Stimulus bill shortchanges colleges and universities
Despite providing over $2 trillion in aid for the U.S. economy, the recent stimulus bill passed in Congress only offers $14 billion to colleges and universities, far beneath the level of need that institutes of higher education will face in the coming months.
The American Council on Education (ACE), an association of college and university presidents, had asked for $50 billion in a March 19 memorandum to Congress along with 10 other higher education groups. The proposal included cash aid for students as well as emergency funding to cover coronavirus (COVID-19)-related budget shortfalls.
When Congress passed the much lower amount of $14 billion on March 24, ACE called the funding “woefully inadequate” in a written statement.
ACE estimates that, based on the funding formulas included in the stimulus bill, the USF system will receive roughly $35 million from the bill. That’s certainly not nothing, but it’s only 2 percent of USF’s current operating budget of $1.8 billion.
What makes this shortfall particularly disappointing is the unique role that the federal government could play in keeping colleges and universities afloat. Facing economic downturns, Congress can borrow money at low interest rates to smooth over financial hardships.
Many state governments, including Florida, don’t have the same flexibility. Their state constitutions require them to keep a balanced budget, meaning they can’t take on debt to pay for services. At the same time, recessions cause people to lose income, buy fewer goods and move less frequently, leading to less tax revenue. As a result, state governments are pushed to make steep cuts in programs like higher education.
After the Great Recession in 2008, that’s exactly what happened. Per figures from USF’s operating budgets, state appropriations for USF peaked in 2008 and declined dramatically through 2013. During the five years following the financial crash, the state government cut funding for USF by over a third, from $371 million in 2008 to $247 million in 2013.
One potential impact of these cuts is an increase in tuition. Over the 2008 to 2013 period, USF’s funding from tuition and fees rose sharply from $137 million to $235 million, a 71 percent increase. Faced with growing need and limited resources, universities passed costs onto students.
The economic problems caused by COVID-19, however, could be much deeper than even the lowest dip of the Great Recession. Unemployment from the 2008 crash maxed out at around 10 percent, while projections from the Federal Reserve suggest COVID-19 could leave up to 30 percent of U.S. workers out of a job.
As families anticipate major cuts to their incomes and state governments face big budget shortfalls, increasing tuition will neither be fair nor sufficient in giving universities emergency cash. Schools could instead find themselves pushed to take more drastic cost-cutting measures, like increasing class sizes or shifting from full-time to part-time faculty.
In short, COVID-19 imperils all of the usual funding streams for colleges and universities. Because of its power to borrow and spend money during economic downturns, the federal government is uniquely positioned to help these institutions weather the storm.
While it’s hard to guess how much universities might lose out, following ACE’s proposal of $50 billion would be a good starting point. Its memo asked that a quarter of these funds go directly to students as direct cash aid. The rest would be allocated to universities on a per-student basis to reimburse losses like tuition refunds and cover new expenses like technology upgrades for online learning.
America’s higher education system can’t afford to weather this storm on its own. The unprecedented crisis of COVID-19 merits a bold response by federal lawmakers.
Nathaniel Sweet is a senior majoring in political science.