College Spending Impacted by the Recession

October 6, 2011

Analysis of revenue and spending patterns in higher education for the 1999-2009 period shows growing gaps between public and private institutions, with the public community college sector falling behind in efforts to meet enrollment demand in the face of deep budget cuts.  While attendees at public universities and community college point to tuition hikes as evidence of financial mismanagement, the fact of the matter is that these institutions are forced to implement tuition increases in order to offset substantial losses elsewhere, says the Delta Cost Project.

  • The large portion of operating costs that were paid for by state and local appropriations have been subject to substantial budget cuts as states look to control spending.
  • The result of these cuts have been particularly harsh for community colleges: because their business model revolves around low tuition, it is difficult for these colleges to make up the difference in state funding via tuition hikes.

However, studies suggest that this financial burden is not diminishing the quality of education to the degree that might be expected.

  • While a small number of schools have been forced to implement across-the-board cuts, most have been able to lower spending and weather the recession through lowered administrative costs and deferred maintenance.
  • The latter strategy, which has been widely implemented, has preserved funding for instruction and student services.
  • An area of expenditure that also bears mention is employment of faculty and staff -- while colleges and universities have managed to stall payroll increases, benefits to employees have continued to increase unabated.

Solace can be taken in the fact that in spite of the economic climate, colleges and universities in all sectors have increased productivity in the period from 1999-2009 with a greater portion of enrolled students earning their degrees.

Source: Kari Hudnell and Jane Wellman, "College Spending Impacted by the Recession: Cost Cutting, Tuition Increases and Growing Gaps," Delta Project, September 2011.

For text:

http://deltacostproject.org/resources/pdf/deltanewsreleasesept10.pdf

For study:

http://deltacostproject.org/resources/pdf/Trends2011_Final_090711.pdf

 

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