Res High Educ (2010) 51:416–450

DOI 10.1007/s11162-010-9164-5

Politics, Interest Groups and State Funding of Public

Higher Education

David A. Tandberg

Received: 15 January 2009 / Published online: 27 January 2010

Ó Springer Science+Business Media, LLC 2010

Abstract State support of public higher education has rapidly declined relative to total
state spending. Much of this decline in support is due to the rapid growth in spending on
such things as Medicaid. However, relative support of public higher education varies
significantly between states. This study applies Tandberg’s (2009) fiscal policy framework
created to explain state support of public higher education in order to evaluate the rela-
tionship between various factors and states’ relative support of higher education. While
Tandberg’s fiscal policy framework accounts for traditional economic and demographic
factors in explaining state support for higher education, it also draws attention to political
influences as well including the impact of state-level interest groups. Using cross-sectional
time-series analysis these relationships are explored over a 19-year period. The findings
provide evidence of the significant impact of interest groups and politics on state fiscal
policy in regard to higher education.

Keywords Higher education funding  Higher education policy  Politics 

Policy formation  Policy makers  Policy  Politics of education  State policies 
Educational policy  State politics  Finance  Appropriations

Introduction

State support of higher education has received considerable attention in the popular press
and the scholarly literature. However, the politics of the appropriations process has not
received adequate attention beyond from some very recent attempts (e.g., Tandberg 2009;
McLendon et al. 2009). At times, the political factors have been either entirely ignored or,
when attention is paid, often under valued and improperly measured. This has led some to
conclude that politics has little influence on state funding of higher education (e.g., Layzell
and Lyddon 1990; Rizzo 2005; Kane et al. 2003).

D. A. Tandberg (&)
Pennsylvania Department of Education, 333 Market Street, 12th Floor, Pennsylvania, USA
e-mail: dtandberg@state.pa.us

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Additionally, the politics of state higher education policy in general has for a long time
been underdeveloped, but recently it has begun to receive more attention (Tandberg 2006;
McLendon 2003a; b; McLendon et al. 2009; McLendon and Ness 2003; McLendon et al.
2005; McLendon et al. 2004). This focus on the political has led to more recent efforts
which have attempted to develop clear conceptual frameworks that explain state higher
education spending through a theory-driven driven approach that accounts for the state
political system, state economic and demographic factors, and higher education system
attributes (e.g., Tandberg 2009).
However, the higher education literature historically suffers a dearth of any systematic
efforts aimed at understanding the role of interest groups in state-level policy formation for
higher education. So while recent studies have examined the influence of legislatures,
bureaucracies, governors and other institutional political actors on state higher education
policy, very few have sought to account for the activity of organized non-governmental
interest groups (Ness et al. 2009; Tandberg 2009).
This study attempts to extend the recent work connecting state political attributes to
state policy outcomes for higher education, explicitly account for state interest groups, and
apply a broad conceptual frame work to the analysis of the factors that are associated with
the relative state investment in public higher education over time.

State Spending on Higher Education Relative to Total State Spending

As Fig. 1 shows, state spending on higher education as a percent of total state spending has
been decreasing over the last 20 years or so, with a dramatic decline beginning in 1988.
The expansion in state spending has not benefited higher education in the way it has
benefited other state expenditure areas such as Medicaid.
A logical argument could be made that public higher education funding is susceptible to
trade-offs wherein state policymakers take money from one budget item in order to fund
another. Public higher education might well be on the losing end of such trade-offs
0.18

0.17

0.16
Share

0.15

0.14

0.13

0.12
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year

Fig. 1 Higher education’s share of state general fund expenditures. Source: National Association of State
Budget Officers (2007)

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because, by raising tuition and fees, it has the means to offset reductions in state appro-
priations. In addition public institutions can pursue private donations and apply for
research funding. Some institutions can even engage in entrepreneurial activities allowing
them to recover (at least in part) some of their budget lost to state withholdings. Further,
the federal government and most state governments subsidize higher education through
student aid, which makes increases in tuition slightly more tolerable. Because of these
unique characteristics, state lawmakers may see higher education as a resource they can
siphon when needed (Delaney and Doyle 2007; Kane et al. 2003; National Education
Association of the United States 2001).
However, decisions made at the state level about whether to support higher education
relative to other expenditure areas or to engage in trade-offs that negatively impact higher
education are not made in a uniform manner across the states, as states prioritize higher
education differently. Understanding what factors impact policymakers’ decisions in these
regards is a question that can be addressed both theoretically and empirically. This paper
will endeavor to do both.

Interest Groups

The literature on state interest groups and lobbying that has arisen in political science
provides helpful conceptual framing that can be used to guide the examination of interest
group activities in higher education. This section will review relevant literature from
political science and discuss how it might relate to the discussion of state support for higher
education.
Interest groups play an important role in state policymaking. Researchers have found
that interest groups have a visible and powerful impact on establishing state policy out-
comes and spending priorities. Specifically, the actual make-up, strength and diversity of
the interest group ‘‘ecology’’ in a state in part explains what expenditure areas and policies
a state favors and enacts (Gray and Lowery 1999; Heinz et al. 1993; Jacoby and Schneider
2001; Nice 1984; Tandberg 2006; Tandberg 2009).
Specifically, Heinz et al. (1993) have shown that interest groups are an important
influence on legislative and executive actions in certain circumstances and Nice (1984)
found that state-level interest group activity was shown to impact public policy in a variety
of areas and ways, including spending. Recent literature stresses that interest groups are
most successful when there are relatively few of them within the state: the groups are
concentrated in particular substantive areas and the active interests possess economic
power (e.g., Browne 1990; Cigler 1991; Gray and Lowery 1999; Heinz et al. 1993).
In addition, Gray and Lowery (1999) point out that if we are to discern the real influence
of special interests, ‘‘we need to examine specific interests at specific times in specific
places’’ (p. 241). The authors conclude that ‘‘when such [organized] interests, as well a
government interests, add their weight to efforts to pass legislation, it has a greater like-
lihood of passage, all other things being equal’’ (p. 242). Clearly, interest groups are
swaying state decision-making.
Higher education within the American states has legitimately been considered a type of
interest group or groups (Thomas and Hrebenar 2004). In fact, Thomas and Hrebenar
(2004) have found that the state higher education lobby is acquiring greater influence
within states. Most universities, acting as a type of interest group, have either an in-house
lobbyist or an outside contract lobbyist, and all public institutions engage in some form of
lobbying (Ferrin 2003, 2005; Gove and Carpenter 1977; Murphy 2001; Tandberg 2006).

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Many, if not most, large public universities have an office of government affairs that
lobbies at the state and federal level. At the state level one of its primary purposes is to
lobby for more state funding and work strategically in the institution’s interest (Tandberg
2006). Even if the institution does not have an office or individual responsible for lobbying,
as is the case for some smaller institutions, presidents frequently assume that role, as do
others within the institution, including students.
While there exists a meager amount of studies focused on interest groups and higher
education institutions, even fewer efforts have attempted to analyze the influence of
interest groups on state support of higher education (Tandberg 2009; McLendon et al.
2009). Higher education institutions are forced to compete for increasingly scarce
resources (Sabloff 1997). One way they do this is through their lobbying efforts. Lowry
(2007), in his review of the literature on the determinants of state funding for public higher
education, found that past studies have not actually measured organized interest groups and
indicates that one set of organizations that has a clear interest in state funding is the public
universities themselves. This paper is one attempt at filling this apparent gap in the existing
literature.

Conceptual and Theoretical Framework

Tandberg (2009) developed a fiscal policy framework for understanding and possibly
explaining state appropriations for higher education. This theory-based framework follows
in the tradition of new institutionalism and specifically institutional rational choice (March
and Olsen 1984; Shepsle 1979, 1989; Coriat and Dosi 1998; Ostrom 1999). Building on the
work that has been done in political science and more recently in higher education policy
research (e.g., McLendon et al. 2005) the framework assumes that political actors, while
seeking their own self interest, are impacted by their environment. Simply put, various
attributes of both the actors themselves, as well as the political, economic, demographic,
and higher education environment they find themselves in, shape the level of support they
are willing to give higher education. According to Tandberg, the relative mix of political
actors and contextual factors will decide whether higher education receives greater or
lesser funding for a given year. The resulting framework is depicted in Fig. 2.
The model defines state appropriations for higher education as a product of the attributes
of the policymakers and the attributes of the decision situation. The attributes of the
decision situation are impacted by and/or comprised of interest group activity, mass
political attributes, governmental institutions, state higher education factors, economic and
demographic factors of the state, political culture, and other budgetary demands.
Following in the tradition of Gray and Lowery (1999), and others, a major factor in
Tandberg’s framework is that it accounts for the importance of state interest groups and
lobbying in the setting of state fiscal policy in regard to higher education. This is one of the
first studies of state support of higher education to do so (Tandberg 2009) and, as the
results will show, the inclusion of this factor is significant.
Since the various political variables are a primary conceptual interest of this study they
are discussed first. The remaining categories (higher education sector and socioeconomic
and demographic factors) are considered the control variables for this study and are dis-
cussed following the political variables. The explanatory variables which make up the
various political categories are displayed in Fig. 3. Tandberg (2009) found that state higher
education interest groups, the political ideology of the state’s populace, legislative pro-
fessionalism, having a unicameral legislature, the centrality of a state’s higher education

