Higher Education Funding Squeeze

A favorite target for budget cutters in Virginia and other states during the
economic recession has been higher education.  While public institutions of higher education rely on state funding, there are other sources of funds available to them, the most obvious being tuition and fees.  As the number of wealthy alumni grows, there is the potential for increased endowments.  Fundraising campaigns at the University of Virginia, for example, have goals in the billions of dollars and exceed many private institutions.  Contracts with the private sector and government agencies help to grow university research budgets.

There is no denying the fact that colleges and universities in Virginia have been
hard-hit with budget reductions.  Some schools find themselves operating at the level of 2004 state funding when they must meet inflationary cost increases and expected student growth.  There appeared to be hope for the colleges and universities when Governor McDonnell announced a goal of 100,000 more
graduates and in December of last year communicated that he was going to seek
additional monies for higher education.

With the Governor’s support the General Assembly did increase funding for higher education.  Last week, however, the Governor sent college presidents a letter asking them to limit in-state tuition and fee increases to the Consumer Price Index (CPI).  While keeping tuition down is a legitimate concern of parents and students, the limitation means that efforts to expand programs and services will likely be curtailed.

The Commonwealth Institute for Fiscal Analysis in Richmond found in its study that during the time Governor McDonnell has been in office state funding for higher education has not kept up with the CPI.  In addition, the FY 2013 increase in state support for higher education is not even enough to make up for declines in support in FY 2011 and FY 2012 when inflation is factored in.  While the decline in state support for higher education has been a key factor in institutions having to raise tuition and fees in recent years, the limitation of keeping tuition and fee increases to the CPI means that something else will have to go, whether it is programs or classes.  According to the Institute, if Virginia’s funding for higher education had kept up with inflation since FY 2010, then FY 2013 and FY 2014 general fund support for higher ed would have been $1.76 and $1.79 billion,
respectively. 

Instead, the levels were $1.67 billion per year.  Clearly, higher
education is caught in a funding squeeze that is likely to result in a reduction in programs if funding is not increased.