Report: HBCUs Rely Heavily on Federal, State Funds, Yet Struggle to Keep Up

By Joelle Fredman, NASFAA Staff Reporter

Despite having been created to equal the playing field for a traditionally disadvantaged population, Historically Black Colleges and Universities (HBCUs) are facing inequities in funding from federal, state, and local resources, according to the American Council on Education (ACE).

The authors—Krystal Williams and BreAnna Davis of the Frederick D. Patterson Research Institute at the United Negro College Fund—wrote in an ACE issue brief released Tuesday that HBCUs rely more heavily on federal, state, and local resources than other institutions. While those resources account for 38 percent of total revenue at other colleges and universities, they make up more than half of total revenue (54 percent) at HBCUs. The authors warned that this reliance makes HBCUs “susceptible to economic downturns, state divestments from higher education, or policy changes.”

Further, while all institutions experienced a decline in federal funding per full-time student between 2003 and 2015, the authors found that HBCUs saw the steepest decline. Among HBCUs, private institutions experienced the largest drop, from $4,300 per student to $2,500, which amounts to a 42 percent decline in funding. The authors wrote that this phenomenon “illuminates a need for better insights about the distribution of federal funds.”

“Other research supports the need to increase HBCU participation in federal programs and initiatives, including competitive grants and contracts, and to strengthen HBCUs’ capacity to compete for federal awards,” they wrote.

As a result, Williams and Davis found, private HCBUs depend more on tuition fees for revenue (45 percent) than other private institutions (37 percent), which the authors warned “leave many HBCUs more vulnerable to swings in enrollment.”

The authors also found that private HBCUs collect a smaller portion of their revenue from private gifts, grants, and contracts (17 percent) when compared to other private institutions (25 percent), and that both public and private HBCUs’ endowments are around 70 percent lower than those at other comparable institutions. The authors wrote that this funding inequity may be the result of “unequal consideration for funding by foundations and corporate donors, as well as challenges with alumni giving.”

“HBCUs may also receive less in private gifts because of ever-growing gaps in racial wealth, which can put the preponderance of HBCU alumni at a disadvantage to support philanthropic efforts,” they wrote. “When taken in concert with continuing decreases in public funding for higher education, the lower endowment levels of HBCUs present a significant resource constraint.”

The authors argued that because a majority of students enrolled at HCBUs—more than 70 percent—rely on some kind of aid, and because HBCUs are “mission driven-driven to broaden college opportunities for black students,” they cannot increase their costs or “grow endowments overnight.”

“As a result, federal, state, and local funding continue to play a critical role for HBCUs in their mission to support students that the country needs to earn college degrees,” the authors wrote. “... Creating a better balance of funding sources along with endowment growth will help HBCUs better prepare for a future that will likely be characterized by diminishing public support for postsecondary education.”


Publication Date: 1/23/2019

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