Postsecondary Education Funding: Now Might Not Be the Time to Stick to the Plan

Postsecondary & Workforce

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As states turn the page on a new fiscal year, concerns about how to fund education systems abound. Postsecondary education is no exception. Many institutions, systems and states are bracing for immediate and long-term budget impacts.

In a new 50-State Comparison, we detail the primary drivers of postsecondary education funding as outlined in state statute, state rule or regulation, agency policy and enacted budget bills. As states balance budgets, the potential for disconnects between funding policy and funding practice may grow. Policy review indicates potential impacts for states that fund postsecondary education based on enrollment, credit or credential completion and connections to state workforce development efforts.

Allowing student enrollment to drive allocation decisions can make a lot of sense. Institutions that serve more students generally require more resources. In fact, 30 states account for student enrollment in their funding model for at least one institution or sector. An additional three states provide an option to include an enrollment metric. Many students may be rethinking enrollment decisions in the current pandemic, however, and may opt not to enroll or to reduce their credit hour load. Both decisions have the potential to impact institutions’ tuition revenue and their state appropriation amounts. This is especially true in states that calculate funding based on full-time equivalent enrollment, where the FTE enrollment count could impact the calculated state funds even though the total student count has increased.

The recent push toward postsecondary completion — not just postsecondary access — promoted the development of funding metrics that provide funding boosts to institutions based on both credit accumulation and completion, and credential completion. As such, 29 states account for course or program completion metrics within their funding model for at least one institution or sector. The impact the pandemic has had on students’ ability to complete enrolled credits this past spring is undeniable. States using a rolling average of credits may be more insulated from this than others. However, alternative approaches to this funding metric may be considered given extraordinary impacts on credit completion.

Finally, connecting state funding for postsecondary education to workforce development efforts has been adopted in at least one institution or sector in 16 states. It is an optional funding model component in an additional four. Thirteen of these states specifically tie funding to job placement. The results of such a funding metric in a recovering economy, where job availability is compromised, may affect the ways this metric plays out across the states.

To be sure, a funding model is only as useful as the dollars invested in it and the fidelity in which it’s employed. And all states are in extraordinary circumstances that were very unlikely to have been accounted for when funding model policies were adopted. A more comprehensive and equitable look at how the pandemic has influenced institutions’ ability to meet the expectations set out in adopted funding models may be required. A clear pathway to how states will recommit to their funding policy goals as people and economies recover from this emergency will also be important.

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Senior Policy Analyst at Education Commission of the States |

Sarah supports the research and analytical capacity of the policy team in her role as a senior policy analyst at Education Commission of the States. Sarah has extensive experience in student financial aid programs, and is frequently called upon as an expert in state financial aid policy and practice. A recipient of state aid herself, Sarah believes that state policy leaders have a key role to play in ensuring affordable postsecondary opportunities for students from all backgrounds.

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