Federal relief aid is complicating budget season for some public colleges

Dive Brief:

  • Federal coronavirus relief aid meant to cushion the pandemic’s financial blow could affect the future budgets of higher education institutions in some states. 

  • Lawmakers in Florida and Iowa have cited federal aid as a reason to potentially scale back public higher education funding. 

  • Additional complications could come from requirements that states maintain their public education spending in exchange for receiving certain forms of relief aid. 

Dive Insight:

Congress has approved three major coronavirus relief bills, sending billions of dollars to colleges. The latest, the American Rescue Plan, sets aside about $40 billion specifically for higher ed institutions, though the U.S. Department of Education has yet to release it. 

Policy experts say the funds are necessary to shield institutions, particularly public schools, from the pandemic’s financial fallout. They predict that cuts to colleges’ state appropriations would have been much more drastic without it. 

However, lawmakers in some states see the federal cash infusions as a reason not to fund colleges at higher levels. Legislators in Iowa’s House of Representatives don’t want to increase funding for the state’s regent board, according to a student media report. House Republicans justified the move by saying the federal aid could compensate for the funding increase the regents requested. 

Lawmakers in the Florida Senate wanted to base budget cuts for colleges in the state on the amount of aid they got from the first relief package, according to local media. The legislature has since backed off most major cuts, the Miami Herald reported, though it plans to stop funding certain financial aid programs.

Colleges could be losing out on state funding in another way. The federal relief packages require states to keep public education funding at certain levels if they accept federal aid for K-12 schools. They must do the same in exchange for education-related emergency funding that governors have the power to distribute. The Education Secretary has the power to waive the mandate, but it’s unclear whether he would do so.

This has emerged as a problem in Texas, where the governor is refusing to release billions of dollars in relief money to K-12 school districts until the state invests at least $1 billion more in higher ed, the Texas Tribune reported. Texas officials are asking for an exemption from the higher ed funding mandate, according to the publication, which also reported that the share of funding to colleges shrank as K-12 spending increased.

A department spokesperson did not respond to a question Tuesday asking if any other other states sought waivers.  

Federal funding has helped to stabilize public college budgets, according to the annual Grapevine report from Illinois State University’s Center for the Study of Education Policy. The analysis counted a $300 million increase in federal funding year over year.

Despite receiving federal aid, it’s “critically important” that states maintain their higher ed funding right now, said Tom Harnisch, vice president for government relations at the State Higher Education Executive Officers Association. Colleges missed out on key auxiliary revenue because of the pandemic and more losses are expected, he said.

Harnisch said the federal relief was designed to help maintain higher ed investments. “We can’t have state lawmakers gaming the system.”

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