The State Higher Ed Picture, 2007

Looking ahead, the outlook for higher education in the states is decidedly mixed and seeming to worsen by the day. But for most states, public colleges will be entering the down times with a couple good years under their belt, according to an annual report released today by the State Higher Education Executive Officers.

The study, State Higher Education Finance FY2007, is the final version of a report that the group released in February. The final report finds that in 2007 the fiscal year, state and local funds for higher education rose to $83.5 billion, up 7.7 percent over 2006. After taking enrollment growth (0.7 percent) and inflation (3.3 percent) into account, per student state and local appropriations for education in public colleges and universities grew to $6,773, an increase of 3.9 percent in constant dollars from 2006.

The numbers may have changed relatively little from the initial report's release in February, but the economic and political context is a little different. "The sense of economic challenge is a little deeper than it was six months ago," Paul Lingenfelter, president of the State Higher Education Executive Officers group, said in an interview Tuesday.

The most recent assessment of state budgets by the National Conference of State Legislators is projecting that "[w]ith few exceptions" -- notably in energy-rich regions -- "state finances are deteriorating -- in some cases considerably." And the Rockefeller Institute of Government at the State University of New York said this month that growth in state tax revenues has dropped to its lowest level in five years, portending the possibility of tighter state budgets and a tough year for public colleges and universities that rely on state appropriations.

The political climate has also intensified. At the urging of public college leaders, Congress has been turning up the pressure on state legislatures to sustain if not increase their spending on higher education. (Late Tuesday, a panel of members of Congress included in legislation to renew the Higher Education Act a provision that would let a state compete for funds in a new program only if it sustained established levels of spending on higher education.)

The underlying message of the campaign to force states to maintain their support for colleges and students is that if legislatures decrease their financial backing for public colleges and student aid, states will inevitably turn to students (in the form of rising tuitions) to meet the growing public demand for postsecondary education. States must get out of the habit of decreasing per-student spending and ratcheting up tuitions in economic downturns, only to rebuild and grow in good times.

The SHEEO report indicates that "the states are getting it," and that there is "enormous receptivity to the challenge we and others have laid out for achieving educational attainment," Lingenfelter said. Of course, that is much easier in the relatively upbeat economic times of the last few years than it is likely to be in the tougher climate that is ahead for most states, he acknowledged, but "these conversations are going on in the states."

The following table shows how individual states fared in terms of their appropriations and tuition