Higher Education Finance: A Case Study of Minority-Serving Institutions in New Mexico

This study explores the relationship between state and federal funding policies and the ability of minority-serving institutions (MSIs) to support low-income and minority students. The way US public higher education is financed has changed dramatically since the Great Recession. State appropriations to institutions have declined (SHEEO, 2017), tuition increases have dramatically outpaced growth in household income (College Board, 2016a) and state financial aid has drifted from need-based to merit-based (College Board, 2016b). Many wonder how this policy environment is impacting low-income and minority students and the institutions that serve them. MSIs have risen to the forefront of institutions committed to serving these students, and more should be known about how these institutions are affected by the current fiscal policy environment. The purpose of this study is to explore the relationship between finance policies and the ability of MSIs to serve their students. Case study methodology was used to provide an in-depth analysis of how three campuses in New Mexico respond to state and federal finance policies and shifting revenue streams, and how these responses impact students. The three campuses include one Native American-serving Nontribal Institution that is a community college, and two Hispanic-Serving Institutions—a community college and a regional comprehensive university. These campuses share similar geographic and student characteristics, but are funded through different finance polices. The findings suggest that: local appropriations play a critical role in the fiscal stability of community colleges in New Mexico; state funding favors well-resourced institutions and students; and institutional leaders perceive federal funding as providing the most support for low-income student success. This study also reveals that finance policies in the state are not aligned to their full potential for increasing degree attainment.