Midwest

In Arkansas, the reduction in state revenue collections has resulted in across the board budget reductions of 5 percent based on the forecast for the state. This reduction applied to institutions of higher ed as well, so current year funding is 5 percent less than the recommended and approved levels. This was also a concern at the end of the last fiscal year, however revenues actually came in above forecast so institutions were able to get their full funding for FY2020.

Updated 10/30/2020

COVID-19 is having a multi-level impact on Illinois’ higher education finances:

FY 20 State Appropriations – There were no state funding cuts or revisions in state appropriations. However, the major declines and delays in state tax revenues have delayed payments to universities and community colleges.

Refunds – There were substantial refunds issued, reducing net revenues. This hit residential campuses much harder than mostly commuter schools and community colleges.

Capital – There was a short, initial stoppage of work on most construction projects, but planning for projects was not impacted. Construction has started again across the state. The hit to funding streams to pay for the capital program will cause some delays in projects over time but so far nothing official, as it relates to our six-year program.

FY 21 Budget – The Governor’s FY 21 budget included a 5 percent increase for universities and community colleges, a $50 million increase in our signature financial aid program, the Monetary Award Program, which was part of a four-year plan to increase funding by 50 percent, and a series of smaller increases. With the COVID-19 shock to state finances, the state instead passed a flat budget for all lines. The state budget also assumes the state will eventually receive $5 billion more in federal relief funds. The Governor has broad authority to impose budget reserves. So far, no reserves have been imposed on public universities or community colleges.

Lost Revenues – Colleges and universities control their own tuition and fee revenues, rather than it being included in state appropriations. There is an expectation of a negative impact on tuition and fees that is uncertain at this point. However, there has been a significant negative impact on ancillary revenues. Unfortunately, these costs generally are not reimbursable through CARES Act or FEMA programs.

Costs – As noted previously, while community colleges and public universities have not had their budgets cut, they have experienced significant increases in costs due to the COVID-19 response. Much of this will be covered by the CARES Act funds or FEMA. However, some of their costs will not be claimable.

Updated 08/03/20

The State of Indiana operates on a biennial budget, with each fiscal year ending June 30th. Fiscal Year 2021 is the second year of the 2019-2021 biennium, and the appropriations for this fiscal year were passed during the 2019 legislative session. As a result of COVID-19, the State placed a 7 percent reserve on all public university operating and line item Fiscal Year 2021 appropriations. There was also a 15 percent reserve placed on state agency general and dedicated fund appropriations, though student financial aid appropriations were exempted from this reserve. As budget development for the upcoming 2021-2023 biennium begins this fall, we are not quite sure what the effect of the pandemic will be on the appropriations for the next biennium. We hope to gain more insight as the budget process continues.

Updated 10/14/20

The primary revenue sources providing FY 2021 general operating funds for Iowa’s public universities are state appropriations and tuition revenues. The 2020 General Assembly cut state appropriations by $8 million. In June 2020, the Board froze (0.0% increase) all tuition rates for the 2020-21 academic year after massive disruptions created by the COVID-19 pandemic affected all students, faculty, and staff. Fall 2020 enrollment decreased by 4.4% (3,333 students), so tuition revenue decreased as well. Budget impact to Iowa’s public universities (excluding athletics and University of Iowa Hospitals) since the start of the pandemic is an estimated net loss of over $100 million (accounting for increased costs of the response, state budget cuts, tuition revenue losses, and offset by federal CARES, GEER and CRSSA, and identified efficiencies). The Iowa General Assembly has not yet approved a budget for FY 2022. The Board requested $26 million in additional general fund money, no new capital requests, $30 million for deferred maintenance, and $4 million for biosciences research. While budget bills have not yet been introduced at this point of the legislative session, support for these requests seems relatively weak. No new sources of state student financial aid for public university students are anticipated.

Updated 02/08/21

With the start of the Fiscal Year on July 1, Kansas was facing a state budget shortfall of nearly $700 million. The Governor issued a budget allotment totaling $704.3 million, including a cut to Higher Education of $46.2 million, with a portion of that ($26.3 million) offset by GEER funding available within the CARES Act. As we look forward to the next fiscal year, estimates show a shortfall of nearly $1.5 billion which would constitute a nearly 18 percent budget reduction to balance our books. Our higher education system realized a drastic loss of revenue as we closed out our spring semester by transitioning classes online and issuing refunds for housing and dining contracts. As we prepare for the upcoming semester, we have incurred additional costs relating to facility modifications, saliva testing for campuses, and purchasing PPE as we plan to open our campuses safely for everyone.

Updated 07/27/20

The state universities of Michigan have projected a negative financial impact between $1.071 billion to $1.271 billion for the year ending September 30, 2021. In context, a $1.271 billion loss is equal to 17.9 percent of university general funds or 82.7 percent of state appropriations. The state cut FY 20 higher education operations funding by 11 percent, or $169 million, and then backfilled that cut with an equal amount of CARES Act funding. Recovering revenues, sharp state spending cuts early in the pandemic, and a strong FY 20 carryforward balance allowed the state to hold flat FY 21 appropriations for state universities. Continuing one-time revenue is forecasted to carry forward into FY 22, providing temporary relief even if the state budget is structurally imbalanced. Capital outlay requests were not accepted from state universities for consideration for the FY 22 budget.

