Higher Education Revenue Sources

1. Higher Education Revenue Sources

2. UM System Revenue Sources Source: University of Missouri System (2013) Fiscal year 2013 Operating Budget https://uminfopoint.umsystem.edu/media/fa/budget/operating/FY2013BudgetBook.pdf

3. University of Missouri - “Enterprise” Operations Source: http://budget.missouri.edu/2011_MU_Budget_Snapshot.pptx

4. Washington University - STL Source: Washington University Annual Report 2007-2008 - http://annualreport.wustl.edu/financial.html

5. St. Louis Community College Source: Financial Statements, June 30 2008, and 2007, Junior College District of St. Louis - http://www.stlcc.edu/Document_Library/STLCC_FS_2008.pdf

6. Community College Funding • 26 State’s CCs Receive local funding • Amount varies quite substantially • High of 55% in Arizona • Missouri – 26% • Trends is lower support from local tax bases • Property Tax Revolts in at least 7 states • Ability of small communities to support increasing costs of higher education

7. Community College Funding • Every state’s CCs receive some state funding • 29 use a Funding Formula, including MO • 15 don’t • 6 were not included in survey • High of 71% in Arkansas and Connecticut • Low of 14% in Vermont (83% from tuition) • MO – 41%

8. Desrochers, D. M., Lenihan, C. M., & Wellman, J. V. (2010).  Trends in college spending: 1998-2008. Washington, DC: Delta Cost Project on Postsecondary Education Costs, Productivity, and Accountability

9. Group Activity • Recent history has indicated that public institutions are relying less on their states and more on alternative revenue sources to support their operations. Develop a theoretical explanation for why this is occurring. • Develop a logic map which details what your group considers the primary explanation for this trend. • What theoretical perspectives drive your map? • What empirical evidence supports your map?

10. 5 Narratives for Tuition Inflation • The states made prices rise • Since 1990, the University of Missouri revenues (general operating) have dropped from 70% to 37% state supported. • Tuition and Fees (gross) is now the largest revenue source in the budget. (As of 2004) Source: Mumper, M. (2001). The paradox of college prices: Five stories with no clear lesson. In D. E. Heller (Ed.), The states and public higher education policy: Affordability, access, and accountability. Baltimore, MD: The Johns Hopkins University Press.

11. Operations Fund Revenue State Appropriations vs. Tuition Does not include Hospital or Extension Source: http://mubudget.missouri.edu/2009-mu-budget-snapshot.ppt

12. 5 Narratives for Tuition Inflation 2. Medicaid and Prisons Made Prices Rise • Higher education is the largest discretionary item in a states budget • During recessions something has to be cut • K-12, Medicaid, and prisons are guaranteed items • 1986-1996 state budgetary changes: • Medicaid 96% • Corrections 26.7% • Higher Education -13.8% • K-12 Education -4.8% Source: Mumper, M. (2001). The paradox of college prices: Five stories with no clear lesson. In D. E. Heller (Ed.), The states and public higher education policy: Affordability, access, and accountability. Baltimore, MD: The Johns Hopkins University Press.

13. 5 Narratives for Tuition Inflation • Quality Programs Cost Money • “We could let tuition increase or we could cut back on quality” – New York General Assembly member • Cost of providing a high quality education is increasing • Technology • Old buildings Source: Mumper, M. (2001). The paradox of college prices: Five stories with no clear lesson. In D. E. Heller (Ed.), The states and public higher education policy: Affordability, access, and accountability. Baltimore, MD: The Johns Hopkins University Press.

14. 5 Narratives for Tuition Inflation • Quality Programs Cost Money • Higher Education Price Index (HEPI) • Estimated by the Commonfund Institute • Inflation index for institutions of higher education • Fixed market basket of goods purchased by institutions of higher education • Faculty Salaries, Admin. Salaries, Clerical, Service Employees, Fringe Benefits, Misc. Services, Supplies and materials, Utilities

15. HEPI vs. CPI

16. HEPI vs. Public Tuition Costs

17. 5 Narratives for Tuition Inflation 4. Unaccountable Public Colleges • Colleges are increasing put under pressure to act more like a business • Cut inefficient positions • Calls for accountability at state and Federal levels Source: Mumper, M. (2001). The paradox of college prices: Five stories with no clear lesson. In D. E. Heller (Ed.), The states and public higher education policy: Affordability, access, and accountability. Baltimore, MD: The Johns Hopkins University Press.

18. 5 Narratives for Tuition Inflation 5. It only looks like a problem • Despite the increases in costs more students are attending, thus, college must still be a good investment. • Increases in demand have allowed more enrollment despite high prices. Source: Mumper, M. (2001). The paradox of college prices: Five stories with no clear lesson. In D. E. Heller (Ed.), The states and public higher education policy: Affordability, access, and accountability. Baltimore, MD: The Johns Hopkins University Press.

19. Discussion • Given what we have discussed, are there any changes you would make to your logic map? • What were some things you had not considered? • How important is the state context in state funding 0f higher education? • What do you think are some potential consequences, long- and short-term, that can result from the funding trends in either state?