What Happened to College Spending During the Pandemic?

It’s definitely the holiday season here at Kelchen on Education HQ (my home office in beautiful east Tennessee). My Christmas tree is brightly lit and I’m certainly enjoying my share of homemade cookies right now. But as a researcher, I got an early gift this week when the U.S. Department of Education released the latest round of data for the Integrated Postsecondary Education Data System (IPEDS). Yes, I’m nerdy, but you probably are too if you’re reading this.

This data update included finance data from the 2020-21 fiscal year—the first year to be fully affected by the pandemic following a partially affected 2019-20 fiscal year. At the time, I wrote plenty about how I expected 2020-21 to be a challenging year for institutional finances. Thanks to stronger-than-expected state budgets and timely rounds of federal support, colleges largely avoided the worst-case scenario of closure. But they cut back their spending wherever possible, with personnel being the easiest area to cut. I took cuts to salary and retirement benefits during the 2020-21 academic year at my last job, and that was a university that made major cuts to staff while protecting full-time faculty employment.

In this post, I took a look at the percentage change in total expenditures over each of the last four years with data (2017-18 through 2020-21) for degree-granting public and private nonprofit institutions. These values are not adjusted for inflation.

Changes in total spending, public 4-years (n=550)

Characteristic2020-212019-202018-192017-18
Median change (pct)-1.22.32.22.6
>10% decrease58193919
<10% decrease256152141151
<10% increase174318316307
>10% increase62625472

Changes in total spending, private nonprofit 4-years (n=1,002)

Characteristic2020-212019-202018-192017-18
Median change (pct)-1.8-0.52.32.1
>10% decrease119533522
<10% decrease472494262305
<10% increase340415620595
>10% increase71397973

Changes in total spending, public 2-years (n=975)

Characteristic2020-212019-202018-192017-18
Median change (pct)1.03.61.41.5
>10% decrease77457952
<10% decrease353222305330
<10% increase406548488489
>10% increase139160103104

These numbers tell several important stories. First, spending in the community college sector was affected less than the four-year sector. This could be due to fewer auxiliary enterprises (housing, dining, and the like) that were affected by the pandemic, or it could be due to the existing leanness of their operations. As community college enrollments continue to decline, this is worth watching when new data come out around this time next year.

Second, private nonprofit colleges were the only sector to cut spending in the 2019-20 academic year. The pandemic likely nudged the median number below zero from what it otherwise would have been, as these tuition-dependent institutions were trying to respond immediately to pressures in spring 2020. Finally, there is a lot of variability in institutional expenses from year to year. If you are interested in a particular college, reading financial statements can be a great way to learn more about what is going on that would be available in IPEDS data.

A quick and unrelated final note: I have gotten to know many of you all via Twitter, and it is far from clear whether the old blue bird will be operational in the future. I will stay on Twitter as long as it’s a useful and enjoyable experience, although I recognize that my experience has been better than many others. You can follow my blog directly by clicking “follow” on the bottom right of my website, and you can also find me on LinkedIn. I haven’t gone to any of the other social media sites yet, but that may change in the future.

Have a safe and wonderful holiday season and let’s have a great 2023!

Author: Robert

I am an a professor at the University of Tennessee, Knoxville who studies higher education finance, accountability policies and practices, and student financial aid. All opinions expressed here are my own.

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