Following recent historic increases in funding for higher education, at least 15 states proposed or enacted cuts to public university and college funding this year, according to Pew Charitable Trusts, a public policy nonprofit.
Recent economic headwinds and policy changes by the Trump administration have created complex funding constraints across the federal and state policy landscape, drying up the funds available for public institutions.
The University System of Maryland enacted a 7% drop in its 2026 fiscal budget to compensate for a $155 million reduction in state funding. Similarly, state university systems in Connecticut, Kansas, Minnesota, Missouri, Nebraska, New Hampshire and Wyoming also enacted serious cost-cutting measures, Pew found.
Decreases in state funding and universities’ budget allocations have resulted in major drawbacks for public institutions, such as delayed campus infrastructure projects across Virginia and South Dakota. Backlogs in maintenance requests across California’s two university systems now total a combined $1.5 billion, CalMatters reported. In addition, institutions have been forced to raise tuition, freeze hiring and lay off staff and faculty.
“What remains to be seen is whether any future return to more stable fiscal conditions will bring balance to higher education funding once more, or whether these challenges are now a permanent part of the landscape,” wrote Page Forrest, Riley Judd and Samuel Pittman, members of Pew’s fiscal policy team.
How federal funding has impacted state budgets—and universities directly
Recent proposals in the federal budget reductions contain serious ramifications for state funding for mandatory spending, such as Medicaid. Federal dollars are the second-largest source of funding for state governments, according to Pew.
“When federal funding for a program disappears, state policymakers must choose whether to let that program end or draw resources from some other priority,” a similar report by Pew read.
More often than not, state policymakers divert discretionary funding from higher education to cover the increased costs of Medicaid spending, according to Brookings.
The federal government has also directly impacted funding for dozens of public universities by cutting the budgets of some of the largest funders for higher education research. For example, the National Institutes of Health has lost $18 billion in funding, according to Pew.
“In recent years, federal grants and contracts have ranged from 7.4% of total revenue at all public colleges and universities in fiscal years 2017 and 2018 to as much as 8.7% of total revenue in fiscal 2022,” the report read.
The Trump administration has also implemented a 15% cap on the proportion of grant funding universities can use on the indirect costs of research, according to the report. This cap extends across the National Institutes of Health, Department of Energy, Department of Defense and the National Science Foundation.
