Public Research Universities:
Changes in State Funding

A Publication of The Lincoln Project: Excellence and Access in Public Higher Education

© 2015 by the American Academy of Arts & Sciences
All rights reserved.

isbn: 0-87724-106-6
This publication is available online at https://www.amacad.org/LincolnProject.
The views expressed in this publication are those held by the contributors
and are not necessarily those of the Officers and Members of the American
Academy of Arts & Sciences.
Please direct inquiries to:
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Cover: The lights on the map represent the locations of Carnegie-classified
Very High Research Activity and High Research Activity public universities
in the United States as of September 2015.

The Lincoln Project: Excellence and Access in Public Higher Education

Public Research Universities:
Changes in State Funding

Introduction
Public research universities serve a distinct and indispensable role in America’s educational
landscape, producing research and scholarship that drive innovation and graduating thousands
of educated citizens, leaders, and professionals in each state annually. While other institutions
may also address this mission, public research universities hold a unique social contract to meet
these challenges together as effectively, efficiently, and affordably as possible. But today, public
research universities are confronted with unprecedented reductions in state investment.

2  The Lincoln Project: Excellence and Access in Public Higher Education

Between 2008 and 2013,
states cut appropriation
support by more than

20 percent
per full-time equivalent
student in the median
public institution, and
cut support to the
median public research
university by more than

26 percent.

Higher education is the third-largest priority in state general fund budgets (the portion financed primarily by taxes),
after elementary and secondary education and Medicaid.1
In 2014, higher education accounted for approximately 9.4
percent of state general funding: about half as much as general fund spending on Medicaid, and one-fourth of state
k–12 education spending.2
Measured in inflation-adjusted dollars per full-time equivalent (fte) student, states have been cutting this support
for well over a decade, and spending cuts accelerated in
response to the Great Recession. Between 2008 and 2013,
states cut appropriation support per fte student in the
median public research university by more than 26 percent
(overall, support per fte student at the median public
institution was cut by more than 20 percent).

The decline in support in part reflects difficult choices states have made in response to mandatory spending programs like Medicaid, rising pension contributions, and a desire to preserve
k–12 education.3
Today, public research universities still rely on state appropriations for approximately 51 percent
of their educational revenue, although the percentage fluctuates widely by institution—ucla,
for example, receives only 7 percent of its funding from the state. For most public institutions,
further cuts could be devastating.
In this climate, the American Academy of Arts & Sciences created the Lincoln Project: Excellence and Access in Public Higher Education to study the importance of public research universities, analyze economic trends affecting their operations, and recommend new strategies to
sustain these critical institutions. In its first publication, Public Research Universities: Why They
Matter, the Lincoln Project demonstrated the many ways in which public research universities
are a vital public good.4 This publication examines state financing of higher education, describes
the challenges that state governments face, and assesses the prospects for greater state support
in the future.

Public Research Universities: Changes in State Funding  3

Section 1: An Overview of State Funding for Higher Education
Figure 1: State General Fund Expenditures in 2014 (Estimated), by Category
$300

Billions of Dollars

$250
$200
$150
$100
$50
$0

Elementary
& Secondary
Education

Medicaid

Higher
Education

Corrections

Public
Transportation
Assistance

All Other

Higher Education is the third-largest spending area in the typical state budget. In this figure, "All Other" is defined
as expenditures from revenue sources that are restricted by law for particular governmental functions or activities.
Source: National Association of State Budget Officers, State Expenditure Report: Examining Fiscal 2012–2014 State
Spending (Washington, D.C.: National Association of State Budget Officers, 2015). See also State Higher Education
Executive Officers (SHEEO) Association, SHEF: FY 2014—State Higher Education Finance (Boulder, Colo.: State Higher
Education Executive Officers Association, 2015); State Higher Education Executive Officers Association and Illinois
State University Center for the Study of Education Policy, “Grapevine Compilation of State Fiscal Support for Higher Education, Fiscal Year 2014–2015,” http://education.illinoisstate.edu/grapevine/; National Center for Education Statistics,
IPEDS [Integrated Postsecondary Education Data System] (U.S. Department of Education, Institute of Education Sciences), https://nces.ed.gov/ipeds/; and David A. Tandberg and Casey Griffith, “State Support of Higher Education: Data,
Measures, Findings, and Directions for Future Research,” in Higher Education: Handbook of Theory and Research, vol.
28, ed. Michael B. Paulsen (Dordrecht: Springer Netherlands, 2013), 613–685, http://link.springer.com/10.1007/978-94
-007-5836-0_13.

