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Earmarking and the business cycle: The case of state spending on higher education

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  • Bhatt, Rachana
  • Rork, Jonathan C.
  • Walker, Mary Beth

Abstract

Recent economic events have created severe budget problems for state governments, and one area seemingly affected by this fiscal crisis is state funding for higher education. State governments have the ability to alter funding to higher education mostly through general fund contributions and earmarked revenue. This paper examines trends in state higher education appropriations, with a specific focus on the relationship between these two funding sources. We find that on average, total appropriations have actually increased over the past decade, and moreover, earmarked revenue has constituted an increasing share of higher education funding, while general fund contributions have been declining. Our regression analysis suggests that the magnitude of the fungibility between the two sources is substantial, but somewhat surprisingly, does not differ across recessions and expansions.

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  • Bhatt, Rachana & Rork, Jonathan C. & Walker, Mary Beth, 2011. "Earmarking and the business cycle: The case of state spending on higher education," Regional Science and Urban Economics, Elsevier, vol. 41(4), pages 352-359, July.
    • Handle: RePEc:eee:regeco:v:41:y:2011:i:4:p:352-359
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    Cited by:

    1. Winters, John V., 2012. "Cohort crowding and nonresident college enrollment," Economics of Education Review, Elsevier, vol. 31(3), pages 30-40.
    2. Elizabeth Bell & Wesley Wehde & Madeleine Stucky, 2020. "Supplement or Supplant? Estimating the Impact of State Lottery Earmarks on Higher Education Funding," Education Finance and Policy, MIT Press, vol. 15(1), pages 136-163, Winter.
    3. Elizabeth B. Clelan & Michael S. Kofoed, 2017. "The Effect Of The Business Cycle On Freshman Financial Aid," Contemporary Economic Policy, Western Economic Association International, vol. 35(2), pages 253-268, April.
    4. Faishal Fadli & Ouyang Hongbing & Yaqing Liu, 2020. "Earmarking Tax for Indonesia's Economic Growth through the Education and Health Sector in the Long and Short Term Period," Business and Economic Research, Macrothink Institute, vol. 10(1), pages 1-39, March.

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    Keywords

    Higher education finance Earmarks;

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