PROJECTState and Local Backgrounders

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  • Higher Education Expenditures

    Higher education spending includes expenditures on the operation, maintenance, and construction of public community colleges, universities, and postgraduate institutions such as law and medical schools.1

    How much do state and local governments spend on higher education?

    In 2021, state and local governments spent $311 billion on higher education, or 8.5 percent of state and local direct general spending.2 As a share of state and local direct spending, higher education was the fourth-largest expenditure in 2021.


    In 2021, 90 percent of higher education spending went toward operational costs, such as instruction, administration, research, libraries, dormitories, cafeterias, and other student or faculty services. The remaining 10 percent was for capital outlays, such as construction and maintenance.

    How does state spending differ from local spending and what does the federal government contribute?

    State governments spend more of their budgets directly on higher education than localities. State spending goes toward public four-year universities and colleges, other state institutions, and state grants given to students, while local spending is typically for community college systems. (While local governments spend directly on community colleges, these systems are still largely funded by state governments).

    Overall, 85 percent of higher education direct spending occurred at the state level in 2021. In 22 states, 100 percent of higher education spending occurred at the state level. In 2021, California, Florida, Illinois, Iowa, Mississippi, and Wyoming were the only states where local direct spending on higher education accounted for 25 percent or more of combined higher education expenditures.

    As a result, higher education spending is a significant share of state budgets but a small share of local spending. In 2021, 15 percent of state direct general spending went to higher education versus 2 percent of local direct general spending. Among local governments, school districts dedicated the largest share of their budgets to higher education spending (6 percent) in 2017 (the most recent year we have data for these levels of government). This is because some high schools (funded by school districts) have programs that allow students to take community college courses at the school, and some community colleges were originally established through the school districts (e.g., California). 


    The federal government mostly does not transfer funds to state and local governments for higher education spending. Instead, the federal government contributes to higher education largely by providing financial aid directly to students (e.g., Pell Grants).

    How much do tuition and other charges contribute to higher education spending?

    The Census data on higher education expenditures include revenue from both government transfers to schools and charges related to higher education, such as tuition, that are paid directly from students to public institutions of higher education. 

    In addition to tuition and other instruction-related charges (such as laboratory fees), higher education charges include receipts from dormitories, university cafeterias, and bookstores. In 2021, higher education charges totaled $115 billion and accounted for 37 percent of total state and local higher education expenditures. Tuition plus other instruction-related charges were $96 billion (31 percent) and receipts-related charges from dormitories, cafeterias, and bookstores were $27 billion (9 percent).

    Other services, such as hospitals, also often operate within institutions of higher learning and contribute to higher education revenues. However, these funds are allocated separately within the Census of Governments data. For more on how those revenue streams contribute to higher education, see a separate study of higher education funding from the US Department of Education.

    How have higher education expenditures changed over time?

    From 1977 to 2021, in 2021 inflation-adjusted dollars, state and local government spending on higher education increased from $116 billion to $311 billion (168 percent increase). (For more information on spending growth see our state and local expenditures page.)


    However, the composition of higher education funding also changed significantly over this period. Specifically, higher education charges as a share of total higher education spending grew from 30 percent in 1977 to a peak of 45 percent in 2011. In 2021, charges represented 37 percent of higher education spending. Tuition alone grew from 19 percent of higher education expenditures in 1977 to 31 percent in 2021. Tuition as a percentage of higher education spending grew in part because state direct appropriations per student declined over the period. That is, state and local spending on higher education only increased over the period because tuition payments increased.


    As a share of total state and local direct general spending, higher education expenditures have remained relatively constant over time. In both 1977 and 2021, roughly 9 percent of state and local direct general expenditures went to higher education.

    How and why does spending differ across states?

    State and local governments spent $938 per capita on higher education in 2021.3 Utah spent the most per capita on higher education at $1,718, followed by Wyoming ($1,665), North Dakota ($1,585), and Delaware ($1,572). Among the states, Nevada spent the least on higher education ($553), followed by Florida ($561), Tennessee ($569), and Georgia ($591). The District of Columbia spent the least ($251) because, unlike the 50 states, the city does not have a large statewide university system.


    Data: View and download each state's per capita spending by spending category

    Per capita spending is an incomplete metric because it doesn’t provide any information about a state’s demographics, its policy decisions, administrative procedures, or the choices its residents make. Spending on higher education is mostly driven by the number of students in two- and four- year public universities as well as the cost of college.

    For example, California has lots of students in public schools relative to its population and higher payroll and nonpayroll costs (after accounting for tuition and fees), leading to higher spending per capita. Meanwhile, states with lower per-capita spending, such as New Jersey, have sometimes offset high payroll costs by hiring fewer employees per student or spending less per student on nonpayroll functions.4 They also often have more students enrolled in non-public universities.