4  The Lincoln Project: Excellence and Access in Public Higher Education

Higher education has been described as the “balance wheel” of state budgets: state appropriations for higher education tend to rise disproportionately when the economy is strong, and fall
disproportionately when the economy is weak.
Three observations support this argument: 1) Unlike state agencies, higher education institutions have separate budgets, reserves, and revenue streams (tuition and fundraising), and therefore possess a perceived capacity to absorb cuts; 2) Higher education institutions have a greater
capacity to cut or slow the growth of employee pay in bad times, or raise it in good times,
because they are not bound by statewide pay scales; and 3) Higher education institutions can
vary program elements, such as course offerings and class sizes, and therefore associated spending, in ways that may be difficult for state agencies.
Since public higher education is perceived as a relatively flexible budget item—a rarity among
the proliferating mandatory spending programs that dominate state budgets—each institution contends separately with unpredictable funding patterns, a volatility that has a profound
impact on their operations. This volatility complicates long-term planning and may reduce
their attractiveness as employers, since professors and other staff face greater uncertainty about
their job security and long-term career prospects. And the inability to count on state funding

Figure 2: State and Local Government Noncapital Support
for Higher Education in 2014

0.6% ($0.550)
All Other

2.6% ($2.231)

Student Aid for Use at
Independent Institutions

7.7% ($6.677)

76.8% ($66.295)

General Operating
Support for Public Higher
Educational Institutions

Student Aid for Public
Institution Tuition and Fees

12.2% ($10.562)

Research, Agricultural, and
Medical Education Purposes

(Amount in $ Billions)

Source: State Higher Education Executive Officers (SHEEO) Association, SHEF: FY 2014—State Higher Education
Finance (Boulder, Colo.: State Higher Education Executive Officers Association, 2015).

Public Research Universities: Changes in State Funding  5

leads to tuition increases at the very times when those
increases are most difficult for students and their families to bear. Between 2008 and 2014, published public
higher education tuition increased by 28 percent after
adjusting for inflation. Tuition increased by more than
20 percent in twenty-nine states, more than 40 percent
in ten states, and more than 60 percent in six states.
Tuition in Arizona rose by 81 percent per student, after
adjusting for inflation.5
A number of factors drive the variation in state spending on higher education (see Figure 3):
	 Economic and demographic variables such as
per capita income, the size of the college-age
population relative to the total population (with
a relatively greater college-age population associated with lower spending per student), and
the proportion of students attending college
out-of-state;
	 Fiscal variables such as pressures to spend in
other areas, particularly k–12 education and
Medicaid; and
	 Local, institutional factors
such as the political parties
of governors and legislative
majorities, the demographic
compositions of state legislatures, and tax and expenditure limits.6

State Support for Higher
Education (Both Public
and Private Institutions)
Outside of Normal
Budgetary Appropriations:
	 Subsidized loans required to be repaid
to the state
	 Tax systems
	 IRS section 529 plans that allow
tax-advantaged savings for higher
education7
	 Additional tax benefits for education,
including tuition tax credits, tuition
deductions, deductions for interest on
student loans, and exclusion of scholarship income from state personal
income tax calculations
There is no comprehensive tally for the
cost of these loans and tax expenditures,
but it is likely to be at least several billion
dollars annually (based on review of
selected state tax expenditure reports).

One reason that states willingly cut
higher education support is that,
unlike other areas of the budget,
colleges and universities have their
own revenue source:

tuition.

In this report we focus primarily
on spending per fte student as
an important measure of the resources available per
student, and of the potential consequences of cuts.
Governors and legislatures do not, of course, have the
luxury of simply funding a desired amount of spending per fte student: they must make choices about

6  The Lincoln Project: Excellence and Access in Public Higher Education

Figure 3: State Support for Public Higher Education
(All Colleges and Universities) in 2014,
per Full-Time Equivalent Student
WA
MT

ME

ND

OR

VT

MN
ID

WI

SD

WY

MI
IA

NE

NV

PA

UT

IL

CO

CA

AZ

NH
MA
CT RI

NY

KS

NM

MD
WV

KY

NJ
DE

VA
NC

TN
AR

SC
MS

TX

IN

MO

OK

OH

AL

GA

LA

FL

AK

HI

State Support ($) per
Full-Time Equivalent Student
$8,000 to $9,999
≥ $16,000
$6,000 to $7,999
$14,000 to $15,999
$4,000 to $5,999
$12,000 to $13,999
$2,000 to $3,999
$10,000 to $11,999

State support for public higher education per full-time equivalent student ranges from about $3,000 to over $18,000.
Source: State Higher Education Executive Officers (SHEEO) Association, SHEF: FY 2014—State Higher Education
Finance (Boulder, Colo.: State Higher Education Executive Officers Association, 2015).

how much funding to provide for public priorities such as k–12 education, higher education,
corrections, and health care, in dollar terms. The amount needed or desired will depend in part
on whether the population involved is growing or shrinking—more or fewer children in school,
students in college, prisoners in prisons, and elderly persons in nursing homes—but must fit
into overall priorities. Except for k–12 education, there is no universal access guarantee. While
higher education funding will not necessarily follow enrollment, spending per fte student is a
good indicator of how overall changes in spending will affect students.

