The Revenue Reality

Abstract

As state legislators met during the opening months of 2011 to work on budgets that would be the first in three years without sizable support from federal stimulus money, higher education emerged as one of the immediate targets for state funding reductions. Though legislators publicly tout the importance of higher education, when push comes to shove in the budgeting process, most states have such a list of mandated expenses that postsecondary education is one of the few flexible items for appropriations adjustments. State requirements to meet federal funding for Medicaid, constitutionally-mandated expenditures for K-12 education, and relatively inflexible commitments to the corrections system consume such a large proportion of available revenue that when hundreds of millions of dollars must be eliminated and colleges are seen as having other potential sources of income, higher education becomes especially vulnerable. While most states significantly cut public higher education funding at the height of the 2008 recession, funds have yet to be restored to prerecession levels. The majority of community colleges with funding formulas representing 48 states that responded to a survey reported that they did not receive full funding during fiscal year 2007–2008, for example.¹