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State Spending on Higher Education on the Rise

Published: March 9, 2017 | Category: Blog Posts, Latest News

graphic with graduation caps and dollar signs representing state spending on higher education

State spending on higher education is on the rise again.

The Great Recession of 2007 spurred a huge growth in college attendance as out-of-work individuals turned to school to gain an edge in the job market.

Obviously, the recession also severely slashed state budgets. According to the Bipartisan Policy Center, state tax revenues dropped by 7.4 percent between 2008 and 2009. Together, these two events hindered states’ ability to keep higher education funding at previous levels.

However, state spending for higher education is finally on the rise again.

According to the annual Grapevine survey conducted by Illinois State University, state spending on higher education continues to slowly climb. On average, the 2016 fiscal year showed a 3.4 percent increase across the nation. The survey shows that Hawaii, Idaho, South Dakota and Virginia had the largest growth. These states’ spending for higher education increased by roughly 10 percent from 2016.

In fact, the majority of U.S. states reported increased spending on higher education over the last fiscal year, while only ten states reported a decrease. Overall, higher education spending over the last nine years is up 16 percent.

Nonprofit Quarterly reports that endowments have lost an “average of 1.9 percent. . . This brings the 10-year average annual return to five percent, rather than the 7.4 percent that many endowments need to retain their purchasing power over the years.” With this decline in donations and investments, states will need to step in even more to support universities and colleges.

Due to these recent losses in university and college endowments, it is now up to college leaders to show the importance of increased spending in higher education.