Public Research Universities: Changes in State Funding  7

Section 2: The Decline in State Funding
Overall, states have been cutting their support for higher education for well over a decade.
Reductions were most dramatic between 2001 and 2004, and in the wake of the Great Recession
and its accompanying decline in tax revenue. Although spending increased slightly in 2013 and
again in 2014, these increases are dwarfed by the magnitude of prior cuts, and spending per
fte student in 2014 was nearly 30 percent below its level in 2000, after adjusting for inflation
(see Figure 4). And in many states, even with a turnaround in the level of state funding, the situation has gotten worse due to corresponding tuition-increase freezes or caps. In states where tuition is constrained, universities are experiencing a net loss even when states do increase funding.

Figure 4: Percent Change in State Support for Public Higher Education
(All Colleges and Universities) per Full-Time Equivalent Student,
in Constant 2014 $, since 2000
5
0

2000 2001

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Percent Change

-5
-10
-15
-20
-25
-30
-35
-40
Despite modest increases in 2013 and 2014, state support for public higher education per full-time equivalent student
remains nearly 30 percent below spending in 2000, after adjusting for inflation using the State Higher Education
Finance cost adjustment. Source: State Higher Education Executive Officers (SHEEO) Association, SHEF: FY 2014—
State Higher Education Finance (Boulder, Colo.: State Higher Education Executive Officers Association, 2015).

8  The Lincoln Project: Excellence and Access in Public Higher Education

The higher education share of general fund spending fell from

14.6 percent in 1990 to 9.4 percent in 2014.
As a result of sustained cuts and governmental spending pressures elsewhere, higher education
has declined as a share of state budgets. While states once spent more on higher education than
Medicaid, higher education has been overtaken, and the gap is widening. The higher education
share of general fund spending fell from 14.6 percent in 1990 to 9.4 percent in 2014, while the
Medicaid share more than doubled, from 9.5 percent to 19.1 percent. States now spend more
than twice as much on Medicaid as they do on higher education.

Figure 5: Higher Education (All Colleges and Universities)
and Medicaid as Share of State General Fund Expenditures
20%

19.1%

18%
16%

14.6%

14%

Medicaid

12%
10%
8%

9.5%

Higher Education

9.4%

6%
4%
2%
0%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Higher education has fallen as a share of state budgets, while Medicaid has risen. Source: National Association of
State Budget Officers, State Expenditure Report (various years, 1990–2014) (Washington, D.C.: National Association of
State Budget Officers, 1991–2015), http://www.nasbo.org/publications-data/state-expenditure-report/archives.

Public Research Universities: Changes in State Funding  9

Higher education has suffered relative to other priorities, too, particularly elementary and secondary education and corrections. According to one recent analysis, “eleven states spent more of their
general funds on corrections than on higher education in 2013. And some of the states with the
biggest education cuts in recent years also have among the nation’s highest incarceration rates.”8
In all, forty-six states cut support for public higher education per fte student between 2008
and 2014, after adjusting for inflation (see Figure 6). And these cuts were deep: thirty-six states
cut inflation-adjusted spending per fte student by more than 20 percent, nineteen cut by more
than 25 percent, and ten cut by more than 30 percent.9

Figure 6: Change in State Support for Public Higher Education (All Public
Colleges and Universities) per Full-Time Equivalent Student, 2008 to 2014
WA
MT

ME

ND

OR

VT

MN
ID

WI

SD

WY

MI
IA

NE

NV

PA

UT

IL

CO

CA

AZ

NH
MA
CT RI

NY

KS

MD
WV

KY

NJ
DE

VA
NC

TN
AR

SC
MS

TX

IN

MO

OK

NM

OH

AL

GA

LA

FL

AK

State Support ($) per
Full-Time Equivalent Student
HI

≤ −$4,000
−$2,000 to −$3,999
$0 to −$1,999

$1 to $1,999
$2,000 to $3,999
≥ $4,000

State support for public higher education, per full-time equivalent student, is below the 2008 level in forty-six states.
Although the map shows a substantial increase in Illinois, that does not reflect increased spending to support current
students. Rather, it reflects an increase to support underfunded university pensions: support to pay for services delivered
years or even decades in the past. Source: State Higher Education Executive Officers (SHEEO) Association, SHEF: FY
2014—State Higher Education Finance (Boulder, Colo.: State Higher Education Executive Officers Association, 2015).

10  The Lincoln Project: Excellence and Access in Public Higher Education

State Spending on Corrections
In general, state spending on corrections has grown much faster than education spending over the last three
decades. In eleven states, corrections has now surpassed higher education as a percentage of funding.