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Interest Group
Activity

Mass Political Other Budgetary

Attributes Demands

Governmental
Institutions
Attributes of
Decision
State Higher Situation
Education Factors
Appropriations
Decision
Previous Year’s
Appropriation Attributes of the
Policymakers

Economic
Demographic
Factors

Political Culture

Fig. 2 Fiscal policy framework. Source: Tandberg (2009) Copyright Ó 2009, SAGE Publications

Interest Group
Activity
-HI Ed Interest
Ratio
-Interest Density

Mass Political
Attributes
-Citizen Ideology
-Electoral
Attributes of
Competition
Decision
-Voter Turnout
Situation
Appropriations
Decision
Governmental
Institutions
-Budget Powers Attributes of the
of Gov. Policymakers
-Professionalism -Party of Gov.
of Leg. -Party of Leg.
-Unified Leg.
-Term Limits
-Governance
Structure

Political Culture
-Political Culture

Fig. 3 Fiscal policy framework political variables. Source: Tandberg (2009) Copyright Ó 2009, SAGE
Publications

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governance structure, the party of the governor, and the party of the legislature all had a
statistically significant impact on state support of higher education.

Theoretical Arguments and Study Hypotheses

Interest Group Activity

As argued previously, interest groups play an important role in state policymaking. Jacoby
and Schneider (2001) found that interest groups have a visible and powerful impact on
establishing state spending priorities. Gray and Lowery (1999) found that the types of
interest groups in the state is a key consideration. Because interest groups compete with
each other (Heinz et al. 1993; Truman 1951), the larger a specific interest area is relative to
the rest of the state lobby, the more successful it should be in procuring state dollars.
Consistent with these findings, Tandberg (2009) found that as the number of higher edu-
cation interest groups in a state increases relative to the total number of interest groups,
state support for higher education increases. Therefore, the inverse must also be true: when
the number of non-higher education related interest groups increases state support for
higher education would tend to diminish.

Mass Political Attributes

Ideology

Political ideology has been defined as ‘‘a coherent and consistent set of orientations or
attitudes toward politics’’ (McLendon et al. 2009). Erikson et al. (1993) argue that state
policy is largely the result of public ideology. For instance, they showed that Aid to
Families with Dependent Children (AFDC) expenditures increased linearly as state opinion
became more liberal (Erikson et al. 1993). Research has replicated the influence of public
ideology on welfare policy numerous times (e.g., Brown 1997; Ringquist et al. 1997;
Fellows and Rowe 2004) and a large literature has been built up around the influence of
political ideology and state expenditures (Barrilleaux et al. 2002; Soss et al. 2001).
Using Berry et al. (1998) measure of state citizenry ideology (the mean position of the
state’s electorate on a liberal to conservative continuum) and using as their dependent
variable appropriations per $1,000 personal income, Archibald and Feldman (2004) found
that more liberal states were more generous towards higher education. Likewise, Tandberg
(2009) found that as states become more liberal state support of higher education increases.
Therefore, this study posits that the more liberal a state becomes the more generous it will
be towards higher education.

Electoral Competition

Electoral competition is a measure of how competitive elections are for public office within
states. When state contests are highly competitive, political leaders will vie for support by
offering services and support to the widest possible range of constituents, thereby causing
them to favor policy areas which encompass more constituents (Barrilleaux and Berkman
2003; Plotnick and Winters 1985). Plotnick and Winters (1985) went so far as to say that
‘‘probably the best known link in comparative state politics is between two-party com-
petition and redistribution’’ (p. 463). Because higher education offers diffuse benefits (like

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some other state expenditure areas) greater electoral competition may result in more
funding for higher education. In his 1976 cross-sectional study, Peterson found that
Sharkansky and Hofferbert’s (1969) interparty competition-voter turnout factor scores
were associated with more generous appropriations.

Voter Turnout

Voter turnout impacts politicians’ perception of and attention to their constituents (Bibby
and Holbrook 2004; Bowler and Donovan 2004). The greater the turnout, the more
responsive the elected officials become (Sharkansky 1968). Because citizens are generally
supportive of higher education (Selingo 2003), and therefore, in states with greater voter
turnout, or as voter turnout increases within a state, policymakers may feel compelled to
appropriate more funds to higher education. There is some evidence in the higher edu-
cation literature to support this argument (Lindeen and Willis 1975).

Governmental Institutions

Budgetary Powers of the Governor

While some scholars have portrayed the governor as an influential part of the state political
process (e.g., Barrilleaux and Berkman 2003; Beyle 1996; Sharkansky 1968), others have
portrayed the governor as unimportant (e.g., Erikson et al. 1993). Governors vary in the
amount of institutional power they have over the political and policy processes of their
states, including the budgetary process (Beyle 1996). Barrilleaux and Berkman (2003)
developed a budget powers index in order to measure the relative power of the governor
over the state budgetary process versus the legislature. Governors with greater budgetary
powers tend to limit funding for higher education, according to several factors: first,
governors often serve as a check against legislative spending (Bails and Tieslau 2000;
Dearden and Husted 1993); second, governors may divert funds away from higher edu-
cation and toward other policy areas. Hendrick and Garand (1991) found that governors
with greater powers were more willing to engage in expenditure tradeoffs (funding one
area at the expense of another). They argued that decision makers in centralized decision
environments are better able to coordinate the reciprocal changes in spending priorities that
are implied by the tradeoff concept. Because higher education is particularly susceptible to
tradeoffs (Delaney and Doyle 2007; Kane et al. 2003; National Education Association of
the United States 2001) greater budgetary powers of the governor may be associated with
less funding for higher education.

Legislative Professionalism

Legislative professionalism is generally defined as the extent to which state legislatures

embody the attributes of the U.S. Congress (i.e., a well-staffed body, amount of pay, time
in session) (Squire 2000). Studies have found that professionalism is associated with
greater policy innovation (Hayes 1996; Rosenthal 1998, 1991) and increased spending in
general (Squire and Hamm 2005). Professional legislatures are also likely to have more
Democrats than legislatures less professionally constituted (Fiorina 1994). Three studies
have found that legislative professionalism was associated with increased state appropri-
ations for higher education (Peterson 1976; McLendon et al. 2009; Tandberg 2009).

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This makes sense for several reasons. First, more professional legislatures have been
found to be associated with increased spending in general (McLendon et al. 2009). Second,
professionalized legislatures typically attract more highly-educated members (Barrilleaux
and Berkman 2003) and people with more education tend to be more sympathetic toward
higher education and place higher value on higher education (Pascarella and Terenzini
2005). Third, more professional legislatures have greater analytic ability (Squire 2000) and
therefore may be better able to recognize the benefits greater investment in higher edu-
cation may bring their states (McLendon et al. 2009).

Unified Institutional Control

Uni-party legislatures are those in which one party controls both houses. Rizzo (2005)
found that uni-party legislatures preferred to fund K-12 education rather than higher
education. This argument was supported by Tandberg (2009). This is an understandable
result in that when faced with income shocks unified governments are more able to react
quickly by adjusting state spending priorities. Unified legislatures may be more able to cut
higher education funding and to make expenditure tradeoffs (Alt and Lowry 1994).

Term Limits

In the only available study on higher education that included term limits as a predictor of
state spending, term limits were found to have a positive effect (McLendon et al. 2009).
Though term limits were originally advocated as a possible way of limiting government
spending, the evidence gleaned by investigating this theory has been mixed at best (Lopez
2003). McLendon, Hearn, and Mokher argued that the positive result may be caused by
term-limited legislators, the principal, depending more on higher education, the agent, for
the interpretation of information and data, especially that which is technically complex,
like higher education finance. Another argument made in regard to term limits is that they
make elected officials more responsive to the citizenry, as they dampen the incumbency
effect (Bails and Tieslau 2000). Citizens generally favor state spending for higher edu-
cation (Selingo 2003). If legislators become more responsive to the state’s citizens, then
term limits may result in increased spending for higher education.

