Business of Education February 11, 2010, 1:10PM EST

State Universities Brace for Another Brutal Year

With dwindling support from recession-battered state governments, many schools are bracing for more cost-cutting and steep tuition hikes

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Just two days before Christmas, Louisiana State University Chancellor Mike Martin received an unwelcome holiday surprise. The state had just slashed $12.6 million off the Louisiana flagship campus' $430 million operating budget, and Martin had just two weeks to make a round of fresh cuts. When students returned to campus in early January, the school had laid off employees, canceled several required courses, and implemented several other painful cost reductions.

Martin says he doesn't want to be caught off guard next time around. Anticipating further severe budget cuts for fiscal year 2011, which begins in July, he recently sent notices to 300 non-tenured instructors informing them that they may not have jobs by the end of the year. Other cutbacks may include implementing furloughs and closing academic programs. "We have been coping with the consequences of a pretty big hit," says Martin. About $43 million was cut from LSU's budget over the last year, including the recent $12 million reduction. "The uncertainty that remains is not only fiscally difficult to deal with but also difficult to deal with in respect to morale because people are feeling under assault."

The past year has been one of the most brutal for the higher education world in decades, with private schools struggling to stay afloat and even some of the most elite institutions suffering huge endowment losses and cutbacks. But state schools perhaps have been hit the hardest, with dwindling government support and increasing student demand casting their collective future in doubt. Already battered by the economic downturn, many are bracing for an even tougher year ahead.

'Apocalyptic' Predicament

In the last six months colleges and universities in states from California to Illinois have already done what they would have deemed unthinkable a few years back—laying off hundreds of employees, raising tuition by double digits, and capping enrollment. And it doesn't look like it is going to get easier anytime soon. Mid-year budget shortfalls have opened in at least 41 states this fiscal year, and early indications are that many states will face deficits in the next fiscal year that are just as big, if not larger, according to a Jan. 28 report from the Center on Budget & Policy Priorities, a nonpartisan think tank in Washington.

State support for higher education continues to lag. At least 37 states have made cuts to public colleges or universities or hiked tuition because of insufficient state funding, the report shows. For example, Massachusetts cut $62 million out of its higher education budget this fall. The money that was replaced by federal stimulus funding, but many educators worry that the cuts will be even more drastic come next year. "We've already been subject to very disruptive budget cuts before and then gradual recovery, but this one feels apocalyptic," says Nancy Folbre, author of a new book "Saving State U" and an economics professor at University of Massachusetts. "I'm in a real panic about what will happen next year when the federal stimulus funds are not going to be there to break our fall."

Folbre has good reason to be concerned. In the 2009 fiscal year, state support for higher education nationally fell from $80.7 billion to $77.9 billion, and this year it's expected to fall an additional $2.7 billion, to $75.2 billion, according to the annual Grapevine survey out of Illinois State University's Center for the Study of Education Policy. The impact of those reductions has not been fully felt yet, because nearly $40 billion was provided to states by the federal government through the State Fiscal Stabilization Fund, part of last year's $787 billion stimulus package. With those federal funds soon running out and state and local tax revenues still in decline, many public university presidents are looking anxiously toward the 2011 fiscal year, worried that the they'll have to take even more draconian measures.