Figure 7: Growth in State General Fund Spending,
Adjusted for Inflation, 1986–2013

141%

69%
5.6%

Higher Education

Elementary &
Secondary Education

Corrections

Source: Center on Budget and Policy Priorities analysis of data from National Association of State Budget Officers,
State Expenditure Report (various years, 1986–2013) (Washington, D.C.: National Association of State Budget Officers,
1987–2014), http://www.nasbo.org/publications-data/state-expenditure-report/archives.

Public Research Universities: Changes in State Funding  11

Figure 8: Corrections and Higher Education Spending as Percentage of
State General Fund Expenditures (FY2013)
25%
Higher Education

20%

Corrections

15%

10%

5%

0%

MI

OR

AZ

VT

CO

PA

NH

DE

RI

MA

CT

Source: The Henry J. Kaiser Family Foundation, “Distribution of State General Fund Expenditures (in millions): Fiscal
Year 2013,” http://kff.org/other/state-indicator/distribution-of-general-fund-spending/. Note also that when excluding
appropriations for community colleges and technical schools, additional states—including California—have spent
more on corrections than on higher education in recent years.

12  The Lincoln Project: Excellence and Access in Public Higher Education

Section 3: Public Research Universities Have Been Hit
Harder than Public Higher Education in General
While public higher education in general has been hit by cuts in state support, public
research universities have been hit harder. Between 2008 and 2013, inflation-adjusted state
appropriation support for public higher education per fte student declined by 26.3 percent in
the median public research university. Of the 138 public research universities for which there
was comparable data, inflation-adjusted support per fte student declined by more than 20 percent at 98 institutions, and declined by more than 40 percent at 29 institutions.10
To be sure, tuition increases have abated recently in response to modest increases in state support in 2013 and 2014. Indeed, states that have continued with deep cuts are now the outliers. In
Washington State, the latest budget reportedly provides for tuition reductions of 15–20 percent
at four-year institutions, making it the only state to provide widespread tuition cuts.11 Other
states have experienced modest increases in state support, but with corresponding tuition
freezes. For example, the University of California recently agreed to freeze resident undergraduate tuition for two years in exchange for additional state support of 4 percent per year for two
years. California expects to raise nonresident tuition by 8 percent.12

Between 2008 and 2013, inflation-adjusted
state appropriation support for public higher
education per full-time equivalent student

declined by 26 percent
in the median public research university.

Public Research Universities: Changes in State Funding  13

Figure 9: Revenue Sources of Public Research Universities,
2001, 2006, and 2012
State
Appropriations
Federal, State,
Local Grants
and Contracts
Private Gifts
and Grants
and Contracts

2001
2006
2012

Net Tuition
and Fees
0%

5%

10%

15%

20%

25%

30%

35%

Public research universities are increasingly reliant on tuition and fees in the wake of cuts in state appropriations.
Data shown represent public research universities that are members of the Association of American Universities.
Source: COGR Costing Committee, “Finances of Research Universities, June 2014 Version” (New York;
Washington, D.C.: Council on Governmental Relations, 2014).

14  The Lincoln Project: Excellence and Access in Public Higher Education

Major State Spending Items that Compete with
Higher Education for Resources
Medicaid

Pensions

Medicaid is an entitlement; as a practical
matter, as enrollments rise, states must raise
their expenditures, at least in the short run.
Approximately two-thirds of Medicaid spending is for the elderly and disabled. Demographic forces
will put increased pressure on the elderly component of
this spending. Between 2014 and 2034, the population
aged sixty-five and over is expected to grow by approximately 2.6 percent annually, compared with 0.8 percent
for the population overall.13 Further, many economists
believe that health care will continue to struggle with
“excess cost growth,” in which costs grow more rapidly
than the economy as a whole. Moody’s Analytics
projects that total state Medicaid spending will grow
faster than state tax revenue in every year from 2017
through 2024.14

State and local government pensions for
all workers (not just higher education) are
underfunded by at least $1.1 trillion according to conservative estimates.17 While
some states are trying to cut these benefits, with varying
degrees of success, states are likely to have to pay the
vast majority of this obligation. In aggregate, states
and localities are underpaying actuarially determined
contributions by approximately $21 billion annually, and
under some scenarios, expenditure needs could be much
higher still.18 This will place great pressure on state
finances in many states, crowding out funds that might
otherwise be available for higher education.

Primary and Secondary Education
The 2007 recession was so severe that
states cut inflation-adjusted spending
on K–12 education by approximately 4
percent between 2008 and 2013.15 The
National Center on Education Statistics projects that
the number of pupils will rise 0.6 percent annually from
2015 through 2024.16 Given the depth of recent state
cuts in primary and secondary education and anticipated growth in the number of pupils, states will face
pressure to raise spending on primary and secondary
education in coming years.

