Keeping Higher Ed in the Debate on State Education Spending

The Education Jobs Fund, a $10 billion program passed in the House to support state K-12 education budgets, has been a common topic of conversation in the policy world. Debates surrounding proposed cuts to Race to the Top to pay for the program, along with discussions about whether the Education Jobs Fund is even necessary, have dominated recent media publications. But little has been said about the condition of higher education spending at the state level, a sector explicitly excluded from the version of the Education Jobs Fund passed in the House – though earlier House and Senate versions of the proposal included funding for higher education. Should we be concerned that higher education funding has dropped off the Congressional radar?

According to the Education Commission of the States, higher education spending accounts for an average of 23 percent of total state spending for education purposes. But the degree to which the economic downturn has affected public institutions of higher education varies greatly from state to state. For example, budget cuts to higher education in California resulted in a 32 percent increase in tuition at University of California campuses. Similarly, Florida’s Board of Governors and legislature passed a combined 15 percent tuition increase at the state’s universities. And in Wisconsin, a shortage of resources for higher education resulted in a 5.5 percent increase in tuition at University of Wisconsin campuses.

Ed Money Watch analysis shows that states have relied on State Fiscal Stabilization Funds (SFSF) provided as part of the American Recovery and Reinvestment Act of 2009 to maintain higher education spending in addition to K-12 spending. According to its State Fiscal Stabilization Fund phase one application, Louisiana planned to spend 59.7 percent of its total SFSF allocation on higher education spending. Colorado planned to spend 48.6 percent of its SFSF allocation on higher education and Arizona planned to spend 43.1 percent. On average, states planned to use 17.3 percent of their SFSF monies on higher education purposes.

Despite all this, the House recently chose to exclude institutions of higher education from the Education Jobs Fund. Any funds provided through the program must be used on K-12 salary and benefits expenses. However, higher education spending is still included in the maintenance of effort provision included in the pending proposal. States would be required to maintain both K-12 and higher education spending or proportion of total spending at 2009, 2010, or 2006 levels, depending on which option of the maintenance of effort provision they are eligible for. The decision to include higher education in the maintenance of effort requirement is somewhat perplexing. It seems questionable that Congress would require certain levels of higher education spending from the states if states are not able to use Education Jobs Fund monies to support higher education.

A new resource from U.S. News & World Report provides more details on the future of higher education funding in the country given current budget woes. U.S. News & World Report compiled data on each state’s probability of facing a recession in the next six months, estimated budget shortfall, estimated change in tax support for higher education, and typical per-pupil support from state tax dollars and created a map that shows whether a state’s public education system faces high or low financial pressure in 2011.

For example, the map shows that California has a 30 percent change of a recession in the next six months and is estimated to face a 9.1 percent budget shortfall in 2011. The state’s tax support for higher education is estimated to drop 8.6 percent and typical per-pupil tax support for higher education is $6.928. California’s higher education system is considered to face “very high” financial pressure in 2011.

In contrast, Arkansas’ higher education system is considered to face a “negligible” amount of pressure in 2011. The state has a 15 percent change of recession and faces a 0.0 percent budget shortfall for 2011. The tax support for higher education is estimated to increase by 2.9 percent and typical per-pupil tax support for higher education is $7,955.

Though it looks unlikely that the Education Jobs Fund (if it passed the Senate and is ultimately signed into law) will ever include higher education spending, public higher education is still an important part of the dialogue on greater education spending. Unfortunately, the current debate ignores the role higher education plays in state budgets and the education pipeline despite information available through the U.S. News & World Report map and news coverage of state level higher education budget decisions. Ed Money Watch hopes Congress incorporates higher education spending more explicitly into the debate for the sake of current and potential students and the on-going success of the nation’s public higher education system.