The big squeeze: faced with dwindling funding, state colleges and universities are trying to come up with their own solutions to budget challenges.

• Author: Boulard, Garry
• Position: Cover story

David Gowan says he did not run for the Arizona House to cut higher education funding.

Yet only weeks alter the Legislature convened its 2009 session, the newly elected, 36-year-old Gowan voted in the majority to gut support for the big Arizona university system by $141.5 million.

"I don't think any of us really wanted to make such drastic cuts," he says. "But at the end of the day, I think we felt that we had no other real choice."

The massive higher education cuts in Arizona come after a decade of unprecedented enrollment growth, but also against a backdrop of economic calamity that is hitting other states as well, taking money away from their colleges and universities.

"The news is pretty much bad across the board," says Dan Hurley, director of state relations and a policy analyst with the American Association of State Colleges and Universities.

"It's no secret that higher education in general is either at or close to the top of the list in terms of cuts when lawmakers are revising their budgets to reflect shortfalls," he says. "And that's what we're seeing in state alter state right now."

UNIQUE CIRCUMSTANCES

While the severity and variety of state cuts to higher education are nearly all even if indirectly the offshoot of the national recession, they also reflect the unique economic circumstances of each state.

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In Connecticut, the loss of revenue from the state's capital gains tax has been devastating.

"States such as Connecticut and New Jersey have been seriously affected by the Wall Street fiasco," says Connecticut Representative Denise Merrill. "We have all of these hedge fund managers here who have no incomes right now.

"We thought we were insulated because we put in a tax for the first time in 1991 that does not tax ordinary incomes, but instead taxes capital gains. That is where we were getting a lot of our money from the stock people," she says.

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But the late 2008 meltdown on Wall Street, and subsequent losses suffered by individual stockholders, has meant a huge hit to Connecticut coffers.

As a result, by mid-February, Connecticut was looking at a budget deficit of at least $6 billion. In response, Connecticut Governor M. Jodi Rell unveiled a $38.4 billion budget that suspends, for up to a year, borrowing for capital projects by the state's four-year schools. Although Connecticut schools say the suspension will hurt, Rell says it could save the state up to $300 million.

Despite the objections of higher education leaders in...