Federal dollars stabilized state support for higher ed this year

Dive Brief:

Federal funding increases are helping keep state support for higher education steady in fiscal 2021, according to the annual Grapevine report from Illinois State University's Center for the Study of Education Policy.
States are giving 0.3% more to higher education than they did last year, the report found. Without federal aid, however, state support to colleges would decline 1.3% from a year ago.
The drops in funding aren't as large as some predicted, the report noted, though at least two states saw double-digit declines in state support.

Dive Insight:

The coronavirus pandemic wreaked havoc on states' budgets, but nearly $2 billion in federal funds, up from about $300 million the year before, is helping buoy their support for higher ed, the report found. Still, 21 states reported that their higher education funding declined in fiscal 2021 — the largest number to do so in at least six years.

Some states saw particularly deep cuts. To make up for a $1.2 billion shortfall, Nevada slashed millions from its higher ed budget, resulting in state support falling by 17.8% in fiscal 2021.

Alaska saw the second-largest drop, with a 10.5% decline, though its budget woes predated the pandemic. The state's university system is weathering a massive reduction in support — $70 million spread over three years — that began in 2019.

Optional Caption

Natalie Schwartz/Higher Ed Dive, data from Grapevine

Over the past five years, state support for higher ed increased 15.8% nationwide, though these figures do not account for inflation. Sixteen states saw increases of at least 20% over the period, while five states had declines ranging from 2.2% to 22%.

Falling state funding isn't public colleges' only hurdle. The pandemic also cut into auxiliary revenue sources, such as housing and dining, and contributed to heavy year-over-year enrollment losses at community colleges. Enrollment at public and private nonprofit four-year colleges was flat.

Congress allocated roughly $77 billion in direct aid for colleges to help offset their pandemic-related losses and give emergency grants to students, but this amount falls short of the $120 billion that higher ed groups requested.

Colleges in states whose industries have been decimated by the pandemic will likely need much more funding to recover, Politico reported. Hawaii, where the tourism industry has come to a standstill, may cut its university system's general fund budget by 15%. Louisiana and Rhode Island are also exploring heavy reductions.