higher education funding - legislature...

Higher Education Funding:The Relationship Between State Support, Tuition & Financial Aid

House Subcommittee on Education Finance Structures

January 18, 2005

Barbara McLain & Susan Howson

Office of Program Research

Presentation Overview

State SupportHow higher education institutions are fundedEnrollmentCost of instruction and state support per student

TuitionRelationship to state general fund and cost of instructionCurrent policy and historical tuition rates

Financial AidState support for financial aid and students servedRelationship to tuition

OtherFuture enrollment demandResearch

1

Higher Education received $2.76 billion from the state general fund and Education Construction Account in 2003-05.

Source: Legislative Budget Reporting System

EWU3.2%CWU3.1%

TESC1.8%

SIRTI0.1%

WWU4.1%

WSU14.2%

CTC's38.3%

HECB/Financial Aid

11.6%

UW23.6%

CTC's 1,053,401$ UW 659,634 WSU 391,401 EWU 87,945 CWU 86,392 TESC 48,168 WWU 114,780 SIRTI 2,822 HECB/Financial Aid 313,867 Total Higher Education 2,758,410$

Higher Education GF-S & ECA 2003-05(Dollars in Millions)

2

Higher education institutions had a total budget from all fund sources of nearly $3 billion in FY 2004.

Source: Legislative Budget Reporting System

General Fund-State 1,166,435$ Grants and Contracts 1,122,925Tuition 552,732Other 564,608UW Hospital 437,674Ed Construction Acct 26,374Total 2,995,400$

$ in millions

Institution Expenditures by Fund Source FY 2004

Grants & Contracts

29%

UW Hospital11%

Other15% GF-S

30%

Tuition14%

Education Construction

Account (ECA)1%

3

For all institutions, state funds make up 44% of operating funds, but the proportion varies by institution.

73%CTCs77%WWU90%TESC66%CWU77%EWU59%WSU24%UW

Institution Expenditures FY 2004: Percent General Fund + ECA +

Tuition

Source: Legislative Budget Reporting System 4

Higher education institutions are not funded through a formula. The Legislature makes incremental decisions to create a biennial budget.

Reductions

Special Initiatives

Salaries & Benefits

Enrollment

Waive less tuitionAcross-the-board

Proteomics researchAdvanced technology initiative

Wine Industry EducationEngineering & Science Institute

Part-time facultyHealth benefits

Across-the-boardRecruitment & retention

Worker retrainingVeterinary studentsEngineering pipeline

General enrollmentHigh demand enrollmentJunior-level transfer

Examples of Budget Decisions:

Source: Legislative Budget Notes 5

The state assumes a “budgeted” level of enrollment, but does not limit an institution’s actual enrollment.

Source: OFM Budget Driver Report, January 2005

Budgeted Level 2004-

05

Projected Annual

AverageOver

EnrollmentUniversity of Washington Seattle 32,857 33,379 522

Bothell 1,265 1,352 87Tacoma 1,544 1,666 122

Totals 35,666 36,397 731

Washington State University Pullman 17,370 17,946 576Spokane 1,110 1,152 42Tri-Cities 675 634 -41Vancouver 1,228 1,334 106

Totals 20,383 21,066 683

Central Washington University 7,999 8,816 817

Eastern Washington University 8,269 9,222 953

The Evergreen State College 3,933 4,125 192

Western Washington University 11,389 11,627 238

Community and Technical Colleges 128,885 130,026 1,141

Total Higher Education 216,524 221,279 4,755

Projected Annual Average FTE Enrollments 2004-05

6

Cost study conducted by HECB every four years.

Identifies direct and indirect expenditures related to instruction, not including research, public service, or other programs.

Reflects expenditures from a combination of state general fund and tuition.

Broken down by lower and upper division and graduate programs, as well as various academic disciplines.

The cost of adding new enrollment has been based on a per-student “cost of instruction.”

7

$5,542NA$5,542Community & Technical Colleges

$13,560$13,560NABranch Campuses

$7,966$9,917$6,263Comprehensive Institutions*

$8,912$12,394$6,285Research Institutions

UndergradAverage

Upper Division

Lower Division

2004-05 Average Per-Student Cost of Instruction: State General Fund + Tuition

Source: HECB January 2005, based on 2001-02 Education Cost Study. Operating unds from ECA included with GFS.

*Calculation does not include Evergreen.

Average costs of instruction mask differences between costs of lower versus upper division.

8

Although not used in budgeting, “state support per student” is another funding indicator.

