State and local government financial commitment to higher education has increased substantially over the past twenty-five years. In 1986, state and local governments combined provided $31.4 billion in direct support for general operating expenses of public and independent higher education institutions. This investment increased to $47.8 billion in 1996, $77 billion in 2006, and $88.8 billion by 2008.
A recession beginning in 2008 dramatically reduced state revenue and ended the growth in state and local support achieved between 2004 and 2008. In response, the American Recovery and Reinvestment Act approved February 17, 2009 provided funding to stabilize state support for education among other interventions to achieve economic recovery. With the approval of the Secretary of Education, funds allocated to the states by Congress could be used to supplement state and local funding for education in 2009, 2010, and 2011.
In 2011, 31 states provided ARRA funding to their higher education systems totaling $2.8 billion, helping to offset reductions in state and local support since 2008. State and local support in 2011 including ARRA funds totaled $87.5 billion, actually showing a 2.5 percent increase in funding for higher education over 2010 (although still below 2008 and 2009). The stability in support for higher education is an indicator that ARRA funding has served its purpose in minimizing the negative effects of the economic recession on higher education.