Maintenance of Effort: An Evolving Federal-State Policy Approach to Ensuring College Affordability

Abstract

Congress has recently focused on the complex relationship between federal student aid, states' funding appropriations for higher education, and institutional tuition and fee levels. Fueling this focus is the ongoing cost shift in public higher education, from states to students and families, as well as to the federal government via student aid programs. This shift in who pays for education is primarily a consequence of gradual state disinvestment in public higher education. As a result, college officials have compensated for the loss of state dollars with a combination of cost-cutting measures, reductions in student enrollment, and an increased reliance on student tuition and fee revenues. The shift in higher education funding, from states to students—driven by insufficient, and in many cases, sharply reduced state appropriations for higher education—has placed more pressure on federal lawmakers to expand existing student aid programs. Increased federal investment in student aid has helped negate the impact of rising tuition and fees. The trend in states' disinvestment in public higher education is especially problematic considering the burgeoning student enrollments occurring in many states. As a result, recent federal legislation has included financial incentives for state lawmakers to maintain specified minimum funding levels for public higher education in order to dissuade states from substantially reducing their appropriation commitments. In establishing these "Maintenance of Effort" (MOE) provisions that determine minimum funding thresholds states must meet in order to receive specified federal funds, Congress intended for these federal monies to supplement state resources aimed at supporting institutions and students, not supplant states' fiscal commitments to higher education.