RESOURCE GUIDE
The Partnership's annual resource guide collects and shares information related to Higher Education across the State of Alabama from expert sources like the U.S. Census Bureau, the Southern Region Education Board, the Bureau of Labor Statistics and the Federal Reserve. We put all the key data in one place to help you be a more informed advocate for higher ed.
Download the Resource Guide or scroll through the highlights below for important facts and information regarding Higher Education.
HIGHER ED IMPACT
2022 ANNUAL RESOURCE GUIDE
As our nation begins to recover from the effects of the COVID-19 pandemic, our universities will play a critical role in leading us into the future. Despite advances in funding in recent years, Alabama's universities are still funded at lower levels than many nations in the region and across the U.S. This has grave impacts for a state that already lags behind in income levels. Educational attainment is one the best way to improve income and wellbeing. Competitively funding our universities paves the way to a better and brighter future for ALL Alabamians.
HOVER OVER THE MAP TO EXPLORE MORE FACTS ABOUT POVERTY IN THE U.S.
Poverty and Income in Alabama
In measuring the economic health of a region, poverty and income are key indicators of quality of life. Higher income levels encourage industry, spending, and greater production. Increases in income usually bring more jobs and lower unemployment as companies and innovative startups find inspiration and available funding in the region. On the other hand, lower income levels (and higher poverty levels) are related to increased likelihood of negative outcomes. Not only do lower income levels mean there is less possibility for economic activity, studies have shown that lower income levels are related to worse health outcomes, increased crime, lower levels of high school graduation and academic proficiency, and difficulties in recruiting new industries to an area.
Alabama has the 7th highest poverty rate in the nation.
What does the poverty rate really mean?
The Poverty Rate (or percent of the population in poverty) measures how many individuals live below a federal threshold, based on a consistent formula that takes into account income and family size. In 2020, the maximum income limits The Census Bureau measured poverty for a family with two kids and two adults at annual total income of $26,246 [1].
Income
The poverty rate alone is not always indicative of the full living conditions of those in a region. Because many individuals live slightly above the poverty line or face economic instability that might cause them to fall below the poverty line throughout the year.
For these reasons, we also analyze income levels as a measure of economic health.
Income levels move in opposition to poverty rates – as income levels rise, poverty rates decrease, or improve.
Alabama ranks
46th
in per capita income, nationally.
Source: Federal Reserve Bank of St. Louis. U.S. Bureau of Economic Analysis.
Release: Personal Income by State.
Though income and economic growth levels across the U.S. have been negatively affected as a result of the COVID-19 pandemic, the first quarter of 2022 reflected a slow growth over the last year as the nation began to recover from the height of the pandemic.
Alabama’s income has grown
1.3% less
Than the national average In the last year
However, Alabama’s per capita income did grow at a slower rate than the national average growth of 4.8, though not as slowly as some neighboring states.
As Alabama looks to compete in the economy of the future, we must look to grow more rapidly to continue to compete at an elevated level.
eDUCATION
Higher levels of educational attainment are strong predictors for overall success. Alabama lags behind much of the nation in educational attainment.
Educational Attainment
Merely 27 percent of Alabamians over 25 have a Bachelor’s Degree or higher. This is almost 7 percentage points behind the national average.
In 2020, 52 percent of the working population in Alabama had only a high school degree or less.
Source: U.S. Census Bureau, Current Population Survey, 2020 Annual Social and Economic Supplement
Education Pays
Higher education is the most significant predictor of income level. Research shows that a college degree offers significant increases in annual income, adding up to be worth over $1 million in lifetime earnings for an individual with a Bachelor’s Degree than their peers without.
The Georgetown Center on Education and Workforce found that a college degree can bring an earnings premium of 85 percent annually. In Alabama alone, in 2019, college grads were expected to make around $20,000 more than their peers without a Bachelor’s Degree (seen in graph left).
In the national SHED survey, almost all of those with a Bachelor’s Degree or higher said they were “At least doing okay financially,” compared to merely 75% of those with an Associate’s Degree and 63 percent of those with a high school diploma alone[i]. Those with higher levels of educational attainment were significantly less likely to feel that they were unable to meet their monthly bills or cover a $400 emergency expense.
In response to the COVID-19 pandemic, those with a Bachelor’s Degree were 7 percent less likely to lose their jobs as than their peers without. This mirrors similar trends throughout history that have shown a college degree is a strong protective factor against unemployment during economic crises[ii]
[i] SHED.
Demand for Jobs
In 2020, more than one-fourth of the job market required a Bachelor’s Degree or higher for an entry-level position (left, U.S. Bureau of Labor Statistics).
Even further, of total jobs in the market almost one-third are looking for those who have higher educational attainment (below). This reflects a trend over multiple decades that shows an increased demand for a Knowledge Based workforce.
The Bureau of Labor Statistics predicts that employment opportunities for those with Bachelor’s Degrees or higher will have the strongest growth over the next decade (right).
This reflects a trend over multiple decades that shows the increased demand for a Bachelor’s Degree in the workforce (right).
