education funding and very slow recoveries that didn’t eventually make it up to where funding levels were before the cuts were made.
Dan: Your reporting also discusses the possibility of a future cuts, and you reported that regional and community colleges will be the most impacted by future cuts. Could you tell us why that’s so?
Emma: All state colleges will be hurt by cutting funding, but typically larger universities have additional revenue streams that can help them in these kinds of times. So I will note that because of coronavirus right now, a lot of these revenue streams are out of commission, but typically athletics facilities rentals and adjacent businesses are bringing in some sort of other revenue for these colleges, in addition to state higher education funding and student tuition revenue. So these colleges are also more likely to have rainy day funds or significant endowments that they can leverage to help weather the storm. But regional community colleges typically don’t have these other revenue streams. They rely greatly on state funding and student tuition income to make up their operating budgets. It’s also important to note that they serve low-income local students. And if they take the greatest hits when the state cuts come, that could cause a problem for education access down the road if these schools have to close or scale down their programs as a result. I will give one example. I was talking about this with Daniel Greenstein, who’s the chancellor for the Pennsylvania state system. In the past, there have been efforts to merge or close some of the smaller campuses in the state. And now they’re facing a $52 million revenue shortfall for the entire system as a result of the coronavirus.
Dan: My goodness.
Emma: But he’s arguing that if you close a college, which doesn’t actually always save money in the short term, an area not only loses an employer, the community loses a chance to foster local community business leaders, and then a population of students loses access to education. And these students are going to have a more difficult time going elsewhere to find it.
Dan: Yes, that’s an interesting point. I’ve always been skeptical of the short-term benefits of college closures. I think most of the studies indicate that in the short-term, it actually results in increased costs.
Emma: Yeah. A lot of these colleges have significant debt and somebody needs to pay for that, even after the college is closed.
Dan: Obviously, an 18% decline since 2001 adjusted for inflation paints a pretty grim picture. I’m glad you’ve quantified it for us, but those you interviewed for the article seemed to be claiming that the problem is actually worse than it seems, because national data is skewed in a positive direction by a few large states that spend more generously on higher ed. Could you explain that for us?
Emma: I believe the people that you’re referring to are discussing something called “student share,” which is a really interesting metric. It’s the proportion of the total education revenue in an institution that comes from net tuition revenue. So in other words, it’s how much the students themselves are funding their public education, and student share numbers are artificially low nationwide because of a few big States like California, which has a huge population of students, the largest enrollment in the country, and their tuition rates are lower than average rates across the country. So they’re pulling student share down, when in fact, in many States it’s actually higher than 50%. More than half of States have already surpassed 50% student share. And one of the people I spoke to Kevin McClure, who’s an associate professor of higher education at the University of North Carolina Wilmington. He put it really nicely. He said that student share gives you a good sense of who the biggest stakeholders are in higher education. And it’s clear that for many states, it’s no longer the states who are the biggest stakeholders in public higher education. It’s the students.
Dan: That’s a fascinating point. It makes me wonder at what point education can continue to be called “public” when the public becomes the minority stakeholder in the outcome. Our listeners certainly want to know what lies ahead. As an education reporter, you have a broader view and access to information than many of my listeners. The article that I’m referring to in this interview was released on May 5th, which is a lot of coronavirus news cycles ago. Has anything happened since then that would affect your view of what would happen next with regard to funding? Are the prospects worse, or perhaps do you see some renewed commitment to funding? For example, I’m reminded of that because of the example you just gave of the chancellor who argued, no, if we want to pull out of this, this is the time when additional support is needed.
Emma: I’ll admit I’ve been pretty focused on the private sector for the last few weeks; I can tell you things are not looking great there either. I wish I had a more definitive answer for you, but I think everyone’s still waiting, one, to see if there’s another aid package from Congress with more funding for higher education. I know a lot of colleges are lobbying for that at the moment. We’re also waiting to see if enrollment numbers are as negatively impacted in the fall, as many people are fearing, they will be. As students are able to make more firm plans, I think we’ll have a better idea of just how bad the pandemic will be for higher ed in the long run. But I do want to note one positive thing that I’ve seen both public and private spheres talk about – that communities are showing their commitment and support for the institutions around them. A lot of colleges are turning to crowdfunding and other creative support measures, which aren’t necessarily going to solve huge endemic funding issues that have been brought on by the coronavirus, but for some colleges, they can be a band-aid to help them buy time until they work out a better fix. And a lot of higher education leaders have talked to me about being really inspired by their community’s response to the crisis. So I hope I continue to see that as I continue to report on this.
Dan: Emma Whitford is a reporter at Inside Higher Ed, and she covers governance, leadership, and business at colleges and universities across the country. She’s a graduate of St. Olaf College and previously worked at Politico as a digital producer. You can follow her on Twitter @Whitford_Emma. Emma, thanks so much for joining me today.
Emma: Thanks for having me.