State Funding for Higher Education in FY 2009 and FY 2010

The recession that began in late 2007 has taken a brutal toll on state revenues as its impact has deepened and spread across the country. Because states, unlike the federal government, are required to balance their budgets, large revenue shortfalls translated into budget cuts for most state services in fiscal year (FY) 2009 and FY 2010. Funding for higher education was particularly hard hit.   

State funding for higher education is heavily influenced by the states’ fiscal situation, reflecting a cycle unique to higher education. Funding typically takes a disproportionate hit when state fiscal conditions are weak, but experiences more robust increases when state budgets recover. This happens, in part, because state elected officials often view support for higher education as more discretionary than funding for many other programs. The rationale is simple: Colleges and universities can find other sources of income, such as tuition, to compensate for reduced state support. This is not an option available to other state services. As a result, fluctuations in state fiscal conditions often have a greater impact on higher education.

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