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By Paul Bradley  /  
2010 February 8 - 12:00 am

COVER STORY: A Dearth of Dollars

A group of Florida business luminaries recently stood before a bank of television cameras and microphones and unveiled an ambitious wish
list aimed at reforming public education from top to bottom in the country’s fourth most populous state.

Led by former Gov. Jeb Bush, the Florida Council of 100 and the Florida Chamber of Commerce called for, among other things, doubling spending on higher education over five years and boosting the academic qualifications for recipients of the state’s popular Bright Futures scholarship program.

“This is about ensuring that the American dream continues,” said Susan Story, chair of the Council of 100, a business group that advocates on behalf of the state’s business community.

But as legislatures in Florida and elsewhere around the country convene to shape their fiscal year 2011 spending plans, the aspirations of educators and business leaders are colliding with the grim reality
of the damage left behind by the deep economic recession.

At a time when President Obama has called for producing 5 million more community graduates by 2020, and
two-year colleges cope with record-high enrollments, higher education spending is withering across the country.

A downward trend in higher education spending has taken hold, and colleges are struggling to hire more professors and adjuncts and to provide needed services
to students. Some colleges are capping enrollments and turning students away.

Meanwhile, lawmakers are confronting difficult choices in closing huge budget gaps, now and for the foreseeable future. Higher education – always a favorite target of budget-cutters because of its ability to raise tuition – will be on the chopping bock.

How bad is it for states struggling to make ends meet?

Back-to-Back Reductions

According to a report by the National Governor’s Association and the National Association of State Budget Officers, states were forced to reduce spending by 4.8 percent in 2009 and 4 percent in 2010, marking the first time that state spending has been reduced in back-to-back years.

“These are the worst numbers we have ever seen in the decades of putting together this report,” said NASBO Executive Director Scott D. Pattison. “States have been forced to lay off and furlough employees, raise taxes, drain rainy day funds and sharply cut state spending in ways that impact every part of state government.”

States are resorting to creative ways to close budget gaps and stave off Draconian budget cuts to higher education and other state services.

In Kentucky, for example, Gov. Steve Beshear is betting on gambling to avoid deep cuts to education in the state. The governor has proposed expanding gaming, a move he said would raise an estimated $780 in state revenue. Even with the added cash, however, state spending on higher education would be cut by 2 percent under Beshear’s budget proposal. Without it, higher education spending could be reduced by 14 percent in 2011 and 34 percent in 2012, the governor said.

In his annual budget message, Beshear argued that gambling revenue would help the state reverse a trend of relying on one-time money for expenses that continue over time.

“It will provide a reliable source of income we can use year after year after year to make investments in the institutions and people of this state, to strengthen our efforts to emerge from this recession not shell-shocked and shattered, but ambitious and able,” he said.

Closing Gaps with New Taxes

But legislative leaders in Kentucky say the gambling plan has little chance of passing.

In New York, Gov. David Paterson, facing a $7.4 billion budget gap, is proposing $212 million in cuts to higher education in his proposed budget. He is also backing several new taxes, including one on surgary beverages, a levy that would add 12 cents to the cost of a can of soda, and an extra 67 cents for a two-liter bottle of soda.

Paterson is proposing $56.7 million in savings by slashing direct aid to the state’s community college system. Direct aid to the SUNY and CUNY college systems would be reduced by about $285 per full-time student — from $2,545 to $2,260.

At the same time, Paterson would cut $50 million from the state’s Tuition Assistance Program, cutting the grant to every state recipient by $75, and reducing the maximum amount that community college students can receive from $5,000 to $4,000 a year.

The dismal budget outlook solidifies the downward trend in higher education spending, recently documented by the Grapevine, a report which annually compiles and releases data on state support for higher education.

Issued by the Illinois State University Center for the Study of Education Policy and the State Higher Education Executive Officers, Grapevine reported that total state support for higher education in 2009-10 was $79.4 billion, a decline of 1.1 percent from a year earlier.

Without $2.4 billion in federal stimulus dollars, the reduction would have been 3.5 percent over one year and 6.8 percent over two years. The numbers reflect overall state appropriations, and do not include tuition revenue.

The data for fiscal 2010 showed that 29 states experienced declines between fiscal 2009 and fiscal 2010. Without the addition of stimulus money, 37 states reported declines.

The reductions stand in sharp contrast to the upward trend higher education experienced when the economy was booming. Between 2005 and 2008, state support for higher education grew by 24 percent, from $65.1 billion to $80.7 billion. The report found.

“The overall downward trend underscores the limited capacity of most states to sustain higher education funding at a time when public policy emphasizes the need to increase the education attainment of the population and when the demand for post-secondary education — as measured by the proportion if individuals in the 18-24 age category attending college — is at an unprecedented high,” the report said.

In a statement released with the report, Paul E. Ligenfelter, president of SHHEO, said, “The financial data for 2009 and 2010 make it clear: higher education in the Unitead States is at a turning point. Enrollment demand has grown relentlessly for more than a quarter century, from 7 million in 1980 to 10.8 million in 2009, with no signs of stopping. Even with the substantial increases in state and federal funding for higher education, public financial support has not generally kept pace with enrollment growth and inflation. These trends have contributed to persistent increases in tuition and fees, and in some states, to subtle, less visible reductions in opportunity and quality.”

Ligenfelter added that the long term outlook is bleak for three reasons:

More than 5 percent of all state appropriations were in federal stimulus dollars, which are now exhausted or nearly so.

State revenues have fallen at an unprecedented rate, and a full recovery is expected to take many years.

Recent enrollment increases likely understate student demand, as many students who would otherwise enroll are deterred by tuition increases and budget-driven enrollment caps and course cancellations.

“But money and enrollment demand are not the only issues,” Ligenfelter said. “Public higher education, and education at every level, must improve its effectiveness in order to help Americans meet the challenges posed by the aging of America’s best-educated cohort and by a global economy where other nations are gaining on or passing the U.S. in educational attainment.”

“These are serious and complicated problems. We can and must solve them. They will be solved, not by throwing money at them or by wishful thinking, but by confronting the fundamental issues of growing educational needs and limited resources. No country has ever improved the quality and scope of its educational system by persistently reducing its budget. While some may wish it is possible, it is not.”

Lingenfelter concludes that the stakes could not be higher.

“Complacency about the adequacy of public higher education puts the future of the American people in jeopardy – economically, intellectually, morally. Public higher education is not an optional priority. The fundamental well-being and future prosperity of the United States depend on a reinvigorated partnership between the public and higher education and an unwavering commitment to educational excellence and student success.”

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