Tough Breaks for the Blame-Cheap-States Crowd

An explanation for explosive college prices that’s very popular with ivory-tower apologists is that state governments have been ruthlessly “defunding” higher ed for years, forcing schools to raise prices. Two new reports help to make clear – as I have argued many times in the past – that this simply doesn’t hold water.

The first report is the annual State Higher Education Executive Officers’ State Higher Education Finance Report.  While it shows that on a per-pupil basis state and local funding has declined over the last few years, total amounts have risen pretty steadily since 2000. Adjusted for inflation, total state and local support dipped from $81.3 billion in 2000 to $78.0 billion in 2005, ballooned to $87.1 billion in 2009, then dropped just a bit to $85.5 billion in 2010. Helping to put it all in perspective, SHEEO reports that in 1985 state and local funding totalled just $65.5 billion. In other words, the general trend line has gone steeply up. But don’t believe me? Take it right from the report:

Some observers have suggested that states are abandoning their historical commitment to public higher education. National data and more careful attention to variable state conditions strongly suggest that such a broad observation is not justified by the available data.

Of course, if total taxpayer funding is generally up but per-student funding is down, increases in enrollment must be significant. And indeed they are. Unfortunately, evidence suggests that that’s very likely not a good thing.

The other bad news for the blame-the-taxpayers crowd is a new report from the Center for College Affordability and Productivity that illustrates that external factors such as decreasing state subsidies are not the main culprit behind skyrocketing prices. Student aid is, because it allows colleges to increase their prices with impunity. Evidence of this includes college prices considerably outpacing overall inflation; hugely declining faculty productivity; tuition growing far beyond instructional costs; and ballooning financial aid that hasn’t been accompanied by decreasing net costs.

Unfortunately, much of this will likely either be dismissed out of hand or just ignored. But the evidence, when you examine it, is awfully compelling: Subsidies, not pennypinchers, are the big problem in higher ed.