Business Cycles and HBCU Appropriations

Abstract

The demand for postsecondary education has steadily increased since the 1970s. However, state government’s pecuniary investments in higher education have steadily declined over this same period, a decline that is magnified during recessions. This paper examines the effect of state level business cycle measures on the funding of Historically Black Colleges and Universities (HBCUs), relative to other schools. We find that when controlling for school characteristics, HBCU funding is very responsive to the business cycle—particularly downturns. Generally, HBCUs receive less funding than other institutions, but this result is exacerbated during periods of economic downturn. Our results are driven by 4-year institutions—the most common type of HBCU—and dissipates when only considering 2-year institutions. Additionally, when examining the results within each state, we find that during periods of increased unemployment, Kentucky, Maryland, North Carolina, Ohio, South Carolina, and Virginia provide fewer funds to 4-year HBCUs. We also find that Florida, Kentucky, Louisiana, Pennsylvania, Tennessee, Texas, and West Virginia do not appropriate fewer funds to 4-year HBCUs within their states, independent of any unemployment effects. The remaining states have provided less funding for 4-year HBCUs, in general, over the time of our sample. We also examine states that have at least one public 2-year HBCU. The results suggest that Alabama appropriates more funds to 2-year HBCUs, relative to other 2-year schools, during economic downturns and otherwise; South Carolina provides fewer funds to HBCUs during periods of higher unemployment. In discussions with each states’ higher education executive association, we find that the mechanism through which funding disparities persist are difficult to assess due to the influence and autonomy state governors and legislatures possess in determining appropriations.

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Fig. 1

Notes

  1. 1.

    https://www.cbpp.org/research/state-budget-and-tax/years-of-cuts-threaten-to-put-college-out-of-reach-for-more-students.

  2. 2.

    Full-time equivalent enrollment is calculated by adding fall full-time enrollees plus an institution’s part-time enrollment scaled by factors determined by the U.S. Department of Education to account for the less than full-time status.

  3. 3.

    There are only eight 2-year HBCUs in our sample.

  4. 4.

    Mississippi is the only state to not respond to our inquiries.

  5. 5.

    The contact person for each institution is available upon request.

  6. 6.

    Results are available upon request.

  7. 7.

    In our discussions with the Ohio state higher education commission, this was acknowledged and recognized with additional funding to Central State University. It is not clear given the years that we have in this sample, if this has led to more equitable funding in Ohio.

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Correspondence to Alberto Ortega.

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Appendix

Appendix

Table 7 Public Historically Black Colleges and Universities by state
Table 8 Predominantly white public institutions in HBCU states
Table 9 Income per capita effects within HBCU states—2¬-year Colleges
Table 10 Income per capita effects within HBCU states—4¬-year Colleges

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Ortega, A., Swinton, O.H. Business Cycles and HBCU Appropriations. J Econ Race Policy 1, 176–195 (2018). https://doi.org/10.1007/s41996-018-0009-5

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Keywords

  • Business cycles
  • Higher education finance

JEL classification

  • H52
  • H75
  • I22
  • E24