For state tax collectors, the recession is now a distant memory. For the colleges and universities that rely on state funding, it's still happening.
State tax revenue rose 6 percent last year, the third consecutive increase, the U.S. Census Bureau reported this week. States took in $846 billion -- $140 billion more than in 2010, the nadir of the Great Recession, and almost 9 percent more than their pre-recession peak.
Apparently nobody told the people who fund public colleges and universities. State lawmakers responded to the revenue drops of 2009 and 2010 by cutting money for higher education, from $79 billion in 2008 to $71 billion two years later. That made some sense: It's easier to strip money from colleges than prisons, elementary schools or Medicaid.
Then a funny thing happened. After leveling off in 2011, education funding dropped 7 percent further the next year. Even with a small bump in 2013, state spending on higher education remained 13 percent lower than in 2008. The tax revenue came back. The money for colleges and universities didn’t.
This latest squeeze in state funding comes at a challenging moment for the U.S. higher education system. The cost of a bachelor's degree rose 46 percent from 2000 to 2010, and default rates on student loans are at their highest level in almost two decades. Meanwhile, cost-cutting risks turning tenure into a memory at most schools.
What's going on here? One explanation is that the recession only accelerated a trend that's been happening for more than a decade: the gradual and long-term withdrawal of state money from higher education. In 2002, 11.5 percent of all state tax revenue went to universities and colleges. Last year, it was 8.1 percent.
Part of that trend reflects the growing demands of health care and incarceration. But part of it reflects a dangerous gamble by state policy makers, who bet that you can cut education spending without causing lasting harm to the economy, to say nothing of civil society.
Now that tax money is coming back, lawmakers have a chance to revisit that calculation. Last year's bump in higher-education spending could signal a turnaround. Even if it is, those lawmakers have a lot of distance to make up.
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