National Report on Higher Education Documents State’s Shrinking Support for Public Colleges

Colleen O'Dea | March 20, 2013 | Education
Cutting funding boosts tuition, reduces course offerings, and -- according to one expert -- can deter businesses from moving to New Jersey

New Jersey has cut funding for public colleges by more than a quarter since the start of the recession, resulting in higher tuition at the exact time layoffs and salary cuts were making it more difficult for many families to pay more, according to a new national report.

The study by the Center on Budget and Policy Priorities found that, nationally, states are spending an inflation-adjusted $2,353, or 28 percent, less per student this year than in 2008.

New Jersey’s reduction of $2,549 per student was the 20th largest in the nation. And it’s taking a toll in a number of ways. Public colleges are raising tuition by more than 10 percent on average — pushing up already-steep charges. The state of the state’s fees and funding are also discouraging companies that depend on an educated workforce from locating in New Jersey.

Public colleges are feeling the pinch in other ways, cutting faculty, eliminating course offerings, and reducing hours for computer labs and other services. What’s more, New Jersey’s shrinking support for public education is part of a continuing trend, leading one observer to characterize the state’s funding model as “broken.”

“More jobs in the future will require college-educated workers,” said Phil Oliff, CBPP policy analyst and author of the report. “For the sake of its economy and future workforce, New Jersey should start reinvesting in its colleges and universities now.”

New Jersey public colleges have raised tuition by 13 percent to compensate, according to the report, which was the 7th smallest percentage in the nation; in Arizona and California, students are paying in excess of 70 percent more to attend public college than in 2008. That translates into an average increase of $1,429 per student, which puts New Jersey in the middle of all because of its already higher-than-average tuition – it costs about $12,000 in tuition and fees for New Jersey students to attend one of the nine state colleges this year, while the College Board reports the national average is $8,655.

Including fees, the increase has been higher than reported by the CBPP. According to data from the state office of higher education, costs rose 13.3 percent at Rutgers University, an average 16.7 percent at the four-year state colleges and 19.3 percent at the county colleges in the last five years. While still modest compared to national averages, that follows a period of large increases – in the prior five years, tuition and fees jumped by 46 percent at Rutgers, 53 percent at the state colleges and 30 percent at the county colleges.

Attracting Business

New Jersey Policy Perspective, a nonpartisan group focused on research and analysis of issues, termed the confluence of state funding cuts and tuition increases during a deep recession a perfect storm for New Jersey families that also has made it more difficult for the state to attract businesses that need a well-educated workforce.

“Despite the prevailing mythology that tax rates are the major factor in business location decisions, the evidence is overwhelming that it is the quality of the workforce that is most important,” said Gordon MacInnes, president of NJPP, a member of Rutgers’ Board of Governors and a former state legislator. “Nothing better measures workforce quality than educational levels, which is one of New Jersey’s greatest, but largely ignored, assets. Given this wisdom, one would expect that New Jersey would invest first in higher education instead of leaving it at the back of the line.”

Rochelle Hendricks, the state’s secretary of higher education, argues that New Jersey’s public colleges and universities are not getting short shrift.

“The report is not reflective of the priority this Governor has placed on higher education and student assistance,” she said. “Governor Christie has shown strong support for higher education in New Jersey by making $1.6 billion available in higher education construction funding this year. The Governor increased Tuition Aid Grants (TAG) by $31.5 million last year, and he is proposing to increase TAG by another $17 million while restoring $1 million to independent colleges this year.”

Last November’s successful bond referendum for construction of new academic facilities will increase student capacity, but that will not help individual students afford continued high tuition costs, said Susanna Tardi, a William Paterson University sociology professor and executive vice president of the American Federation of Teachers New Jersey (AFTNJ), representing 20,000 faculty and staff at state four-year colleges, universities and county colleges.

“We need New Jersey legislators to provide much-needed general funding for higher education instead of putting the burden on New Jersey students and their families to shoulder costs and accumulate debt,” she said. “The CBPP report should serve as a wake-up call to fund higher education for the sake of our students and the state as a whole.”

Yearly Cuts

Between the 2008 fiscal year and the current one, the state cut the amount of money to public four-year colleges as grants-in-aid for operating expenses by 14 percent and it cut support for Rutgers during the same time period by 20 percent. State support of all senior public colleges, according to a 2010 state Higher Education Task Force report, has been dropping almost yearly, from about 42 percent of the total in the 1994 fiscal year to 28 percent in 2010.

“The model for funding the state colleges is broken,” said Paul Shelley, a spokesman for the New Jersey Association of State Colleges and Universities.

He said the state’s continuing reduction over time of the amount of support it provides to higher education has left the colleges little choice but to raise tuition. During the recession and post-recession, though, the colleges have been especially mindful of the difficult economic circumstances of families and kept tuition and fee increases to a minimum, taking other steps to cut expenses without hurting programs – for instance, by not filling positions that become vacant.

“The reality is the state has not been particularly generous to higher education,” Shelley said. “Our tuition increases were bigger from 1999 to 2009, in the 7-to-8 percent range. In more recent years, they are around 3 or 4 percent . . . We really tried to cope with the cuts through efficiencies and attrition.”

He said colleges are looking more and more to new revenue sources to make up for declining state support. These include public-private partnerships, which can range from as a solar-paneled roof that provides cheaper electricity for the school and generates income for the builder or new student housing by a for-profit developer that includes income-generating businesses at the ground level.

At the same time as the state was cutting support, enrollment rose — by 15 percent at Rutgers and 13 percent at the nine state colleges between 2008 and the current year.

And at the same time, New Jersey families’ incomes dropped. According to NJPP, real median family income dropped 7.3 percent between 2007 and 2011 to $82,255. The group surmises that the combination of rising tuition and falling income is likely to produce even greater expenses and rising student loan debt as students grapple with closed courses and delayed graduations.

Oliff blamed the cuts on “poor policy choices” by states when the recession hit in 2008 and tax revenue dropped. Most states decided to cut spending, rather than mix spending cuts and revenue increases. That led to “severe and very widespread” cuts to public higher education. Only North Dakota and Wyoming are spending more today than five years ago.

But these are only the most recent cuts. According to CBPP, state and local funding for higher education has been dropping and tuition has been increasing for the last quarter century so that, over time, students have assumed much greater responsibility for paying for public higher education.

The growth in the cost of education has also far outpaced students’ and their families’ financial resources. Between 1991 and 2011, median household income grew by about 3 percent while the cost of a four-year public college grew by 159 percent. Even with grants and tax benefits, the cost of college grew by 58 percent in real terms, well above the rate of growth in household income.

“Reversing this trend should be a priority,” Oliff said. “Getting a college degree is more important than ever . . . State revenues are beginning to come back but it will be years before they have fully recovered. Many states need to raise additional revenues, or at least should avoid implementing short-sighted tax cuts.”

Tardi said students could be facing an even greater challenge in trying to pay for college given the effects of the federal budget cuts that Congress allowed to occur. As it stands now, the federal sequester would make cuts to student financial aid, work-study jobs, and college access programs, she said.

“This year’s state budget will exclude many from academic opportunities especially if compounded with the impact of a federal sequester,” she said. “The high tuition/high-assistance model that depends on limited grants and costly loans is not working.”