A “dismal outlook” is projected for state higher education funding in most states over the next decade due largely to a “crowding out” of discretionary funding by Medicaid, a new analysis shows.
The analysis — performed by Moody’s Analytics and titled “Crowded Out: The Outlook for State Higher Education Spending” — found that, nationwide, state Medicaid spending will increase as a share of overall state spending to 17.9 percent by fiscal 2024, up from 15.6 percent in fiscal 2013.
“In dollar terms, that equates to as much as $60 billion spent on Medicaid over the next decade that previously would have been available for discretionary items such as higher education,” the analysis states. “The bulk of these costs is incurred beyond 2020, when federal assistance falls to its lowest point.”
The analysis says national higher education spending will correspondingly fall from 12.9 percent in fiscal 2013 to 12.7 percent on average by fiscal 2024.
The anticipated shrinking of state funding for higher education will likely have an adverse impact on low-income students and underrepresented groups, said Ray Scheppach, project director for the National Commission on Financing 21st Century Higher Education, a Lumina Foundation-backed initiative that commissioned the analysis as the first in a series it plans to release in the coming months.
“Let’s face it. As tuition has increased in the last 10 years, it’s had a negative impact,” said Scheppach, who is also a Senior Fellow for Economic Policy at the University of Virginia. “What we’re fearful of is it’s going to continue.
“If you look at the population that needs to be educated in the next 10 years, it’s more heavily weighted toward minorities and low-income people. It will be a challenge because they often come to the table with less education in elementary and secondary,” Scheppach said, echoing statistics that show Blacks and Hispanics have higher rates of enrollment in remedial education than Whites. “So it’s going to be challenging.”
