At least eight states are fighting to preserve federal money for low-income college students after the U.S. Education Department ruled they did not meet a mandate to provide consistent spending on higher education.
The rule, enacted as part of the 2008 reauthorization of the Higher Education Act, requires states to spend at least the same amount of money for colleges each year as they spent on average in each of the previous five years. States that fail to meet the "maintenance of effort" requirement can lose their eligibility for federal College Access Challenge Grants. Grants awarded under the $150-million-a-year program are meant to help low-income students prepare for college and pursue a degree by providing financial aid, academic counseling, and other assistance.
The maintenance-of-effort mandate took effect at the same time that state tax revenues began to sink with the economic downturn, and state leaders were already protesting the requirement in early 2009, fearing that coming budget gaps would make it difficult to comply. Since the 2009 budget year, states have had to close budget gaps of more than $500-billion, and spending on higher education is barely at 2006 levels in many places—far less than the amounts that most states were spending when Congress approved the higher-education law.
States that have been threatened with losing the access grants include Alabama, Iowa, Louisiana, Michigan, Mississippi, Nevada, Ohio and Virginia.
In Michigan, state spending on higher education in the 2010 budget year was 6.35 percent below the average for the previous five years, or about $114-million less, according to a September 8 letter to Michigan education officials from the U.S. Department of Education. Over all, state spending declined by about 5 percent for the 2010 budget, the department said. The state's revenue shortfall that year was more than $6-billion, about 16 percent of its budget.
Michigan sought a waiver from the maintenance-of-effort requirement, but the department denied its request.
The state's request was "rooted in an unprecedented and undeniable economic reality," the state's superintendent of public instruction, Michael P. Flanagan, wrote in a letter to U.S. Education Secretary Arne Duncan. "The fiscal realities faced by Michigan were deeply impacted by the bankruptcies of General Motors and Chrysler when our state was beset with widespread plant closings, the nation's highest unemployment rate, and deep reductions in state tax revenues," Mr. Flanagan wrote.
The department can waive the requirement for exceptional circumstances, but according to the September 8 letter, agency officials "determined that it would not be equitable to grant a waiver" to Michigan, because the state's higher-education appropriations declined slightly more than overall state spending did.
Department officials did not respond to a request for comment, but the letter said the state needs to restore about $59-million in higher education spending to qualify for the access grant. The state would have a full year to appropriate the extra money, the department said.
But if the department does not waive the spending requirement, Michigan will forfeit about $4-million this year, said Brandy Johnson, executive director of the Michigan College Access Network. And with the economy in such poor shape, the state is not likely to qualify for the federal grants for the next three years, she said, especially now that federal stimulus dollars used to prop up education spending are gone.
In his letter, Mr. Flanagan said a decision to deny the waiver requests from Michigan and other states places "another barrier in the way of students who are trying to beat tough odds to get a good education and a better way of life."