State support for higher education saw a significant jump this year, rising more than 10 percent from 2023 — even though the share of that money provided by the federal government dropped 50 percent.
That’s according to the annual Grapevine report released Thursday by the State Higher Education Executive Officers Association, or SHEEO. The data reflect a continued upward trajectory for state investment in higher education, with a 36.5-percent increase in support nationally over the last five years, not adjusted for inflation.
Pressure from politicians to keep tuition rates at public colleges flat helped drive some of the increase for the 2024 fiscal year.
“States are needing to increase funding more, and that’s to make up for declines in tuition revenue and institutions’ inability to raise tuition rates to meet inflationary costs,” said Kelsey Kunkle, a policy analyst for SHEEO. Several states have agreed to increase funding for higher ed in order to keep tuition rates more affordable, she said.
The data are not adjusted for inflation and provide a preliminary look at allocation of federal stimulus money and state appropriations. The report largely measures money allocated between July 1, 2023, and June 30, 2024, based on numbers reported between October 2023 and January 2024. The data will be adjusted to account for inflation in the coming months, likely lowering the estimated 10.2-percent increase slightly, Kunkle said.
“Since Grapevine has been published, the average is about 5.7 percent of an increase” per year, Kunkle said. “With that 10-percent increase being from state support, excluding stimulus, that’s almost double the average for the last 30-some years.”
Almost half of states’ $126.5 billion in total higher-ed appropriations went toward the operating budgets of public, four-year institutions, according to the report. This is fairly typical, Kunkle said, and is used to cover day-to-day operations of a college.
State leaders are going to have some really hard choices to make.
The sizable drop in federal money comes as one-time stimulus funds from the pandemic era dwindle.
“We’re still in that period where federal stimulus is tapering off and those financial cushions that states had — whether that was to fund higher education or whether they were funding other areas in their budgets and didn’t have to cut funds from higher education — those are going away,” Kunkle said.
This may spell trouble for several states still relying on millions of dollars in federal aid to pay for higher ed, including Connecticut, where 15 percent of the state’s 2024 higher-ed appropriation came from stimulus funding, according to the report’s data. The ramifications are already beginning at the University of Connecticut, where leaders have proposed a 15-percent budget cut amid a projected $70-million deficit in the coming year.
“A number of states that have had chronic budget issues over the years, they’re starting to have projections for 2025 that it’s going to be difficult moving forward,” Kunkle said. “State leaders are going to have some really hard choices to make.”
Pennsylvania and Vermont are among those predicted to struggle with the loss of federal money. Pennsylvania State University is grappling with a proposed $94-million cut in its fiscal year 2026 budget as state funding lags behind inflation rates; much of that reduction would affect Penn State’s regional campuses, while the flagship in State College is expected to see an $11-million cut. In Vermont, state support for higher ed increased just 1.1 percent between 2023 and 2024, while federal stimulus funds decreased 79 percent.
Beyond the handful of states that are in trouble, though, the outlook for state investment in higher education is positive, Kunkle said. She pointed to a historic, $3.9-billion one-time investment in a research endowment fund the Texas Legislature made in November 2023.
“Although these Grapevine data are not adjusted for inflation, we are pleased to see what these projections look like for 2024,” Kunkle said. “We’re just going to have to keep that in mind as we are moving forward into 2025, as we might see a very different year.”