Governance Structures

Each state’s level agency, or governance structure is responsible for higher education.
More professional state agencies and agency heads have been shown to be more successful
in budgetary matters (Thompson and Felts 1992). Likewise, agencies have become far
more assertive (Thompson 1987; Thompson and Felts 1992; Wilson and Sylvia 1993). This
assertiveness has implications for the budgetary process, because the amount that the
agency requests from the state government has a significant impact on the ultimate amount
appropriated to the agency (Sharkansky 1968). In addition, agency administrators have
been shown to be among the most successful lobbyists within state political systems, and
have been shown to impact state spending priorities (Elling 1999; Gormley 1996; Jacoby
and Schneider 2001).
Furthermore, a growing body of research within the higher education literature supports
the argument that the type of higher education governance structure maintained within a
state can influence the higher education policies pursued by the state (Doyle 2006; Hearn

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and Griswold 1994; McLendon et al. 2005, 2006; Zumeta 1996). A few have specifically
examined the link between governance structures and state fiscal support of higher edu-
cation (Tandberg 2009; McLendon et al. 2009; Nicholson-Crotty and Meier 2003; Lowry
2001). Theoretically, a more powerful centralized agency or structure would have more
resources and have more influence within state government. Therefore, states with cen-
tralized higher education governance structures may appropriate more money to higher
education than states with less centralized governance structures.

Political Culture

Elazar (1984) developed a classification of state political culture, defining political culture
as the ‘‘particular pattern of orientation to political action in which each political system is
imbedded.’’ Elazar’s typology theorizes that the individualistic subculture emphasizes the
market place and a limited role of government; that the moralistic subculture promotes the
commonwealth and expects government to advance the public interest; and that the tra-
ditionalistic subculture expects the government to maintain the existing social and eco-
nomic hierarchy and that governance remains an obligation of the elite rather than the
ordinary citizen (Elazar 1984). Moralistic states may tend to be the more likely to spend
more on higher education and be less likely to engage in tradeoff behavior.
More recently Hero and Tolbert (1996) developed a new way of conceptualizing
political culture. Hero and Tolbert argue that state political culture is heavily shaped by the
racial/ethnic diversity of the state. Elazar’s conceptualization of political culture left out
major racial and ethnic groups by largely ignoring non-European groups. Hero and Tolbert
contend that ‘‘much of state politics and policy is a product of racial/ethnic diversity and
that the [Elazar’s] political culture conceptualization masks and may be a surrogate for
state racial/ethnic diversity’’ (p. 853). They go onto argue that there is considerable evi-
dence to indicate that political culture impacts state policy and politics but that their
conceptualization better captures culture and better measures what is actually driving the
political culture of the state. Hero and Tolbert find that their measure is a significant
predictor of both education and social policy outcomes in the US states. Hero and Tolbert
(1996) argue that more homogeneous states would produce a consensual pluralism that
would be akin to Elazar’s moralistic political culture. The homogeneity would lead to an
underlying consensus which would be centered on a concern for the commonwealth, and
possibly greater concern for higher education. Therefore, consistent with Elazar’s argu-
ment, as the diversity of the population increases consensus will decrease and so will state
support for policy areas such as higher education.

Attributes of the Policymakers

Party Affiliation

Studies have shown that a relationship exists between party strength in governmental
institutions and the policy posture of the state. For instance, market-oriented policies have
been associated with Republicans, and greater spending on education has been associated
with Democrats (McLendon et al. 2004). Most recently, McLendon et al. (2009) and
Tandberg (2009) found that a Democratic governor was positively associated with
appropriations per $1,000 personal income. As in the case of the governor, different
spending priorities have been associated with shifts in partisan control of the state legis-
lature (Alt and Lowry 1994; Garand 1985) and specifically in regard to higher education

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(Kane et al. 2003; Archibald and Feldman 2004; Bailey et al. 2004; Tandberg 2009).
Democratic governors may be associated with increased levels of support for higher
education and legislatures with larger proportions of Democrats also ought to be associated
with greater support of higher education.

Higher Education Control Variables

Several higher education factors, or attributes of higher education within the states, have
been shown to impact state funding of higher education. These include the share of higher
education enrollments in private higher education, the share of higher education enroll-
ments in 2-year institutions, whether a state employs a higher education funding formula,
the average in-state tuition, and the total giving to public research universities.

Enrollments

Theoretically, as total enrollment rises in public four-year institutions, states will feel
pressured to increase funding in order to maintain quality and to remain competitive. The
findings of several studies support this notion (Tandberg 2009); Hossler et al. 1997;
McLendon et al. 2009; Rizzo 2005). However, total enrollments in public higher education
cannot be included on the left side of the model directly, as increased funding may result in
increased enrollments; therefore, the pressure of enrollments on state policymakers must be
measured in other ways. The opposite may be true for enrollments in 2-year and private
higher education. Two-year institutions offer educational services at a lower cost, and
private higher education generally receives little to no direct state funding. States with a
higher proportion of students in private colleges and universities will experience less
demand for public higher education and will view public higher education as a lower
priority, compared to other states with small private sectors. Likewise, as more students
enroll in 2-year institutions, the demand for state funds will diminish because the states
will be able to educate more students at a lower cost. Support for these arguments is
provided by past studies which found confirming evidence (Tandberg 2009); McLendon
et al. 2009; Rizzo 2005).

Higher Education Funding Formulae

Funding formulae have been instituted in as many as 38 states to assist states in setting
higher education appropriations levels (MGT of America 2007). The formulae provide a
mechanism by which states fund higher education. They have been defined by Marks and
Caruthers (1999) as a system that ‘‘links resources mathematically to an institution’s
characteristics’’ (p. 5). These formulae generally include an inflation index, adjustment for
enrollment fluctuations, as well as calculations for instruction, academic support, research,
public service, and other functional areas. States generally refrain from funding at the full
formula rate and provide the majority of state support through more traditional means
(MGT of America 2007).
Because the formulae are generally tied to several factors, such as those discussed
above, one may expect that higher education institutions within states with funding for-
mulae will be buffered from economic and demographic pressures. Thus, states that
employ funding formulae may do a better job at insulating higher education from the
budget axe than nonformula states. Since enrollments have remained fairly static or have

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increased in most states during the period of this study, funding formulae may be predicted
to have a positive effect on higher education funding, as Leslie and Ramey (1986), Rizzo
(2005), and Tandberg (2009) have found.

Average in-state Tuition

Recently it seems that many states have been adopting a more market-based approach to
public higher education (Geiger 2004; Hossler et al. 1997; McLendon et al. 2009; Rizzo
2005; Tandberg 2009), meaning that they depend more on tuition and other funding
sources and less on state financing. Therefore, as tuition increases states may be inclined to
reduce appropriations. Legislators, being sensitive to the concerns of their constituents,
may reduce appropriations as a way of penalizing higher education for being to aggressive
with tuition. At the same time, if given the opportunity, higher education institutions will
raise tuition in response to inadequate levels of appropriations. Clearly, the results related
to the variable ‘‘average in-state tuition’’ should be interpreted with care.

Total Giving to Public Research Universities

For similar reasons, increases in private giving may also be expected to lead to decreases in
state funding as states view increases in alternative forms of revenue as an opportunity to
shift the burden away from public financing of higher education (Rizzo 2005).

Economic and Demographic

The effect of economic and demographic variables on state higher education funding has
been well established in the literature (e.g., Archibald and Feldman 2004; Hossler et al.
1997; Kane et al. 2003; Lowry 2001; McLendon et al. 2009; Rizzo 2005; Toutkoushian
and Hollis 1998; Tandberg 2009). The variables included in this study have been shown to
be significant predictors of state funding for higher education, and include: income
inequality; unemployment; the proportion of the population below the eligible Pell grant
level; gross state product per capita; and the age share of a state’s population.

Income Inequality (Gini Coefficient)

Tandberg (2009) found that greater income inequality leads to increased support for
public higher education. Fernandez and Rogerson (1995) found that increases in the
level of income inequality make it more likely that poorer individuals are excluded from
obtaining an education, while at the same time their tax payments help offset the cost of
education obtained by others. Previous research by Hansen and Weisbrod (1969),
Windham (1970), UNESCO (2003), and Rizzo (2005) suggest that the economic middle
and upper classes have been able to shift income toward themselves in the political
process using the higher education finance system. Tandberg’s (2009) findings support
this argument.

Recessions

Past research has shown that state support of higher education is very responsive to the
business cycle. National recessions have been shown to negatively affect state support.

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When the economy is bad, states will reduce funding to higher education in order to
balance the budget (Delaney and Doyle 2007; Hovey 1999; Humphreys 2000; Rizzo 2005;
State Higher Education Executive Officers 2006).

Unemployment

States with higher unemployment may appropriate relatively less to higher education
because they may have and/or anticipate weaker economies which may be less able to fund
areas such as higher education (Lowry 2001; McLendon et al. 2009; Toutkoushian and
Hollis 1998).

Proportion of the Population below the Eligible Pell Grant Level

Rizzo (2005) found that states with a large proportion of the population below the eligible
Pell grant level were less generous towards higher education. There are several possible
reasons why this may be expected. States with a larger poor population may be less
inclined to support higher education, as it is seen as primarily benefiting the rich. Second,
states with high proportions of poor may not have adequate tax bases to support higher
education, and third, such states may have other priorities such as Medicaid and other
assistance programs.

