CounterCurrent: The Myth of State Disinvestment

Chance Layton

CounterCurrent: Week of 8/21/2023

The COVID-19 pandemic caused great stress in American colleges and universities. Schools had to spend immense capital to comply with state and federal regulations and allow for the safe attendance and teaching of students. All the while, many students chose to defer matriculation or higher education entirely. In the background of all this turmoil is a declining population from which to enroll students and, so we are told, declining state investment in higher education.

Andrew Gillen, Minding the Campus contributor and senior policy analyst at the Texas Public Policy Foundation, debunks the myth of state disinvestment in this week’s featured article.

We’ve heard for many years that states are disinvesting in colleges and universities to focus on other priorities (similar claims have been made about public education as well). This, we are told, has led to ever-higher tuition rates, fewer courses, larger classes, and missed opportunities for students—all of which strains university finances.

Thankfully, Gillen enjoys dissecting these arguments (someone’s gotta do it, right?). He reports that state funding ebbs and flows alongside the business cycle: state funding of higher education boomed in the years before the Great Recession and crashed after. But in the long run, funding bounced back and, overall, is much higher than in decades prior. This even applies to states that are often whipped for disinvestment, such as West Virginia. State funding, he finds, has increased by $22 to $59 per student per year since 1980.

A recent Wall Street Journal report adds some important context. While many states did decrease funding for flagship universities—a “reallocation of funding among [states’] colleges and universities,” says Gillen—none except for the University of Idaho tightened its belt alongside the tightening of state finances and lower tuition. Instead, schools increased spending by “38% between 2002 and 2022.” This rise in spending coincided with a 64% tuition increase for each student, or, as the Journal states:

For every $1 lost in state support at those universities over the two decades, the median school increased tuition and fee revenue by nearly $2.40, more than covering the cuts […].

For many years now, the National Association of Scholars has argued for the financial reform of colleges and universities. These reforms would ensure that schools have skin in the game: if students didn’t graduate or acquire jobs after graduation that could pay for tuition debt, schools would be on the hook to pay back some of that debt. During the 2020 recession, NAS encouraged Congress to add such reforms to the COVID relief packages that eventually gave $76.2 billion to higher education.

So, with all this information in front of us, it becomes quite clear that “state disinvestment is a myth,” as Gillen argues. Now we are left with the question: Why does the myth persist?

Gillen is kinder to the perpetrators of this myth than I am. He notes three reasons why it persists: confirmation bias, the fact that states do occasionally cut funding following the business cycle, and a failure to adjust for inflation. I’ll add special interests to the mix of reasons why “smart people” might lie about state disinvestment.

Any bystander can see that American colleges and universities are in need of severe reform. These institutions have proven unworthy of the public trust bestowed on them by essentially flushing taxpayer dollars down the drain, all while demanding more from governments and driving students and their families into debt they can ill afford. It is time to put a stop to it.

If you are curious about what such higher ed reform might look like, I encourage you to read our reports and recommendations in Priced Out: What College Costs America, Freedom to Learn Amendments, and Critical Care.

Until next week.

Photo by Giorgio Trovato on Unsplash

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