Total State General Fund Appropriation= State Support Per Student

Budgeted FTE Students

Example: State Support Per Student University of Washington FY 2003

$333,762,000= $9,496

35,146

9

State support per student is a benchmark that can be used to make comparisons or measure trends over time.

Source: LEAP Office, Adjusted using Implicit Price Deflator (IPD). 10

State Support Per StudentAverage GF-S Appropriations per Budgeted FTE Student

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

FY 1994 FY 1995 FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003

Inflation Adjusted - FY 2003 DollarsReal Dollars

$8,327

$9,817

$9,624

Research Institutions

$5,476$4,812

$5,673 Comprehensive Institutions

$4,166

$3,118

$3,676

Community & Technical Colleges

Tuition is considered a state fund, even though it is no longer appropriated by the Legislature.

Since 1994, tuition revenue has been collected and kept by each institution.

The Legislature does not direct how it is spent.

Tuition does not have to be spent in the same year it is collected.

However, the Legislature continues to consider how much tuition revenue will be generated when making decisions about state funding levels. $552,732TOTAL

183,990CTC

38,443WWU

13,274TESC

26,517CWU

26,257EWU

85,745WSU

$178,506UW

Tuition Expenditures FY 2004

Source: LEAP Expenditure Data

11

Higher Education Institution Expenditures: GFS, ECA & Tuition (Operating Fee Only; $ in millions)

$247 $313 $310 $328 $342 $381 $396 $408 $444 $508 $553

$866$880 $888 $929 $980

$1,035$1,115 $1,192

$1,237$1,230 $1,195

$-

$400

$800

$1,200

$1,600

$2,000

94 95 96 97 98 99 00 01 02 03 04Fiscal Year

GFS/ECA (2 & 4 yr)

Tuition (Operating Fee)

22%

78%

32%

68%

Source: LEAP Expenditure Data

Tuition represents a larger proportion of institution budgets compared to ten years ago.

12

An increasing share of the per-student cost of instruction comes from tuition rather than state general funds.

Source: HECB. Operating funds from ECA included with GFS.

Tuition's Share of the Cost of Instruction(Operating + Building Fee Per Full-Time Resident Undergraduate Student)

37.5%36.2%

28.8%

23%

40.3%38.5%

31.5%

25%

51.7%50.9%

41.1%

33.3%

1992-93 1994-95 1996-97 1998-99 2000-01 2003-04 2004-05

Research Institutions

Comprehensive Institutions

Community & Technical Colleges

13

Since 1995, the state’s tuition policy has been:The Legislature sets tuition as part of the overall budget for higher education, balancing tuition costs for students and families, institutional operating revenues generated by tuition, state appropriations to support institutions, and state funding for financial aid.

Until 2008-09:The Legislature retains authority to set tuition for resident undergraduate students, in the biennial operating budget.

Institution governing boards have authority to set tuition for non-resident and graduate students.

Current Tuition Policy

14

$-

$1,000

$2,000

$3,000

$4,000

$5,000

1985 1990 1995 2000 2005

Com m unity Colleges

Com prehensiveInstitutions

Research Universities

Resident Undergraduate Tuition

1985 1995 2005Research $1,158 $2,658 $4,758Com p $ 824 $1,967 $3,451CC $ 509 $1,166 $2,081

Source: HECB Tuition & Fee Report 2003-04, updated

Tuition costs more than four times as much as 20 years ago.

15

5% to9%

7%7%

16%

7%

4%4%4%4%4%4%

16%

14%

3%

12%

7%

2%

4%

8%

0%

23%

1986 1990 1995 2000 2005 2006 2007

Annual Increase in Resident Undergraduate Tuition

Research University Average1985-2005 & Locke Proposed

Source: HECB Tuition & Fee Report 2003-04; Locke Proposed Budget 2005-07

On an annual basis, tuition increases have varied. The twenty-year average is 7%.

16

State support for higher education also includes state funds for financial aid programs.

Program Name2005 GF-S

AppropriationEstimated # of

RecipientsState Need Grant $ 124,901 55,500 State Work Study 17,048 8,000 Promise Scholarship 8,390 7,500 Health Professional Program 3,100 85 Educational Opportunity Grant 2,867 1,145 WA Scholars Program 2,155 461 WA Award for Vocational Excellence 845 276 Future Teachers 430 60 WICHE 273 14 WA Center Scholarships 60 15 Total $ 160,069 73,056

Source: HECB January 2005 17

4%

11%

14%

7%

-1%

13%

26%

23%

12%

19%

-5%

0%

5%

10%

15%

20%

25%

30%

1995-97 1997-99 1999-01 2001-03 2003-05

Cha

nge

from

Prio

r Bie

nniu

m

Higher Education Institutions

HECB/Financial Aid

On a percentage basis, funding for financial aid has increased more than funding for higher education institutions.

