State funding cuts slam public colleges

(MoneyWatch) Grappling with large cutbacks in state funding, America's public colleges and universities are responding by jacking up tuition, firing professors, shutting facilities and taking other drastic measures to reduce costs.

Every U.S. state except for North Dakota and Wyoming is spending less per student on higher education than they did before the 2008 financial crisis and ensuing recession, concludes the Center on Budget and Policy Priorities, a Washington think-tank, in a new report. Nationwide, that amounts to a roughly $2,350, or 28 percent, per student decrease in spending.

Over time, dwindling state support for public institutions of higher learning will make it harder for local employers to find qualified workers, hurting local economic growth, said Phil Oliff, a senior policy analyst with the CBPP and the main author of the report. For young people, especially those in low- and middle-income families, the funding decline could discourage college attendance. In the U.S., more than 75 percent of undergraduates attend public colleges and universities.

"It sets a really dangerous trend," Oliff said in a conference call. "Growing tuition beyond the ability to pay for college is really discouraging our young people from getting college degrees and getting the economic skills they need to succeed in the workforce. It's safe to expect that the enormous rise in college costs is dissuading students from attending college."

The CBPP's findings track with other research that highlights what some experts describe as a full-blown crisis in public higher education. Total state and local support for public colleges fell 7 percent last year, according to a recent report by the State Higher Education Executive Officers, an association of leaders involved in post-secondary education. Paul Lingenfelter, president of the group, called the decreases in state funding and increases in student costs "unprecedented over my 40-year career in higher education."

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The cuts in college spending can be be severe. Of the states that have dialed back, 36 reduced funding by more than 20 percent, while 11 have slashed it by more than one-third. Arizona and New Hampshire have cut their higher education spending in half.

Such declines are hitting schools hard. Faced with eroding state support, colleges must compensate by cutting spending or raising tuition. Often, they do both. Adjusting for inflation, the annual listed tuition at four-year public colleges has risen $1,850, or 27 percent, since the 2007-08 school year, according to the CBPP.

The amount of tuition hikes vary widely by state. While schools in some states have raised the price of attendance generally in line with inflation, in the last five years tuition at state institutions in Arizona and California is up more than 70 percent.

College costs have been spiraling up for years. But the housing crash put the trend on overdrive, as rising unemployment and stagnant employee income gouged state budgets. State and local government revenue last year accounted for more than half of funding a public colleges.

Although federal assistance for these schools has increased since the financial crisis, that spending has only partially offset state reductions in education outlays, especially in states like California with the highest tuition hikes, according to the CBPP.

For young people beginning to contemplate a career, the decline in state support for public higher education creates another problem: Extensive data underline the growing importance of having a college degree both in terms of landing a job and in earning power.

"The long-term economic impact is very significant," Oliff said in alluding to the falling state support for colleges. "Higher education attainment is growing increasingly important. Getting a college degree is increasingly a prerequisite for success in the workforce and entry into the middle class. A large and growing share of future jobs is going to require higher education."