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Contact: Heather Jack
Voice: 408-792-3144
E-mail: hjack@highereducation.org

March 4, 2003

NEWS ADVISORY

STATE SHORTFALLS PROJECTED THROUGHOUT THE NEXT DECADE
HIGHER EDUCATION BUDGETS LIKELY TO FEEL CONTINUED SQUEEZE


San Jose, CA-- The financial problems of public higher education are likely to continue beyond the current economic downturn according to projections released by the National Center for Public Policy and Higher Education.

Even after recovery, states are likely to face very tight budget conditions over the next decade, and financial pressures on higher education will be severe. The projections show that higher education will face stiff competition as the demands on state resources for other programs take a larger share of the overall budget.

These findings are based on a study of the revenue and expenditures needed in each state to maintain current public service levels over the next eight years within current tax structures, using conservative estimates of expenditures. If economic growth is slower than anticipated, the outlook for support of higher education will be even worse.

Based on the projections, all but a handful of states will find it impossible to maintain current levels of public services within their existing tax structures. Forty-four states will face budgetary shortfalls by year eight (see Table 1 in Policy Alert), with twelve states facing a shortfall of 5 percent or more. The primary reasons are that economic growth is expected to be more balanced than it was in the late 1990s, and increases in sales tax revenues are expected to slow considerably, according to the findings.

Dennis Jones, author of the Policy Alert, states, "What these shortfalls suggest is that states will continue to face fiscal stress even after their economies strengthen." For higher education this picture is even worse. Higher education's share of state budgets will continue to get smaller, according to these projections.

The projections were developed for the National Center for Higher Education Management Systems by the Rockefeller Institute of Government. They are summarized in Policy Alert, a National Center publication for state policy makers (www.highereducation.org). Detailed projections and additional state-by-state information can be obtained at www.higheredinfo.org.

The National Center for Public Policy and Higher Education is an independent, nonprofit, nonpartisan organization. It is not affiliated with any government agency, political party, or college or university. The National Center conducts policy research and fosters public awareness and discussion of public policy issues affecting education and training beyond high school. The purpose of the National Center's studies and reports is to stimulate public policies that will improve the effectiveness and accessibility of higher education. Established in 1998, the National Center receives continued, core financial support from a consortium of national foundations that includes The Pew Charitable Trusts, The Atlantic Philanthropies, and The Ford Foundation.

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