| Description |
State and national policy makers for 150 years have promoted public access to higher education, supported through state tax funds and more recently through federal direct appropriations and tax expenditures. In the past 3 decades, state tax funding of higher education has declined, resulting in increased reliance on tuition and reduced college affordability, thereby raising barriers to access. There are also vast differences in how well states fund higher education, with some providing more generous tax funds and others steadily providing less. Higher education researchers have conducted ongoing inquiry regarding factors that may influence the level of state legislative support for higher education. These include institutional, political, economic, cultural, demographical, and fiscal factors. Several have pointed to what appears to be an inverse relationship between state funding of higher education and state funding of Medicaid. This study employs regression analyses of a 20-year, 50-state panel of data (1992-2011), considering the changes in budget share devoted to higher education, Medicaid, K-12 Public Education, and Corrections. During that 20-year period, higher education's share declined in 33 states, Medicaid's increased in 44 states, and 28 states experienced both a decrease in higher education's share and an increase in Medicaid's. Also considered were political party control of states, and changes in Gross State Product. The analysis tries to determine if increases in Medicaid's share is contributing to a decline in the share for higher education, and whether the share for each budget category explains state funding variations. A fixed effects regression model, taking into account both the differences within (across time) and between (across states), determined that 85% of the variation in the error term is due to the wide cross-sectional state differences. This calls into question much of the prior research that relied on ordinary least squares regression models, and did not account for what Zhu called "cross-unit heterogeneity." These findings indicate that additional research is needed, both quantitative (considering groupings of states rather than all 50 states), and interpretive case studies to elicit more insights and research questions that will yield more definitive answers about budgetary tradeoffs between higher education funding and other budgetary categories. |
