The First To Go: Funding Cuts For Higher Education During The Great Recession

By Alice Shao

The Situation

It is no secret that the Great Recession severely impacted many states throughout the United States. Since the Great Recession, New Mexico has arguably experienced almost no growth. In 2017, 32 of its 33 counties have higher unemployment rates than they did in 2010 at the height of unemployment in the state.¹ Just as economic activity fell in New Mexico in the past 10 years, so have its revenues. As a response to the falling revenues, the government has opted to decrease its budget and allocations to certain sectors. As a result, New Mexico is now one of the states with the largest reductions in higher education spending.² This is extremely detrimental to students of the state as the falling investment has led to rising tuition and making it harder for students to obtain a college degree. Furthermore, this issue is especially prominent for New Mexico’s most vulnerable students. This issue prompted the inclusion of s a proposition of issuing almost $130 million in bonds for higher education³ in its 2018 ballot. Ultimately, without government action, the issue will continue to be detrimental to students in the state.

New Mexico’s budget cuts, especially in cuts in education funding, are among the worst in the nation. On average, New Mexico has cut higher education funding by 34 percent per student, placing it the 7th worst state cut in the nation. For comparison, the national average budget cut per student is a mere 16 percent per student.⁴ Although a decade has passed since the Great Recession, the current state spending is still 11.7 percent lower than its recession levels.⁵ Consequently, students have been significantly more disadvantaged due to the lower amounts of resources allocated by the state to its education system. New Mexico is already experiencing an almost stagnant population growth as its experienced an exodus with a population growth rate of only 1.1 percent since 2010.⁶ A main issue is New Mexico’s lack of economic diversification. With its revenues heavily dependent on energy prices, its economic prospects are unsustainable and can lead to even more detrimental effects to its students.

Addressing the Problem

New Mexico’s lottery scholarship is the easiest way to see how its budget cuts have negatively impacted its students. The lottery scholarship covers tuition at New Mexico universities for students who graduated from a New Mexico high school and start college the following semester if they maintain an average grade point average of 2.5. From 2000 to 2010, the amount of students who have received the lottery scholarship increased by 84 percent, from 7,377 students per semester in 2000 to 13,619 students per semester in 2010.⁷ However, as both state revenues and higher education funding decreased after the recession, the lottery scholarship is covering less and less of student tuition. Initially the scholarship used to cover certain percentages of students’ tuition. However, as a way to adjust for budget cuts, students will only receive baseline amounts decreasing its total tuition coverage from 60% to about 30%⁸ .

Financial aid is not the only portion of students’ education that is negatively impacted. As school funding decreases, schools are cutting staff jobs and employee’s benefits. In fact, New Mexico State University has cut 120 jobs in the last fiscal year and has also increased class sizes in order to accommodate for its lower budget.⁹ Needless to say, this decrease in funding has negatively impacted students’ educational experiences. For instance, a remedial writing program created at the University of New Mexico, or UNM and at New Mexico State University, or NMSU is currently placed on hiatus after experiencing a $3,000 decrease in budget every year for the past decade since the recession. Additionally, New Mexico State University’s English department has 33 percent less graduate students and 33 percent less graduate assistants than in previous years.¹⁰ In other words, as funding shrinks, departments do too.

Another cause for the lack of funding is New Mexico’s failure to diversify its economy. The tax and royalty revenues on oil and natural gas is the single largest contributor to state revenues.¹¹ At its peak, oil prices were just over $100 per barrel in 2014 before drastically falling to under $30 in 2016.¹² This drastic decrease further served to dampen New Mexico’s economic growth, only exacerbating its budget crisis.

Evidently, students have been hurt by the recession and the state’s budget responses in two ways. As students receive less financial aid than before, the burden of attending a four-year college has increased for many. In fact, the UNM’s enrollment fell by 7.2 percent this fall in comparison to previous years and a decrease of expected tuition by $9.7 million.¹³ This has caused schools to increase charges on tuition in order to account for the revenue losses– UNM has just agreed to increase its tuition by 2.5 percent.¹⁴ This causes a vicious cycle as students have less support to attend college which decreases college revenue. Coupled with expansive cuts, schools increase tuition making it even harder for students to enroll. Additionally, the students who are able to enroll experience a lower quality of education as faculty and programs are cut. It is undisputed that education is essential to economic growth. As students’ educational prospects within the state suffers, so will its already weak economic situation.

Recommendation and Conclusion

It is becoming increasingly apparent that New Mexico should diversify its economy in order to increase tax revenues. Despite its cuts, higher education is still the third most funded sector by the local government.¹⁵ By increasing its budget, the local economy will be able to more readily spend money on its educational sector. Not only will this help make higher education more attainable for students, it will also help the economy in the long run. Since states are restricted to balancing their budget, this would require increasing taxes. Instead of creating tax breaks for large corporations, the government should decrease the taxes of small businesses in order to help foster their growth while increasing the taxes on bigger companies in order to increase revenues. The fastest growing industry in recent years have been in the healthcare sector which creates another channel of revenue for the state.

