Three decades of spending cuts by states have left public colleges with nearly 25 percent declines in state funding per student. What happened to the money that could have been invested in higher education during that time? Most of it went to Medicaid, according to a new study.
The study, “Higher Ed, Lower Spending: As States Cut Back, Where Has the Money Gone?” found that state spending has increased for public-school education, prisons, police, and fire protection, but the largest spending increases have gone to public welfare. Public higher ed is the only category in spending decline.
Doug Webber, author of the study and an associate professor of economics at Temple University, said Medicaid is the single biggest cause of the decline in higher-education funding at the state and local levels. He also found that a $1 increase in per capita public-welfare spending was associated with a $2.44 decrease in per-student higher-education funding.
Red and blue states alike have had increased Medicaid funding since 2017, according to Families USA, a nonprofit consumer advocacy group. Part of what makes the finding difficult to swallow, Webber said, is that people who generally support public welfare also support public colleges, even though spending on the former may be eating away at higher-ed’s slice of the pie.
The study comes at a time when there is plenty of public debate over how much should be invested in higher education. When states experience declining budgets, program cuts and layoffs soon follow. Still, some observers may be less sympathetic to colleges’ budget problems after reading about laser-tag playpens, lazy rivers and multimillion-dollar student centers, Webber said in an interview with The Chronicle. Headlines about such facilities may create the perception that higher education doesn’t need more money, he said.
“One of the reasons for why higher ed is often cut, anecdotally, is because when a legislator decides where to allocate money, they say, We see people hurting right now,” Webber said. “So it makes sense to them to allocate more money to things that affect right now.”
People outside the university world don’t always distinguish differences between state funding and donor dollars for college construction and other major projects, Webber said. Extravagant spending of any kind may create a harder argument for higher-ed administrators to sell.
“Most colleges are not opening up a $200-million facility. That’s unrepresentative of the entirety of higher ed. But those types of big spending items don’t do higher education any favors,” he said. “It makes it easier for legislators to argue that other spending may do more good.”
Given decreased political will in some states to raise revenue through taxes to offset the declines, higher-ed proponents should prepare for this cycle to continue, Webber said. But there’s still time for higher-ed officials to argue for why they need more funding, not less.
“It is important to recall that state budgets result from complicated political processes and that new financial pressures — such as from ailing pension funds or withdrawn federal social-service support — are constantly emerging,” Webber writes in the study. “There is no reason to think that the politicians of tomorrow will make the same choices as the politicians of yesterday.”