Updated 02/09/21

The pandemic has not yet impacted state appropriations to higher education in Minnesota–although budget reductions seem likely (the scale is not yet known). Minnesota did receive the following federal funding:

GEER funding – Minnesota’s postsecondary institutions received $5.3 million in GEER funding ($300,000 to Tribal Colleges, $5 million in need-based institutional grants).

CARES funding – Minnesota’s postsecondary institutions received $195 million as part of the CARES Act, $103 million of which was required to be provided directly to students (data as of May 1). Of the $195 million the University of Minnesota received $35.8 million ($18 million was required to be sent directly to students) and Minnesota State received $98.7 million ($52 million was required to be sent directly to students).

Problems institutions and the enterprise are still experiencing:

Before getting into specifics, we wanted to highlight the compounding challenges facing postsecondary institutions this fall. Historically, postsecondary enrollments run countercyclical to the health of the state’s economy – e.g., when the economy is doing well enrollments typically decline and when the economy is in a recession, postsecondary enrollments typically increase as displaced adults return to school to re-tool and students remain in school for a longer period due to the lack of job opportunities.

During a typical recession, appropriations to postsecondary institutions typically decline (often significantly) due to state budget constraints, but public postsecondary institutions are better positioned to deal with the revenue declines because of the increased tuition revenue resulting from higher enrollment levels. As tuition has grown to represent a larger share of public postsecondary institutions’ revenue pie over time, declines in enrollment carry more weight.

The recession resulting from COVID-19 likely will present a perfect storm of financial constraints for postsecondary institutions – potentially placing them in a very precarious situation:

1. It seems likely that Minn State and the UMN will experience some reduction in appropriations in FY21 and in the coming biennium resulting in declining revenue.

Potential decreases are a major concern for our public institutions – especially for community colleges and our regional four-year institutions that are acutely vulnerable. In fact, we’ve heard the desire voiced for all additional funding from the federal government to come in the form of a block grant to the states framed as stabilization funds for campuses serving vulnerable students. The intent would be that these additional funds do not become a replacement for state dollars (potential additional Maintenance of Effort provision?). The heightened concern around potential state budget cuts will make more sense in the context of number three below.

1. As a result of preparing for COVID-19 and re-opening, postsecondary institutions are incurring significant and extraordinary unbudgeted expenses, while trying to fulfill the existing obligations (e.g., auxiliary services) resulting in increased expenditures.
2. Tuition revenue will likely be significantly down due to enrollment declines. OHE’s analysis of FAFSA application data indicates that FAFSA filing for the year is down about 8 percent (data available through July 14) compared to the same point in time last year. Additionally, first-time FAFSA filers are down 12 percent for the year, and Pell-eligible FAFSAs are down 14 percent. It’s clear that the recession brought on by COVID-19 likely will not follow historical enrollment trends. It’s unclear how an institution’s decision to have in-person classes versus online may further impact enrollments. Certainly, ambiguity around safety and whether classes will be on campus cannot be helpful. Overall this will result in declining revenue.

One smaller note – athletics actually plays a significant role in enrollment numbers at some community colleges and regional four-year institutions. At some community college athletes can account for 40 percent of campus housing slots. So the loss of athletics in the fall and beyond could have a significant impact on enrollment at these institutions.

Obviously, increasing spending while experiencing declining revenue is not a sustainable business model. Even if institutions survive this threat, it could take years before they regain their financial footing (not including getting back to pre-COVID-19 levels).

In terms of specifics, funding is needed to:

• offset lost revenue,
• continue to build out technology capacity–online really is a huge expense and although we understand the frustration of students and families being asked to pay the same rate as in-person, in this instance the costs are real. A hybrid model would be the most expensive option.
• continue to develop and move student support & other services into a hybrid or online environment
• ramping up for re-opening – including COVID-related expenses (estimates nationally are around $74 billion for higher ed).

Updated 07/28/20

The COVID-19 pandemic continues to have a substantial impact on Missouri’s funding for higher education. Prior to the pandemic, Missouri faced challenges, ranking forty-sixth in public higher education support per capita. As a result of COVID-19, at the conclusion of the state’s FY20 (July 2019 – June 2020), public two- and four-year higher education institutions sustained a combined $114 million expenditure restriction. For each institution, this was over a 12 percent reduction in their original FY20 allocation. Since Missouri economic recovery remains unclear, for FY 21, institutions are held at their closing FY20 funding levels through expenditure restrictions enacted by the Governor.

