Monday, January 27, 2014

New Data on State Appropriations for Higher Education

Colleagues at the Center for the Study of Education Policy at Illinois State University and the State Higher Education Executive Officers released new data this past week (on 1/20/2014) on state spending on higher education. Their annual Grapevine report is a survey of state general fund appropriations for higher education. Grapevine has been published since 1960 and offers a detailed look at state spending on higher education. The media headlines this week (for instance in Inside Higher Ed, The Chronicle of Higher Education, and The Wall Street Journal) discuss higher education funding as beginning a “rebound,” “recovery,”  or “comeback.” While I agree that the Grapevine data show that state support for higher education appears to be recovering, I also want to highlight the slow pace of recovery.

States tend to recover more slowly than does the general economy because states need to wait for taxes to be levied in order to see their state treasuries rebound. Hence, recovery on state spending for higher education tends to lag behind general economic recoveries.

My co-author, William R. Doyle from Vanderbilt University, and I have been working on an article that documents how long it takes for state spending levels to recover after higher education cuts. We use data from the Grapevine survey and consider how many years it takes to recover to prior spending levels following a cut of 5% or more in state appropriations. The Wisconsin Center for the Advancement of Postsecondary Education (WISCAPE) has graciously published a policy brief on our work entitled, Bouncebacks in Higher Education Funding.

We show that recovery was swift in the 1980s, slowed in the 1990s, and is likely to be a decade or longer in the new millennium. If institutions need to wait more than a decade to recover following a cut, then the cuts appear to be much more permanent than they were in prior decades.

To illustrate this idea, the figure below shows state appropriations per young person in Illinois from 1979 to 2007. We see that there were only two major (greater than 5%) cuts to higher education spending in the state – in 1981 and 1991 – shown by the shaded years. Many other states faced three or more cuts during this time period, so Illinois has a relatively stable funding pattern. However, we can see that the length of time required for recovery has increased. The cut to higher education spending in 1981 lasted until 1984. The cut in 1991 lasted until 1997. Although the news this week from the Grapevine survey likely means that states like Illinois are on the road to recovery, it is likely to be a long road. Given the severity of the cuts in the last economic recession, I would not at all be surprised if this recovery took longer than a decade.

This post also appears at WISCAPE

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