Some States Have Increased Higher Education Spending

Mar 23, 2010

Ten states that experienced minimal budget deficits in the current fiscal year have taken the opportunity to increase funding for local colleges and universities. Some hope to stimulate long-term economic growth by bolstering research and improving access to higher education and job training.

Education Funding

Investing in the Future

At the beginning of the year, reports on state funding for higher education looked gloomy. As the recession hit state budgets hard, nationwide trends showed a sharp decline in funding for colleges and universities that was only somewhat alleviated by an influx of federal stimulus money. Many experts expressed fear that the decline was only beginning - even when states slowly begin to recover, higher ed will be competing with urgent need from other state-funded services.

But a closer look at the data shows that there are some states in which higher education has benefited from the economic downturn. Seeking to invest in long-term economic growth, 10 states that are only experiencing very small budget deficits actually increased their education spending between 2008 and 2010.

Increases in State Spending on Higher Ed

Source: The State Higher Education Finance Report, FY2009.

It's worth noting that the majority of these increases came directly from the state budget. Many policymakers have pointed out that while federal stimulus dollars have been able to temporarily support state education funding, state budgets will still be struggling when the federal funds run out. Experts expect this to hit the K-12 sector the hardest, but it could also have an affect on higher education.

However, those states that have been able to increase their higher education spending may avoid this pitfall. According to the FY2009 State Higher Education Finance Report (SHEF), only two of the above states included funding from the American Recovery and Reinvestment Act (ARRA) in their higher education budgets. Those states were Colorado and Indiana, for which federal funding made up 7.9% and 1.4%, respectively, of total state and local appropriations and tuition revenue.

The other eight states did not include any ARRA funds in their higher education appropriations this fiscal year. This doesn't guarantee that funding increases will continue - some states may not have felt the full force of the recession yet, and not all will make higher education a priority if budget shortfalls grow. But for some states it does appear to herald a new commitment to higher education that will continue to attract state-level financial support.

university of north dakota

University of North Dakota

North Dakota, which committed the largest recent funding increase by far to higher education, has managed to maintain a budget surplus over the past couple of years thanks to an energy-driven economy and abundant natural resources. As higher education funding has dropped across the nation, leading to tuition hikes and understaffed schools, state officials saw an opportunity to attract talented students by strengthening their postsecondary offerings. As Daniel J. Hurley of the American Association of State Colleges and Universities notes, 'this recession very well may make North Dakota a magnet state.'

North Dakota is an under-populated state that currently falls slightly below the national average on the number of residents over age 25 with bachelor's degrees. And according to the Western Interstate Commission for Higher Education, the number of high school students in North Dakota is expected to drop by 18% in the coming decade. It's therefore crucial to the health of the state's economy to attract - and keep - skilled young people who will build their lives and careers locally.

In order to achieve this goal, the state's higher education institutions are using their new funds to make college more affordable. Community colleges have frozen tuition increases, and 4-year colleges have placed a cap of 3.5% on annual increases for the current budget cycle. They're also providing more funding for need-based financial aid, and have scheduled regular faculty pay raises.

The state is also funding the development of new educational programs that will attract students and bolster the energy-driven economy. The University of North Dakota has expanded its engineering and environmental offerings and improved its nursing and life-science programs. The North Dakota State College of Science is expanding its nanoscience and applied technology programs, and Bismarck State College is building up vocational training programs in the energy sector.

Texas Tech

Texas Tech

Among the other states that increased education spending from 2008-2010, Montana is the only one that had zero budget gap in the current fiscal year. Many of the rest had deficits that only amounted to under 10% of their general-fund budgets. And North Dakota isn't the only state using those funds to make a play for greater prestige in the world of higher education.

As the legendary public university system in California crumbles in the face of major budget cuts and enrollment caps, Texas has moved aggressively to put its own public universities on top. Over the past five years lawmakers have appropriated some of the revenues from lucrative oil and gas industries for higher education, resulting in a 34% increase in higher education spending between 2005 and 2010. While the recession slowed things down somewhat, Texas was still able to increase its higher education budget by 8% over the past two years.

Much of the money has gone to bolster university research. In November, voters approved an almost $500 million endowment increase in order to increase research capacity at several state universities. The state has designated seven 'emerging research universities' that are now eligible to compete for the new endowment, called the National Research University Fund, including Texas Tech University, the University of Texas at San Antonio, the University of North Texas, the University of Houston and University of Texas campuses in Dallas, Arlington and El Paso.

In response to the funding increases, and in anticipation of the new funds, many of these universities have gone on hiring sprees. They're finally filling old faculty vacancies and even creating new positions. Texas Tech filled 70 vacancies this year in science, technology and engineering, and plans to hire 30 more professors in the next academic year. San Antonio recently filled 53 tenure track positions, and also has plans to hire 30 more instructors by the fall.

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