Scholarship programs were also impacted. Funding was reduced for the Higher Education Academic Scholarship (“Bright Flight”) program, Missouri’s merit-based program, by $10 million and Access Missouri, the state’s need based grant, by $2.5 million. This reduction forced the Department of Higher Education and Workforce Development to reduce scholarship award amounts for both programs. In addition, the state’s A+ Scholarship Program, which provides funds to eligible graduates of A+ designated high schools who attend a participating public community college or vocational/technical school, could also see reduced award amounts.

Other statewide priority areas for higher education and workforce were not immune. They include:

• $19.6 million in FY21 funds for workforce initiative projects to support local workforce training needs was withdrawn.
• Missouri resident FAFSA filings are down by approximately 12,900 (9.9 percent) from 2019. First-time filers are also down 6,600 (17.2 percent) from 2019.
• The department anticipates a 10-15 percent decline in enrollment this fall. This will have negative implications for Missouri’s “Big Goal”—60 percent of Missouri working-age adults holding a degree or certificate by 2025.

While the financial strain on state funding is severe, the Governor has supported higher education through $113.6 million in CARES Act funds to support safely returning to in-person instruction, remote learning, and other institutional needs.

Updated 07/29/20

The State of Nebraska did not reduce appropriations for public institutions or financial aid programs for FY 2019-20. There were no reductions for FY2020-21, either; in fact, the Nebraska Legislature and Governor maintained the 3.5 percent increase previously included in the biennial budget and increased funding by $6.5 million, about 0.8 percent, primarily for financial aid. The FY 2021-22 and FY 2022-23 state appropriations recommended by the Governor in his biennial budget include increases of 2.7 percent and 2.6 percent, respectively.

Increases in state funding for postsecondary education in Nebraska do not imply that the public colleges and universities have not experienced reductions in overall revenue due to changes in enrollment and reductions in auxiliary activities such as housing, athletics, conferences, etc.; nor do they negate the fact that the institutions have faced extraordinary expenses for equipment, testing, mitigation measures, new technologies, staff training, etc.

Updated 02/09/21

In Ohio, general fund tax revenue shortfalls as a result of the COVID-19 pandemic have led to reduced higher education operating funds in both FY 2020 and FY 2021. In FY 2020, non-debt operating appropriations (general fund) were reduced by 4.8 percent, with instructional subsidies to colleges and universities reduced 3.8 percent and other non-debt appropriations reduced by 8.5 percent. FY 2021 reductions were made final by executive order on January 22, 2021. Instructional subsidies to colleges and universities were reduced by only 0.01 percent. All non-debt operating appropriations ended up with a 3.1 percent reduction.

With regard to financial aid, existing awards for students were preserved going into FY 2021. A scheduled increase in awards for Ohio’s primary needs-based financial aid line, the Ohio College Opportunity Grant (OCOG), for FY 2021, was deferred and awards were held flat at FY 2020 levels. The state Controlling Board voted to provide more than $300 million in COVID relief from federal dollars to colleges and universities, including funding from the Governor’s Emergency Education Relief (GEER) Fund for student mental health support on campus.

On the capital funding side, Ohio saw the passage of Senate Bill 310 late in calendar year 2020, which provided $452 million for colleges and universities, with a particular emphasis on deferred maintenance and basic renovations.

Updated 2/18/21

Due to existing legislation, the South Dakota Regental System is currently required to charge different tuition rates for courses offered face-to-face versus those offered online or in a hybrid model. The differential tuition model also assesses discipline fees on face-to-face courses, but not those offered via distance. The need for social distancing required a significant number of course offerings to be moved to online alternatives. The unintended consequence was a decline in revenue from special discipline fees that would have otherwise been charged but for the change in delivery method.

South Dakota is in a unique situation in that it is not experiencing the major revenue shortfalls and declines in funds available that many other states are. Rather, it is estimated that at least $200M in funds are available for one-time expenditures for state agencies. As a result, the Regental System has not experienced any cuts to higher education funding and a bill is currently being heard in our Legislature to commit $50M to an endowment for needs-based aid.

Updated 2/18/21

The University of Wisconsin System has experienced both significant cost increases and revenue reductions associated with the pandemic. The institutions have incurred a total of $17.4 million in COVID-related costs in FY 20 alone. On the revenue side, our institutions have realized $88 million in lost revenue in FY 20 primarily from refunds from housing, dining, and parking. In addition, the State of Wisconsin has lapsed $370 million from state agencies to help maintain a balanced budget. UW System’s share of this lapse is $85.7 million in state over FY 20-21 means UW System will bear nearly 25 percent of the statewide lapse, despite the fact they receive roughly 6 percent of the state’s annual GPR allocation. It is important to note that these are not base cuts but rather one time claw backs of state funding. With the biennial budget process due to not start until the Governor introduces a budget in February, we won’t know what, if any, budget cuts will be implemented long term. Finally, UW System institutions did receive $48.5 million in CARES act funding, and another $47 million was allocated directly to students. The Governor has allocated an additional $18.9 million in CARES Act funding from his designated allocation to education to help offset FY 20 costs and conversations are continuing about securing additional funding to support testing, tracing, and other efforts on campuses this fall.

Updated 10/20/20