    Spending per full-time equivalent student (FTES) can provide a more nuanced picture because it reflects the spending on students who are enrolled in higher education. According to the National Center for Education Statistics, public higher education enrollment has been increasing since 1980.

    The United States, on average, spent $31,890 per FTES in two- and four-year public postsecondary institutions in 2021.5 Among the states, Alaska spent the most, with $50,912 per FTES, followed by Connecticut ($47,407), Wyoming ($46,145), and Delaware ($46,007). Georgia spent the least, with $19,863 per FTES, followed by Ohio ($22,708), Idaho ($22,810), and Florida ($23,173).

    While per capita and per FTES numbers are valuable for evaluating state and local spending over time, both miss a valuable distinction in higher education financing: tuition. Once all higher education charges and fees are removed from consideration, state and local governments overall spent $20,094 per FTES—down from $31,890 per FTES overall.


    States make different decisions regarding how much to charge students and set different tuition rates for in-state versus out-of-state students. For example, Vermont ranks seventh in FTES spending ($42,421), but it drops to 32nd once charges and fees (mainly tuition) are subtracted ($16,233). In contrast, California moves from 12th place ($38,081) for total per-FTES spending to sixth when tuition is subtracted ($29,926).

    Similarly, New York moves from 31st place ($30,051) to 16th place ($22,154), whereas Florida moves from 48th place ($23,173) to 28th place ($16,747). Overall, after subtracting all higher education charges, state and local spending per FTES is highest in Alaska ($39,020), Wyoming ($38,488), New Mexico ($31,795), and Connecticut ($31,097). States with the lowest spending per FTES in 2021, subtracting all higher education charges, are Ohio ($8,398), Rhode Island ($9,964), Missouri ($11,544), and Georgia ($11,919). (See every state's FTES spending data with and without tuition and fees in the table below.) Thus, because the Census of Governments includes tuition and charges in its calculation of public spending on higher education, readers should be careful in interpreting the overall spending numbers.


    Interactive Data Tools

    Financing Public Higher Education

    State and Local Finance Data: Exploring the Census of Governments

    State Fiscal Briefs

    What everyone should know about their state’s budget

    Further Reading

    Understanding State and Local Higher Education Resources
    Sandy Baum and Kim Rueben (2016)

    Tuition and State Appropriations
    Sandy Baum, Michael McPherson, Breno Braga, and Sarah Minton (2018)

    Nontuition Expenses: Implications for Collage Affordability and Financial Aid Policies
    Sandy Baum and Jason Cohn (2022)

    State Grant Aid and Pell Grants
    Sandy Baum and Fanny Terrones (2022)

    The Federal-State Higher Education Partnership: How States Manage Their Roles
    Matthew Chingos and Sandy Baum (2017)

    Assessing Fiscal Capacities of States: A Representative Revenue System–Representative Expenditure System Approach, Fiscal Year 2012
    Tracy Gordon, Richard Auxier, and John Iselin (2016)

    1 Data are from the census expenditure functions E16, E18, F16, F18, G16, G18, K16, and K18. 

    2 Unless otherwise noted, all data are from the US Bureau of the Census, Survey of State and Local Government Finance, 1977–2021, accessed via the Urban Institute, April 4, 2024, The census recognizes five types of local government in addition to state government: counties, municipalities, townships, special districts (e.g., a water and sewer authority), and school districts. All dates in sections about expenditures reference the fiscal year unless explicitly stated otherwise.

    3 Calculation from the US Bureau of the Census, Survey of State and Local Government Finance, 1977-2021, accessed via the Urban Institute, April 4, 2024,; and National Center for Education Statistics, Digest of Education Statistics, Table 307.20. Full-time-equivalent fall enrollment in degree-granting postsecondary institutions, by control and level of institution and state or jurisdiction: 2000, 2010, and 2021 (March 2023),

    4For an analysis of components of state and local spending using 2012 data, see the Urban Institute’s interactive tool, “What everyone should know about their state’s budget,”

    5 Calculations using the US Bureau of the Census, Survey of State and Local Government Finance, 1977-2021, accessed via the Urban Institute, accessed April 4, 2024,; and National Center for Education Statistics, Digest of Education Statistics, Table 307.20. Full-time-equivalent fall enrollment in degree-granting postsecondary institutions, by control and level of institution and state or jurisdiction: 2000, 2010, and 2021 (March 2023),

    Research Areas State and local finance
    Policy Centers Urban-Brookings Tax Policy Center