Tuition Always Increasing
In “The Disinvestment Hypothesis: Don’t Blame State Budget Cuts for Rising Tuition at Public Universities,” American Enterprise Institute Resident Fellow Jason Delisle concludes state government funding reductions have only a small effect on public university tuition increases, and an increase in subsidies would likewise have a tiny impact.
In the study, published by the Brookings Institution, Delisle notes the argument state budget cuts push up tuition is “routinely asserted with a simple graph showing tuition rising and per-student appropriations falling.” Delisle points out state appropriations fluctuate, up and down, whereas tuition has consistently increased.
State Funding a Small Factor
In 2001, the federal government’s National Center for Education Statistics studied the relationship between college tuition and revenues from 1988 to 1997. The study concluded only 19 to 28 percent of changes in tuition could be explained by changes in state appropriations.
In 2004, economists Michael Rizzo and Ronald G. Ehrenberg reviewed state funding as part of a larger study. They observed a typical state increasing appropriations by $1,000 per student would lead to a decrease of only $60 in in-state tuition. In 2014, researchers Mikyong Minsun Kim and Jongwan Ko examined the effects of state funding on public university tuition between 1998 and 2007. They found the correlation was very small, estimating if state funding per student increased by $191 in 2015, the decline in tuition would be approximately 10 percent of that, or $19.71.
Delisle concludes, “More state funding appears to buy pennies on the dollar in lower tuition. That makes increasing appropriations for public colleges and universities an ineffective—even wasteful—policy for keeping tuition low.”
No ‘Silver Bullet’
Robert E. Martin, Ewing T. Boles Professor Emeritus of Economics at Centre College, says Delisle’s debunking of the state-disinvestment claim makes sense.
“There is unlikely to be a ‘silver bullet’ that explains all or most of the increases in tuition and fees over the last four decades,” Martin said. “The increases in tuition and fees are due to a complex combination of such factors as bureaucracy, government mandates, and bundling of services not normally sold with higher education.”
Martin says an important factor Delisle did not mention is the competition for status among nonprofit institutions of higher education.
“The higher education nonprofit [or public university] faces an unlimited number of opportunities that could conceivably enhance its reputation or prestige,” Martin said. “This puts the administrators on an eternal quest to raise the cap on expenditures. Expenditures rise, but they rarely decline.”
‘Broaden Our Search’
Jenna Robinson, president of the James G. Martin Center for Academic Renewal, says Delisle’s study shows it’s important for researchers to set aside the state-disinvestment hypothesis and look for the most important cost drivers.
“It’s clear from Delisle’s report that state spending is only a small piece of a much larger puzzle,” Robinson said.
Jane S. Shaw ([email protected]) is School Reform News‘ higher education editor.
Jason Delisle, “The Disinvestment Hypothesis: Don’t Blame State Budget Cuts for Rising Tuition at Public Universities,” The Brookings Institution, June 1, 2017: https://www.brookings.edu/research/the-disinvestment-hypothesis-dont-blame-state-budget-cuts-for-rising-tuition-at-public-universities/