Trends in College Spending 1998-2008: Where Does the Money Come from? Where Does It Go? What Does It Buy? A Report of the Delta Cost Project

"Trends in College Spending, 1998-2008: Where does the money come from? Where does it go? What does it buy?" is the third in a series of reports on college and university spending from the Delta Cost Project. The findings presented in this report concentrate on the 1998 to 2008 time period--the last academic year for which spending data are available, and what in retrospect may turn out to be a high point in funding for higher education. The Great Recession that began in the middle of the 2008 academic year falls outside of the time period covered in this report. We know that funding has fallen since then, leading to budget cuts that are reported to be heaviest in the public sector and in those private institutions that had come to be dependent on investment earnings for operating funds. Unlike earlier recessions, when revenues were expected to rebound within a few years, the consensus now is that the "new normal" means that higher education has seen a permanent reduction of roughly 10 percent of its revenue base--more in some areas of the country, less in others--money that won't be coming back, and can't realistically be made up in tuition increases. The data in this report also help to remind us that the funding cuts that came in 2009 and 2010 occurred on a base that, in many institutions, were at historic highs. As we collectively try to find our way to the "new normal," we need to recognize that a return to the pre-recession levels of spending is neither realistic, nor for the most part necessary to ensure adequate funding. The question ahead is how to best allocate available resources to accomplish public goals for higher education. That will require more attention from policy makers and institutional leaders to spending, and to the regular use of data to guide decisions about where funds are spent. The authors hope that the metrics presented in this report are useful tools to help support this necessary new focus. Definitions of variables included in aggregate spending measures and additional data details are appended. (Contains 22 figures and 4 footnotes.)