State and Private Funding of Higher Ed Increase

State funding for higher education exceeded $100 billion for the first time in the current fiscal year, according to the Grapevine Report, an annual report produced by by the State Higher Education Executive Officers Association and Illinois State University. This preliminary report shows projected spending for the current fiscal year, which ends June 30, 2022, which corresponds to the current academic year. All in all, this represents the largest increase in state higher education funding since the Great Recession in 2008.

Not including federal stimulus funds, state support for higher education increased by 8.5% from the previous year. Factoring in stimulus funding, the year-over-year increase is 6.5%. Needless to say, state-by-state variations are large, with 32 states increasing funding and six increasing funding by more than 10%. Of the 18 states that did not increase funding, 13 can attribute the decline in funding to decreases in federal stimulus funds. Only five saw actual reductions in state funding.

Where is the money going? Again, the breakdown varies by state but nationally, about half went to four-year colleges, almost one quarter to two-year colleges, and the remainder to agricultural extensions, medical schools, state financial aid programs, research and other programs.

At the same time, the CASE Voluntary Support of Education report found that charitable giving to US colleges and universities increased almost 7% last year. Although the increases were across the board-- all donation sources and purposes tracked by the survey showed increases-- some of the increase can be tied to a short list of large donations including those by MacKenzie Scott.

Alumni giving rose by more than 10%, and donor advised funds-- which have been fueled by tax law changes and stock market gains-- gave more than corporations for the first time. Charitable gifts to colleges and universities are often restricted to specific purposes. Last year, unrestricted gifts, which can be used for any purpose the recipient wishes, rose by a remarkable 30%, again largely due to Scott's gifts.

What remains to be seen is what the actual bottom-line benefit to students turns out to be. Not only are the state numbers preliminary-- since the survey uses projected expenditures, not actual-- but none of these account for inflation. With the CPI increasing by about 7% over the past year, it's possible that some of these increases will result in status quo spending.