State Appropriations: Still More Money Needed.

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Author: Fischer, Karin

SPENDING FOR PUBLIC COLLEGES is on the rise as most states regain their financial footing.

State support for higher education increased in 2005-6 by 5.3 percent, to $66.6-billion, from the previous fiscal year, according to the Center for the Study of Education Policy, at Illinois State University. This marks the second year in a row of real spending growth, following one year, 2003-4, of decline, and another, 2002-3, when such spending lagged well behind inflation.

State fiscal officers are expressing confidence in their budget health for the forthcoming year as well. Twenty-p two states surveyed in December by the National Conference of State Legislatures reported a "stable" budget revenue outlook, while 26 reported a "stable" revenue outlook, says Arturo Ferez, a fiscal analyst for the organization.

"The situation has turned around for states on the revenue front," says Mr. Ferez, who nonetheless adds, "States aren't using the word 'surplus.'"

Public-college leaders are making a bid for a larger share of the growing state coffers. Colleges in about three-quarters of the 31 states that will adopt budgets this year are asking for increases above the rate of inflation, which stood at 3.5 percent as of late last month.

Still, in many states, college officials' optimism about the economic turn-around is tempered. Increased competition for state dollars from schools, prisons, and health-care programs means that the economic recovery is unlikely to produce as big a boost in state support for higher education as college administrators once might have expected. Increasingly, colleges find themselves vying for smaller and smaller portions of state budgets, with the share of general-fund revenues that go to higher education only 11.5 percent in the current fiscal year, down from 14.9 percent in 1990, according to the National Association of State Budget Officers.

Moreover, not every state is going into the year with a bright revenue forecast. In Louisiana, public colleges have already slashed their budgets by $71.4-million and are preparing to cope with additional cuts as state leaders try to erase a $959-million deficit caused by the recent hurricanes. Meanwhile, colleges in Missouri are bracing for cutbacks of $100-million, or 12 percent of state support for higher education, in response to a projected budget shortfall.

Even in some states with relatively stable to positive economic outlooks, higher-education officials fear that their institutions could face a dimmer financial future. Despite a decision by Colorado voters in November to temporarily roll back constitutionally imposed spending limits, residents of several other states, including Maine, Nevada, and Oklahoma, are likely to vote in next fall's elections on ballot measures that impose similar revenue caps.

In Kansas the Board of Regents of the state universities adopted a resolution in October opposing efforts by legislators to establish constitutional or statutory spending limits on the state budget. The regents fear that higher education could be forced to absorb a disproportionate share of any budget reductions brought on by the restrictions. "When budgets are tight," says Kip Peterson, a board spokesman, "what gets squeezed out? Higher education."

Appropriations for colleges and student-aid programs grew by about 5.3 percent in 2005-6, the largest increase in state spending on higher education in the last five years.

 1-year change
1993    -0.9%
1994    +3.3%
1995    +4.1%
1996    +3.2%
1997    +4.8%
1998    +6.0%
1999    +6.5%
2000    +7.1%
2001    +7.0%
2002    +4.6%
2003    +1.2%
2004    -2.1%
2005    +3.8%
2006    +5.3%
SOURCE: CENTER FOR THE STUDY of EDUCATION POLICY, ILLINOIS
 STATE UNIVERSITY

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By Karin Fischer