A Different Kind of Recession

Over the past three decades, governors and legislators have relied on a standard response to recessions: steep cuts in state higher education budgets and replacement of state funds with sudden, large and repeated increases in student tuition and fees. In The Fiscal Crisis of the States: Lessons for the Future, the definitive study of the states in the early 1990s recession, Steven D. Gold found that "higher education took the worst beating of any major spending category," precipitating average tuition increases of 36.6 percent between 1989-90 and 1992-93 at four-year public colleges and universities.

This special supplement to the Winter 2003 issue of National CrossTalk offers a snapshot of round one of the current recession and its impact on state higher education budgets enacted and revised in the last half of 2002. It is a composite drawn from the most credible national sources of higher education information in the states at the beginning of the 2003 legislative sessions. Its principal focus is on three key policy variables: state appropriations, tuition and required fees, and state-funded student financial aid. I urge governors, legislators and higher education leaders to give explicit attention to these variables, for this is not just another recession.

Most national and state observers agree that the reduced funding and increased tuition documented here represent only the opening round of what is likely to be a series of painful adjustments to diminished state revenues. No major state services or programs are likely to be spared. It is too early to know whether higher education will be singled out for disproportionate cuts and its students targeted by a series of precipitous tuition increases, as was the case in the early 1990s recession. However, in the current demographic and economic environment, I am convinced that to follow this earlier standard pattern would be shortsighted and disastrous educational and social policy. My reasons:

  • Higher education enrollments are projected to grow each year in this decade, culminating in the largest high school graduating class in the nation's history in 2009. This is the first time in the modern era that a state economic downturn coincided with a time of projected enrollment increases. Even without a recession, many states would have had difficulty accommodating the increased college enrollments.

  • The students who make up these growing high school graduating classes are concentrated heavily in the south and west and in states where the child poverty rate is high. They are the poorest as well as the most ethnically and racially heterogeneous generation of students to appear on the doorstep of American higher education. Surveys reveal that their college aspirations are very high.

  • We now live in a knowledge-based global economy. Without college-education and training beyond high school-the prospects are that these young Americans will not find employment that supports a middle class life. The prospects for states and communities whose citizens and workers lack college level skills are equally poor.
State leadership and priorities matter, and they matter most in a time of severe budget constraints. Recent history tells us that even when cuts are unavoidable, state and higher education leaders can do much to protect public priorities. For example, in the 1990s recession, the Florida State University System took steps to preserve access. In contrast, California's State University System increased costs and prices, reduced productivity, and cut access by 50,000 students.

I do not know of any formulas or cookie cutter solutions for the difficult issues the states and the colleges face, but can offer four principles for their consideration:

  • When higher education is singled out among state services and programs for disproportionately large cuts, large tuition increases and damage to access inevitably follow.

  • To preserve access, tuition increases should be limited to what is necessary to assure institutional capacity to educate students-classes and sections, for example.

  • No matter how severe the budget problems, tuition increases should be accompanied by increases in financial assistance for students with need.

  • Every state has a set of institutions-most often community colleges-that serve as an entry point for many first-time students, particularly low-income students, as well as for retraining the unemployed and others seeking to upgrade skills. These institutions are the state's educational "safety net." The protection of their capacity and accessibility should be among the highest public priorities, particularly in economic downturns.
For the states, for the nation, for the next generation of Americans, the stakes are much higher than in past recessions. Our colleges are resourceful; most have surmounted the problems of past economic downturns and are likely to do so again. The future of educational opportunity is more problematic.

Patrick M. Callan, President
National Center for Public Policy and Higher Education