[Excerpt] In public higher education, tuition increases in recent decades have barely offset a long-run decline in state appropriations per full-time equivalent student. State appropriations per full-time equivalent student at public higher educational institutions averaged $6,454 in fiscal year 2010; at its peak in fiscal year 1987, the comparable number (in constant dollars) was $7,993 (State Higher Education Executive Officers 2011, figure 3), translating into a decline of 19 percent over the period. Even if one leaves out the "Great Recession," real state appropriations per full-time equivalent student were still lower in fiscal year 2008 than they were 20 years earlier. Overall, the sum of net tuition revenue and state appropriations per full-time equivalent student at the publics was roughly the same in real terms in fiscal year 2010 as it was in fiscal year 1987.
In addition, academic institutions have changed how they allocate their resources. The share of institutional expenditures going to faculty salaries and benefits in both public and private institutions has fallen relative to the share going to nonfaculty uses like student services, academic support, and institutional support (Desrochers, Lenihan, and Wellman 2010). This change has been accompanied by changing modes of instruction, together with different uses of technology - and in a number of schools by charging differential tuition across students.
This paper discusses these changes in faculty composition, expenditure allocation, pedagogy, technology, and differential tuition, how they are distributed across higher education sectors, and their implications. I conclude with some speculations about the future of American education.