Consequences of State Disinvestment in Public Higher Education: Lessons for the New England States Consequences of State Disinvestment in Public Higher Education: Lessons for the New England States

By Bo Zhao

Public higher education produces many benefits that are vital to the New England economy, but it is increasingly at risk following years of state budget cuts. In 2017 in New England, real per-student state funding for higher education was lower than it was in 2008, with a double-digit decline in each of the region’s states except Maine.

This Research Report shows that reductions in state appropriations have resulted in higher tuition and fees, greater student loan debt, decreased resources for education and research, and fewer graduates and approved patent applications from public colleges and universities. It finds that each dollar of reduced state appropriations leads, on average, to a 17 cent increase in net tuition and fees and a 30 cent decrease in instructional expenditures at public doctoral institutions. At community colleges, $1 in lost state appropriations leads, on average, to a 56 cent cut in instructional expenditures. These cuts seriously diminish students’ opportunities to pursue and earn academic degrees. Estimates in this report suggest that community colleges in New England collectively granted 21,388 fewer associate’s degrees during the 2002–2012 period than they would have granted if they had received per-student state appropriations at the 2001 level each year since the 2001 recession.

State funding cuts also have implications for employers and the vitality of New England’s economy. When the region’s public institutions grant fewer degrees, it becomes harder to address the demand by its employers for skilled workers. In addition, state funding cuts hurt public institutions’ ability to produce high-quality research. Estimates in this report suggest that the six public doctoral institutions in New England together produced about 117 to 369 fewer approved patent applications during the 2002–2012 period than they would have produced if they had received per-student state appropriations at the 2001 level each year since the 2001 recession.

This report recommends that policymakers provide robust financial support for public higher education, particularly community colleges, which are the most vulnerable to the negative consequences of state disinvestment.

The analysis and findings featured in this research report are derived from two technical working papers:
"Disinvesting in the Future? A Comprehensive Examination of the Effects of State Appropriations for Public Higher Education”, Research Department Working Paper 18-1
"State Disinvestment in Higher Education: The Impact on Public Research Universities’ Patent Applications", Research Department Working Paper 19-2

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