Infrastructure
While it is difficult to obtain objective
measures of infrastructure needs, it
is clear that states and localities cut
back on this spending very sharply
during the Great Recession and in the years that
followed. Between the fourth quarter of 2007 and
the fourth quarter of 2014, real gross investment in
infrastructure by state and local governments fell by 18
percent, and net investment (after allowing for capital
consumption) plummeted more than 55 percent.19
States feel great pressure to increase spending for
infrastructure. In fact, it is one of the few activities for
which the public appears willing to pay higher taxes.
A recent national poll by the Mineta Transportation
Institute found that 69 percent of respondents would
support a ten cent gas tax increase for improved road
maintenance.20

Public Research Universities: Changes in State Funding  15

Section 4: Looking Forward: Prospects for the Future
States’ potential to provide support for higher education depends crucially on tax revenue.
Unfortunately, state tax revenue has remained weak: seven years after the start of the recession,
inflation-adjusted state government tax revenue is only 5 percent above its prerecession level. By
contrast, in four preceding economic recoveries, state tax revenue had grown from 15 to 25 percent above prerecession revenue in the same amount of time.21
The outlook for tax revenue growth is subdued. Most major economic forecasters expect that
the national economy will continue to improve throughout 2015 and 2016, inflation will be low
but will gradually rise, and interest rates will rise slightly.22

Figure 10: Percent Change in Gross Domestic Product
and State Tax Revenue Adjusted for Inflation
% Change in Taxes (Real)

% Change in GDP (Real)

10%

5%

0%
1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

-5%

-10%
State taxes are more volatile than the economy and more volatile than they used to be. Note: Years are twelve-month
periods ending in June, corresponding to the fiscal year of the typical state budgetary office. Source: Analysis of
data from the United States Census Bureau, http://www.census.gov/; and U.S. Department of Commerce, Bureau of
Economic Analysis, http://www.bea.gov/.

16  The Lincoln Project: Excellence and Access in Public Higher Education

State income taxes and sales taxes accounted for 35.9 percent and 31.3 percent, respectively, of
state tax revenue in fiscal year 2014. Income taxes are unlikely to grow much faster than the
overall economy over the next several years: progressive tax structures will drive growth up
slightly, but this will likely be offset by drag from slow growth in nonwage income. Sales taxes
have grown more slowly than the economy for more than forty years.23 This is a result of the
difficulty in taxing the service industry and in collecting taxes on Internet sales, among other
causes. The sales tax is likely to continue to grow more slowly than the economy for years
to come. Thus, the overall outlook is for relatively slow revenue growth in the two major tax
sources for the typical state.24

Conclusion
Tax revenue, although growing, is growing slowly. States face increases in spending areas that
are difficult or impossible to cut, particularly Medicaid and pension contributions. They also
face demands for spending on primary and secondary education: a popular priority that does
not have its own revenue source (like tuition) and might more easily garner legislative support. In addition, states have made sharp cuts in infrastructure spending and face considerable
demand to restore some of that spending,
allowing repairs of roads and bridges and
Public research universities increasingly
improvements in other areas. Thus, higher
are expected to serve more Americans
education, despite its importance to the econwith less funding.
omy, is continuing to fall behind these other
priorities.
Most universities have instituted new programs to reduce costs, but years of dramatic
budget cuts have left little room for austerity:
public research universities increasingly are expected to serve more Americans with less funding. In response to this need, the Lincoln Project is developing new strategies for ensuring that
public research universities continue to serve the nation as engines of innovation, growth, and
opportunity for Americans of all backgrounds.
This is the second in a series of five publications that will examine the importance of our public
research universities. Subsequent publications will include the current financial models of public research universities and how they are changing; and the impacts of the research conducted
at these institutions on people, the economy, and the nation. Ultimately, the Lincoln Project will
offer substantive policy recommendations for sustaining public research universities and will
call on all funding partners—states, the federal government, philanthropies, business, and the
public—to maintain and enhance their investment in them.

Public Research Universities: Changes in State Funding  17

Appendix: State Spending on Public Higher Education
per Full-Time Equivalent Student Varies by More than Sixfold
State support for public higher education in 2014 ranged from more than $18,000 per fte
student in Alaska to about $3,000 per fte student in New Hampshire, a sixfold difference
(see Figure 3). While Alaska and New Hampshire are often extremes on fiscal measures, the
differences between less polar states were still quite large. Connecticut, the fifth-highest spending state, spent three times as much per fte student as did Vermont, the fifth-lowest spending
state; and North Carolina, the tenth-highest spending state, spent 74 percent more than did
Wisconsin, the tenth-lowest spending state.
The variation in state appropriations for higher education means that states also vary greatly in
their relative reliance on appropriations versus net tuition. Alaska and Wyoming, which provide very high state support for public higher education, rely relatively little on net tuition. New
Hampshire and Vermont, which provide relatively little state support for public higher education, rely heavily on net tuition revenue.

