State Funding of Higher Education: A New Formula

Over the last century, functions and activities of the higher education sector in the USA have changed dramatically. As the premise of institutional funding remains unchanged, states' burden on higher education funding continues to grow. With increasing pressure for more funding from state agencies coupled with the growing demand for ‘less government,’ states find it difficult to support higher education institutions at an ever-increasing level. Higher education administrators are quick to blame state legislators for lack of sufficient funds for institutional growth and quality improvement. Heavy dependence on state support is quite detrimental to operational viability of higher education institutions. Therefore, securing financial stability of higher education institutions should be a major priority among higher education policymakers. In this context, this paper presents a new funding formula that can be adopted by any state.