Higher Education Spending and the State Fiscal Stabilization Fund, Part 3

Download or read book Higher Education Spending and the State Fiscal Stabilization Fund, Part 3 written by Jennifer Cohen and published by . This book was released on 2011 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: By late 2008, the United States was in the midst of its most severe economic recession since the 1930s, brought on by a collapse in real estate prices and exacerbated by the failure of many large banks and financial institutions. Heeding calls from economists, Congress and the Obama administration passed an historic law in early 2009 to stimulate the economy with $862 billion in new spending and tax cuts. This law, the American Recovery and Reinvestment Act of 2009 (ARRA), included nearly $100 billion in one-time funding for new and existing education programs, an historic sum given that annual appropriations for federal education programs at the time were approximately $60 billion. The largest single education program included in the law was the State Fiscal Stabilization Fund, a new $48.6 billion program that provided direct grant aid to state governments in fiscal years 2009, 2010, and 2011. The program was designed to help states maintain support for both public K-12 and higher education funding that they might have otherwise cut in response to budget shortfalls brought on by the economic downturn. This paper examines how eight states and their public institutions of higher education used the funds to support higher education and what will happen to these institutions' budgets in fiscal year 2012 when the funds are no longer available. It uses information collected through phone interviews with officials in state higher education offices and at public institutions of higher education to determine how states distributed the funds and how institutions actually used them. Using this information, some general conclusions can be made about how the ARRA funds actually affected higher education in America and what is likely to happen once the funds are no longer available. While every state used the funds differently, the author and her colleagues find that the states they studied used the vast majority of their funds to support salaries and benefits for instructional staff. And while these funds played an important part in keeping these institutions of higher education financially solvent in 2009, 2010, and 2011, many institutions will face budgetary challenges in 2012 and beyond. This paper is the third in a three-part series examining these trends. (Contains 17 notes.) [For related reports, see "The State Fiscal Stabilization Fund and Higher Education Spending in the States: Part 1 of 4. Issue Brief" (ED540794); and "The State Fiscal Stabilization Fund and Higher Education Spending: Part 2 of 4" (ED540795).].