Figure 11: Education Appropriations and Net Tuition at
Public Research Universities per Full-Time Equivalent Student, 2013
$40,000
$35,000
$30,000
Education Appropriations

Net Tuition

U.S. Total

$25,000
$20,000
$15,000
$10,000

$0

AK
CT
NJ
VT
WY
NC
MN
CA
WA
MD
MI
NY
IN
IL
HI
MA
WV
AL
GA
KY
TN
IA
NE
ME
VA
OK
OH
RI
ND
KS
SC
WI
AZ
UT
AR
ID
NH
MO
NM
NV
CO
OR
TX
MS
SD
MT
LA
FL

$5,000

States vary in their reliance on appropriations and net tuition. Source: State Higher Education Executive Officers
(SHEEO) Association, SHEF: FY 2014—State Higher Education Finance (Boulder, Colo.: State Higher Education Executive Officers Association, 2015).

18  The Lincoln Project: Excellence and Access in Public Higher Education

The relationship between education appropriations and net tuition also reflects state philos­
ophies and policies about who should pay the costs of higher education. For example, New
Mexico, which has a relatively high appropriation share, has a policy of keeping tuition low to
allow a large number of students to participate. Vermont, by contrast, prefers to keep tuition
higher for those who can afford college and provides significant financial assistance for those
who cannot.25
How have changes in state support affected individual public university systems, and how have
these institutions responded?

California

New York

“Prior to 2010–11, state funding was the largest single source of support for the education
function of the University. Over the past ten
years, state educational appropriations have
fallen more than $1 billion in inflationadjusted dollars despite uc’s enrollment
growth. State educational appropriations
constituted only 9 percent of uc’s operating
budget in 2012–13 compared to 23 percent in
2001–02.”26

In New York, the percent change in state
educational appropriations per fte student from 2008 to 2014 is –11.1 percent, a
decrease of $1,154 per student. To offset these
cuts, tuition has increased by $1,215 per fte
student (21.3 percent) in the same six years.28

Colorado
“Colorado State this year [2011] received
$94 million in funding from the State of
Colorado, a reduction of about $36 million
over the past three years. Colorado State has
managed these state funding cuts by freezing
hiring and salaries, reducing expenses (with
an emphasis on cuts to administration), and
increasing student tuition.”27

Tennessee
“In Tennessee, total appropriations remain
below fy2008 levels. As a result, in fy2015
there is no funding for general salary
increases for state and university employees,
leading the state to lag in providing compensation at the market rate. In order to
maintain current operations and continue
progress in supporting student success and
completion, the in-state maintenance fee will
increase 6 percent, from $9,780 to $10,366
for in-state students at the University of Tennessee, Knoxville. It should be noted that the
University of Tennessee continues to allocate
additional funding to student aid to keep the
net cost of student fees as low as possible—
expenditures for institutional scholarships
and fellowships grew by over 233 percent
from fy2003 to fy2013.”29

Public Research Universities: Changes in State Funding  19

Endnotes
1  National Association of State Budget Officers, State
Expenditure Report: Examining Fiscal 2012–2014 State
Spending (Washington, D.C.: National Association of State
Budget Officers, 2015). These numbers are for general fund
spending rather than spending from all funds. In many
states, higher education spending in other funds includes
spending by institutions from tuition revenue and other
sources not derived from states’ own resources, and thus
does not measure state “effort” to fund higher education. The data in for 2014 are estimates collected before
final fiscal reports for the 2014 fiscal year were complete.
However, they are not forecasts prepared before the start
of the fiscal year, and tend to offer good estimates of actual
expenditures. See ibid., 102: “For higher education, states
were requested to include expenditures made for capital
construction, community colleges, vocational education,
law, medical, veterinary, nursing and technical schools, and
assistance to private colleges and universities, as well as
tuition, fees and student loan programs. Higher education
expenditures exclude federal research grants and endowments by universities.” Because the data in are for the
general fund, most higher education capital expenditures
are excluded.
2  Some reports have calculated different spending shares
based upon total expenditures rather than general fund
expenditures. Given that our focus is state tax support for
higher education, the general fund is more appropriate
here.
3  According to the Pew Charitable Trusts (The Pew
Charitable Trusts, Fiscal Federalism Initiative, “Federal
and State Funding of Higher Education: A Changing
Landscape,” June 11, 2015, http://www.pewtrusts.org/en/
research-and-analysis/issue-briefs/2015/06/federal
-and-state-funding-of-higher-education), federal spending
for higher education now exceeds state government spending for higher education slightly, the result of a surge in
federal spending after the Great Recession and sharp cutbacks in state spending. The nature of federal spending on
higher education is very different from state spending: state
funding is primarily for operating support to institutions,
while federal spending is mainly for financial assistance
to students (such as Pell grants), specific federal research
projects, and veterans’ education benefits. In addition, the
federal government provides nearly half again as much
support for higher education through tax expenditures as
it does through direct spending, particularly through the
American Opportunity Tax Credit, the successor to the
Hope Tax Credit.
4  American Academy of Arts & Sciences, Public Research
Universities: Why They Matter (Cambridge, Mass.: American Academy of Arts & Sciences, 2015).