Source: LEAP Expenditure Data 18

State Need Grant is not an entitlement, but the program attempts to serve all eligible students.

State Need Grant Parameters

55% of State Median Family Income ($36,500 for family of 4)

Attend half-time or more in degree or certificate program

Award amount based on tuition and student need

Estimated 6,100 unserved students.

19

The Legislature has increased funding for State Need Grant to hold recipients “harmless” from tuition increases.

Relationship Betw een Tuition and State Need Grant:Public Research Institutions

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

2000-01 2001-02 2002-03 2003-04 2004-05

Average Research Tuition & Fees

Maximum SNG Aw ard - Research

$3,649

$3,114

$5,108

$4,416


The Promise Scholarship is based on both need and merit.

Promise Scholarship Parameters

Top 15% of high school graduating class AND

135% of State Median Family Income($89,600 for family of 4)

Maximum award = community college tuition

Actual award based on funds provided and number of eligible students

21

Source: HECB

For every year to date, actual Promise Scholarship awards have been less than the maximum.

Relationship of Promise Scholarship Awards to Community College Tuition

77%

94%

81%

48%43%

51%

75% 75%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06Gov

2006-07Gov

22

The rate of growth in the number of high school graduates peaks in 2008, but growth in the college-age population continues.

High School Graduation and Population Age Cohort Forecasts

100%

105%

110%

115%

120%

125%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

High School Graduates

17-22 Year-Olds

17-29 Year-Olds

Source: OFM Chart by HECB, October 2004 23

By 2010, 22,500 additional state-funded enrollment slots will be needed to allow the same proportion of the state’s population to enroll in higher education.

Data Source: OFM January 2005Participation Rate Projection

170,000

180,000

190,000

200,000

210,000

220,000

230,000

240,000

250,000

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

Academ ic Year

Full-

Tim

e Eq

uiva

lent

Stu

dent

s

S tate B udgetedEnrollm ent

Actual / P rojectedEnrollm ent

216,524 FTEs

239,058 FTEs

Projected N eed:

+ 22,534

24

For FY 2003, the UW spent more than $930 million on research. 79% was federally-funded.

University of Washington Research Expenditures

$-

$200.0

$400.0

$600.0

$800.0

$1,000.0

1999 2000 2001 2002 2003

Fiscal Year

$ in

mill

ions

State/Other

Federal

$600.8 $652.1

$707.6

$808.5

$932.9

UW TechTransfer Office, November 2004

25

40% of research at WSU was federally-funded in FY 2003.

Washington State University Research Expenditures

$-

$200.0

$400.0

$600.0

$800.0

$1,000.0

1999 2000 2001 2002 2003

Fiscal Year

$ in

mill

ions

State/Other

Federal

$96.9 $104.8 $146.9

$107.9

$175.2

WSU Office of Research, November 2004

26

High demand enrollmentsHistory of budgeted versus actual enrollmentsHistory of tuition policy2004-05 Tuition Rates

UndergraduateGraduate

Components of tuition & fees2004-05 cost of attendanceTuition comparisons to other states and institutionsHistory of State Need Grant: funding & students servedRunning Start

Appendices

27

The Legislature began focusing on high demand enrollment in FY 2001.

543$4.65HECB distributes for 2-yr and 4-yr institutions

FY 2001

328241

$3.56$2.40

HECB distributes for 4-yrsSBCTC distributes for 2-yrs

FY 2005 (supplemental)

5261,119

$8.17$12.60

HECB distributes for 4-yrsSBCTC distributes for 2-yrs

FY 2004 and FY 2005

No funding provided. Each institution directed to “give priority to high demand fields.”

FY 2002 and FY 2003

FTEDollars

(millions)ApproachFiscal Year

28

In recent years, there has been more of a difference between “budgeted” and “actual” enrollments.

Source: OFM Budget Driver Report, January 2005

40,000

55,000

70,000

85,000

100,000

115,000

130,000

145,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005*

FTEs

Budgeted 4-Year EnrollmentBudgeted 2-Year Enrollment4-Year Actual Enrollment2-Year Actual Enrollment

* 2005 actual enrollment based on OFM projection using Fall 2004 Quarter/Semester data -January 200529

Since 1995:1995-1998: Tuition rates set in statute.

1999-2001: Maximum increase set in operating budget. Institution flexibility to adopt any increase up to maximum.

