State Higher Education Finance

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State Higher Education Finance
David Wright, SHEEO SHEEO/NCES Network
Conference Washington, DC March 31, 2004
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The SHEF Study

• Purpose of the Study
• Understanding the Data
• Analytical Issues
• Discussion of Analytical Tools and Individual
  State Profiles

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Study 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

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Study Purpose
SHEF Can Help Policy Makers

• Evaluate allocation to higher education as a
  percentage of state and local tax revenues
• Assess comparative strength of states economy
  and its capacity to generate tax revenues to
  support public priorities

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Understanding the Data
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Understanding the Data
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Understanding 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

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Understanding 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

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Understanding 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

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Analytical Issues
Improving Comparisons Over Time and Across States

• Adjusting for Enrollment
• Adjusting for Inflation
• Adjusting Interstate Comparisons
• Enrollment Mix
• Cost of Living

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The Need to Adjust for Enrollment
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The Need to Adjust for Enrollment
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Adjusting 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

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Adjusting 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 BEAs GDP Implicit
  Price Deflator.
• current GDP / constant GDP
• reflects general price inflation in total U.S.
  economy

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Adjusting for Inflation
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Interstate 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

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Developing the EMI
Average Instructional Costs per FTE Fiscal 2001
Source IPEDS, Fall 2000 Enrollment and 2000-01
Finance.
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Developing the EMI
Public System FTE Distributions for Selected
States
Source IPEDS Fall 2000 Enrollment for Sectors 1
and 4.
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Developing the EMI
Public System Enrollment Mix Index for Selected
States
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Interstate 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)

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Interstate Comparisons
Enrollment Mix and Cost of Living Adjustments for
Selected States
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Analytical Tools
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Analytical Tools
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Analytical Tools
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Comments/Questions?
Contact
David Wright Senior Research Analyst (303)
299-3677 dwright_at_sheeo.org