State Funding for Colleges, Universities Hits All-Time High

States are stepping up to invest in institutions of higher education even as federal stimulus funds wane.

February 3, 2022 · Updated on February 3, 2022

Edited by Rebecca Long
State Funding for Colleges, Universities Hits All-Time High
Higher Ed Policy
Photo by tommy / DigitalVision Vectors / Getty Images

  • State support for higher education institutions is on an upward trend.
  • That trend continued in 2022, even with less funds from the federal government.
  • The majority of states increased spending on higher education year-over-year.

State support for colleges and universities this year surpassed $100 billion for the first time.

States allocated a combined $105.5 billion for higher education institutions for the 2022 fiscal year, according to the latest Grapevine report from the State Higher Education Executive Officers Association (SHEEO). An additional $2.25 billion will go to colleges and universities nationwide thanks to federal stimulus money from programs like the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Response and Relief Supplemental Appropriations Act, and the American Rescue Plan.

This 2022 allocation continues an upward trend in state funding over the past five years, according to the SHEEO report. State support has grown 21.4% since 2017 without counting support provided through the stimulus bills.

"This large increase is partly due to states reversing funding cuts implemented between 2020 and 2021 during the pandemic-induced economic recession," researchers behind the report said in a statement. "In some cases, states temporarily replaced state higher education support with federal stimulus funding in 2021; in 2022, those states were again able to fund higher education using state dollars."

These gains aren't in a select few states, either. Only five states, again excluding any federal stimulus funding, had lower state support in 2022 than in 2021.

How Are Colleges Spending the Money?

Grapevine data shows that most funds go toward operating expenses at public four-year universities. State legislatures designated $48.7 billion for these schools in 2022, or 50.4% of all state support.

Meanwhile, legislatures allocated 22.8% of state support for two-year colleges, 13.4% for state financial aid for students, 10.3% for research and medical schools, and 3.1% for "other operations," including private institutions and non-credit operations.

These proportions have not changed drastically year-to-year on a national level, according to the data.

Largely in response to the COVID-19 pandemic, the federal government has awarded billions to states over the past two years for colleges and universities.

According to the Grapevine report, the federal government allocated $1.38 billion to 21 states in 2020. Forty-five states received $3.9 billion in 2021, and 35 states received $2.25 billion in 2022.

Not All States Increased Support For Higher Ed

While the overwhelming majority of states have dedicated more funds in recent years to colleges and universities, there are some stark regional differences.

The Grapevine report breaks the country down into eight regions: New England, the Mideast, the Great Lakes, the Plains, the Southeast, the Southwest, the Rocky Mountains, and the Far West.

From 2021 to 2022, the Rocky Mountains region (Colorado, Idaho, Montana, Utah, and Wyoming) saw the largest increase in state funds. Colleges in these five states are slated to get a 23.3% increase in funds from last year.

However, funding in the Far West (Alaska, California, Hawaii, Nevada, Oregon, and Washington) has grown the most since 2017. These states dedicated 46.9% more funds in 2022 than in 2017. California led the way with a 54% increase during these five years.

The region with the least growth since 2017 is the Mideast (Delaware, Maryland, New Jersey, New York, and Pennsylvania). New York is weighing the region down, as the state has only grown its budget for higher education by 3.9% over the past five years.

Overall, state funding for most colleges has increased since 2017. In 2022, only four states reported a five-year decline in state funding. Those states were Alaska, Mississippi, North Dakota, and Wyoming.