State leaders, flush with projected budget surpluses in most states this year, are considering their boldest education spending agendas since before the economic downturn of 2001, including the first hints of college tuition cuts.

While President Bush’s latest budget proposal would cut federal education funds 5.5 percent to help reduce the national deficit, state governors are outlining major plans for investing in higher education and raising salaries for public school teachers. With 36 states electing governors and 46 states electing legislators in November, education spending is shaping up as a popular political issue this year.

California Governor Arnold Schwarzenegger, a Republican, who is up for re-election this November, has made campaign promises to cut tuition for state college students and invest billions of dollars in K-12 education. Florida Governor Jeb Bush, a Republican, said last week he is planning to scale back proposed tuition hikes for the state university system thanks to a budget surplus that is expected to exceed $3.2 billion. And Minnesota higher education officials approved a plan this month to offer four years of free tuition to qualifying low-income college students.

With a budget surplus of $570 million projected this year, Hawaii Governor Linda Lingle, a Republican running for re-election, wants to offer $10,000 bonuses to teachers who agree to work in underperforming schools for three years.

Arizona Governor Napolitano and Maine Governor John Baldacci, both Democrats, said they want to make sure that every teacher makes at least $30,000 a year. Arizona has a nearly $1 billion projected budget surplus, and Maine has a projected $164 million surplus. Governors in more than half a dozen other states are proposing to catch-up teachers’ raises.

“We cannot expect the best from our teachers as long as we continue to pay them a paltry sum,” Ms. Napolitano said in her state of the state address in January.

State college and university officials hope for a second year of strong funding after significant state budget cuts during the economic downturn from 2001 to 2005 led to record tuition hikes. State higher education appropriations increased an average of 6 percent this fiscal year, which ends June 30, to $66.6 billion, the highest amount since 2001, according to the Center for the Study of Education Policy at Illinois State University.

Appropriations have dipped

While state spending on elementary and high schools kept increasing, state appropriations for higher education lagged and actually dropped in the 2003-2004 school year by 2.1 percent, the first decline since 1992. Meanwhile, the average cost of tuition at four-year public colleges jumped 40 percent from 2000 to 2005 from $3,925 to $5,491 a year.

Now, some tuition relief may be in sight. The University of Minnesota Board of Regents announced Feb. 10 a plan to offer four years of free tuition to all students from families that make less than $50,000 a year. About 4,500 students would qualify next year at a cost of $22 million. Neighboring University of Wisconsin officials proposed earlier this month to reduce nonresident tuition by $2,000 to attract out-of-state students.

In Massachusetts, the state Senate Higher Education Committee approved legislation Feb. 8 that would inject more than $400 million over the next seven years into the state’s 29-campus university system — a 7.7 percent increase nearly double the previous year’s increase. The legislation would require that tuition and fee increases not exceed the rate of inflation.

“Right now the economy is better than it’s been, so we can finally have a positive conversation with the Legislature about spending priorities” for state higher education, University of Massachusetts Chancellor John V. Lombardi told Stateline.org.

It’s not yet like the boom times of the late 1990s, when cash-flush states invested billions of new dollars in education, said Mike Griffith, an education finance expert for the Education Commission on the States, a Denver-based nonprofit education research organization. But state revenue projections are up in nearly every state, and education once again tops politicians’ spending agendas.

“It’s looking like it’s going to be an even better year all around for almost every state, with the exception being the Gulf Coast and Michigan, which at best will have a flat year in education funding,” Mr. Griffith said.

Although state K-12 spending has held steady in recent years, teachers’ salaries have not kept up with inflation, according to the Economic Policy Institute, a Washington, D.C.-based nonpartisan think tank. An analysis by the institute found that the total increase in teachers’ salaries from 1996 to 2004 was less than 1 percent when adjusted for inflation.

Besides Hawaii, Arizona and Maine, several other states also are considering raising teacher salaries, sometimes accompanied by reforms in the way teachers are paid.

New Mexico Governor Bill Richardson, a Democrat, wants to raise teacher salaries 6 percent statewide. Alabama Governor Bob Riley, a Republican, proposed raising all teacher salaries 5 percent, and Georgia Governor Sonny Perdue, a Republican, proposed 4 percent teacher raises. Governors in at least five other states — Delaware, Iowa, Kentucky, Washington and Wisconsin — also proposed increasing teacher pay or adopting so-called “merit pay” plans that would base teachers’ salaries on student performance rather than seniority.

Higher-education spending increased in 28 states by 5 percent or more this fiscal year, with the strongest growth in the West, Southwest and Southeast, according to the Center for the Study of Education Policy. Still, four states — Missouri, Mississippi, Illinois and West Virginia — cut state aid to colleges, compared to eight states last year. West Virginia for the second year in a row reported the greatest drop in state funding for higher education — down 6 percent to $319 million.

Some education experts expect to see stronger gains this year, especially in states with tight gubernatorial races.

“In hotly contested states like California and Maryland, gubernatorial campaigns are putting higher education in a more prominent position,” said Travis Reindl, director of state policy analysis for the American Association of State Colleges and Universities.

Both Mr. Schwarzenegger in California and Maryland Governor Robert Ehrlich, Republican incumbents who have trailed Democratic challengers in recent polls, have announced proposals for major investments in higher education.

Mr. Schwarzenegger has promised to provide funding to repeal recent tuition increases of 8 percent for undergraduates and 10 percent for graduate students in California public colleges and universities. Mr. Ehrlich has promised to boost higher education funding by 14.5 percent, or $1.5 billion — more than double last year’s 6 percent increase — with most of the money going to building and maintenance projects. He also proposed a 28 percent increase — $19.5 million — for need-based college scholarships.

Both governors’ Democratic challengers have responded with proposals intended to one-up their opponents, Mr. Reindl said.

One of Mr. Schwarzenegger’s Democratic opponents, State Controller Steven Wesley, has proposed forgiving student loans for the first two years of college for any student who graduates on time. One of Mr. Ehrlich’s Democratic challengers, Baltimore Mayor Martin O’Malley, criticized the governor for not proposing a tuition freeze for the 13-campus University of Maryland system, where students face a 4.5 percent tuition jump next year.

Because of the state’s struggling economy, Michigan Governor Jennifer Granholm, a Democrat, who is running f
or re-election, has made education central to her recovery plan for the state. Ms. Granholm outlined several major education proposals in her state of the state address last month, including calls for increased funding for early education and after-school programs. She also asked the Legislature to approve $4,000 merit scholarships for every Michigan high school student who goes to a state college.

“Our new Merit Award Scholarship will create a Michigan Promise right now — a promise that every child in Michigan will — for the first time in this state’s history — have the financial means to go to college,” Ms. Granholm said in her speech.

Colorado Governor Bill Owens, a Republican who is term-limited this year, spent much of his two terms in office at odds with state higher education leaders. But last November, Mr. Owens campaigned with college officials in favor of suspending a 1992 state constitutional spending cap, a measure voters approved in part because of widespread concern that the spending limits were starving public colleges.

Colorado’s spending on higher education had dropped by 20 percent in the past five years. With the spending cap temporarily lifted, Mr. Owens proposed in his state of the state address last month to cap college tuition increases at 2.5 percent and to increase the state’s per-student stipend from $2,400 to $2,580.

“All governors and elected officials start thinking about their legacy at the end of their term, and Mr. Owens is really looking at how he’s going to be viewed,” Mr. Reindl said.

Contact Kavan Peterson at kpeterson@stateline.org