1. Challenges in Financing Higher Education Access in the Emerging Global Competition William Zumeta Evans School of Public Affairs & College of Education University of Washington and National Center for Public Policy and Higher Education Presented at: National Center for the Study of Collective Bargaining in Higher Education April 16, 2007

2. National Economic Outlook Economy is growing fairly slowly. Oil’s volatility and the housing slump seem to have been weathered but the world is full of risks. Inflation seems under control again. Job growth is moderate and unemployment relatively low (4.6%) though wages are weak. Recent stock market “correction” is likely a blip though it shows how connected we are to China.

3. Total Year-End Balances as Percentage of Expenditures FY 1979-2007 Source: NGA-NASBO, 2006: 15.

4. Source: NGA-NASBO, 2006: 2. Annual General Fund Percentage Budget Increases, FY 1979-2007 (preliminary)

5. Source: NGA-NASBO, 2006: 17. Total Year-End Balances as a Percentage of Expenditures, Fiscal 2006 5.0 percent or more (41) 3.0 percent o to 4.9 percent (5) 1.0 percent to 2.9 percent (1) Less than one percent (3)

6. Enacted State Revenue Changes FY 1991 - 2007 Source: NGA-NASBO, 2006: 11.

7. Source: Jones, 2006: 3. Data are from Boyd, 2005.. Projected State and Local Deficits in 2013, as Percentage of Revenue More than 7.5 percent (9) 6.0 percent to 7.5 percent (9) 4.0 percent to 5.9 percent (20) Less than 4.0 percent (12) Total U.S. = 5.7%

8. Simplified Description of Revenues Calculation Current Rates Applied to Projected Levels of Factors on Which Taxes Are Levied Personal Income Sales Property Values Also Includes Projections of Funds Provided to States by Federal Government

9. Simplified Description of Expenditures Calculation Current Rate of Expenditures per Unit (Where Units Depend on Program/Agency) –K-12 Student –Higher Education Student –Medicaid Recipient –Prisoner –Etc. Applied to Projected Number of Units/Recipients Adjusted for Programmatic Inflation Factors

10. How Do Revenues Influence These Results? Economic Growth Unlikely to Generate Major Surges in Capital Gains Tax Revenues Sales Tax Revenues Will Be Dampened –Consumption Shifting from Goods to Services –Internet Transaction Growth Excise Taxes not Keeping up with Economic Growth Federal Budget Deficit May Result in Substantial Cuts in Grants to State and Local Governments

11. What About Expenditures? Medicaid

12. Educational Appropriations per FTE, % Change by State Fiscal 01-05 Source: SHEEO, 2006.

13. Total Educational Revenues per FTE: % Change by State Fiscal 01-05 Source: SHEEO, 2006.

14. Total Educational Revenues per FTE by Component, US, Fiscal 1991-2005 Source: SHEEO, 2006.

15. Public Higher Education Appropriations per FTE and Tuition Share of Total Educational Revenues, Constant 2005 Dollars, FY 1981-2005 Source: SHEEO, 2006. Constant 2005 Dollars

16. Appropriations of State Tax Funds for Operating Expenses of Higher Education per $1000 of Personal Income FY 1961-2007 Appropriations per $1000 Personal Income Source: Mortenson, 2007: 1.

17. Change In State Tax Fund Appropriations per $1000 of State Personal Income FY 1980 - 2007 Source: Mortenson, 2007: 4. Louisiana Wyoming North Dakota Arkansas Nevada Maine Ohio Alabama Oklahoma Washington Kentucky New Mexico Indiana New Jersey New Hampshire Nebraska Connecticut Maryland North Carolina Pennsylvania Georgian Illinois Delaware Massachusetts Iowa Hawaii Florida New York South Dakota Missouri Vermont Michigan Montana Mississippi Idaho Virginia Kansas Utah West Virginia Tennessee California Rhode Island Texas Oregon Wisconsin Arizona Colorado Minnesota Alaska South Carolina Change ($) All = -$3.39

18. Percentage Change Over the Most Recent One, Two, and Five Years (In $1,000s) in Appropriations of State Tax Funds for Operating Expenses of Higher Education FY 2002 – 2007 Source: Grapevine, 2007.

19. Average Annual Published Tuition and Fees Charges for Public Four-Year Schools 1997-98 to 2006-07 (Enrollment-Weighted) Source: College Board, 2006a: 10. Tuition and Fees Annual Percent Change – Current Dollars

20. Average Annual Published Tuition and Fees Charges for Public Two-Year Schools 1997-98 to 2006-07 (Enrollment-Weighted) Source: College Board, 2006a: 10. Tuition and Fees Annual Percent Change – Current Dollars

21. Total Funding: Grants and Loans for Undergraduate Students Grants Versus Loans, Percent Share of Total Aid, 1991-92 to 2005-06 Source: College Board, 2006b: 15.

22. Maximum Pell As a Percentage of Published Tuition, Fee, Room, and Board (TFRB) Charges at Public and Private Four-Year Colleges and Universities, 1985-86 to 2005-06 Source: College Board, 2006b: 17.

23. Median Debt Levels of Undergraduate Degree Recipients Who Borrowed, by Degree and Institution Type in Constant (2003) Dollars, 1992-93 to 2003-04 Source: College Board, 2006b: 12.

24. 10-Year Growth in Inflation-Adjusted Tuition and Fees, Income, and Aid, 1985-86 to 2005-06 Source: Adapted from the College Board, 2006b:23. Percent Growth

25. Net College Costs as a Percent of Family Income Source: NCPPHE, 2006: 20. Note: Net college costs equal tuition, room, and board minus financial aid. The numbers may not be exactly equal due to rounding.

26. Educational Attainment: Percent of Adults with an Associates Degree or Higher, 2003 Source: McGuinness, 2006 based on data from OECD and U.S. Census.

27. Percentage of Population Ages 25-64 with Bachelor's or Higher Degree Source: Adapted from National Center, 2005: 4. Data are from U.S. Census Bureau, 5% Public Use Microdata Samples (based on 1980, 1990, and 2000 Census).

28. References Center for the Study of Higher Education Policy, Illinois State University. Grapevine: An Annual Compilation of Data on State Tax Appropriations for the General Operation of Higher Education; http://coe.ilstu.edu/grapevine/./ College Board, The. Trends in College Pricing. Washington, DC: Author, 2006a. _______________. Trends in Student Aid. Washington, DC: Author, 2006b. Jones, Dennis. State Shortfalls Projected to Continue Despite Economic Gains. National Center for Public Policy and Higher Education Policy Alert. February 2006. [Based on Donald Boyd, State Fiscal Outlooks from 2005 to 2013: Implications for Higher Education. Boulder, CO: National Center for Higher Education Management Systems, 2005.] McGuinness, Aims C. “International Comparisons: How Do the US and Washington Compare and What Are Other Nations Doing?” Presented to Washington Learns Steering Committee, May 15, 2006. Mortenson, Thomas. “State Tax Fund Appropriations for Higher Education FY1961 to FY2007.” Postsecondary Education OPPORTUNITY (January 2007): 1-4. National Center for Higher Education and Public Policy. Income of U.S. Workforce Projected to Decline If Education Doesn’t Improve. Policy Alert. November 2005. National Center for Higher Education and Public Policy. Measuring Up 2006: The National Report Card on Higher Education. San Jose, CA: Author, 2006. National Governors Association and National Association of State Budget Officers. The Fiscal Survey of States. Washington, D.C.: Author, December 2006. State Higher Education Executive Officers, State Higher Education Finance FY 2005, Executive Summary. Boulder, CO: Author. 2006.