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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
Source: HECB January 2005 20
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
Graduate Tuition 2004-05(Operating & Building Fee Only)
33
Graduate Tuition 2004-05(Operating & Building Fee Only)
$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.
Source: HECB January 2005 38
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