Consequences of State Disinvestment in Public Higher Education: Lessons for the New England States - Research Report

Oct 15, 2026

Uploaded by Jacob

Public higher education delivers benefits essential to the New England economy, yet sustained state budget reductions have increased financial risk. This research report analyzes how decreases in state appropriations raise tuition and fees, increase student loan debt, and reduce resources for education and research, resulting in fewer graduates and fewer approved patent applications. Holding other factors constant, each dollar of reduced appropriations increases net tuition and fees while cutting instructional spending at doctoral and community-college levels, with community colleges particularly affected.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages26

Reading Time1 h 6 min

AccessFree to download

Executive Summary

Introduction

The Role of Public Institutions in the Higher Education Sector

The Role of State Appropriations in Public Higher Education Finance

The Consequences of Decreasing State Appropriations for Higher Education

Conclusion and Policy Recommendations

New England Public Policy Center Consequences of State Disinvestment in Public Higher Education: Lessons for the New England States By Bo Zhao RESEARCH REPORT 19-1 February 2019 New England Public Policy Center [www.bostonfed.org/neppc](www.bostonfed.org/neppc) Staff Katharine Bradbury Mary Burke Nicholas Chiumenti Melissa Gentry Lan Ha Osborne Jackson Morgan Klaeser Jimin Nam Jennifer Rios-Pena Darcy Saas Riley Sullivan Jeffrey Thompson Thu Tran Bo Zhao The views expressed in this report are those of the author and do not necessarily represent positions of the Federal Reserve Bank of Boston or the Federal Reserve System. Table of Contents Executive Summary ................................................................................................3 I. Introduction ..........................................................................................................4 II. The Role of Public Institutions in the Higher Education Sector ....................7 III. The Role of State Appropriations in Public Higher Education Finance ......9 IV. The Consequences of Decreasing State Appropriations for Higher Education .......................................................... 13 The Impact on Tuition and Fees .............................................................. 14 The Impact on School Expenditures........................................................ 16 The Impact on Degree Completion ......................................................... 17 The Impact on Research Productivity...................................................... 18 V. Conclusion and Policy Recommendations ................................................... 21 - EXECUTIVE SUMMARY Public higher education produces many benefits that are vital to the New England economy, but it is increasingly at risk following years of state budget cuts. In 2017 in New England, real per-student state funding for higher education was lower than it was in 2008, with a double-digit decline in each of the region’s states except Maine. States have reduced funding for higher education to address short-term budget gaps caused by recessions and long-term budget gaps attributed to the growing costs of Medicaid and public pensions. Research in this report shows that reductions in state appropriations have resulted in higher tuition and fees, greater student loan debt, decreased resources for education and research, and fewer graduates and approved patent applications from public colleges and universities. If the New England states wish to better meet the educational needs of the region’s students and the workforce requirements of employers, policymakers will need to restore some of the reduced appropriations and safeguard public higher education against future budget cuts. Among the findings highlighted in this report are that when other factors are held constant, each dollar of reduced state appropriations leads, on average, to a 17 cent increase in net tuition and fees and a 30 cent decrease in instructional expenditures at public doctoral institutions. At community colleges, $1 in lost state appropriations leads, on average, to a 56 cent cut in instructional expenditures. These cuts seriously diminish students’ opportunities to pursue and earn academic degrees. Estimates in this report suggest that due to state funding cuts, community colleges in New England collectively granted about 21,388 fewer associate’s degrees during the 2002–2012 period than they would have granted if they had received per-student state appropriations at the 2001 level (after inflation adjustments) each year since the 2001 recession. Because community colleges have a higher concentration of racial minorities and low-income students, these students are more likely to be affected and miss the opportunity to use a community-college education as a steppingstone for moving up the career and income ladder or transitioning to a four-year college. St

FAQs

What does the report identify as the main impacts of reducing state appropriations for public higher education?

The report links reductions in state appropriations to higher tuition and fees, greater student loan debt, fewer resources for education and research, and reduced numbers of graduates and approved patent applications.

What does the report estimate about the effect on tuition and fees?

When other factors are held constant, each dollar of reduced state appropriations leads, on average, to a 17-cent increase in net tuition and fees at public doctoral institutions.

What policy recommendations does the report make for New England states?

Policymakers are urged to restore or safeguard funding for public higher education—especially community colleges—using both short-term measures like strengthening budget stabilization funds and long-term actions to address persistent budget gaps.

Oct 15, 2026

Uploaded by Jacob