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Higher education organization weighs in on Nevada budget crisis

By Bob Conrad

Information provided by a SHEEO news release, report and email with its president

BOULDER, Colo. – The State Higher Education Executive Officers (SHEEO) released last week its annual State Higher Education Finance (SHEF) report, which provides a comprehensive review of state funding and enrollment trends for higher education.

The economic recession beginning in 2008 dramatically reduced state revenue and ended the growth in state and local support for higher education achieved between 2004 and 2008. In 2009, state support fell from $80.7 billion to $77.9 billion, but $2.4 billion in federal funds to stabilize state higher education budgets mitigated the loss. Enrollment continued to grow to a record high of 10.8 million students at public institutions, representing an increase of 3.4 percent over the previous year. (In the full report, Table 1 provides data for the past six years, and Figure 3 displays constant dollar funding and enrollment trends from 1984 to 2009.)

Paul Lingenfelter, president of SHEEO, said, “In recessions, public higher education typically experiences an increase in workload (enrollments grow more rapidly) and a decrease in revenue from states. The consequences usually include increases in tuition and fees, enrollment caps, and cuts in student services.”

SHEEO’s annual studies of higher education finance show that state and local support tends to recover after economic recessions, but the cumulative effect of these recessionary cycles over time has generated a fundamental shifting of the cost to families.

In a statement given exclusively to This Is Reno, Lingenfelter outlined the impact the recession has had on Nevada.

“Nevada is a state where these issues are particularly important and severe,” he said. “The attached chart shows Nevada experience from 1983 to 2008, which is good information for context. Enrollments have grown more rapidly in Nevada than in any other state for some time. They’ve grown fast all over the country since 2000, but faster still in Nevada.

“Nevada is a low tuition state (about 61% of the national average), but increases in state support in 2004 brought total support per student (state appropriations plus tuition revenue) modestly above the national average. Since 2004, however, Nevada has lost ground compared to other states.  Most states lost ground in 2009, but Nevada lost more. Even with the losses in 2009, most states are 8% higher than 2004 (an all time low year for most states), but adjusted for inflation, total educational support in Nevada is 0.5% lower than 2004 (see Tables 4-7 pp. 27 to 33).

“Nevada on a per capita basis is richer than most states (about 50%) but its rate of taxation is lower (83.7% of the national average) (p. 46 Table 9).

“Nevada’s support for higher education is about 80% of the national average in per capita support and in support per $1000 of personal income. As a percentage of the state budget devoted to higher education, Nevada is also below average, 5.7 % compared to 6.4% nationally. (p. 47, Table 10).

“The most crucial issue in Nevada is what happened in 2010 and what will happen next.

“Despite the infusion of $92 million in federal stimulus funds in Nevada in 2010, total funding for higher education is down 4.8%. (See pp. 51-51 Grapevine Tables 1 & 2)  Most states managed not to reduce funding, but economic conditions in a few (Nevada among them) have led to a crisis in higher education funding.”

Federal stimulus funding partially offset the effects of the 2009 recession by averting deeper budget reductions and mitigating drastic tuition increases that would otherwise have been unavoidable during 2009 and the current fiscal year. Nevertheless, funding for all state services including higher education programs and student financial assistance has fallen at an unprecedented rate. Recovery likely will take several years.

“Federal stimulus funds account for more than 5% of the FY 2010 budget; when they are exhausted, the budget holes in states risk growing even deeper,” Lingenfelter added. Recently released figures by Grapevine for the current FY 2010 fiscal year, show state funding falling another $2.7 billion to $75.2 billion. Federal stimulus funds raise this total to $79.4 billion, about $1.3 billion less than states provided alone in 2008. Meanwhile, 2010 enrollments continued to grow, in some states by more than 10 percent.

“The economic vitality of our nation depends on successfully educating a much larger portion of Americans to a higher level of knowledge and skill than required in the 20th century. But tuition increases and the volatility of higher education funding are making it much more difficult to meet public needs for a better educated workforce. Overcoming these challenges is a shared responsibility, one that will require participation by not only colleges and universities, but also state and federal governments, businesses and families.”

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