National Center for Policy Analysis

POLICY DIGEST

Education

November, 1995

DRIVING UP HIGHER EDUCATION COSTS

The nation's colleges and universities are experiencing their own budget problems due to escalating faculty salaries and costs of complying with federal mandates.

Six years ago, 48 percent of administrators rated their school's financial position excellent or very good-compared to only 40 percent this year.
In the 1979-80 school year, subsidies from all levels of government amounted to 49.3 percent of revenues-compared to 41.2 percent in the 1990-91 year.
From 1970 to 1983, federal subsidies grew from $1.4 billion to $14.5 billion.
Although that figure fell last year to $7.9 billion, it is forecast to revert to $14 billion for the 1995 fiscal year.

With the overall decline in subsidization, colleges and universities are looking elsewhere for funds. Comparing the 1979-80 academic year with the 1992-93 year:

Tuition and fees for a full-time student at a four-year public college increased 211 percent-compared to an increase in the Consumer Price Index of 75.4 percent.
Average dormitory charges rose 147.7 percent at four-year public colleges and 201.9percent at private colleges.
Voluntary support from alumni and other sources jumped from $3.8 billion to $10.7 billion.

Increasing personnel costs are partially to blame for rising prices and the budgetary squeeze at colleges and universities:

Personnel compensation jumped by 67.5 percent from 1983 to 1993.
In the 1979-80 year, the average salary for professors stood at $22,100.
By the 1992-93 year, these salaries had risen 108.1 percent at public schools and 133.5 percent at private institutions-compared to an inflation increase of 75.4 percent.

In addition, the cost of complying with federally mandated civil rights programs has been heavy:

Starting salaries for professors in civil rights specialities range from $35,000 to $60,000.
Buildings newly constructed or renovated to comply with terms of the Americans with Disabilities Act cost at least 10 percent more to construct.
The Student Right to Know law requires schools to compile detailed data for prospective and current students.
The Higher Education Amendments of 1992 will raise paperwork requirements and compliance costs.

Some states, such as Florida, are looking into privatization as a way of controlling costs.

Source: Carl Horowitz, "Where Higher-Ed Funding Goes," Investor's Business Daily, November 7, 1995.