States Where Public Colleges Are Underfunded

Colleges receive a mix of federal and state funding, but the beneficiaries typically differ. The federal government tends to provide assistance to students and research projects, according to a data analysis from Pew, while state funding often supports operating expenses. Funding can also come from private sources, as well as the tuition and fees that students pay. When a school is underfunded, students often pay the price.

The latest Student Loan Hero study looks at the states where public colleges are underfunded (and where they’re not). We’ll mainly highlight 2019-2020 data (the latest available) at the state and school level, but we’ll also look at underfunding over the past five years.

Keep reading to learn more.

Key findings

• Combining all institutions, 10 states’ public colleges were underfunded in 2019-2020 — the latest available data. Reported revenues covered 87.6% of reported expenses in Connecticut — the lowest on the list. Just ahead were Wyoming (92.5%) and New Jersey (96.6%). Meanwhile, six states were overfunded by at least 10%, led by New Mexico (137.4%), Delaware (114.0%) and Kentucky (113.1%).
• Depending on the state, more of a school’s funding can come from tuition, meaning students may shoulder heavier costs. During the 2019-2020 period examined, 45.7% of Vermont public colleges’ total funding came from tuition and fees — the highest in the U.S. New Hampshire (38.5%) and Arizona (37.9%) were closest. Tuition and fees comprised at least 25% of public school funding in 23 states in 2019-2020.
• The top of the list of the most underfunded schools in 2019-2020 was dominated by two-year and less-than-two-year institutions. Among the 10 most underfunded schools, seven are two-year-or-less schools, led by Poplar Bluff Technical Career Center in Missouri, where reported revenues covered only 21.1% of reported expenses. The first four-year school to appear was the University of New Hampshire Franklin Pierce School of Law (62.7%).
• Looking wider, only five states’ schools were underfunded in the combined period from 2015-2016 to 2019-2020. Mississippi public colleges only had enough funding to cover 93.5% of incurred expenses during that period, while Hawaii (97.5%) and New York (98.1%) were next. Only one state was overfunded by at least 10% in this period: Texas (111.4%).

10 states’ public colleges were underfunded in 2019-2020

Public colleges in 10 states were underfunded in 2019-2020. Colleges are getting a dwindling amount of federal funding, according to the latest Pew research. Because state funding generally goes to operating expenses, states’ investments in higher education can play a significant role in whether schools are underfunded.

From 2008 to 2018, state funding for higher education dropped by an inflation-adjusted $6.6 billion, according to the Center on Budget and Policy Priorities. But looking between 2017 and 2018, the center found 27 states reduced per-student funding while 23 increased allocations, so it’s more of a split picture.

In 2019-2020, the following states’ public colleges had the least amount of their expenses covered by reported revenues.

• Connecticut: 87.6%
• Wyoming: 92.5%
• New Jersey: 96.6%

Here’s a full look across the U.S.:

On the flip side, six states’ public schools were overfunded by at least 10%, with the following states being the most overfunded:

• New Mexico: 137.4%
• Delaware: 114.0%
• Kentucky: 113.1%

Depending on the state, students may shoulder heavier costs through tuition

Due to underfunding, some states rely more on tuition, which ultimately leads to students shouldering more of their college costs to achieve a higher education.

For example, almost half (45.7%) of Vermont public colleges’ total funding came from tuition and fees in 2019-2020. New Hampshire (38.5%) and Arizona (37.9%) also heavily relied on student contributions. In 23 states, tuition and fees comprised at least 25% of public school funding during that same period.

Ultimately, though, because state funding varies so widely, more reliance on tuition and fees doesn’t equate to states’ public schools being fully funded. For example, even though Arizona was the third most-reliant state on tuition and fees, its public schools were still slightly underfunded in 2019-2020. That means Arizona still has more funding gaps to fill.

You can use the chart below to compare which states get a higher (or lower) percentage of their revenues from tuition and fees:

2-year (or less) institutions dominate the top of the list of the most underfunded schools

Two-year and less-than-two-year institutions topped the list of the institutions that are often the most underfunded. Among the 10 most underfunded schools, seven are two-year-or-less schools. The most underfunded school was Poplar Bluff Technical Career Center in Missouri, where reported revenues covered only 21.1% of reported expenses. Two-year-or-less schools are known for receiving much less funding than four-year institutions, but eventually the playing field gets a bit more even. Among the top 25 most underfunded public postsecondary schools, there is a more even split between four-year and two-year-or-less institutions.

The University of New Hampshire Franklin Pierce School of Law was the most underfunded four-year institution. Graduate programs often charge higher prices to help generate revenue that offsets some of the costs of undergraduate education. That means that graduate students at underfunded schools are shouldering even more of a financial burden (and likely taking on more student loan debt).

You can better understand which types of schools are the most underfunded by reviewing the following chart.

Looking wider, here’s how underfunding looked over the past 5 years

It seems as if states becoming underfunded is rising. When you look at the five years from 2015-2016 to 2019-2020, only five states were underfunded during that time, compared to twice that amount (10 states) being underfunded in 2019-2020.

During those five years, Mississippi public colleges only had enough funding to cover 93.5% of incurred expenses, followed by Hawaii (97.5%) and New York (98.1%). But these three states saw their funding rise toward the end of the five years. During 2019-2020, they each had slightly more than 100% of their expenses covered by funding.

To better understand why changes like this occur, we can use New Mexico as an example. During the five years, its schools were the 15th most underfunded, but they were the least underfunded in 2019-2020.

Why did this happen? It’s likely because New Mexico in recent years has been using lottery funds to cover tuition payments for eligible students, while it limited using lottery funds for this purpose from 2015 to 2018, when it was one of the more underfunded states.

Here’s a wider look at public funding in each state over five years: