Why State Schools Cost More

According to a recent piece published by the Federal Reserve Bank of New York, cuts in state funding “could” be responsible for the rise in tuition at public universities. Yes, perhaps. How much more proof do we need here?

As the article explains:

Data from the State Higher Education Executive Officers (SHEEO) show that, from 2000 to 2010, public funding per pupil, defined as state and local support for public higher education per pupil (excluding loans), fell by 21 percent, from $8,257 to $6,532.

From 2000 to 2010, real net average tuition at public universities and colleges rose by 33.1 percent, from $3,415 to $4,546.

It’s a much more sophisticated analysis than I can summarize here. There are 50 different states, and while the declining state support trend is national, different states have different policies, priorities, and rules about tuition hikes. But by grouping the states by common factors, the researcher concludes that there is likely a connection between state funding and tuition trends. No surprise there.

It’s not exactly a one-to-one ratio, however. As the author of the piece, Rajashri Chakrabarti, an economist in the Regional Analysis Function of the New York Fed’s Research and Statistics Group, explains, when state universities experience funding cuts from the legislature, they have options beyond charging more. “They can lay off instructional, administrative, or other types of staff,” Chakrabarti writes, “or they may even eliminate specific programs from their academic curriculum.”

Ultimately, however, state cuts appear to result in higher costs for students.

This is a problem for obvious reasons (no one wants to pay more money to get the same product and higher tuition means more student debt) and also for less obvious ones. One of the major problems with this trend is there’s no sign it’s abating. In coming years state schools are likely to face even more legislative cuts.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer