Nevada’s Higher Education Cuts Have Created Roadblocks to Economic Growth

Posted on

Across the nation, state funding for higher education fell during the Great Recession. A new report by the nonpartisan Center for Budget and Policy Priorities (CBPP) found that states are still funding higher education below pre-recession levels. This public disinvestment has made college less accessible to students and has major long-term economic impacts.

The Silver State has not been immune to this trend. After adjusting for inflation, state funding for the Nevada System of Higher Education (NSHE) is 31 percent lower in 2014 than in 2008. Much of the cost burden for higher education has shifted to students. Prior to the recession, state funding made up 71 percent of the combined amount of state funding and tuition/fees. By 2014, the percentage of state support fell to 54 percent.  For Nevada’s college students, this means that tuition and fees have increased by 44 percent from 2008 to 2014, after adjusting for inflation.

Given that NSHE competes with surrounding states for college students, it is important to compare Nevada’s changes in state funding and tuition/fees to other states in the Intermountain West. These states include Arizona, California, New Mexico, Texas, and Utah. This analysis shows that Nevada provides a relatively high level of state funding per full time equivalent enrollment and has relatively low tuition and fees compared to neighboring states. This makes higher education in Nevada comparatively more affordable than other states. However, when state funding and tuition and fees are combined, Nevada has fewer resources available for higher education than half of the Intermountain West states, which reduces Nevada’s competitiveness.

All States in the Intermountain West Have Reduced funding for Higher Education

Figure 1 shows that all states in the region have reduced state appropriations to higher education per full-time equivalent enrollment (FTEE). Arizona had the largest percentage decrease in state funding in the region and Nevada had the third highest percentage decrease. While Nevada has reduced state funding for higher education, it continues to provide the second highest level of per FTEE support in the region both prior and after the recession. Nevada provided $10,994 in state funding per FTEE in 2008, which fell to $7,546 in 2014 in inflation adjusted dollars.

Figure 1


Students Across the Intermountain West are Facing Higher Tuition and Fees

Figure 2 shows that tuition and fees per student have increased in every state in the region from 2008 to 2014. The highest increases have been in Arizona and California, which increased tuition and fees by 81 percent and 62 percent respectively. Nevada had the fourth highest tuition increase at 44 percent. NSHE tuition and fees increased from $4,434 in 2008 to $6,385 in 2014 in inflation adjusted dollars. Figure 2 also shows that Nevada’s tuition and fees are the third lowest in the region.

Figure 2


Combining State Funding and Tuition/Fees Shows Increases in Some States and Decreases in Others

Figure 3 combines state funding and tuition/fees to show the joint impact of reduced state funding and rising tuition and fees.  Nevada is one of four states in the Intermountain West where there was an overall reduction in the sum of state funding plus tuition/fees from 2008 to 2014. These states include Nevada, New Mexico, Texas, and Utah. In contrast, Arizona, California, and Colorado raised tuition and fees sufficiently to make up for the reductions in state funding and had an increase in the sum of state funding plus tuition/fees.

Figure 3 also shows that Nevada ranks fourth in the combined amount of state appropriations and tuition/fees, behind California, New Mexico, and Texas. This limits the ability of Nevada to offer the same level of services as states with higher funding levels and could reduce Nevada’s competitiveness with other states in the region.

 Figure 3


Cuts Have Created Challenges for Nevada’s College Age Students

The combination of lower state investment and higher tuition and fees has had a major impact on higher education in Nevada.

  • Cuts have significantly reduced services to students: CBPP found that Nevada was one of only three states in the country where full-time equivalent instructional staff at public colleges and universities fell between the 2007-08 and the 2012-13 school years, even as student enrollment grew.
  • Higher tuition has increased the need for financial aid: The Institute for College Access and Success found that the percentage of Nevada’s students who need financial aid increased from 34 percent in 2007-08 to 59 percent in 2011-12.
  • Students must take on increased debt: While federal student aid has increased, it has not kept pace with rising expenses. CBPP found that the median amount of student debt increased 20 percent nationwide from 2007-08 to 2011-12. The Institute for College Access and Success found that the number of Nevada public college students receiving federal Pell grants increased from 13,175 in 2007-08 to 37,257 in 2011-12, a 172 percent increase. The average Pell grant amount also increased by 26 percent after adjusting for inflation. Meanwhile, the average debt of Nevada’s four-year college graduates increased by 7 percent after adjusting for inflation.
  • Higher tuition deters some students from enrolling in college: CBPP found that rapidly rising tuition costs has negatively affected college enrollment nationwide, with a particular impact on lower-income students.
  • Higher tuition could exacerbate Nevada’s low college attainment rate: As Figure 4 shows, Nevada had the lowest college attainment rate in the region based on 2012 Census data. Making college less accessible to students will make it difficult for Nevada to increase college attainment rates and successfully compete with neighboring states for employers that demand a college-educated workforce.

Figure 4


Cuts have Created Roadblocks for Nevada’s Economy

The low rate of college educated individuals could have significant long-term impacts on Nevada’s economy. Increasing the number of college-educated residents can have major economic benefits for all Nevadans. The Georgetown Center on Education and the Workforce estimates that 65 percent of all jobs will require at least some college education by 2020. CBPP cites research showing that wages of workers at all levels of education are higher in metropolitan areas with high concentrations of college-educated residents. This occurs because areas with concentrations of college-educated residents attract employers that pay competitive wages. Employees of these companies use their purchasing power to buy goods and services throughout the community, which benefits the whole economy.

Next Steps for Nevada

The Nevada Board of Regents is currently considering a 17 percent tuition and fee increase for Nevada’s college students. As this issue is being debated, decision-makers, including the Regents and state legislators, may want to consider the following questions:

  • What are the long-term economic impacts of reducing the affordability of college?
  • Will increasing tuition and fees reduce incoming student enrollment? And if so, how will this affect Nevada businesses?
  • Will increasing tuition and fees make it difficult for current students to graduate?
  • Can new sources of financial aid be identified to offset tuition increases?
  • Can state funding be increased to restore some of the reductions made to higher education and to make Nevada more competitive with other states in the Intermountain West?