Reform Necessary for Financing Public Higher Education

WASHINGTON, DC: Change is necessary in how U.S. public higher education is financed, according to a report issued today by the National Association of State Budget Officers (NASBO). Scarce state resources, rising university costs, higher tuition rates, increased debt loads and other factors make the current model used to finance public higher education unsustainable.

The report, Improving Postsecondary Education Through the Budget Process: Challenges & Opportunities, explains that the present system may have worked well in past decades, but fiscal changes at the federal and state levels, as well as private market changes, make reform necessary. “State revenues for higher education will still be a critical source of operating support for public higher education institutions, as well as for infrastructure needs”, explains NASBO President Jason Dilges, budget officer of South Dakota.” But stiff competition for state dollars is expected to continue and state resources will remain constrained.”

NASBO’s report demonstrates how state financing and management strategies can help control rising costs and improve results. “Going forward, we will have to focus on performance and have a serious conversation about how to make positive change in how higher education is financed,” says Scott D. Pattison, NASBO Executive Director.

As Dennis Jones, President of the National Center for Higher Education Management Systems, explains, “The future economic competitiveness of our nation and the quality of life of its citizens will increasingly depend on the education attainment levels of the adult population…State higher education policy– particularly policy relating to financing and the allocation of resources– can do much to support the achievement of this goal.”

This report calls for state officials and public higher education institutions to collaborate to:
• Target funding to improve performance.
• Slow tuition and fee growth.
• Create incentives for increasing college and university access.
• Develop transparent information on higher education spending and results.
• Increase productivity and efficiency.

The report, part of a project funded by the Bill & Melinda Gates Foundation and written from the perspective of state budget officers, presents the current landscape of state higher education finance and highlights opportunities to improve outcomes while reducing costs.

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