5  Michael Mitchell, Vincent Palacios, and Michael
Leachman, States are Still Funding Higher Education below
Pre-Recession Levels (Washington, D.C.: Center on Budget
and Policy Priorities, 2014), http://www.cbpp.org/research/
states-are-still-funding-higher-education-below-pre
-recession-levels; and Michael Mitchell and Michael Leachman, Years of Cuts Threaten to Put College Out of Reach for
More Students (Washington, D.C.: Center on Budget and
Policy Priorities, 2015), http://www.cbpp.org/research/
state-budget-and-tax/years-of-cuts-threaten-to-put
-college-out-of-reach-for-more-students.
6  For recent reviews of research on this topic, see Jennifer
A. Delaney and William R. Doyle, “State Spending on
Higher Education: Testing the Balance Wheel over Time,”
Journal of Education Finance 36 (4) (2011): 343–368; Jennifer A. Delaney and William R. Doyle, “The Role of Higher
Education in State Budgets,” in State Postsecondary Education Research: New Methods to Inform Policy and Practice,
ed. Kathleen M. Shaw and Donald E. Heller (Sterling, Va.:
Stylus Publishing, 2007); and Michael K. McLendon, James
C. Hearn, and Christine G. Mokher, “Partisans, Professionals, and Power: The Role of Political Factors in State Higher
Education Funding,” The Journal of Higher Education 80 (6)
(2009): 686–713, doi:10.1353/jhe.0.0075.
7  National Conference of State Legislatures, “Saving for
College: 529 Plans,” May 22, 2014, http://www.ncsl.org/
research/education/saving-for-college-529-plans.aspx.
8  Mitchell, Palacios, and Leachman, States are Still Funding Higher Education below Pre-Recession Levels.
9  Analysis derived from State Higher Education Executive Officers (sheeo) Association, SHEF: FY 2014—State
Higher Education Finance (Boulder, Colo.: State Higher
Education Executive Officers Association, 2015). These
numbers differ slightly from numbers in a report by the
Center on Budget and Policy Priorities, likely because
these numbers reflect updated data for 2014. See Mitchell,
Palacios, and Leachman, States are Still Funding Higher
Education below Pre-Recession Levels.
10  Analysis of ipeds data, see National Center for
Education Statistics, ipeds [Integrated Postsecondary
Education Data System] (U.S. Department of Education,
Institute of Education Sciences), https://nces.ed.gov/ipeds/.
11  Stacy Teicher Khadaroo, “Dramatic Cuts to College Tuition in Washington State: Will Others Follow?” The Christian
Science Monitor, July 2, 2015, http://www.csmonitor.com/
USA/Education/2015/0702/Dramatic-cuts-to-college-tuition
-in-Washington-State-Will-others-follow.
12  Bay City News, “University of California to Freeze
Undergraduate Tuition for California Residents for 2

