Public Institution and University System Financial Conditions Survey

This report provides an overview of current financial conditions in public higher education. Using such metrics as funding levels, budget cuts, strategies for cost reductions, creative board actions, tuition and financial aid levels, enrollment projections, private support, and current board practices, we have tried to capture the essence of the challenges college and university boards are facing and how they are responding.

As the economy continues to dominate the news nationally, states are cutting, limiting, and redistributing resources. According to the Center on Budget and Policy Priorities’ State Budget Troubles Worsen, “47 states faced or are facing shortfalls in their budgets for this and/or next year.” The Center’s March 2009 report also indicated that 2009 mid-year shortfalls of $53 billion are plaguing the states. In this economic climate, states are facing severe budget deficits that are directly influencing educational revenue and expense streams for public higher education.

Several senior administrators have weathered previous recessions and budget downturns in the early 1980s and early 1990s. There are fears, however, that this recession may be worse than any economic downturn since the Great Depression. Federal dollars from the Obama Administration will help. But with the length and depth of the current recession unknown, public college and university governing boards, their chief executives, and other senior administrators will face difficult challenges and choices.

The current fiscal downturn in the nation and in our states is of serious concern to policymakers and higher education leaders, not only for its effects on colleges and universities, but also for its effects on students and families. The National Center for Public Policy in Higher Education (NCPPHE) recommended in its March 2009 report, Challenge to States: Preserving College Access and Affordability in a Time of Crisis,

in the immediate crisis, the leadership of governors, legislatures, and governing boards is critical. They must devise and implement strategies to preserve college opportunity while stimulating innovations to prepare for a future that will require enhanced access, quality, cost-effectiveness, and productivity.

In light of the economic realities and fiscal constraints placed on higher education, it is arguable that public higher education is in a critical position to be dramatically altered for future generations. Decisions will not likely be incremental; rather, for public institutions and systems to thrive, transformational change will be required to sustain fundamental needs and interests.

All stakeholders, especially state policymakers and higher education leaders, must come together to accept ownership and responsibility to create effective and responsive public policies that advance state agendas and public workforce needs. Those who will lead public higher education through this crisis must also keep a focus on the future—on the strategic choices that must be made to transform their institutions while addressing the all-important priorities of the state public agenda.

As we prepared this report, we were cognizant that state fiscal conditions are volatile. Many experts are predicting that conditions will worsen as the year continues. We hope that this turns out not to be the case. But based on what several survey respondents project at this point and the fact that state tax collections will lag at least one year behind any economic recovery, we fear that funding for public higher education will indeed worsen from the already declining situation presented in this report.