States Maintain Higher Ed Funding

Federal relief dollars appear to be enough to keep nationwide totals of state higher ed funding steady this fiscal year, even amid the pandemic. But almost half of individual states still reported funding declines.

March 16, 2021
 
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With the help of nearly $2 billion in federal COVID-19 relief funding, state funding allocations for higher education during the 2021 fiscal year remained roughly the same as last fiscal year, according to the latest Grapevine higher education funding report.

Total state support for higher education edged up by 0.3 percent to $96.7 billion in the 2021 fiscal year, which began July 1, 2020, and will end on June 30, 2021. Without federal dollars, direct state funding levels would have declined by 1.3 percent this fiscal year.

“The results suggest that budgets have not been wrecked to the extent we feared they might be by the pandemic,” said Jim Applegate, visiting professor at Illinois State University's Center for the Study of Education Policy and editor of the Grapevine report. “Part of the reason for that is the federal government did step up.”

The annual report, a collaborative effort between the Center for the Study of Education Policy at Illinois State and the State Higher Education Executive Officers Association, looks at state higher education appropriations for the current fiscal year. The Grapevine data are not adjusted for inflation.

This year, the funding totals include federal dollars sent to states as part of the CARES Act and the Governor’s Emergency Education Relief Fund that were allocated for higher education. It does not include CARES money sent directly to colleges and universities, nor does it include federal assistance from the December stimulus package or the recent $1.9 trillion relief bill.

The national average diverged from a six-year trend of more substantial state funding increases. In both fiscal years 2019 and 2020, state higher education funding increased year over year by 4.4 percent.

While across-the-board averages look better than experts predicted at the beginning of the pandemic, they don’t tell the whole story for many states, said Paul N. Friga, a clinical associate professor of strategy at the University of North Carolina at Chapel Hill and leader of the strategic transformation of public higher education practice area for the Association of Governing Boards of Universities and Colleges.

Twenty-six states reported state funding declines in fiscal year 2021, and 21 states reported declines even after federal assistance was taken into account, the Grapevine report states. Nevada, Alaska and California reported the largest year-over-year declines, with state appropriations dropping 17.8 percent, 10.5 percent and 7.5 percent, respectively. California has plans to restore some of that funding in the upcoming fiscal year, but Nevada is looking at further cuts. Alaska has struggled for years to support public higher education. Mike Dunleavy, Alaska’s governor, in 2019 cut $70 million from the University of Alaska system’s budget over a period of three years.

“These data suggest a better scenario for higher ed than may have been the case when you consider the significant negative impact that the states have had to deal with,” Friga said. “It doesn’t change the fact that for 21 states, they’re dealing with decreases in appropriations and in some cases significant amounts.”

Colorado also stood out in the data. Direct state funding for higher education declined by 45.3 percent in the 2021 fiscal year, but that drop was cushioned by federal assistance. After adding in federal support, Colorado’s state funding levels only slipped by 3.8 percent.

The report totals funding for seven so-called megastates, which account for more than half of higher education funding in the United States. They are California, Florida, Georgia, Illinois, North Carolina, New York and Texas. The megastates reported an overall funding decline of 2.1 percent in fiscal year 2021, according to the report.

Some states reported higher education funding increases in 2021. Washington upped its higher education allocations by 13.8 percent. Ohio increased funding by 12 percent, and New Jersey increased its higher education budget by 11 percent. Vermont reported a 45.7 percent increase, though it was due to one-time funding for the state’s colleges.

The report also looks at longer-term funding trends. Fiscal year 2021 appropriations are up 4.7 percent compared with fiscal 2019 funding levels. Only nine states reported two-year declines in state funding.

Five-year trends, on the other hand, show a 15.8 percent increase in state appropriations nationwide from fiscal year 2016 to fiscal year 2021. Sixteen states reported five-year funding increases of 20 percent or more, while five states reported five-year decreases between 2.2 percent and 22 percent.

The long-term totals cannot be evaluated without context, Applegate said. For example, Illinois reported a 42.6 percent funding increase over the past five fiscal years, but the change can primarily be attributed to several cash injections to the college and university pension system, which had been underfunded in the past.

“For a couple of years there, they were putting as much or more money in the pension program as they were in the actual operating budgets of colleges and universities, yet they count all of that as state appropriations for higher ed,” Applegate said.

The Grapevine totals are also subject to change. Sometimes states make appropriations adjustments during the fiscal year and report them to Grapevine later. Friga also emphasized that the report doesn’t take into account two of the three stimulus packages.

“The news could get even better for higher ed, depending on what states do with the money, but it could be mitigated as the states continue to calculate what their losses in revenues are -- and additional costs due to COVID such as health care, such as unemployment, etc.,” Friga said. “I would continue to be cautious about thinking of this as any sort of windfall for higher ed, especially given their own major losses in revenues and additional COVID-related expenses. And they should be very strategic about how they invest any new state and federal funds.”

