04.10.2012 News Releases, Policy Points

Two Decades Of Cuts To Public Higher Education

CHAPEL HILL (April 10, 2012) – Since 1990, state governments have steadily disinvested in the nation’s public four-year and two-year institutions of higher learning. These reductions have resulted in a major shifting of the cost of higher education from states as a whole to individual students in the form of escalating tuition charges—charges that students and their families increasingly are struggling to pay.

These findings come from a new report entitled “The Great Cost Shift: How Higher Education Cuts Undermine The Future Middle Class.” Commissioned by Demos, a national public policy organization based in New York City, the report was prepared by South by North Strategies, Ltd., a research firm in Chapel Hill, North Carolina, that specializes in economic and social policy.

“Since 1990, states as a whole have disinvested in their public colleges and universities and in the process have transformed how public higher education is financed,” said the report’s principal author, John Quinterno of South by North Strategies. “The result has been a shifting in the cost of higher education to students and their families. Compared to prior generations of college students, young adults who have reached college age since 2000 have increasingly been left to their own devices.”

Key findings from the report include the following:

  • Public institutions have played an important role in serving the growing numbers of undergraduate students. Public institutions absorbed 65.6 percent of the undergraduate enrollment increases that have occurred since 1990.
  • After controlling for inflation, states collectively invested in higher education $6.12 per $1,000 in personal income in 2010-2011, down from $8.75 in 1990-1991, despite the fact that personal income increased by 66.2 percent over that period.
  • Over the past 20 years, there has been a breakdown in the historical funding pattern of recessionary cuts and expansionary rebounds. The length of time for higher education funding to recover following recessions has lengthened for every downturn since 1979 with early evidence suggesting that the recovery from the Great Recession will be no different.
  • Between 1990-1991 and 2009-2010, published prices for tuition and fees at public four-year universities more than doubled, rising by 112.5 percent, after adjusting for inflation, while the real price of two-year colleges climbed by 71 percent.
  • Median household income in the United States in 2010 was just 2.1 percent higher than in 1990.

“When we turn our back on higher education, we turn our back on the future of the middle class in America,” said Viany Orozco, Senior Policy Analyst at Demos, who oversaw the development of the report. “State and federal legislators need to recognize that our future workforce will demand a higher education degree; a college degree is not a privilege, it is a necessity.”

“Despite its long history of support for community colleges and public universities, North Carolina has not been immune to the wave of disinvestment that has swept across the nation since 1990,” explained Quinterno. “After adjusting for inflation, the state’s investment of its own funds in higher education amounted to $11.51 per $1,000 in personal income in 2010-2011, down from $13.64 in 1990-1991.”

“The decline in North Carolina’s investment occurred despite the fact that inflation-adjusted personal income in the state grew by 90 percent over the past 20 years,” added Quinterno. “Simply put, North Carolina has become a richer state that is investing less of its wealth in the institutions that help individuals secure a place in the middle class and help fuel the state’s long-term economic prosperity.”

The report calls for renewing America’s commitment to nurturing a strong and inclusive middle class through investments in public higher education. It underscores that states have the capacity to invest more, for despite the budget challenges of recent years, every state is wealthier than it was 20 years ago.

In conjunction with the Demos report, the North Carolina Budget and Tax Center in Raleigh released a companion report that applies the methodology to more detailed data for North Carolina. That analysis is available here.
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