The COVID-19 pandemic has left millions out of work, putting them in uncertain financial circumstances. They are not the only ones. State revenues are down while costs are up, leaving state lawmakers grappling with how to prioritize the spending of the money that they have available for essential services in the coming year.

When state legislatures meet over the next few months, many will have to make tough choices about their budgets during the continuing pandemic. A lot of worthy programs and initiatives will be on the table.

Lumina Foundation and the Bill & Melinda Gates Foundation are urging state lawmakers to weigh their decisions in light of the ongoing need for education and economy security, and to think twice before making across-the-board cuts to higher education.

Most higher ed institutions are struggling with their own cuts in revenue from decreased enrollments and their own higher costs and they are wary of cuts in state appropriations.

The Lumina and Gates foundations make the case in a new report that making wholesale cuts to all higher education can do “significant” harm now and in the future, and that higher education is an economic engine that is extremely valuable as we look to a post-COVID recovery.

Working with input from leading experts in higher education policy and finance, Higher Ed Budgets for the Post-COVID Era offers up a framework to help state leaders navigate the crisis and find the best outcomes for these institutions and their state residents.

Higher Ed is an Engine for Economic Recovery

“Writ large, the number one and number two priorities within state government are going to be public health and K-12 education. That’s where most of their taxpayer dollars go currently, to support those areas,” says Scott Jenkins, Lumina Foundation’s strategy director for state policy.

Trying to do in-person instruction and trying to keep people safe, those things have cost a tremendous amount of money, he explains. Going forward, higher education will have a harder time competing with those incredibly vital budgetary items within state government.

Scott Jenkins, Lumina Foundation (Photo: Lumina Foundation)

“About six months ago, we realized that we were in the midst of a trifecta of a pandemic, a pandemic-induced recession, and a racial reckoning in this country that was going to result in, potentially, an extinction-level event in state budgets around higher education.”

“We know from the last recession that those with more education fared much better in that recession and that the overwhelming majority of new jobs after the recession went to people with a baccalaureate degree or some form of formal, post-secondary credential,” Jenkins adds.

He tells WorkingNation that the report argues for legislators to “stop and take a breath and do a little analysis of the environment within (their) state. Pay attention to the way that the pandemic and the economy is affecting your states, and the industries that it’s affecting, and make decisions based on that real time data that you have.”

An Equitable Recovery

Gabriella Gomez, Bill & Melinda Gates Foundation (Photo: Gates Foundation)

The report makes the case that the most vulnerable members of our society are at risk of the most economic damage as we look forward to an equitable economic recovery.

“We know that those across the board cuts really do damage to a lot of progress that’s made in the higher education sector. This can’t be a one-size-fits-all approach,” says Gabriella Gomez, deputy director of U.S. policy, advocacy, and communications for the Bill & Melinda Gates Foundation.

“We really are saying do as little harm as possible. In particular, focus and prioritize low-income students, students of color, adult learners, which we know are a growing part of the higher education sector and a lot of those who are unemployed,” Gomez tells WorkingNation.

“Prioritize those, put those at the center of your decision-making and your North Star, as you’re trying to address this current crisis.

Higher education is not limited to four-year colleges and universities. Jenkins adds that there are a “tremendous number of training and technical types of educational opportunities at local community colleges, and at tech centers with third party nonprofit providers and other non-governmental entities, that provide a pathway to a stable and resilient job that can lead to further education and even better employment.”

“A 5% across the board cut would impact a big, comprehensive research institution in a different way than a 5% cut would hit a community college or a technical college that doesn’t have the same resources to absorb the cut and to meet the (community’s) workforce talent development needs,” adds Jenkins.

“Higher education does play a significant role. As we’re looking at where to make cuts, let’s not have higher education be one of those places where that happens, because we do know that higher education can help sustain an economy and be ready to respond to the workforce needs within states and communities.”

Guiding Principles and Recommendations

Lumina Foundation and the Gates Foundation worked with the education and financial experts to envision a worst case scenario and outline options around what the states should do as they face the financial constraints created by the pandemic.

The advice is to look at programs individually, to be data-driven, and to look at what has already been working in a state’s higher education system. And the report urges lawmakers and policymakers to apply the following principles to their decision making:

  • Principle 1: Prioritize funding for institutions that can best serve Black, Hispanic, Native American, and low-income students and those institutions that provide timely opportunities for unemployed or underemployed individuals to reskill.
  • Principle 2: Protect and expand need-based financial aid through increased or reallocated investment.
  • Principle 3: Support programs and strategies that advance students’ ability to complete credentials.
  • Principle 4: Expand resources and invest differently to drive economic growth.
  • Principle 5: Evaluate and improve system and institutional cost structures.

The report goes into detail on how these principles can be applied to address the critical funding issues facing each state in 2021. You can read all the details here: Higher Ed Budgets for the Post-COVID Era.

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Read more about Lumina Foundation here.
Read more about Bill & Melinda Gates Foundation here.

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