2002-2009: Resident undergraduate increase set in operating budget.Institution authority to set nonresident and graduate tuition.

Before 1995:1977-1980: Research tuition set at 25% of instructional cost.

Other institution sectors pro-rated.

1981-1992: Research: 33.3% Regional: 25.0%CCs: 23.0%

1993-1994: Annual increase in tuition’s share of instructional cost.

Before 1995, the state’s tuition policy was to set tuition as a percent of the cost of instruction.

30

$7,289$2,081Community Colleges

$14,083$3,468The Evergreen State College

$12,852$3,465Western Washington University

$12,888$3,405Eastern Washington University

$11,016$3,466Central Washington University

$13,163$4,745Washington State University

$17,400$4,770University of Washington

Non-ResidentResident

Undergraduate Tuition 2004-05(Operating & Building Fee Only)

31

Graduate Tuition 2004-05(Operating & Building Fee Only)

$31,000$12,800Medical/Dental

$19,300$13,000Law

$17,300-$19,200$7,350- $9,700Pharm D – (Varies by Class)

$17,300/$17,400$17,550

$7,100/$7,800$7,350

Nursing – Continuing/IncomingBothell/Tacoma

$21,000$20,000

$12,100$11,000

Business Masters – SeattleTacoma

$17,300$17,550$17,800

$7,100$7,350$7,600

Graduate – Tier ITier IITier III

$17,800$7,600Post Baccalaureate/Non-Matriculated-Grad Courses Only

Non-ResidentResidentUniversity of Washington

32

$31,000$12,800Medical/Dental

$19,300$13,000Law

$30,803$12,245Veterinary Medicine

$16,769-$19,125$7,221- $9,673Pharm D – (Varies by Class)

$17,423$7,020Nursing

$7,117$8,993

----

Distance Degree – UndergraduateGraduate

$15,189$5,995Graduate

Non-ResidentResidentWashington State University


33


$15,736$4,893Western Washington University

$19,506$6,069The Evergreen State College

$16,692$5,373Eastern Washington University

$11,459$5,079Central Washington University

Non-ResidentResidentComprehensive Institutions

34

Components of Total Tuition & FeesResident Undergraduate Tuition & Fees: UW 2004-05

$4,531 Operating Fee $239

Building Fee

$291S & A Fees

$120Technology Fee

Set by Legislature. Used for institution operating budget.A percent of operating fee.

Used for capital projects.

Set in collaboration with students. Pays for student

services & activities.

Set by some, not all, 4-year institutions. Pays for

technology for student use.

Tuition = $4,770

Operating + Building Fee

Total Tuition & Fees = $5,181

35

Tuition and fees represent the smallest portion of the expected costs of attending college.

Cost of Attendance - Student Living Away From Home (2004-05)

$10,100 $10,100 $10,100

$5,108 $3,879$2,313

$-

$4,000

$8,000

$12,000

$16,000

Research Comprehensives CTCs

Tuition & FeesBooks/Living Allowance

Tuition’s Share of Cost of Attendance:

34% 28% 19%Data Source: HECB 36

Washington’s tuition is lower than national averages and peer institutions, but higher than other Western states.

2003-04 Resident Undergraduate Tuition & Fees

UW WSU Regionals TESC CCsCompared To:

NATIONAL AVG -6.8% -7.3% -11.3% -12.4% -0.6%

PEERS -17.4% -10.4% -11.3% -27.9% -0.6%

WICHE STATES +24.3% +23.6% +11.1% +9.7% +19.4%

Source: HECB Tuition and Fee Report 2003-04

37

Funding for State Need Grant has increased 126% over the last ten years.

State Need Grant: Total Appropriations and Students Served

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

Num

bers

of S

tude

nts

Serv

ed

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

$140,000,000

App

ropr

iatio

ns (t

otal

dol

lars

)

Students

Appropriations

$124.9 M

$55.2 M

43,650

55,500 est.


State funds also support Running Start students dually enrolled in high school and college.

Running Start 2003-04

School Districts

$2.613 million maximum retained

District keeps up to 7% for program costs and pays higher education institution for each FTE student in Running Start

Higher Ed

$34.719 million contract revenue

$3,647 / academic FTE $4,337 / vocational FTE

9,839 FTE studentsCTCs: 9,533WSU: 31.5CWU: 31.6EWU: 243

OSPI

$37.332Million GF-S

$3,922 /academic FTE$4,664 /vocational FTE

OSPI allocates funding to school districts based on statewide annual average FTE high school student allocation

39

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