Dive Brief:

• State policymakers should not pursue proportional budget cuts to colleges and instead preserve money for institutions that assist populations most vulnerable during the pandemic: Black, Hispanic, Native American and low-income students, a new report urges. 

• States should also protect their need-based financial aid programs, according to the research from the Lumina and Bill & Melinda Gates foundations.

• Colleges are bracing for states to slash their funding as the coronavirus continues to spur global economic turmoil. 

Dive Insight:

The virus has ravaged local and state budgets. Estimates of how much the public health crisis will cost vary but are in the billions of dollars, the report notes. Moody's Analytics calculated a $500 billion shortfall among local and state governments over the next two years.

Past periods of economic contraction prompted people to enroll in college to sharpen their skills. However, undergraduate postsecondary enrollment has so far dropped year-over-year, according to preliminary data from the National Student Clearinghouse Research Center. 

Many colleges, then, are grappling with significant enrollment declines while state funding wanes. States may be tempted to institute "across-the-board" cuts to institutions in the name of fairness, but the report's authors argue this is the wrong approach. Instead, states should direct dollars to institutions enrolling the most vulnerable students, they note.

States should also examine their workforce needs and focus on programs that teach job skills. Indiana, despite higher education budget cuts, maintained its Next Level Jobs program, the report states. The program provides the state's residents with training in areas such as the health sciences and construction. 

Additionally, states should review their need-based aid financial aid initiatives and evaluate whether certain students, such as those who are part-time, transfers or nontraditional, have difficulty getting the money. Older students should have access to aid, the report notes.

States could also leverage federal relief. The Coronavirus Aid, Relief and Economic Security (CARES) Act, which President Donald Trump signed in March, sent $14 billion to the sector, about half of which went to colleges for emergency grants for students. Governors also received a total of $3 billion in discretionary funding, some of which went to higher ed.

States could continue access to emergency aid beyond the federal funding, the report states. A new relief bill will likely not materialize soon, as negotiations over more aid have largely halted.