DataPoints: State funding for higher education

Total state support for higher education increased by 4.3% for fiscal year 2025, based on data recently released by the State Higher Education Executive Officers Association (SHEEO) in its annual Grapevine report.

However, after adjusting for the effects of inflation, the increase was a more modest 1.3%. The level of support from FY 2019 (prior to the pandemic) to FY 2025 increased 38% (See Figure 1). Even after adjusting for inflation, state support increased by 9.4% across that time. Figure 1 demonstrates the impact that Covid had on the level of state support for higher education for FY 2021, where support decreased nearly 1% from FY 2020 to FY 2021 after adjusting for inflation.

While the overall trend for state support increased between FY 2019 and FY 2025, there was significant variation across states. After adjusting for the effect of inflation, Alaska’s support for higher education decreased by 17.3% between FY 2019 and FY 2025, while Virginia saw a 41.8% increase. Twelve states saw a decrease in inflation-adjusted support across this time period.

The range of variation was smaller for the most recent year-over-year change, ranging from a low of a 10.4% decrease for Vermont and a 28.4% increase for Nebraska. Half of the states had a decrease in inflation-adjusted support for higher education in FY 2025 compared to FY 2024.

Since 2019, the Grapevine data has collected data on “details on the allocation of total state support across different areas.” The data set includes the following categories of state support: 1) public two-year colleges; 2) public four-year colleges; 3) state financial aid; 4) research, agricultural extension and medical appropriations; and 5) other uses, which include agency funding, operational funds for independent institutions, and non-credit appropriations.

Colleges self-define the public two-year and public four-year sectors, but it appears that baccalaureate-granting community colleges in states with large numbers of them are included among public two-year colleges.

As shown in Figure 3, nearly half of all state support for higher education nationally goes to public four-year colleges (between 48.4% in FY 2021 and 49.5% in FY 2019). The public two-year college share ranged from 20.5% for FY 2024 to 22.0% in FY 2022. State-supported financial aid averaged 12.1% of the state support, while research, agricultural extensions and medical appropriations averaged 11.5% across the time period.

While the total percentage of state funds that went to public two-year colleges was 21.4% in FY 2025, there is wide variation across states, ranging from none in Alaska and the District of Columbia, to 38.1% in California. Between FY 2024 and FY 2025, 28 states saw a decrease in the public two-year college share, while only 20 states increased the sector’s share.

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