Higher Education Needs Funding Formulas - A Brief Series Examining State Higher Education Financing from a K–12 Perspective

Oct 15, 2026

A briefing series examining how state higher education funding formulas work through a K–12 lens, highlighting the “turtles all the way down” problem of recursive allocations built on prior-year assumptions rather than current needs. It contrasts more established, cost-driven K–12 models with the limited and often base-plus approach used for universities. The text argues existing frameworks reflect historical discrimination, lack objectivity, and fail to meet students, institutions, and labor-market needs.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages8

Reading Time20 min

AccessFree to download

Introduction

The “turtles all the way down” analogy

K–12 funding models vs. higher education

The Problem: A Lack of Objectivity

Core principles: Efficiency, Transparency, Stability

EDUCATION & WORK Higher Education Needs Funding Formulas A Brief Series Examining State Higher Education Financing from a K–12 Perspective By: Matt Richmond Introduction Stephen Hawking’s seminal book on cosmology, A Brief History of Time, begins with a well-worn anecdote: A well-known scientist once gave a public lecture on astronomy. He described how the earth orbits around the sun and how the sun, in turn, orbits around the centre of a vast collection of stars called our galaxy. At the end of the lecture, a little old lady at the back of the room got up and said: “What you have told us is rubbish. The world is really a flat plate supported on the back of a giant tortoise.’ The scientist gave a superior smile before replying, What is the tortoise standing on?”“You’re very clever, young man, very clever,”said the old lady.“But it’s turtles all the way down!” The phrase “turtles all the way down” is used in philosophical and legal circles to describe a concept with no logical base to rest upon, one that relies on limited interrogation to make sense. In higher education, it perfectly encapsulates the current methodology for funding public colleges and universities in most U.S. states. Allocations this year are based on the prior year, which were based on the year prior to that, and so on. Yet, while the world turtle stands on the back of a rich mythological past, higher education funding is built upon a history of discrimination and inequality, one which has frustrated efforts to equalize student opportunity today. K–12 schools were once served similarly. Things have changed considerably in the last 50 years, in part due to a wave of litigation starting in the 1970s, so that today every state in the country has some type of formula in place to identify the needs of schools relative to each other and allocate money accordingly. Formula effectiveness varies, with some states doing a better job than others, but they all have some form of cost-driven model in place which—crucially—drives the vast majority of state education spending to schools. These models use up-to-date data to estimate the best resource distribution newamerica.org/education-policy/briefs/higher-education-needs-funding-formulas/ 1 based on the needs of public-school students today. This approach means that lobbying from individual districts is limited, because the allocation of funds is objectively derived. Funding for higher education is several decades behind K–12 schools in both theory and practice. Less than a quarter of state governments have any formula in place for distributing funds to their universities, despite the fact that hundreds of millions, and in some cases billions, of dollars are on the line annually. Such a small amount of state funding is distributed through these mechanisms that they can hardly be called “funding formulas”at all, with most states using them to distribute new dollars only. As a percentage, this is typically in the (low) single digits of state funding for universities. Instead, the most common methodology used for allocating resources is known as base-plus funding. In this context, the base refers to the amount of money an institution received in the prior year, and the plus refers to any funding changes defined by the legislature. In practice, most institutions receive the same funding as the prior year, with a small adjustment up or down tied to enrollment and inflation. But even momentary consideration of this approach raises red flags. In the second installment of this brief series, Equity Before Adequacy in Higher Education Funding, we explored the deep resource inequities that exist today between public institutions serving large numbers of economically disadvantaged and racially minoritized students and their states’ flagship institutions. These inequities are rooted in a history of discrimination and policy decisions that prioritize certain advantaged groups over others. College and university l

FAQs

Why does the brief use the phrase “turtles all the way down” to describe higher education funding?

It describes a funding methodology that rests on assumptions with no solid logical base, where allocations repeat prior-year determinations rather than reflecting current needs.

How does higher education funding compare with K–12 funding in the text?

K–12 states largely use cost-driven formulas using up-to-date data to guide spending toward schools, while higher education is decades behind and often relies on limited or base-plus approaches.

What three principles should any university funding model include?

The text calls for efficiency (maximize impact and align with priorities), transparency (clear, simple decision processes), and stability (avoid wild year-to-year funding swings).

Oct 15, 2026

Uploaded by Taylor Morgan