New Study Shows Increased Level of State Aid for Higher Ed

The Chronicle of Higher Education – one of the best sources for higher education news on the web – is once again first to report that after declining steadily since the financial crisis of 2008, state funding for higher education is rebounding. It is still expected that a long time will pass before the funding will return to pre-2008 levels, but thinks are looking up in a sector that has had little to look forward to in the last few years.

Last fiscal year, states spent .4% less on higher ed than they did a year before, but the picture changes when looking at the numbers this year. Eric Kelderman analyzed the data compiled at Illinois State University and the State Higher Education Executive Officers and reports that 30 states are set to increase higher education funding this year anywhere between .1% and 14%.

The overall drop in this year's budgets stemmed from larger cuts in big states, such as Florida, where state lawmakers have decreased higher-education spending by 8 percent. In California, where state money for colleges fell nearly 6 percent from the year before, Gov. Jerry Brown, a Democrat, has proposed increasing state funds for the public-college systems by 4 percent to 6 percent in the coming fiscal year. As in many other states, that proposal came with the expectation that state colleges will keep tuition flat and increase their efficiency in producing graduates.

The increase in funding represents a welcome reversal of the trend of the past five years, when only 12 out of 50 states managed to maintain the same or higher levels of higher education funding. According to Kelderman, that includes states that have made substantial spending cuts like Arizona, whose public university system lost 37% of its funding, and New Hampshire, where the hit was only a slightly more modest 36%.

"Barring a further downturn in the economy, the relatively small overall change … suggests that higher education may be at the beginning stages of a climb out of the fiscal trough caused by the last recession," says a news release accompanying the survey data.

As the Chronicle goes on to note, this month has not been filled with exclusively good news for the higher education sector. Kelderman refers to the recently published analysis by Moody's Investors Services which has cut the outlook for the U.S. higher education sector to negative based on the fact that the current education model is financially unsustainable in the long term.

Among its reasons for the downgrade, Moody's cited the issue of funding, predicting that state allocations for higher education will continue to shrink. It is unclear if the data in the survey which came out after Moody's downgrade has any implications for the company's analysis.

01 23, 2013
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