Gross State Product Per Capita

Delaney and Doyle (2007) found that higher education funding is uniquely sensitive to the
economic situation of the states. In particular, Cohen and Noll (1998), Rizzo (2005), and
Tandberg (2009) have found that the gross state product has a significant positive influence
on state funding of higher education. When the GSP is high, policymakers may anticipate
improved tax revenue and may have more funds to appropriate immediately.

Share of the state’s Population age Range

Changes in a state’s population shares may impact funding for higher education. Certainly,
different age ranges place varied pressures on a state’s budget. A state with a large college-
age population may be more concerned with funding higher education to meet increased
demand. A state with a large elderly population may find greater demand for budgetary
areas such as Medicaid. Also, from the median voter’s perspective, elected officials may
seek to bring benefits to these constituencies if they account for a large share of the
population (McLendon et al. 2009; Rizzo 2005; Tandberg 2009).

Share of State General Fund Expenditures Devoted to Medicaid

The expansion of spending on Medicaid at the state level has been shown to negatively
impact state spending on higher education (Kane et al. 2003; Tandberg 2009). State
spending on Medicaid has expanded significantly in the last 20 years and has outpaced all
other state budgetary areas (National Association of State Budget Officers 2007). Fur-
thermore, because of higher education’s ability to generate revenue beyond its state
appropriation (e.g., increased tuition and fees or greater emphasis on private fund raising),
state lawmakers may see higher education as a resource they can siphon when needed

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(Delaney and Doyle 2007; National Education Association of the United States 2001).
Therefore Medicaid should be negatively associated with state support for higher
education.

Percent Change in General Fund Expenditures

An additional variable that was not included in Tandberg’s (2009) fiscal policy framework
but which is included in this study is the percent change in general fund expenditures. This
variable is included to assess the relationship between HI ED Share and changes in state
expenditures.1 It is expected that percent change in general fund expenditures will be
negatively related HI ED Share as state support for higher education has not kept pace with
total state spending.

Variable Construction and Description

Dependent Variable

To determine higher education’s share of state general fund expenditures (HI ED Share)
this study uses National Association of State Budget Officers (NASBO) data for both state
general fund expenditures for higher education and total state general fund expenditures.
NASBO data was used to construct the dependent variable as opposed to other data sources
(e.g., Grapevine, Census, SHEEO) for several reasons. First, NASBO uses similar criteria
in determining what is classified as higher education general fund expenditure and total
general fund expenditures. Second, NASBO also collects data on each of the other major
general fund expenditure areas. Third, the NASBO data separates capital expenditures
from basic general fund expenditures, and also separates federal reimbursements, which
can be substantial and can greatly inflate the amount states are spending if not separated
(Tandberg 2006).
The rationale for using HI ED Share as the dependent variable is two-fold: first, it
allows control for general increases or decreases in state spending and therefore isolates the
specific relationship each independent variable has with spending on higher education;
second, using HI ED Share may capture different dynamics of the state budgetary process
than other measures of state support of higher education.
Three of the dynamics mentioned above are worth highlighting. First, as discussed
earlier, states are required to balance their budgets. Therefore, an increase in one area often
necessitates a decrease in another because of state policymakers’ reluctance to increase
taxes. This dependent variable is an attempt to capture that tradeoff. Second, the decision
regarding who gets how much funding is a political one involving give-and-take between
interest groups, individual actors with their own interests and attributes, and numerous
other factors. This variable may help capture that complex dynamic. Third, this variable
may better highlight the internal factors that influence the decision making of state

1
Tandberg’s (2007) original model included a lagged dependent variable. Because of concerns over cor-
relation between the error terms it was dropped in favor of the percent change in the dependent variable
(Tandberg 2009). However, percent change in the dependent variable does not fully capture the impact of
previous years funding level nor does it carry much theoretical importance. Therefore, for this model percent
change in the dependent variable has been replaced by percent change in total state expenditures.

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policymakers as they decide how they will support higher education relative to other major
state expenditure areas.

Independent Variables

Some of the indepenent variables deserve specific mention in regard to their construction
beyond what was discussed in the conceptual framework section. A description of other
variables not discussed here can be found in Appendix 1.

Gini Coefficient/Income Inequality

The Gini coefficient is a measure of inequality of a distribution, and is defined as a ratio.

The numerator is the area between the Lorenz curve (the cumulative distribution function
of a probability distribution) of the distribution and the uniform (perfect) distribution line;
the denominator is the area under the uniform distribution line (Dorfman 1979). The Gini
coefficient is often used—and is so used here—as an income inequality metric. Zero
corresponds to perfect income equality (i.e., everyone has the same income), and 1 cor-
responds to perfect income inequality (i.e., one person has all the income, while everyone
else has no income). The source for these data is the US Census Bureau’s Current
Population Survey, 1977–2005.

Interest Groups

The interest group density measure is constructed by taking the total number of registered
interest groups minus the total number of registered higher education interest groups. The
interest group data was retrieved from state websites and government archives, from the
Council on Governmental Ethics Laws (CGEL) Blue Book (various years), and data
provided by Lowery.2

Citizen Ideology

Berry et al. (1998) measure citizen ideology by identifying the ideological position of each
member of Congress in each year, using interest group ratings. Next, they estimate citizen
ideology in each district (both house and senate districts) of a state using the ideology score
for the district’s incumbent, the estimated score for a challenger (or hypothetical chal-
lenger) to the incumbent, and election results that presumably reflect ideological divisions
in the electorate. Finally, the authors use the citizen ideology scores for each district to
compute an unweighted average for the state as a whole. The authors have updated their
measure to span 1960–2005.

Electoral Competition

Holbrook and Van Dunk’s (1993) measure of electoral competition is a state-level indi-
cator of competition based on several district-level competition variables. First, the per-
centage of the popular vote won by the winning candidate; second, the winning candidate’s

2
Similar to Tandberg (2007) I found that interest group density and the higher education interest group ratio
used in Tandberg’s analysis were highly correlated. The interest group density measure was the only
significant variable of the two in this analysis and therefore it was the only one used in the final model.

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margin of victory; third, whether the seat is ‘‘safe’’ (the authors conceptualize ‘‘safe’’ as a
seat won by 55% or more); and fourth, whether the race was contested. The complete
absence of competition is indicated by a score of zero. The scale increases from 0 to 100,
although a score of 100 is theoretically impossible as long as someone wins the election.
Holbrook and Van Dunk’s measure was employed as opposed to other ‘‘competition’’
measures (e.g., the Ranney index) because it is the only indicator that actually attempts to
assess competition among candidates instead of state-level competition between political
parties (King 1989; Holbrook and Van Dunk 1993; Barrilleaux et al. 2002).
A problem with this measure is that it has only been updated to 1992. Because of this
issue a proxy was used. A predictive model was developed that included Ranney’s
interparty competition score, the original cross-sectional measure of electoral competition,
the party of the governor, the party of the legislature, whether a state has term limits,
political culture, interest group density, the Gini coefficient, the percentage of the popu-
lation that is elderly, the gross state product per capita, unemployment, legislative pro-
fessionalism, and a dummy variable indicating years that included a recession. The R
square of the predictive model is 0.63 and is correlated with the original measure at 0.77.

Budget Powers of the Governor

One measure of budget powers of the governor was developed by Barrilleaux and Berkman
(2003) and is a scale composed of seven items. However, the index is a cross-sectional one
and only measures a governor’s budgetary powers for 1990. Beyle uses data on governors’
budget powers to develop his overall measure of gubernatorial powers, though his index of
budget powers has a critical data error that makes it unfit for use.3 Furthermore, Beyle’s
measure does not rely on as many indicators of gubernatorial budget powers as Barrilleaux
and Berkman and does not include data for each year covered by this study and would
therefore require significant ‘‘data stretching.’’
Therefore, a new index was developed. This index closely resembles the one developed
by Barrilleaux and Berkman. It is a scale of 0–7 and includes data from 1976–2004 across
all 50 states. The items included are whether state agencies make appropriations requests
directly to the governor or to the legislature; whether the executive budget document is the
working copy for legislation or if the legislature can introduce budget bills of its own, or
whether the legislature or the executive introduces another document later in the process;
whether the governor can reorganize departments without legislative approval; whether
revenue estimates are made by the governor, the legislature, or another agency, or if the
process is shared; whether revenue revisions are made by the governor, the legislature, or

3
It shows a systematic decrease in governors’ budgetary powers across almost every state in 1994 and the
decrease is not corrected for in subsequent years (change of 1.8 on a 5 point scale). A review of the source
data used by Beyle (e.g., Council of State Governments’ Book of the States) reveals that governors’ powers
did not decrease in that manner, nor did state legislatures’ powers increase in that manner. The fifty state
average before 1994 was between 4 and 4.8 (it had been steadily increasing until 1994). From 1994 until
2001 the average was between 3 and 3.1. The largest change before 1994 was .4 and after 1994 the largest
change was .1. Because of this error the data may not be useable.
Generally researchers use Beyle’s overall index of gubernatorial powers and not his measure of budgetary
powers alone which may be why this error has gone undetected until now. Beyle’s budget power data can be
viewed here: http://www.unc.edu/*beyle/E-Budget-501.doc

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another agency, or if the process is shared; whether the governor has the line-item veto;
and whether the legislature can override the line-item veto by a simple majority. Each of
these has a value of 0 or 1. The 1990 data correlates with the Barrilleaux and Berkman data
at 0.76. The sources for the data are Council of State Governments’ The Book of the States,
the National Association of State Budget Officers’ Budget Processes of the States, and The
National Conference of State Legislatures data (various years). The variable constructed
for this study is the first true time-series measure of governors’ budget powers available,
which enable cross-sectional time-series analysis and a more precise measure of the
budgetary powers of the governor.

