Higher ed spending rose in 2020. But what comes next?

State appropriations for higher education grew by 5 percent in fiscal 2020 over the prior year, according to the just-released Grapevine survey, the biggest such spending jump in five years. And only three states reported a decline in higher education funding from the prior year. This represents the second year of sustained gains across the nation—a big drop from the 10-18 states reporting declines in the previous three years.

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These higher education spending data emerge from a wave of modest increases in state appropriations in recent years, reflecting ongoing recovery from the depths of the Great Recession of 2008. Total state spending grew 5.7 percent in fiscal 2019, just a hair above the 33-year historical average increase, and well above 2018’s 3.4 percent bump, according to a recent report from the National Association of State Budget Officers. 

The headline increases in FY 2019: 

  • Infrastructure/transportation 8.9 %

  • Public assistance 5.9 

  • Medicaid 4.8  

  • K-12 education 4.7

  • Corrections 4.1

  • Higher education 3.5

Regionally, the far west and Rocky Mountain west outpaced the rest of the nation, with only the southwest states posting a 0.9 percent decline in spending from all sources. 

But might cautious policymakers hit the brakes in coming years, perhaps dialing back on the initially approved fiscal 2020 state higher education budgets reflected in the Grapevine survey? 

Analysts are still examining to what extent recent statewide and higher education appropriations increases may flatten in the future. “State spending is expected to slow in fiscal 2020,” the NASBO authors concluded, as governors and legislatures consider “structural balance, long-term sustainability, and strengthening their reserve funds.”

More broadly, a recent Wall Street Journal survey of private-sector economic forecasters found that 65.3 percent thought US manufacturing was in a recession—and they expected further economic weakness moving forward, citing “the uncertain trade picture [and] weak global growth” exacerbated by an “election cycle swoon.” Stay tuned.

Access the Grapevine “Results for 2020” and data tables. Grapevine is a project of the Center for the Study of Education Policy at Illinois State University in collaboration with the State Higher Education Executive Officers Association (SHEEO).

And check out NASBO’s “2019 State Expenditure Report: Fiscal Years 2017 – 2019.”

Here’s the October 2019 "Wall Street Journal Survey of Economists."

State of the StatesNeal JohnsonState Spending, Higher Education