To survive the recession, many states chose to pass the pain on to college students. Legislators gutted higher education budgets knowing they could make up the difference with increased fees. Students at public colleges found themselves paying 28 percent more after state funding per-pupil fell by nearly a quarter nationwide between 2008 and 2013.
So far, states have been slow to undo the cuts they made during the crisis. In Washington state, per-pupil spending remains 28 percent below pre-recession levels, while sticker prices at public four-year colleges is up 58 percent — and that’s all after adjusting for inflation.
The state ranks among some of the worst defunders of higher education since the recession — but not for much longer. This week, legislators agreed to an unprecedented set of tuition cuts. Over the next two years, prices will decrease by 15 to 20 percent at public four-year colleges, and by 5 percent at public community colleges.
At a time when other states are struggling just to hold college costs constant, Washington state lawmakers demonstrated remarkable resolve in their latest budget. The tuition cuts — part of a $200 million increase in state higher-education funding — will be paid for largely by raising taxes on businesses.
As the Seattle Times reports, the new budget raises $185 million over the next two years by closing business tax breaks and increasing business tax penalties. A full 30 percent of the estimated new revenue will come from one company —Microsoft — which will now have to pay sales tax on some of its equipment purchases.
Microsoft is the only company that will lose that particular tax break, under the terms of an unusual provision that singles out software companies with more than 40,000 employees that have been in Washington since before 1981. That narrows the field down to a single company. It’s estimated that Microsoft will pay an additional $57 million in taxes over the next two years.
For its part, Microsoft did not seem to protest much. In March, its general counsel, Brad Smith. told the Seattle Times that the company would be “comfortable” with paying higher taxes, especially to benefit civic causes.
“[O]f course if our taxes are going up, we would really like the money spent well, which from our perspective would mean actually investing in education and transportation but doing it with a strong sense of accountability,” he said to the newspaper.
Higher education spending has been slow to recover in part because overall state revenue is still depressed. After adjusting for inflation, thirty states have still not returned to pre-recession levels, as this chart from Pew shows:
Some of the worst states for higher education funding include Arizona and Louisiana, where per-pupil spending is down 47 and 42 percent, respectively. There’s no relief in sight for these two states, where the governors have promised not to increase taxes and legislatures have struggled — with mixed success — to shield colleges from further cuts.