Legislative Professionalism

This study is interested in specific characteristics and behavior of the memberships of

state legislatures. Thus, legislative professionalism will be measured using legislative
salary (Barrilleaux and Berkman 2003) which has been found to indicate important
characteristics of the membership (Chubb 1988; Carey et al. 2000; Fiorina 1994). In
fact, Carey et al. (2000) argue that, of the various resources available to highly pro-
fessionalized state legislatures, a high salary is the most important contributor to
incumbent electoral success.
Some past studies have used a composite index score in order to develop a measure of
legislative professionalism (Squire 1992). These indexes tend to emphasize various
institutional characteristics as opposed to individual characteristics and behavior. Either
way, the composites scores and legislative salary are highly correlated with each other
(0.86) for the specific years in which the composite scores exist.
Another reason to use legislative salary as a measure of legislative professionalism is
that the data is available for every year covered by this study, whereas the composite
scores have only been constructed for various specific years (1963–1964 fiscal year,
1973–1974 fiscal year, 1983–1984 fiscal year, 1988, 1993–1994 fiscal year, 1996 and
2002) (King 2000; Squire 1992, 2000; McLendon et al. 2009). Therefore, if the com-
posite score were to be used much of the year-to-year variance would be lost as the data
would have to be stretched over the periods of missing data. Likewise, one would be
unable to target the specific year in which a change took place. Since the two measures
are so highly correlated it may make better sense to use the more complete time-series
measure (legislative salary).

Higher Education Governance Structures

McGuinness (2003) developed a four-fold state governance typology which is as follows

(in descending order of strength of control): consolidated governing board, regulatory
coordinating board, weak coordinating board, and planning agency. His metric serves as
the basis for this study’s variable. The governance structure variable for this study is a
dummy variable with consolidated governing boards coded as 1 and coordinating boards,
weak coordinating boards (advising), and planning agencies all coded as 0. The use of a
dummy variable in this fashion is consistent with previous research (e.g., McLendon et al.
2009).
Data were gathered from the Education Commission of the States’ (ECS) website;
ECS’s State Postsecondary Education Structures Handbook and State Postsecondary
Education Profiles Handbook: 1976–2003; and with input from McGuinness (Education
Commission of the States 1976, 1978, 1980, 1986, 2006; McGuinness 1988, 1994, 1997,

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2003). Using the written state governance descriptions, which include information on when
states actually transitioned from one structure to another, for each individual state provided
in the Handbooks and on the ECS website the coding reflects the year a transition from one
type of governance structure to another happened.

Political Culture

The most popular deployment of Elazar’s political culture model was developed by
Sharkansky (1969). His scale assigns each state a culture rating on a scale ranging from 1
to 9. In this scale, 1 is a pure moralistic culture, five a pure individualistic culture, nine a
pure traditionalistic culture, and the values in between represent states with combinations
of cultural types. Sharkansky’s rating scale has been used in previous research with ade-
quate results (e.g., Fitzpatrick and Hero 1988; Koven and Mausolff 2002; Morgan and
Watson 1991). However Sharkansky’s measure is cross-sectional and data is not readily
available to develop time-series measures for all fifty states, which is essential if a fixed-
effects model is to be used.
For this study Elazar’s culture types will be operationalized using a time-series version
of a measure developed by Hero and Tolbert (1996). Using data from the 1980 The
Statistical Abstracts of the United States, Hero and Tolbert developed a cross-sectional
ratio of each state’s minority population compared to the dominant white population. Their
index was computed using Eq. 1:
Political culture minority diversity ¼1  ð%Latino populationÞ2 þð%Black populationÞ2
þð%White populationÞ2 þð%Asian populationÞ2 :
ð1Þ
This measure correlated very well with Elazar’s original measure and Sharkansky’s later
operationalization (p. 7). Hero and Tolbert go onto argue however that their index is more
clear, precise, and dynamic than what has been offered in regard to political culture in the
past, primarily because the alternatives have ignored recent and some older minority
groups.
The remainder of the variables should not require extensive description. Again, for
variable names, brief descriptions, and sources, see Appendix 1; for general descriptions,
see the appropriate sub-section under the Conceptual Framework section; and for
descriptive statistics see Appendix 2.

Research Design and Methods

Based on Tandberg’s (2009) fiscal policy framework the study employed a cross-sectional
times-series analysis. Stepwise regression is used to compare the relative influence of the
political, economic and demographic, and higher education variables. The study uses data
on all fifty states from 1985 to 2004. The data set consists of 950 observations (50 states by
19 years). This analysis involved original and secondary data collection from 26 sources.
The analysis consists of modeling higher education’s share of state general fund expen-
ditures (HI ED Share).
The model will be run using both raw scores and standardized scores (z-score). The
z-score reveals by how many units of the standard deviation a case is above or below the

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mean. In regression analysis, when each of the dependent and independent variables’
scores are standardized or transformed into z-scores, the relative contributions of each of
the independent variables can be more easily compared. The raw scores allow for inter-
pretation in the variables’ original matrix. The b coefficients represent the results using the
raw scores and the Beta coefficients represent the results using the z-scores.

Methods

This study will employ a pooled, cross-sectional times-series analysis. Such an approach is
capable of developing a more powerful and accurate predictive model than a simple cross-
sectional design, because multiple states are examined over multiple points in time. This
approach enables the researcher to increase the sample size and thereby the predictive
power. The general cross-sectional time-series model is as follows (Equation 2):
Cross sectional time  Series model yit ¼ a þ b1 xit þ b2 xit þ ui þ vit ð2Þ
where y is the dependent variable, x represents the independent variables, a is the intercept
coefficient and b1 represents the coefficients for the various political variables, b2 repre-
sents the control variables, and i and t are indices for individual states and time. The error
terms, ui and vit, are very important in this analysis. The ui is the fixed or random effect,
and the vit is the pure residual. Assumptions about the first error term determine whether
the model is a fixed effects or random effects model. Fixed effects models control for
omitted variables that differ between states but are constant over time. Using a fixed effects
model is the same as generating dummy variables for each case and including them in a
standard linear regression to control for fixed ‘‘case effects.’’ Therefore, fixed effects
models allow the researcher to observe primarily the effects of changes in independent
variables within states on the dependent variable.

Diagnostic Tests

A Variance Inflation Factor (VIF) test was used to evaluate the multicollinearity among the
independent variables and none of the variables included in the model approached 10; the
average VIF was 1.94. All of the tolerance levels were above 0.1 indicating that multi-
collinearity is not a concern (UCLA Academic Technology Services 2006; Williams
2005). The results of the Hausman test indicated that it was not safe to use a random effects
model (significant p value), so a fixed effects model was used for each multivariate
analysis. For descriptive statistics please see Appendix B.

Discussion of Results

The results of this study appear to indicate that Tandberg’s (2009) fiscal policy framework
is a suitable guide for the examination of state support of higher education, that politics
matters, and that interest groups impact state support. Some past studies have argued that
higher education appropriations are almost solely the result of economic and demographic
factors and that politics matters little if at all (i.e., Layzell and Lyddon 1990; Rizzo 2005).
However, the results of this study directly contradict such claims. Politics appears to play a
role in determining the share of state expenditures that are devoted to higher education.

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The political variables as a group contribute modestly to the explained variance, the
amount depending on the order in which they are introduced.4 In addition, a number of the
political variables were statistically significant in the full model.
The remainder of this section will discuss the results outlined above using Tandberg’s
(2009) fiscal policy framework and the theoretical arguments relating to each variable.
Also, because the political variables make up the primary conceptual interest of this study,
they will be discussed first and in most depth. Finally, when interpreting the results and
regression coefficients it is important to note that the dependent variable (HI ED Share) is a
percentage with a mean of 0.151, a standard deviation of 0.053, and a range of 0.045–0.52
(see Appendix 2 for additional summary statistics). For example an increase of $10,000 in
legislative salary (legislative professionalism) would result in an increase in the mean for
HI ED share of about 0.05% (from 0.151 to 0.158) (Table 1).