Overall, diversifying its economy will not only help students but also the New Mexican economy in the long run. On average, the median lifetime earnings of people who hold at least a bachelor’s degree earn is twice that of those with only a high school diploma.¹⁶ As people’s income increases, not only will their personal livelihoods improve but so will their consumption which will cause a multiplier effect. It is imperative that New Mexico begins to look for other sources of revenue other than the energy sector.

Endnotes

¹ Cole, Thom. “New Mexico’s Lost Decade: State Mired in Economic Problems since Great Recession.” Santa Fe New Mexican, Santa Fe New Mexican, 11 Apr. 2018, www.santafenewmexican.com/news/local_news/new-mexico-s-lost-decade-state-mired-in-economic-problems/ar ticle_88fb7f77-15a2-5f34-b8fc-9d3a79c46630.html.

² “Unkept Promises: State Cuts to Higher Education Threaten Access and Equity.” Center on Budget and Policy Priorities , Center on Budget and Policy Priorities, 9 Oct. 2018, LINK.

³ “New Mexico 2018 Ballot Measures.” Ballotpedia, Ballotpedia, ballotpedia.org/New_Mexico_2018_ballot_measures.

⁴ “Unkept Promises: State Cuts to Higher Education Threaten Access and Equity.” Center on Budget and Policy Priorities , Center on Budget and Policy Priorities, 9 Oct. 2018, LINK.

⁵ Nott, Robert. “Report: State Education Spending Still 11.7% below Recession Levels.” Santa Fe New Mexican , Santa Fe New Mexican, 29 Nov. 2017, www.santafenewmexican.com/news/education/report-state-education-spending-still-below-recession-levels/artic le_c678ab9a-565f-5d0b-9ab7-884111ff877a.html.

⁶ Galvin, Gaby. “New Mexico’s Exodus Problem.” U.S. News & World Report , U.S. News & World Report, www.usnews.com/news/best-states/articles/2017-08-07/why-new-mexicans-are-fleeing-the-state.

⁷ “Going Broke: Tuition, Financial Need, and the New Mexico Lottery Scholarship Fund.” New Mexico Voices for Children, New Mexico Voices for Children, www.nmvoices.org/archives/6031.

⁸ Rubel, Walter. “Bill Would Make Lottery Scholarship a Set Amount, Rather than Percentage of Tuition.” Las Cruces Sun-News, Las Cruces Sun-News, 25 Jan. 2018, www.lcsun-news.com/story/news/local/new-mexico/legislature/2018/01/24/bill-would-make-lottery-scholarship- set-amount-rather-than-percentage-tuition/1063628001/ .

⁹ Nott, Robert. “N.M. among States with Largest Reductions in Higher Ed Spending.” Santa Fe New Mexican , Santa Fe New Mexican, 27 Aug. 2017, LINK.

¹⁰Mangelsdorf, Kate. “New Mexico Budget Cuts Affect University Writing Programs.” NCTE, National Council of Teachers of English, 20 Aug. 2017, www2.ncte.org/report/new-mexico-budget-cuts-affect-university-writing-programs/.

¹¹ Flynn, Ryan. “OPINION | Oil, Natural Gas Industries Central to New Mexico Economy.” Albuquerque Journal , Albuquerque Journal, www.abqjournal.com/933091/oil-gas-industry-fuels-nm.html.

¹²“WTI Crude Oil Prices – 10 Year Daily Chart.” MacroTrends, www.macrotrends.net/2516/wti-crude-oil-prices-10-year-daily-chart .

¹³ Dyer, Jessica. “UNM Enrollment Drops 7.2%.” Albuquerque Journal , Albuquerque Journal, www.abqjournal.com/1223226/unm-enrollment-drop-means-nearly-10-million-less-in-revenue.html.

¹⁴ Web Staff. “UNM Board of Regents Approve Tuition Increase.” KOB 4, KOB 4, 22 Mar. 2018, www.kob.com/albuquerque-news/unm-regents-university-of-new-mexico-tuition-increase/4836744/.

¹⁵“New Mexico State Budget and Finances.” Ballotpedia , Ballotpedia, ballotpedia.org/New_Mexico_state_budget_and_finances.

¹⁶ Schanzenbach, Diane Whitmore, et al. “Eight Economic Facts on Higher Education.” Brookings , Brookings Institute, 26 Apr. 2017, www.brookings.edu/research/eight-economic-facts-on-higher-education/.