Historically, states have heavily subsidized their public colleges on the premise that the schools serve a public good — educating the state’s workforce and preparing them to participate in the economy.
But over the past couple of decades, legislators have pulled back from this investment. New research suggests that decision could have consequences for the public.
A 10% drop in the money that states send to their public colleges is associated with a 3.6% decline in bachelor’s degree attainment at public research universities, according to a working paper distributed this week by the National Bureau of Economic Research.
A 10% drop in state funding is also correlated with a 5% drop in master’s degrees in science, engineering, technology and math (STEM).
“Money matters,” said Sarah Turner, an economics and education professor at the University of Virginia and one of the authors of the paper. “The declines in state appropriations have had real effects in terms of degree output, enrollment and there’s at least suggestive evidence that there’s some impact on research outputs.”
A decline in state funding to public colleges is also associated with a drop in the number of people earning the types of credentials at public research universities necessary for the types of scientific innovation that boosts the economy, the research found. A 10% drop in state funding is correlated with a 5% drop in master’s degrees in science, engineering, technology and math (or STEM) and a 10.2% drop in Ph.Ds in those fields.
At public colleges with courses that are less research intensive and educate a wider swath of students, a 10% drop in state appropriations produces a 3% drop in spending on instruction and a 1.5% decline in enrollment, the paper found.
A college degree is important for workers to find a decent-paying job. Roughly 35% of the job openings created through 2020 will require at least a bachelor’s degree, according to research from Georgetown University’s Center on Education and the Workforce.
‘Within the higher education market you’ve got to look front and center to the public universities as the source for degree attainment.’
“Within the higher education market you’ve got to look front and center to the public universities as the source for degree attainment,” Turner said. (Public colleges account for about 64% of the nation’s bachelor’s degrees and 72% of doctorate degrees in STEM fields, the paper notes).
To understand the way cuts to state funding affects degree attainment, enrollment and other trends, the researchers compared declines in funding in different states and how they align with educational outcomes and spending.
The paper builds on earlier work on this topic and sheds light in particular on how different types of public universities react to changes in state funding, the researchers said. At more research-intensive universities that draw students from across the country, officials are able to mitigate a loss of state funding in a number of ways. They include:
• Through donations — a 10% drop in state appropriations correlates to a 6% increase in private funds.
• By adjusting the mix of students to increase the share of students who pay more, including those from out-of-state and other countries.
• By raising tuition. The burden of increases in tuition is more likely to fall on in-state students, the researchers found.
Public research universities are competing with colleges across the country for out-of-state and international students, so they have less room to up those rates. Those constraints aren’t present for students focused on schools in-state, so colleges have more room to raise rates in response funding cuts — unless state legislators require them to hold the line on tuition.
At broad-based, less research-intensive institutions, officials have fewer resources to mitigate the loss in state appropriations. Instead, they simply raise tuition and spend less on instruction, when funding declines, the researchers found.
“Declines in public funding for universities have real implications for the labor market both in terms of the supply of high-skilled workers and likely in terms of the research- based ideas that are fueling economic growth,” Turner said.