Political Variables

An important finding of this analysis is that this model confirms the general hypothesis that
variation in the state political context results in variation in state funding of higher edu-
cation. Specifically, each of the major political categories from Tandberg’s (2009) fiscal
policy framework impacts state support of higher education, with at least one variable from
each category reaching statistical significance.

Interest Group Activity

Consistent with the hypothesis of this study, the density of a state’s non-higher education
interest groups has a significant and negative effect on HI ED Share. The result for interest
group density provides further evidence of interest groups’ importance in state budgeting
(Nice 1984). Specifically, it supports past findings asserting that the number of interest
groups in a state influences state political activity, policy, and budgeting (Gray and Lowery
1999; Jacoby and Schneider 2001). It appears that having more active non-higher edu-
cation interests groups in a state makes it more difficult for higher education to be heard,
thus limiting its impact. This is in line with Tandberg’s (2009) earlier analysis which
showed that having a larger proportion of state higher education interest groups relative to
the total state lobby had a positive impact on state support of higher education.

Mass Political Attributes

Political ideology is the only variable included in mass political attributes that has a
significant impact on HI ED Share. This is somewhat of a surprise as voter turnout was
significant in Tandberg’s (2009) model and electoral competition has been shown to be a
significant predictor of other state spending and policy developments (Barrilleaux and
Berkman 2003; Plotnick and Winters 1985).

4
When the average increase in the explained variance for each category of variables is taken (loaded
forward, as they appear in Table 3, and in reverse with the political variables loaded second) the political
variables add 8%, the higher education variables add 4%, and the economic and demographic variables add
14%.

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 Table 1 Share of state general fund expenditures devoted to higher education (stepwise)
(1) % Change (2) Econ and dem (3) Plus HI ED (4) Plus political
state expen
b-coefficient Beta-coef. b-coefficient Beta-coef. b-coefficient Beta-coef.

% Change state expen
% Pop. college age
% Pop. elderly
Gini coefficient
Log GSP per capita
-0.002 (0.001) -0.0038 (0.001)* -0.039 (0.018)* -0.003? (0.001) -0.035? (0.018) -0.003 (0.001)* -0.037 (0.017)*
0.002 (0.001)* 0.079 (0.034)* 0.001 (0.001) 0.048 (0.035) 0.001 (0.001) 0.023 (0.036)
-0.001 (0.001) -0.026 (0.031) -0.00001 (0.0007) -0.002 (0.031) -0.0002 (0.001) -0.01 (0.031)
-0.098* (0.043) -0.051 (0.025)* -0.057 (0.043) -0.033 (0.025) -0.058 (0.043) -0.034 (0.026)
-0.055** (0.01) -0.23** (0.041) -0.052** (0.01) -0.22** (0.044) -0.058** (0.01) -0.245** (0.046)
Res High Educ (2010) 51:416–450

% of pop. below pell -0.00018* (0.00005) -0.055* (0.025) -0.0002* (0.0001) -0.07* (0.025) -0.0002* (0.0001) -0.09* (0.026)
Lag recession year 0.006* (0.002) 0.046* (0.016) 0.006* (0.002) 0.046* (0.016) 0.004? (0.002) 0.031? (0.017)
? ? ?
Unemployment -0.001* (0.001) -0.058* (0.026) -0.001 (0.0007) -0.05 (0.026) -0.001 (0.001) -0.054? (0.026)
Share medicaid -0.01* (0.005) -0.054* (0.022) -0.01* (0.005) -0.048* (0.024) -0.01* (0.005) -0.54* (0.024)
% Enroll private HI ED 0.127* (0.037) 0.298* (0.087) 0.17** (0.037) 0.4** (0.087)
% Enroll 2 Year HI ED -0.002 (0.019) -0.006 (0.052) -0.003 (0.019) -0.009 (0.053)
Funding formula 0.001 (0.003) 0.006 (0.029) -0.0005 (0.003) -0.0004 (0.029)
Giving to public Univ. per -0.001 (0.01) -0.002 (0.022) -0.001 (0.01) -0.005 (0.022)
FTE (*10,000)
Log tuition -0.019** (0.005) -0.136** (0.034) -0.015* (0.005) -0.108* (0.034)
Interest group density -0.007* (0.003) -0.069* (0.032)
(*1,000)
Political ideology (*1,000) 0.219? (0.013) 0.063? (0.036)
Electoral competition -0.0003 (0.0003) -0.015 (0.014)
Voter turnout (*1,000) 0.851 (0.087) 0.018 (0.018)
Budget power of Gov -0.002 (0.002) -0.059 (0.041)
Leg professionalism 0.007** (0.001) 0.317** (0.078)
(*10,000)
Uni-party leg -0.003? (0.002) -0.03? (0.017)
Term limits 0.003 (0.002) 0.02 (0.015)
435

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 Table 1 continued
436

(1) % Change (2) Econ and dem (3) Plus HI ED (4) Plus political
state expen

123
b-coefficient Beta-coef. b-coefficient Beta-coef. b-coefficient Beta-coef.

HI ED Gov structure 0.007 (0.005) 0.062 (0.051)

Political culture 0.016? (0.008) 0.049? (0.027)
Party of Governor -0.005* (0.002) -0.049* (0.016)
Party of legislature (*1,000) 0.204 (0.126) 0.068 (0.042)
R-squared 0.002 0.18 0.18 0.20 0.20 0.24 0.24
?
Standard errors in parentheses significant at 10%; * significant at 5%; ** significant at 1%
Res High Educ (2010) 51:416–450
Res High Educ (2010) 51:416–450 437

Political Ideology

The impact of political ideology is in the predicted direction. These results indicate that the
ideological propensity of a state’s citizenry significantly impacts state support of higher
education. The more liberal a state’s citizenry, the more supportive of higher education
they are. This is consistent with Archibald and Feldman’s (2004) findings and Tandberg’s
(2009) that more liberal states are more generous towards higher education and, with the
general understanding of citizen political ideology, that more liberal citizenries are more
supportive of state spending, big government, and education.

Governmental Institutions

Two out of the five variables that comprise the government institutions conceptual
framework category are significant by conventional standards.

Legislative Professionalism

Consistent with past findings (McLendon et al. 2009; Tandberg 2009) legislative profes-
sionalism is significantly and positively associated with HI ED Share. A $10,000 increase
in legislative salary results in a 0.007 increase in HI ED Share. Comparing the Beta
Coefficients, of all the independent variables it has the largest effect. As legislatures
become more professionalized, they devote a larger share of the state’s spending to higher
education, meaning that there is an actual relationship between the two.
Why do more professionalized legislatures favor higher education? There are several
possible reasons. First, professional legislatures are more likely to be competitive, which
has been associated with more redistributive funding. Second, more professionalized
legislatures generally attract more educated members, who tend to be more sympathetic
toward higher education and value it more highly. And finally, more professional legis-
latures have greater analytic ability and therefore may be better able to recognize the
benefits that increased investment in this area may bring their states.
Option one seems doubtful. Although Bailey et al. (2004) found that state policymakers
view higher education as a redistributive policy area, the results from this study relating to
budgetary powers of the governor and electoral competition show a relationship that is
tentative at best. We are then left with either option two or option three. Both of these seem
plausible, and they also complement each other. The basic argument is that more educated
legislatures will value higher education more highly, as will legislatures with access to
better information and resources.

Uni-party Legislatures

As hypothesized, and consistent with Tandberg’s (2009) findings, uni-party legislatures

have a significant and negative effect on HI ED Share. Having a uni-party legislature is
associated with a .003 decrease in the dependent variable. Legislatures desire to deliver
benefits to their constituents, and when one party controls both houses they are better able
to do so. Having a unified legislature appears to remove at least some of the roadblocks,
enabling them to accomplish more of their legislative goals. Generally, unified govern-
ments have been more generous towards K-12 education (relative to higher education), and
are more able to react in times of income shocks by cutting budgetary areas such as higher
education and engaging in trade-off behavior. Again, the argument here is that higher

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education may be particularly susceptible to budgetary trade-offs and funding cuts

(especially during economic decline) because of its ability to generate income from sources
other than state government.

