Critics call them "pork." Supporters call them "political necessities." Angry taxpayers and Senate Republicans, however, have been calling for a temporary ban on earmarks, the funding provisions tacked onto congressional bills that allow members of Congress to steer funds to projects in their home districts. Jennifer Delaney, a professor of educational organization and leadership who specializes in higher education funding, recently co-wrote studies that examined the relationships between federal academic earmarks and state spending for student financial aid, capital construction on university/college campuses, and general appropriations. Delaney discussed the studies' findings with News Bureau editor Sharita Forrest.
Although the vote failed on Sept. 30, Senate Republicans were proposing a moratorium on earmarks for the next two years. How would a moratorium have affected higher education?
A congressional moratorium on earmarks would have unquestionably impacted higher education. Federal earmarks granted to colleges and universities are substantial, both in volume and dollar amounts. According to The Chronicle of Higher Education, during 2008, 920 colleges and universities benefited from 2,300 earmarks that totaled at least $2.25 billion. That's up from $528 million a decade ago. Federal academic earmarks are not only a big revenue stream for colleges and universities - they're a growing revenue stream.
What did you expect to find and what were your actual findings?
In the study, I sidestepped all of the controversy about earmarks and just thought about them as an alternative revenue stream for higher education. I focused on the incentives embedded in federal academic earmarks for state higher education funding. States fund higher education primarily through three revenue streams: direct appropriations to institutions, capital outlays, and indirectly through student financial aid. I wanted to explore what incentives were attached to the federal earmark funds, how earmarks affected the three state revenue streams, and if all three were impacted in the same way. I expected to find that earmarks would increase capital expenditures and appropriations but decrease student aid spending in the states.
What I found is that earmarks seemed to increase spending by states on both student aid and direct appropriations. I didn't find any effect on capital outlays, however.
What's your hypothesis for the positive effect on student aid and appropriations?
I hypothesize that institutions that are successful in bringing in federal earmarks signal to state policymakers that higher education is a preferred area in which state legislators should be investing. The trade-off appears to be that the states direct funds away from other state programs to increase spending on higher ed and not from one of the state revenue streams for higher education.
But capital outlays are different in some way?
States spend billions of dollars every year building and maintaining the physical infrastructure of college campuses. It's really important not only for university administrators, but also for states as they think about the higher education infrastructure that they have and if that's going to be enough to accommodate future enrollments.
My co-author and I tested three different funding patterns in a study about the relationship between state spending for higher education capital outlays and state budgets. First, we wanted to see if capital spending was linear and predictable - the budget gets better and campuses get more buildings. That's what we expected to find, but there was very little evidence of that.
We also looked to see if capital outlays fell into a boom and bust cycle of funding. In prior work, we had found evidence that state general appropriations served as a balance wheel for state budgets - so that higher education funding increases faster than other budget categories in good budget years, but is cut more than other areas in bad years. But we didn't find evidence of the balance wheel model with capital outlays.
We did find evidence of a quadratic, counter-cyclical relationship, however. At times where states are cutting budgets for higher education, conversely they're increasing their spending on capital outlays. The reverse can also be true - when we're in periods of economic growth, we're not seeing growth in capital budgets accordingly.
We saw this recently with the federal stimulus funding. The federal government is actually spending more on construction during an economic downturn in part because it keeps people employed. That also may explain the counter-cyclical pattern in state spending for higher education capital outlays. We also know that capital projects are often multi-year projects and are harder to start and stop, which may explain why they don't reflect fluctuations in the economy like other higher education expenditures do. With appropriations and student aid, for example, legislators can start and stop the funding more quickly.
Here on our campus, for example, we're seeing severe cuts in appropriations - but we're also engaged in a multimillion renovation project at Lincoln Hall (editor's note: The $57 million renovation project, which was on the University of Illinois' annual capital budget request to the state for nearly a decade, was funded on July 13, 2009 when the governor signed the $31 billion Illinois Jobs Now! capital construction/economic recovery bill).
With the trend of declining state support for higher education in general, how are universities and colleges adapting to that trend to get facilities built and renovated?
Universities appear to be much more reliant on matching funds from donors, the federal government, and other sources. Anecdotally, we observed that some states aren't voluntarily putting up money to build or renovate facilities on their college campuses. University officials have to come to the table with commitments for millions of dollars from other sources and ask the states to match those funds to get projects going.
It could be that external forces such as the availability of matching funds from federal, local or philanthropic sources are driving capital spending for higher education. That's an area that we'd like to explore in future research.