A for Effort? MOE Rules and Higher Ed Funding

Federal maintenance of effort (MOE) provisions play an important role in state funding of higher education, according to a new report by the American Association of State Colleges and Universities (AASCU).

The MOE provisions require states to maintain a minimum level of state aid to public and private higher education institutions in order for states to receive federal funds. In most cases, the minimum level of state aide required is tied to past state appropriations. For example, a state must provide support for higher education equal to or greater than the level of higher education appropriations in 2006 to qualify for certain federal funds in FY2010. The three recent federal spending bills utilizing this provision are:

By analyzing state applications for federal funds and/or waivers of the MOE provision, AASCU found many examples where states cut funding to higher education to the exact (or very close to exact) minimum threshold required by each of the MOE provisions. Based on these trends, AASCU believes that states design higher education with federal funding requirements in mind.

Indeed, state funding for higher education was heavily supported by federal funds. When many federal stimulus funds expired at the end of FY2011, states were unable to fill the gap. In FY2012, only nine states were able to increase total state support (including any remaining federal stimulus funds) for higher education from the year before. Rhode Island was the only New England state among the nine, even though three of the six New England states increased state appropriations overall between FY11 and FY12. Federal funds and MOE provisions thus may incentivize states to maintain certain levels of funding and simultaneously provide needed relief.

In recent remarks at a New England Council Breakfast Roundtable, U.S. Congressman John F. Tierney (D-Mass) stressed the need for continued smart investments in education, transportation and infrastructure improvements that would move the economy forward. The only New England member of House Committee on Education & the Workforce, Tierney played an integral part of shaping the MOE provisions in the last re-authorization of the Higher Education Act.


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