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States Post Historic Declines in Higher Ed Funding

January 19, 2010

by Emily

It’s no secret that the last couple years have been hard for higher education. The recession took a toll on colleges and students from a number of directions, and now a new study is analyzing the impact of state budget woes on public colleges and universities. The figures released this week in Grapevine, a publication focusing on state higher education support, show a continued decline in state funding for higher education and an accompany analysis suggests the funding cuts could have serious negative consequences for students at state colleges.

Overall, state higher education funding has declined 1.1 percent in 2009-2010, following a 1.7 percent decline in 2008-2009, down to $79.4 billion from a high of $80.7 billion in 2008. The declines represent a sharp reverse from the previous three years, which saw a 24 percent increase in state support for higher education. Without federal stimulus funding, a substantial part of which went to higher education, budget cuts would have been even more severe, with a 6.8 percent decline in funding over the course of two years.

Despite the stimulus, some states still made substantial cuts to higher education. While higher education funding reductions in California, Michigan, and Illinois have received the most press, these states were not alone in substantially reducing money spent on colleges. Even after the stimulus, 11 states still posted a decline of more than 5 percent in higher education funding in the last year, with Vermont seeing the steepest drop at 16.4 percent. Overall, 28 states experienced declines in funding after the stimulus, with 37 states reducing funding before stimulus dollars are factored in. Nine states also have shown a reduction in education spending that's severe or sustained enough to register as a decline over the last 5 years.

Other states have managed to increase higher education funding, however. Montana and North Dakota boasted the highest increases at 23.3 and 18.5 percent respectively, with revenue from energy helping to spare them from the dire budget situations most other states faced this year. Similarly, Texas increased education funding by 12.5 percent, even with a much larger population and overall budget.  North Dakota also registered the highest 5-year increase in education spending at 49.3%.

States’ higher education funding choices can have long-term consequences. A report issued last year by the State Higher Education Executive Officers (who also co-sponsored this study) shows that state cuts to higher education made during recessions tend to become permanent. So, while state university systems have more or less managed to weather this year’s cuts, they may not do so well in the future as a lack of adequate funding persists. The study published this week underscores this risk, giving three reasons the current budget trends could potentially reach what the authors term “crisis proportions.”

First, more than 5 percent of the current year’s state appropriations are from stimulus funds, which are exhausted after this year. Second, state revenues have fallen at an unprecedented rate and states are unlikely to quickly make up the difference in the coming years. Finally, the analysis casts doubt on whether schools are able to fully meet student demand, with enrollment caps, course cancellations, and higher tuition all serving as budget-driven barriers to enrollment. In short, state colleges may already be in danger of failing at their mission of educating their state’s students, and the situation is likely to only get worse in the coming years.

While these statistics are a bit dry and may at first seem like primarily a cause for concern among college administrators, they can have a direct effect on your college experience. If you choose to enroll at a state university, the state’s higher education spending has a direct impact on your tuition, your financial aid, and the quality of your college experience. Continued state budget troubles may make currently attractive universities less of a bargain, while increased state spending might help schools in out-of-the-way places like North Dakota flourish and provide better service to their students.


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