Data reported by states in the latest Grapevine survey indicate that initially approved state support for higher education in fiscal year (FY) 2023 reached $112.3 billion, a 6.6% increase over 2022.[1] This is the second time that state fiscal support for all higher education has topped $100 billion. This increase reflects a 27.5% increase over the past five years. Tax appropriations, non-tax support, non-appropriated support, and returns from state funded endowments make up total state support. The Grapevine report provides a first, tentative look at state higher education funding in the new fiscal year. An important caveat is that the Grapevine data do not account for inflation.[2]
Although states allocated less federal funding to support higher education than in the previous two years, an additional $1.2 billion in federal stimulus funding brings the total state fiscal support for higher education in FY 2023 to $113.5 billion, a 5.3% increase over 2022.[3]
Grapevine data are collected annually by the State Higher Education Executive Officers Association (SHEEO) in collaboration with the Center for the Study of Education Policy at Illinois State University. The FY 2023 data summarized online and in these tables represent initial allocations and estimates reported by the states from October 2022 through January 2023 and are subject to change.
From 2022 to 2023, 14 states reported increases of more than 10% in state support for higher education, excluding federal stimulus funding. The states reporting these large increases are Alaska, Arizona, Georgia, Hawaii, Kentucky, Maryland, Mississippi, Missouri, New Mexico, South Carolina, Tennessee, Utah, Vermont, and Virginia. Five states, and Washington, D.C., had decreases in state support, excluding federal stimulus funding: Connecticut, Illinois,[4] Michigan, New Hampshire, and Texas.
Thirty-eight states saw overall increases in state and federal stimulus funding. Twelve states and Washington, D.C., reported an overall decline in state and federal stimulus funding between 2022 and 2023. The 12 states reporting declines are: Connecticut, Delaware, Georgia, Illinois, Michigan, Minnesota, New Hampshire, North Dakota, Texas, Vermont, West Virginia, and Wisconsin. The decreases are caused by reductions in a combination of both federal stimulus and state support in most of the 12 states. However, Delaware, Georgia, Vermont, West Virginia, and Wisconsin saw increases in state support which were reversed by significant reductions in federal stimulus funding.
The Grapevine tables also include data on how total higher education state support allocations were used across two-year public operating, four-year public operating, state financial aid, research, and other uses for FY 2023. While state allocations across each area are not final and include estimates for several states, initial appropriations to each area were as follows:
- $24 billion to two-year public operating (22.1% of state support).
- $56 billion to four-year public operating (49.9%).
- $14.8 billion to state financial aid for all students (13.2%).
- $12.8 billion to research, agriculture extension, hospital extension and medical schools (11.4%).
- $3.8 billion to other uses, including agency funding, private institution operations, and non-credit appropriations (3.4%).
Longer-Term Trends
Longer-term trends in state support for higher education are positive. Excluding federal stimulus funding, state support has increased 16.4% nationally since 2021 and 27.5% since 2018. Note: These data do not account for the impact of inflation, which has risen substantially in recent years.[5]
Only two states, again excluding any federal stimulus funding, had lower state support in 2023 than in 2021 (Connecticut and Wyoming). Likewise, only two states had lower state support in 2023 than in 2018 (Alaska and Wyoming). While multiple-year declines in any state should be of concern, these state counts are relatively low compared to pre-pandemic years.
Federal Stimulus Funding
For the second year in a row, the Grapevine report includes tables on federal stimulus/relief allocations to states that were used for higher education. Funds awarded directly to higher education institutions from the federal government are not included.
Across FY 2020-2023, states allocated $8.8 billion in federal stimulus support to higher education from the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act, the 2021 Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, and the 2021 American Rescue Plan (ARP). If including funds used for capital projects, that number jumps to $10.9 billion in federal stimulus support over the last four years. The full Grapevine report, including tables summarizing the results of the FY 2023 Grapevine survey and a complete dataset of state support for higher education going back to 1980, can be found on the SHEEO State Higher Education Finance (SHEF) website at https://shef.sheeo.org/grapevine.
[1] FY 2023 marks the seventh year Grapevine has included Washington, D.C., in its survey. Washington, D.C., is excluded from all state counts and U.S. totals. The data reported by the District of Columbia, including federal stimulus funding, reveal a 6.2% decline in the last year and a 19.7% decrease in the last two years, but a five-year increase of 42.5%.
[2] While actual inflation data are not available for FY 2023, forecasts suggest the U.S. will face 3.8% inflation over FY 2022. Source: OECD Economic Outlook: Statistics and Projections, Inflation Forecast Indicator https://data.oecd.org/price/inflation-forecast.htm.
[3] Federal stimulus funding was awarded to states for higher education to stabilize state and local sources of funding, and to provide additional resources during COVID-19. Federal stimulus funding excludes funds allocated to public capital projects and any funds (such as HEERF) allocated directly by the federal government to institutions or students.
[4] In Illinois, FY 2022 includes a one-time payment of $250 million to fully address the unfunded liability of the state’s prepaid tuition program, ensuring stability to the program. If this one-time payment were not included, the one-year change in Illinois’ state support would be a $236.1 million increase, or 4.6%.
[5] From December 2021 to December 2022, the Consumer Price Index increased 6.5%. Source: U.S. Bureau of Labor Statistics Economic News Release, Consumer Price Index Summary https://www.bls.gov/news.release/cpi.nr0.htm.