One-, Two- and Five-Year Changes in State Fiscal Support for Higher Education
State 1-Year Change (FY20-FY21) State Money Only 1-Year Change (FY20-FY21) State Money + Federal CARES/GEER Money 2-Year Change (FY19-FY21) State Money Only 2-Year Change (FY19-21) State Money + Federal CARES/GEER Money 5-Year Change (FY16-FY21) State Money Only 5-Year Change (FY16-FY21) State Money + Federal CARES/GEER Money

Alabama

2.3% 0.3% 9.7% 9.7% 21.6% 21.6%
Alaska -10.1% -10.5% -16.6% -16.6% -22.1% -22%
Arizona -4.5% -3.9% 5.8% 6.5% 16.5% 17.2%
Arkansas -2.8% -4% -0.4% -0.4% 0.3% 0.3%
California -7.9% -7.5% -3.2% -2.8% 14.1% 14.5%
Colorado -45.3% -3.8% -39.2% 6.9% -30.1% 22.8%
Connecticut 5.7% 6.5% 7.2% 8% -0.4% 0.3%
Delaware 2.3% 2.3% 6.5% 6.5% 9.9% 9.9%
Florida 3.8% 4.3% 6.5% 6.9% 30.1% 30.7%
Georgia -5.1% -4.8% -0.5% -0.2% 19.5% 19.8%
Hawaii 4.2% 8.1% 2.8% 6.5% 32.5% 37.3%
Idaho 2.2% 4.3% 6.0% 8.1% 27.2% 29.8%
Illinois 3.6% 4.7% 11.1% 12.3% 41.1% 42.6%
Indiana -3.7% -3.3% -3.7% -3.2% 2.4% 2.9%
Iowa -0.9% -0.1% 3.5% 4.4% -0.5% 0.3%
Kansas -2.1% 1.0% 3.7% 7.0% 9.0% 12.4%
Kentucky 3.3% 4.5% 3.0% 4.2% -1.1% 0.1%
Louisiana -8.3% 1.2% -5.5% 4.4% -5.7% 4.1%
Maine -1.4% -1.4% 2.1% 2.1% 10.1% 10.1%
Maryland -1.5% -1.5% 4.2% 4.2% 15.4% 15.4%
Massachusetts 4.1% 4.1% 9.1% 9.1% 17.3% 17.3%
Michigan 12.8% 1.4% 2.3% 2.3% 9.5% 9.5%
Minnesota 0.5% 0.8% 4.8% 5.2% 11.5% 11.9%
Mississippi 0.0% 0.0% 5.7% 5.7% -7.9% -7.9%
Missouri -13.1% -1.3% -7.6% 4.9% -10.8% 1.2%
Montana 3.2% 5.8% 9.1% 11.9% 2.7% 5.3%
Nebraska 4.1% 4.1% 7.2% 7.2% 9.3% 9.3%
Nevada -17.8% -17.8% -12.1% -12.1% 7.0% 7.0%
New Hampshire 0.8% 8.0% 13.1% 34.3% 19.6% 42.0%
New Jersey -1.1% 11.4% -2.4% 9.9% 12.1% 26.3%
New Mexico -4.7% -4.3% 2.2% 2.7% -2.6% -2.2%
New York -1.4% -1.4% -1.9% -1.9% 6.9% 6.9%
North Carolina 0.4% 1.3% 1.3% 2.2% 14.2% 15.3%
North Dakota 0.0% 0.7% 5.9% 6.6% -6.4% -5.8%
Ohio -0.8% 12.3% 3.5% 17.1% 6.9% 21.0%
Oklahoma -3.5% -3.5% -0.8% -0.8% -11% -11%
Oregon 2.9% 3.9% 12.1% 13.3% 27.3% 28.6%
Pennsylvania -0.8% -2.3% 4.0% 4.0% 11.1% 11.1%
Rhode Island -3.0% -3.0% -0.8% -0.8% 14.9% 14.9%
South Carolina -0.3% -0.2% 10.5% 10.6% 26.5% 26.6%
South Dakota -2.1% -5.4% 6.4% 6.4% 18.6% 18.6%
Tennessee -0.5% 0.5% 7.4% 8.5% 29.7% 31.0%
Texas 1.7% 2.9% 6.3% 7.6% 8.4% 9.6%
Utah -1.1% -1.1% 8.9% 8.9% 29.9% 29.9%
Vermont 28.0% 45.7% 30.1% 63.6% 36.4% 71.6%
Virginia 7.6% 6.5% 16.7% 16.7% 33.0% 33.0%
Washington 11.2% 13.8% 21.5% 24.3% 39.8% 43.0%
West Virginia 1.9% 1.9% 7.4% 7.4% 8.6% 8.6%
Wisconsin 1.1% 4.0% 1.3% 4.2% 8.3% 11.4%
Wyoming -1.6% -0.3% -0.3% 1.0% -8.5% -7.3%
Total 50 States -1.3% 0.3% 2.6% 4.7% 13.5% 15.8%
Washington, D.C. 0.0% 0.0% 3.4% 3.4% 25.5% 25.5%

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