Report Proposes Federal Matching Grants for State Higher Education

As Congress begins debating the reauthorization of the Higher Education Act, proposals to change how public colleges get their federal money are starting to pop up.

On Wednesday, the American Association of State Colleges and Universities released a report recommending a new federal block grant to the states for higher education. The goal of the proposed program is to give states some incentive to preserve and even raise the amount they spend on colleges, which has been in decline, and also to strengthen the federal commitment to affordable higher education.

The formula for the additional federal money would be based on a comparison of a state’s per-student appropriation and the maximum Pell Grant.

To qualify for the bonus money, the state would have to provide a per-student appropriation equal to half of the maximum Pell Grant. At that level, the federal government would give the state another 25 cents for each dollar of state money.

“The more fiscal support states provide per … student, the higher the federal match rate, with the peak match reaching $0.60 for each dollar of state investment,” the report proposes. Based on figures for the 2012 fiscal year, Colorado, for example, would receive a block grant of about $1.7-million, while California would get about $1.2-billion.

While the formula would serve as a sort of de facto maintenance-of-effort provision, the additional federal dollars should come largely without strings attached, the report recommends.

“The integration of strong federal financial incentives will encourage governors and legislative leaders to reconsider cutting higher-education funding and raising tuition as a budget-balancing mechanism,” says the report, which was paid for by the Bill & Melinda Gates Foundation, through its Reimagining Aid Design and Delivery project.

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