Despite Increases, States Spend Less on Higher Ed Than Before Recession

Most states still spend less on higher education than they did five years ago.

Studenst protest against an increase in student fees at UCLA on Nov. 19, 2009. The University of California Board of Regents approved a 32 percent tuition increase.
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While most states have increased their spending for higher education, the majority are still stalled at levels below prerecession spending, according to a new report from Illinois State University.

Nationwide, spending for higher education increased by 5.7 percent between fiscal year 2013 and fiscal year 2014, according to the university's Center for the Study of Education Policy. The annual report shows the change in funding is a significant jump from an overall decline of 0.4 percent between fiscal years 2012 and 2013, and from the 7.5 percent decline between fiscal years 2011 and 2012.

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"That's perfectly predictable, given the nation's slow recovery from the last recession," says Jim Palmer, the report's editor. "Trends in higher education track fairly closely to trends in the overall economy."

While the one-year percent change is positive, Palmer says, 35 state higher education systems still operate at levels of state fiscal support that are below what they enjoyed five years ago.

"The short-term trend is up, but the long-term trend shows that many states still haven't recovered the levels of fiscal support that were registered before the Recession," Palmer says.

And because the Great Recession didn't affect every state equally, the changes in state funding during the last five years have varied widely from state to state. The report's long-term, five-year analysis shows state funding for higher education in Louisiana is nearly 35 percent lower in fiscal year 2014 than it was in fiscal year 2009.

Arizona, Nevada and New Hampshire are also still far behind prerecession funding levels, although all increased their funding levels between 2013 and 2014. In fact, New Hampshire had the largest one-year funding percent increase in the nation, at 27.3 percent.

On the other hand, North Dakota, Illinois and Alaska led the country in terms of five-year spending increases – all above 20 percent.

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But Palmer says it's hard to determine if funding increases will actually have an impact on the day-to-day operations of colleges and universities, because each state "has a different story, a different economy, a different political scene."

In Illinois, for example, state higher education officials said a large portion of the increase in higher education funding actually came from increases in appropriations for the State Universities Retirement System, Palmer says.

In general, there needs to be both a political will and a fiscal capacity for states to increase funding for higher education, Palmer says. Often, higher education is put on the chopping block during recessions because tax revenues decrease, making that discretionary funding item a relatively easy one to cut, he adds.

But states also may cut from higher education budgets because colleges and universities have another revenue stream to fall back on: tuition.

Palmer says because of that backup plan built into higher education, it's easier for states to cut from those budgets than from other areas, such as health care, corrections or even K-12 education.

"The state is saddled with the correctional systems that it has. There's only so much cutting that can be made," Palmer says. "There's no parallel to tuition, for example, in corrections, or in the K-12 arena as well."

The reliance on that revenue stream is apparent in trends tracking tuition growth during the last several years. A recent report from the College Board found that tuition is growing at the slowest pace in 30 years, but also noted a significant jump during the height of the Recession.

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The average tuition and fees at public, four-year universities, for example, increased by 9.5 percent between the 2008-09 and 2009-10 academic years. The next year, tuition rates grew by an average of 6.5 percent, and by an average of 4.7 percent in 2011-12.

"What scholars are looking at now is trying to determine if the road to recovery is substantially more difficult and longer for this last recession than it has been for the past," Palmer says.