218 S. Soo Lee et al. Economics of Education Review 18 1999 213–221
Table 5 Distribution by income group of costs of public subsidies to undergraduate education at Illinois public higher education insti-
tutions, 1989 Income group annual
subsidy from state taxes Subsidy from local taxes Total subsidy ’000 Percent share in total
family income in dollars ’000 ’000
under 10 000 46 456
23 927 70 383
6.09 10 000 to 19 999
91 384 33 173
124 557 10.77
20 000 to 29 999 126 337
35 981 162 318
14.04 30 000 to 39 999
147 274 37 191
184 465 15.96
40 000 to 49 999 135 143
31 602 166 745
14.42 50 000 to 59 999
106 569 23 876
130 445 11.28
60 000 and over 245 397
71 807 317 204
27.44 All income groups
898 560 257 557
1 156 117 100.0
Note. This is based on Table 1 and the authors’ calculations using the material reported by Phares 1980, pp. 179–272. Table 6
Distribution by income group of the net benefits of public subsidies to undergraduate education at Illinois public higher education institutions, 1989
Income group annual Percent share of total
Percent share of total Percent share of net
Net benefit million family income in dollars benefits
costs benefits
under 10 000 10.28
6.09 14.19
148.4 10 000 to 19 999
13.15 10.77
12.38 127.5
20 000 to 29 999 18.09
14.04 14.05
146.8 30 000 to 39 999
20.97 15.96
15.01 157.9
40 000 to 49 999 14.14
14.42 20.28
23.2 50 000 to 59 999
9.78 11.28
21.50 217.3
60 000 and over 13.59
27.44 213.85
2160.1 All income groups
100.00 100.00
Note. This is based on Tables 4 and 5
Second, the distribution of positive net benefits does not differ dramatically across the four income ranges.
For three of these groups, the net transfer is of the order of 4 to 5 of the total benefit, and the amount of net
gain lies between 47 and 58 million dollars. For families whose income lies between 10 000 and 20 000, the net
transfer is smaller at 2.38 or 27.5 million dollars. The net transfer from the highest-income group is 13.85,
which represents an amount of about 160 million dollars. In other words, the magnitude of the transfers seems sub-
stantial.
Third, the pattern resembles in some respects the scen- ario in Table 3 of the study by Hight and Pollock 1973,
p. 324. The middle-income and lower-middle groups gain, and the highest-income group is a net loser. How-
ever, one notable difference is that while the Hight-Pol- lock study shows the poorest group to be a net loser in
all the three states, our study indicates the poorest group to be a significant net gainer. Although the income
groups in our study differ from those of Hight and Pol- lock, the broad categorization appears fairly similar.
The patterns noted in our study reflect a combination of the incidence of taxes and the usage of the benefits.
The tax shares rise up to a point and then fall until the highest-income group is reached. The benefit usage rises
up to the middle-income group 30 000-40 000 and shows an erratic downward tendency thereafter.
3. Some further reflections
Table 6 indicates the distribution of the net benefits of undergraduate education at all public institutions.
However, it is of some interest to ask how the pattern may differ across the institutions. While a more detailed
handling of the question is not feasible in our study, we can compare the position for the state universities with
that for public community colleges. Besides the fact that community colleges offer only two-year programs, the
main differences between public universities and com- munity colleges are that a the tuition costs are substan-
tially lower at public community colleges than at the state universities, and b community colleges are largely
open-door institutions while there are admission criteria
219 S. Soo Lee et al. Economics of Education Review 18 1999 213–221
Table 7 Comparison of the distribution of net benefits of public subsidies to undergraduate education at Illinois public universities and
community colleges, 1989 Income group
State universities Public community colleges
annual family benefit share cost share
net benefit share benefit share cost share
net benefit share income in
dollars under 10 000
11.03 5.17
15.86 9.12
7.49 11.63
10 000 to 19 999 12.79
10.17 12.62
13.70 11.69
12.01 20 000 to 29 999
16.13 14.06
12.07 21.08
14.01 17.07
30 000 to 39 999 18.38
16.39 11.99
24.91 15.29
19.62 40 000 to 49 999
13.72 15.04
21.32 14.77
13.48 11.29
50 000 to 59 999 11.00
11.86 20.86
7.92 10.41
22.49 60 000 and over
16.95 27.31
210.36 8.50
27.63 219.13
All income 100.00
100.00 100.0
100.0 groups
Note. This is based on Tables 1, 4 and 5.
of varying rigor at the state universities.
12
Table 7 shows the distribution of net benefits for each category. It is
clear that, as may be predicted, the highest-income group is a bigger net loser in community colleges than in the
universities. Its share of costs is similar in both categor- ies, but its relative participation is much lower in com-
munity colleges.
13
It is also interesting to note that the net gain of the poorest group is much smaller in com-
munity colleges than in universities. This may seem unexpected, but is due to the fact that a the poorest
group bears a larger share of local taxes than of state taxes and b its relative participation in community col-
leges is somewhat lower than in public universities. The community colleges seem to be dominated by middle-
income groups who gain the most from this part of the system.
14
We may also reflect a little on the reasons for the dif-
12
There are other differences too. For instance, as Table 2 shows, community colleges are dominated by middle-income
families. Also, a larger proportion of programs at the com- munity colleges may be more directly career-oriented. Illinois
Community College Board 1990 provides information on some of these aspects.
13
Note that the net loss of the highest-income group in dollar terms is 72.3 and 87.7 million dollars respectively in univer-
sities and community colleges, which indicates a considerably smaller difference than the loss in percentage terms.
14
If a more detailed study is done of the patterns across cam- puses with different degrees of “prestige”, it may be expected
that the net gain of the lower-income groups as well as the net loss of the higher-income groups will be smaller in more
prestigious campuses. The size of the total transfer may thus vary inversely with the prestige of the institution. A perceptive
referee suggested that we give some consideration to this point. It seems to deserve more careful attention in future research on
the topic.
ference between our results and those reported by Hight and Pollock 1973 whose methodology is similar to
ours. First, we take into account direct financial aid to students, which increases the relative benefits received
by low-income groups. That partly explains why, unlike what Hight and Pollock found, there is a significant posi-
tive net transfer to the poorest group in our study. Although the total amount of financial aid given by the
state to students is small relative to the institutional appropriations, as Table 4 shows, financial-aid recipients
are concentrated in the lower-income brackets. For example, if financial aid is excluded, the net benefit of
the lowest-income group is reduced by about 2.16 per- centage points, which is a reduction of more than one-
half, as can be seen from Table 6. Moreover, since the pattern of net benefits depends on the structure of taxes
and tax base and participation in public higher education, these may be expected to vary from state to state to some
extent. For example, the tax share of the top income group in our work Table 6 is much larger than for any
of the states included in their study, although the top income groups in the two studies are fairly comparable.
Similarly, the tax share of the poorest group in our study is much lower than was the case for Florida, and even
for California, in the Hight-Pollock work. It seems a major reason for these differences is that the regressivity
of state and local taxes in Illinois was considerably less severe than in California and Florida and even Hawaii.
15
15
The effective state-local tax rates reported by Hight and Pollock 1973, p.323 are quite regressive for California and
Florida and mildly regressive for Hawaii. For Illinois, Lee 1993, pp. 58-59 shows the regressivity to be less sharp,
especially in regard to state taxes, particularly relative to Cali- fornia and Florida. The distributions of tax base do not seem
to differ markedly. Baranick and Shapiro 1992, pp. A–7, A–
220 S. Soo Lee et al. Economics of Education Review 18 1999 213–221
4. Concluding remarks