Political Culture

Political culture is significantly associated with HI ED Share, though the effect is in the
opposite direction than what was hypothesized. As states become more traditionalistic (or
less moralistic), they spend more on higher education relative to other state budgetary
areas. An increase of one in political culture (a state becoming more traditionalistic) results
in a 0.016 increase in HI ED Share; comparing the Beta coefficients shows that political
culture has a fairly average effect size.
Originally it was argued that homogeneity would lead to an underlying consensus which
would be centered on a concern for the commonwealth, and possibly greater concern for
higher education. Therefore, consistent with Elazar’s argument, as the diversity of the
population increases consensus will decrease and so will state support for policy areas such
as higher education. However the opposite happened. As diversity increased and therefore,
using Hero and Tolbert’s argument, consensus decreased, state support increased. Alter-
natively, it could be said that as consensus increases state support of higher education
decreases.
Applying Elazar’s typology it was argued that because moralistic states promote the
public wellbeing and because traditionalistic states promote the status quo and the pres-
ervation of the elite class, greater state support of higher education would be associated
with more moralistic states. This assertion was based on the assumption that elected
officials and their constituents view higher education as a public good and an equalizing
force in society, which are moralistic values. Based on the findings, this assumption
appears to be incorrect.
There is significant debate in the scholarly literature about whether higher education has
redistributive effects (Bailey et al. 2004; Bowen 1977; Heller 2002; Nicholson-Crotty and
Meier 2003). This study’s finding, as it relates to political culture, provides some evidence
that higher education may not be viewed and/or treated as a redistributive policy area. It
appears that the public may not view it that way and that greater consensus among the
public leads to less support for higher education. This result, along with the gubernatorial
budgetary powers and electoral competition findings (neither of which reached statistical
significance by conventional levels), seem to contradict Bailey et al.’s (2004) findings that
elected officials treat higher education as a redistributive policy area. The perception,
whether real or imagined, that higher education serves the interests of the elite and per-
petuates their place in society may prevail, at least compared to some other state budgetary
areas. Were this not the case, greater consensus (having a moralistic political culture)
would lead a state to be more supportive of higher education and when there is less
consensus (traditionalist states) there would be less support. Of course, further investiga-
tion is needed to more clearly explicate this issue.

Attributes of Policymakers

Past research has shown the importance party affiliation plays in predicting state support of
higher education. The results of this study support those findings however only for the
governor and the impact is not in the expected direction.

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Res High Educ (2010) 51:416–450 439

Party of the Governor

The party of the governor is statistically significant but not in the predicted direction. This
is a surprising finding as prior research has shown the opposite relationship (e.g., Tandberg
2009; McLendon et al. 2009; Alt and Lowry 1994; Garand 1985; Kane et al. 2003;
Archibald and Feldman 2004; Bailey et al. 2004). However, greater overall state spending
has been associated with Democratic control. This fact may reconcile past findings with
this one. If Democratic governors spend more overall, their increased spending on higher
education may be trumped by greater spending in other budgetary areas (e.g., Alt and
Lowry 1994; Barrilleaux and Bernick 2003; Barrilleaux et al. 2002; Yates and Fording
2005). If higher education funding per FTE, per capita, or per $1,000 personal income are
analyzed, then having a Democratic governor will be positively associated with funding;
however, when HI ED Share is analyzed there will be a negative relationship. The rela-
tionship between overall spending and democratic control may likewise explain why party
control of the legislature did not reach statistical significance, although the coefficient is
positive.

Control Variables

The model’s control variables also provided some interesting results. Most were in the
hypothesized direction and all helped us understand better the forces impacting state
support of higher education.

Higher education factors

Two of the five variables that make up the higher education factors category are statisti-
cally significant by conventional standards. These are the percentage of enrolled students
attending private higher education institutions in the state and the average 4-year institution
tuition in the state.

Percentage Enrolled in Private Higher Education

The percentage enrolled in private higher education had an effect opposite of what was
expected. It appears that the more students who are enrolled in private higher education
versus public higher education, the better higher education fares in the distribution of
general fund expenditure dollars. However, the percentage enrolled in private higher
education may be working as a proxy for overall enrollments. Overall, enrollment in public
higher education has been found to be positively associated with state support of higher
education; however, there is an issue of dual causality, because increased appropriations
have been positively associated with increased enrollments (McLendon et al. 2009;
Tandberg 2009).
Two additional possible interpretations are that: one, there may be a positive correlation
between the large enrollments in private higher education in a state and the presence of
college graduates in the legislature and possibly educational attainment of the general
public. Second, large enrollments in private higher education may also be positively related

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to increased funding for state financial aid which may be picked up as part of state support
for higher education (although it is not clear if NASBO includes state financial aid in its
calculation of state expenditures for higher education (Tandberg 2006).

Tuition

The results for average in-state tuition for 4-year institutions confirmed the hypothesis.
Increasing tuition may be related to decreases in HI ED Share. This may represent the
‘‘privatization’’ or ‘‘marketization’’ of higher education, as state policymakers have
been moving away from the public funding model towards a private model of high
tuition. In other cases where the state leaders are committed to the public approach to
funding higher education, state policymakers may be punishing higher education for
raising tuition by cutting appropriations. However, increases and decreases in tuition
rates have been linked to increases and decreases in state funding (less funding
resulting in higher tuition) and therefore this result should be interpreted with caution
(Tandberg 2009).

Economic and Demographic

Economic and demographic factors significantly impact HI ED Share with four out of the
seven variables that comprise the category having a statistically significant impact. Two
out of the five were in the hypothesized direction. The significant variables include the
gross state product per capita, the percentage of the population below eligible Pell Grant
level, unemployment, and Medicaid’s share of state general fund expenditures.

GSP per Capita

Gross state product per capita is negatively associated with HI ED Share, which is opposite
to the hypothesized direction and Tandberg’s (2009) findings. From the perspective of
higher education as a state budgetary ‘‘balance wheel,’’ as economies improve we would
expect to see a reinvestment in higher education. However, as gross state product increases,
states are investing more in other areas relative to higher education.

Percentage of the Population below Eligible Pell Grant Level

Consistent with the hypothesized direction, the percentage of the population below the
eligible Pell Grant level is negatively associated with HI ED Share. Among the possible
reasons for this finding is that states with a larger poor population may be less inclined to
support higher education, as it is seen as primarily benefiting the rich. Second, states with
high proportions of poor may not have adequate tax bases to support higher education; and
third, such states may have other priorities such as Medicaid and other assistance
programs.

Recessionary Year Lagged

The result for the dummy variable which indicated if a documented recession accord
within a calendar year (lagged) was surprising. This is not consistent with past research

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which has shown that when the economy is bad, states will reduce funding to higher
education in order to balance the budget (Delaney and Doyle 2007; Hovey 1999;
Humphreys 2000; Rizzo 2005; State Higher Education Executive Officers 2006). There-
fore, the dummy variable may be capturing some other aspect of those years which is
difficult to identify, which might be linked to the difficulty of using a dummy variable to
flag recessionary years. Many recessions do not last an entire year and other times slightly
overlap years.5

Unemployment

Unemployment is negatively associated with HI ED Share. This is in line with the

hypothesized direction. From a trade-off perspective, any time the economy is weak and/or
there is less tax revenue (such as during times of high unemployment), elected officials will
be inclined to take funds from higher education in order to support other areas that are less
able (or unable) to generate alternative forms of revenue.

Share of State General fund Expenditures Devoted to Medicaid

As predicted, as the share of state general fund expenditures devoted to Medicaid

increases, higher education’s share decreases. This is consistent with previous research
(Kane et al. 2003; Tandberg 2009) and should cause some concern in the public higher
education arena as state spending on Medicaid has continued to increase unabated for the
last 20 years (National Association of State Budget Officers 2007).

Percent Change in State General Fund Expenditures

As expected percent change in state’s general fund expenditures is negatively associated

with HI ED Share. As states increase their total state spending they do not necessarily
increase their spending on higher education at a similar rate. Clearly, the expansion of state
spending in areas such as Medicaid is related to this finding.

Implications for Theory

This study highlighted the importance of interest groups in the higher education appro-
priations process and of politics generally speaking. These results largely support past
research on interests groups and the political process (e.g. Jacoby and Schneider 2001;
Gray and Lowery 1999). The inclusion of the interest group variable revealed the impact
interest groups have on the political process of appropriating money to higher education
within a state. The findings of this study, and Tandberg’s (2009) earlier findings, should

5
As indicated this result is unexpected. Several other approaches were attempted including removing the
unemployment variable, running the model with the unemployment variable but not the recessionary year
variable, and using recessionary year variable that was not lagged. None of this approaches changed the
results in any substantive way for either the unemployment variable (which returned the hypothesized
results) or the recessionary year variable. While not particularly strongly correlated (-0.18) the direction of
the correlation coefficient for the recessionary year variable and unemployment is in the expected direction.

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motivate future researchers to consider the influence of interest groups and lobbying in the
state higher education policy process.
Additionally, the findings of this study support the new institutionalism perspective
that political institutions, environment, culture, history, and attributes of policymakers
affect political outcomes and in particular state support of higher education. While
many past studies and theories of state support of higher education have emphasized
the contribution of economic, demographic, and higher education factors these findings
provide strong empirical evidence of the effect interest groups and other political
influences exert.

