Stateline Story

U.S. Bill Specifies State Higher Education Spending

  • February 11, 2008
  • By Pauline Vu

New legislation being considered by Congress would force states to spend a minimum amount on higher education based on their past spending - or lose some federal funds. The provision is being called a "dangerous precedent" by critics, but is seen by supporters as a stopgap for rising tuition at public institutions."

One of the biggest factors driving tuition increases at public colleges and universities is states' cutbacks in higher education funding," said Rachel Racusen, a spokeswoman for House Education and Labor Committee Chairman George Miller (D-Calif.), the bill's primary sponsor.

"With the federal government putting money in at the top, it's important that states not take money out at the bottom," she wrote in an e-mail.

The provision, part of the College Opportunity and Affordability Act, would require each state's higher education funding to be at or above the average it spent over the last five years. If states don't commit that amount, they could lose their share of federal money from the $65 million Leveraging Educational Assistance Partnership grant program to help low-income students.

The act, which moved one step closer to giving higher education its most significant overhaul in a decade when the U.S. House passed it on a 354-58 vote Thursday (Feb. 7), boosts grant money for college students and aims to hold down the cost of tuition.

The bill is a reauthorization of the Higher Education Act of 1965 - last renewed in 1998 - and would increase the maximum Pell Grant, a need-based award for college students, from $5,800 to $9,000; bar lenders from giving perks to colleges to get on a "preferred lender" list; create a "higher education price index" to allow students to see how much tuition has increased over time; and place colleges that radically increase tuition on a "watch list."

The bill also includes provisions to lower textbook costs by requiring publishers to disclose the cost of the books when marketing them to faculty, and to stop bundling books with supplemental items such as DVDs and workbooks, which drives up the price.

The Senate passed a similar bill 95-0 in July, though their version doesn't include the state-funding provision.

The Association of State Colleges and Universities (AASCU), which represents more than 400 public institutions, backs the state-spending clause.

"This really is the first time in which the federal government has recognized that the states play the critical role in making college affordable," said Dan Hurley, AASCU's director of state relations. "Higher education in America is primarily a state responsibility, and in the last five years, states have at times absolved themselves of their responsibility."

Over the last decade, tuition at public four-year universities has increased an average 4.4 percent each year after inflation, according to the College Board, and Congress blames the rise partly on states cutting higher education money in years when revenues are low.

The federal government says it is doing its part to help. In September, President Bush signed a bill to provide $20 billion in student loans over the next five years, the largest single boost to college financial aid since the GI Bill in 1944.

But critics contend that the provision in the new bill is not a good idea.

"Once again the federal government is saying that they're the ones that have the most expertise to run education in individual states," said North Dakota state Rep. Rae Ann Kelsch (R), the chair of the National Conference of State Legislatures' (NCSL) education standing committee. "The provision would set a dangerous precedent for the federal intrusion into state policy and the appropriation authority. That's an issue that we as legislators pride ourselves in.

"State officials say one consequence of the requirement would be that in good budget years, legislatures would no longer be generous with higher education money, fearful that if a tough budget year follows they would be forced to spend more than they can afford.

David Shreve, NCSL's federal affairs counsel, said there will be hesitancy on the part of appropriators to increase spending "because it ratchets up the new baselines for the following years."

State higher-education funding usually benefits from a sharp uptick in good budget years. According to the National Association of State Budget Officers (NASBO), during the economic slowdown of 2002, states increased higher-education money only 1.8 percent, but between 2006 and 2007, when state coffers overflowed, the group projected that states increased college and university spending 9.3 percent. During that same period, NASBO estimated that federal support actually fell 8.1 percent.

Unlike the federal government, 49 states are required to balance their budgets.

Miller's aide Racusen points out, however, that the bill would allow the funding clause to be waived if the U.S. Secretary of Education determines there are "exceptional or uncontrollable circumstances," such as a natural disaster or a sudden decline in states' financial resources, but state officials said they would resent having to ask for the secretary's approval.

NCSL and the National Governors Association plan to fight the provision as the House and Senate negotiate the bill in conference committee. NCSL also has been asking state legislators across the country to contact their congressional representatives to remove the funding requirement.

Tags: Education