20  The Lincoln Project: Excellence and Access in Public Higher Education

Years,” May 14, 2015, http://abc7news.com/education/
uc-to-freeze-undergraduate-tuition-for-ca-residents-for-2
-years/722871/.
13  Donald Boyd, The Potential Impact of Alternative
Health Care Spending Scenarios on Future State and Local
Government Budgets, The Future of U.S. Health Care
Spending Conference, April 11, 2014 (Washington, D.C.:
Engelberg Center for Health Care Reform at Brookings,
2014).
14  Dan White and Sarah Crane, Crowded Out: The
Outlook for State Higher Education Spending (New York:
Moody’s Analytics, 2015).
15  Donald J. Boyd and Lucy Dadayan, The Economy
Recovers While State Finances Lag, The Blinken Report (Albany, N.Y.: Nelson A. Rockefeller Institute of Government,
June 2015), http://www.rockinst.org/pdf/government_
finance/2015-06-23-Blinken_Report_Two.pdf.
16  Analysis of Institute of Education Sciences, National
Center for Education Statistics, “Digest of Education Statistics 2014,” Table 203.10, https://nces.ed.gov/programs/
digest/d14/tables/dt14_203.10.asp.
17  Donald J. Boyd and Peter J. Kiernan, Strengthening the
Security of Public Sector Defined Benefit Plans, The Blinken
Report (Albany, N.Y.: Nelson A. Rockefeller Institute of
Government, January 2014), http://www.rockinst.org/pdf/
government_finance/2014-01-Blinken_Report_One.pdf.
18  Don Boyd, “National Economic Forces Affecting State
Budgets and Pension Systems,” Governor’s Forum: Pensions at the Harris School, University of Chicago, Gleacher
Center, Chicago, April 27, 2015.
19  Boyd and Dadayan, The Economy Recovers While State
Finances Lag.
20  More than a dozen states considered gas tax increases
in 2015, and the Nebraska legislature even overrode a
gubernatorial veto of a gas tax increase. See ibid.
21  Boyd and Dadayan, The Economy Recovers While State
Finances Lag.
22  For surveys of major forecasters, see The Wall Street
Journal, “Economic Forecasting Survey,” http://projects.wsj
.com/econforecast/; and Federal Reserve Bank of Philadelphia, “Survey of Professional Forecasters,” http://www
.philadelphiafed.org/research-and-data/real-time-center/
survey-of-professional-forecasters/. For the latest forecasts
available at the time of writing, see The Wall Street Journal,
“wsj Economic Survey June 2015,” http://online.wsj.com/
public/resources/documents/wsjecon0615.xls. See also
Boyd and Dadayan, The Economy Recovers While State
Finances Lag.
23  John L. Mikesell, “The Disappearing Retail Sales Tax,”
State Tax Notes (March 5, 2012): 777–791.

24  Boyd and Dadayan, The Economy Recovers While State
Finances Lag.
25  Julie Davis Bell, The Nuts and Bolts of the Higher Education Legislative Appropriations Process, Getting What You
Pay For Policy Brief (Boulder, Colo.: National Conference
of State Legislatures and Western Interstate Consortium
for Higher Education, November 2008), http://www.wiche
.edu/info/gwypf/bell_appropriations.pdf.
26  University of California, Accountability Report 2014
(Oakland: University of California Regents, 2015), “Chapter 12: University Finances and Private Giving,” http://
accountability.universityofcalifornia.edu/2014/index/
chapter/12.
27  Colorado State University, Financial Accountability
Report: Fiscal Year 2011 Financial Highlights (Fort Collins:
Colorado State University, 2012), 2, http://busfin.colostate
.edu/finstmt/finacct11.pdf.
28  Mitchell, Palacios, and Leachman, States are Still
Funding Higher Education below Pre-Recession Levels.
29  The University of Tennessee, Budget Document FY
2014–2015 (Knoxville: University of Tennessee System
Budget Office, 2014), http://www.tennessee.edu/budget/
docs/FY15_Proposed.pdf.

The Lincoln Project: Excellence and Access in Public Higher Education
Advisory Group
Robert Birgeneau, Cochair, University of
California, Berkeley

Ann Marie Lipinski, Nieman Foundation for
Journalism at Harvard University

Mary Sue Coleman, Cochair, University of
Michigan

George Miller, former United States
Representative, California

Lawrence S. Bacow, Tufts University

William Powers, Jr., The University of Texas
at Austin

Gene D. Block, University of California,
Los Angeles

John Rogers, Ariel Investments

Henry Brady, University of California,
Berkeley

Thomas Siebel, C3 Energy;
First Virtual Group

Phil Bredesen, former Governor of
Tennessee

Shirley M. Tilghman, Princeton University

Nancy Cantor, Rutgers University–Newark
John T. Casteen III, University of Virginia
Jonathan Cole, Columbia University
Gray Davis, former Governor of California
Patrick Doyle, Domino’s Pizza, Inc.
David B. Frohnmayer†, University of Oregon
E. Gordon Gee, West Virginia University
Matthew Goldstein, The City University of
New York
Donald Graham, Graham Holdings
Company

Phyllis M. Wise, University of Illinois at
Urbana-Champaign
Frank Yeary, CamberView Partners llc;
University of California, Berkeley
Pauline Yu, American Council of Learned
Societies

Funders
The William and Flora Hewlett Foundation
The Spencer Foundation
Carnegie Corporation of New York
Thomas and Stacey Siebel Foundation

Carl Guardino, Silicon Valley Leadership
Group

Robert and Colleen Haas

Robert D. Haas, Levi Strauss & Co.

Contributing Author

Jim Hackett, Steelcase

Donald J. Boyd, Nelson A. Rockefeller
Institute of Government (affiliation given
for identification purposes only)

Ann Weaver Hart, University of Arizona
Michael Hout, New York University
Kay Bailey Hutchison, former United States
Senator, Texas
Jim Leach, University of Iowa
Earl Lewis, The Andrew W. Mellon
Foundation

Project Staff
Samantha Carney
Eliza Berg
John Tessitore
Elissa Chin Lu, Consultant
Beata FitzPatrick, Consultant
	† Deceased

@americanacad
www.amacad.org