Implications for Practice

The first implication for practice relates to the interest group results. The relative
number of interest groups in a state negatively impacts state support of higher edu-
cation. This would appear to indicate that lobbying matters and that perhaps a con-
certed effort on the part of higher education institutions in a state would be beneficial.
Some institutions that have avoided engaging directly in the political process might
reconsider that decision; others that have limited their efforts may want to intensify
their actions.
Institutional leaders and lobbyists should acquaint themselves with their state’s political
institutions and ideology so they understand these areas’ impact and can develop their
institutional strategy accordingly. Having an intimate knowledge of the process and the
factors possibly influencing the process will help advocates plan accordingly. For example,
an awareness that a uni-party legislature may lead to reductions in state appropriations
enables higher education advocates to focus their efforts to stave off any efforts to reduce
state support.
Finally, as Layzell and Lyddon (1990) put it, referring to state budgeting for higher
education: ‘‘You have got to know the system to beat the system’’ (p. xix). Because higher
education appears to be susceptible to political influences, institutional leaders must take
the time to understand the political system and be engaged in the political process if they
wish to adequately compete for state resources.

Conclusion

This analysis provides further evidence of the impact of politics on state policy, and state
fiscal policy in particular, in regard to higher education and reveals that the higher edu-
cation appropriations process does not occur within a vacuum immune to politics or other
budgetary forces. Because of its susceptibility to political influences, higher education may
stand to benefit the most from its involvement—or lose the most by refusing to engage—in
state political and budgetary processes.

Appendix 1

See Appendix Table 2.

123
 Table 2 Variable descriptions and sources
Variables Description
Primary dependent variables
HI ED share Higher education’s share of state general
fund expenditures
Economic and demographic variables
Gini coefficient Ratio of inequality within a state (measure of
the inequality of the distribution)
GSP per capita Gross state product per capita
Recession year Dummy variable, 1 if a recession happened
during the year
Unemployment Unemployment rate—entire population
% of Pop. below pell Proportion of households below maximum
Pell Grant eligibility level
% Pop. elderly Share of population [ 65 years old
% Pop. college age Share state population age 18–24
Share medicaid Medicaid’s share of state general fund
expenditures
Higher education variables
Funding formula Higher education funding formulas; dummy
variable, 1 if state uses a funding formula
123
Source
National Association of State Budget Officers, State Expenditure Reports,
1986–2005
US Bureau of the Census, Current Population Survey, Selected Measures
of Household Income Dispersion: 1977 to 2005
US Bureau of Economic Analysis, http://www.bea.gov/rss/rss.xml
Res High Educ (2010) 51:416–450
National Bureau of Economic Research, http://www.nber.org/cycles.html
US Department of Labor, Bureau of Labor Statistics. Local Area
Unemployment Statistics (published and unpublished data)
US Bureau of the Census, Current Population Survey (unpublished data),
Estimates of Income of Households by State 1979–2005; King (2003)
American Council on Education, Status of the Pell Grant Report
US Bureau of the Census, Population Estimates Program,
http://eire.census.gov/popest/archives/state/st_sasrh.php
US Bureau of the Census, Decennial Census Microdata Files: via IPUMS
http://www.ipums.org
US Bureau of the Census, Population Estimates Program,
http://eire.census.gov/popest/archives/state/st_sasrh.php
US Bureau of the Census, Decennial Census Microdata Files: via IPUMS
http://www.ipums.org
National Association of State Budget Officers, State Expenditure Reports,
1986–2005
MGT of America, Funding Formulas, Paper present at the Annual SHEEO
Professional Development Conference, August, 2007, Chicago
443
 Table 2 continued
444

Variables Description Source

123
Giving to public Giving per student ($1,000), total giving per US Department of Education’s Integrated Postsecondary Education Data System
research FTE student from all sources at public (IPEDS) Surveys via WebCASPAR. http://caspar.nsf.gov;
Universities per research universities US Department of Education’s Higher Education General Information Surveys
FTE (HEGIS) via WebCASPAR; IPEDS Peer Analysis System www.nces.ed.gov/
ipedspas/; Council for Aid to Education, Voluntary Support of Education, Various
years
Tuition Average four year tuition, logged US Department of Education’s Integrated Postsecondary Education Data System
(IPEDS) Surveys via WebCASPAR. http://caspar.nsf.gov;
US Department of Education’s Higher Education General Information Surveys
(HEGIS) via WebCASPAR; IPEDS Peer Analysis System
www.nces.ed.gov/ipedspas/
% Enroll private HI Share of higher education enrolled in private Southern Regional Education Board, Fact Book on Higher Education,
ED institutions http://www.sreb.org/main/EdData/FactBook/indexoftables05.asp#Enrollment
% Enroll 2-year HI Share of higher education enrolled in 2-year Southern Regional Education Board, Fact Book on Higher Education,
ED institutions http://www.sreb.org/main/EdData/FactBook/indexoftables05.asp#Enrollment
Political variables
Budgetary powers of Index 0–7 Closely based on Barrilleaux & Berkman (2003); Council of State Governments:
the governor Book of the States: 1977–2005; National Association of State Budget Officers:
Budget Processes of the States 1977–2002; National Conference of State
Legislatures
Citizen ideology Annual, state-level measures of citizen ideology Berry, Ringquist, Fording, and Hanson via the Interuniversity Consortium for Political
and Social Research (ICPSR #1208), ideo6004.
Electoral competition Predicted district level competition Original competition data provided by Barrilleaux; predictive model described in text.
Higher education 1 governing board (strongest); 0 for coordinating Education Commission of the States http://www.ecs.org/ecsmain.asp?page=/html/
governance board, coordinating advising board, planning issuesPS.asp, State postsecondary education structures handbook; State postsec-
structure agency (weakest) ondary education profiles handbook: 1969–2003
Interest group density Total number of interest groups minus registered Originally developed by Gray and Lowery (1996), data provided by Lowery; state
public hi ed interests government websites; State archives; and COGEL Blue Book
Res High Educ (2010) 51:416–450
 Table 2 continued
Variables Description Source

Legislative professionalism
Party of the governor
Party of the legislature
Political culture
Legislative salary
Coded 1 if Democratic governor
Percentage of democratic legislators in both
houses combined (Nebraska average of
surrounding statesa
Racial/ethnic diversity ratio
Council of State Governments, Book of the States: 1977–2005
US Bureau of the Census, Statistical Abstract of the United States: 1977–2005
US Bureau of the Census, Statistical Abstract of the United States: 1977–2005
Originally developed by Hero & Tolbert (1996). Data from US Bureau of the Census,
Statistical Abstract of the United States: 1977–2005
Res High Educ (2010) 51:416–450

Term limits 1 if a state has term limitsb National Conference of State Legislatures: http://www.ncsl.org/programs/legismgt/
about/states.htm
Unified institutional control One party controls both houses of the US Bureau of the Census, Statistical Abstract of the United States: 1977–2005
legislature; 1 if unified (Nebraska coded 1)
Voter turnout Percent of eligible voters casting ballots US Bureau of the Census, Statistical Abstract of the United States: 1977–2005
a
Two other approaches were used (dropping Nebraska and coding Nebraska as 1) neither changed the direction of the coefficient for party of the legislature or whether the
coefficient was significant or not. In order to keep Nebraska in the data set and in order to retain as much variance within the data for party of the legislature the average of the
adjoining states was used. The standard deviation of the averages of the percent of each state’s legislature that is Democratic of the adjoining states to Nebraska is.1 for the
years included in this study. The average correlation between the same states for the years included in this study is .3.
b
In order to account for states where term limits did not take affect until some time after they were enacted the term limit variable was also lagged by one year however;
taking that approach did not significantly change the results. In some cases term limits were quickly overturned and therefore may not have had the effect observers thought
they might have.
445

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Appendix 2

See Appendix Table 3.

Table 3 Descriptive statistics

Conceptual area Variable Mean SD.

Dependent variable HI ED’s share of state general fund expenditures 0.151 0.053
Interests Interest group density 683.658 416.931
Mass political attributes Citizen ideology 48.611 14.601
Electoral competition 27.06 22.01888
Voter turnout 44.263 11.229
Government institutions Budget powers of the governor 3.983 1.296
Legislative professionalism 20760.53 18646.63
Uni party legislature (dummy) 0.465 0.499
Term limits (dummy) 0.157 0.364
HI ED governance structure (dummy) 0.465 0.5
Political culture Political culture 0.012 0.176
Attributes of Party of governor (dummy) 0.497 0.495
policymakers Party of legislature 55.309 16.204
Higher education sector % Enrolled in private HI ED 0.209 0.122
% Enrolled in 2 year HI ED 0.305 0.142
Funding formula (dummy) 0.645 0.478
Giving to public research Univ. per FTE 1757.819 1552.24
Average public 4 year tuition (log) 1.00 0.385
Economic and % Population college age 13.289 2.153
demographic % Population elderly 12.84329 2.302563
Gini coefficient 0.431 0.029
GSP per capita (log) 10.233 0.221
% Of the population below pell grant level 44.934 16.828
Recessionary year (dummy) 0.150 0.357
Unemployment 5.611 1.759
Medicaid’s share of state general fund 0.138 0.265
expenditures

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