Bleak State Budgets in the Offing

December 8, 2010

A new study out today reinforces the impression left by other recent surveys of the country's economic landscape: tight state budgets are going to put a squeeze on public colleges and many other state-financed entities. The newest analysis, released today by the National Conference of State Legislatures, follows other recent assessments of the state budget environment by the National Governors Association and the National Association of State Budget Officers, the Nelson A. Rockefeller Institute of Government, and the American Association of State Colleges and Universities. The big-picture view of the legislators' report, consistent with the others, is that state revenues in the 2011-12 and 2012-13 fiscal years are expected to turn up somewhat over this year, but those increases will leave most states well short of where they were in 2008 -- with overall general fund spending $42 billion less than in that year. And unlike the last two years, most states will be unable to plug those holes with billions of dollars in federal stimulus funds, even though the rising costs that those federal monies were meant to mitigate -- especially in increased Medicaid payments -- show no signs of abating. With many new governors having won their jobs in part with pledges of "no new taxes," and continuing pressure on colleges to keep tuition increases to a minimum, the political choices for state leaders will be difficult, said Daniel J. Hurley, director of state relations and policy analysis at the state-college association.

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