The SREB reports that 30 percent of work activities in Alabama could be automated by 2025 and that adults without a Bachelor’s Degree are more likely to be displaced as a result of this automation.
Georgetown’s Center of Education and the Workforce reported that the most in-demand competencies of the next decade are “cognitive competencies” like critical thinking, creativity, communication, and teamwork. They found that these competencies are most easily communicated to employers through a Bachelor’s Degree or higher.
“Occupations that Need More Education for Entry are Projected to Grow Faster Than Average”
– Bureau of Labor Statistics
Historically, the greatest job growth post-recession has been for those with a Bachelor’s Degree or better (below).
As the U.S. recovers from the COVID-19 pandemic and braces for continued economic impacts, it’s reasonable to expect this trend to continue.
FUNDING
HIGHER ED
Higher Education funding in the U.S. comes from 3 primary sources:
-
State Appropriations
-
Endowments
-
Tuition and Fees
This resource guide will focus on the relationship between state appropriations and tuition and fees. Business Insider found that this relationship was the most significant factor in determining cost to students[i].
Where does the money go?
The largest expense for Universities is Instruction Costs – this covers faculty, staff, and your day to day experience in the classroom. Other top expenses include:
Student Support Services Hospital and Health Services
Research and Innovation General Operations[ii]
[i] [i] https://www.businessinsider.com/why-is-college-so-expensive-2018-4
[ii] Higher Education Partnership, Analysis of University Budgets.
State Appropriations
The enacted version of the FY 2022 ETF Budget totals just over $7.6 billion. The subtotal for Colleges and Universities was $1,330,709,121. This is a positive budget for education, seeing growth in nearly every area. This success in increased revenue despite the global pandemic and economic strife is in part due to the Rolling Reserve Act of 2011, which the Partnership helped to support.
Despite growth in recent years, Alabama’s budget still lags behind the region and the nation. Per FTE allocations in Alabama are more than $4,000 lower than they were in 2008, when adjusted from inflation – the most discrepancy of any state (seen left).
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The State Higher Education Executive Officers (SHEEO)’s annual report found that in most states across the U.S., higher education funding has still not fully recovered from the 2008 recession when adjusted for inflation. Though funding in Alabama (and across the U.S.) has trended upwards over the last few years, there’s still a significant difference.
In Alabama, as of 2020, state spending per student still lagged 27 percent behind 2008 levels when adjusted for inflation.[i]
[i] Center for Budget Priorities. SHEEO. Article.
Distribution of Funding
K-12 and Higher Ed
Since the early 1990s, Alabama public universities have suffered from a change in the funding formula. Prior to 1995, state funding for public education was split: one-third (Higher Ed to two-thirds (K-12). By moving away from that distribution, the state has created a void that has resulted in Alabama’s universities falling behind other states. The lack of competitive state appropriations has a negative impact on salaries, tuition, and accessibility. This points to the need to base funding decisions on a sound formula. Universities do not seek to decrease funding for other sectors of public education, but rather to have a reasonable balance that encourages the state to prosper.
2-Year Schools and 4-Year Schools
The comparison between Alabama’s higher ed funding for 2-year colleges and funding for 4-year colleges shows dramatic differences. Two-year schools are receiving significantly more per FTE than four-year schools.
This is in opposition to the national average, which funds 4-year schools at higher rates.
While Alabama lags behind the region and the nation in funding for schools, this discrepancy only deepens the divide as four-year schools are shown to create greater earning potential and, thus, should be funded more competitively.
In FY 2021 2-year schools were funded
$1,433 more per FTE
than 4-year schools.
Lower Funding Pushes Costs to Students and Families
When one source of funding for higher education suffers, University budgets are put in a tight squeeze as they do their best to protect students and families while offering the highest quality educational experience.
Reliance on tuition and fees to cover operation expenses has continued to grow over the last century.
In 1991, the student and family overall portion of funding per students was only about 29 percent, but by 2016 students and families contributed nearly half of all revenue for operational expenses. During that same period, the state share of overall funding decreased from approximately 70 percent of expenses to only about half. These are further indicators of the challenges facing Alabama.
In Alabama, in 2020, for 4-year schools 75 percent of costs were covered by the students.
Rising Costs to Students Discourages Attendance
Almost 2/3 of adults who did not attend college cited cost as the leading factor. While less than half said that they made the choice because they preferred to go to work. This demonstrates a strong desire for higher education. Making a college degree more affordable allows students to reach their full potential and achieve their dreams.
Student Debt
58% of full-time first-time undergrads in Ala. Were awarded student loans to cover the cost of college. The median amount of average student loans for one year among the public universities was $6,752 (in year 2019-2020) Alabama students took on more debt than almost any other state in the region and more debt than the national average.
Source of State Funding
90%of the ETF budget comes from Sales and Income Tax.
By investing in higher education, we can raise the educational attainment of Alabama, thus attracting more highly paid career opportunities and creating more disposable income which will be returned to the ETF through these sales and income taxes.
Impact on the Economy
Our universities have a $20 billion impact on the Alabama economy annually. Every $1 invested in higher ed returns $12.5 directly in increased economic productivity.