Part 2: Reimagining Higher Education Funding in a Post-Pandemic Era
By Martha Snyder, Partner, HCM Strategists and Wil Del Pilar, Senior Vice President, EdTrust
In 2020, the COVID-19 pandemic disrupted life as we knew it. Prolonged lockdowns shuttered businesses, schools shifted entirely online, and institutions across the country were forced to rapidly adapt. The upheaval sparked a widespread reevaluation of education, work, and the systems that shape opportunity in America, especially education.
While the pandemic affected everyone, its impacts were far from equal. Students of color and students from low-income backgrounds faced disproportionately severe disruptions, and the colleges and universities that predominantly serve these students experienced heightened financial and operational strain.
In response, the federal government deployed historic emergency investments through programs like the Governor’s Emergency Education Relief (GEER) Fund, the American Rescue Plan Act (ARPA), and three rounds of Higher Education Emergency Relief Funds (HEERF). These temporary resources helped institutions stabilize enrollment, support student retention, and address immediate fiscal challenges.
But the pandemic also exposed deeper structural issues in higher education finance. As states and institutions emerged from the crisis, policymakers increasingly focused on whether existing funding systems were adequately supporting today’s students and delivering meaningful value.
2020: Pandemic Uncertainty Seeds Adaptability and Transformation
The post-pandemic era accelerated calls for funding systems that are more agile, equitable, and student-centered. Policymakers and advocates began emphasizing affordability, completion, workforce relevance, and long-term sustainability.
Recognizing the need for more strategic investments, Lumina Foundation and the Gates Foundation co-published Higher Education Budgets for the Post-COVID Era, offering states a framework for reshaping postsecondary budgets around student-centered priorities.
At the same time, organizations across the field pushed for stronger equity considerations in funding policy. Amid heightened awareness of racial and economic disparities, EdTrust released Re-Imagining Outcomes-Based Funding, a report examining how existing state funding policies addressed equity concerns and recommending ways states could better align outcomes-based funding models with equitable student success.
The report identified five equity-centered metrics states should incorporate into outcomes-based funding systems and emphasized the importance of making equity measures central, not optional, within state formulas.
Together, these efforts reflected a broader policy trend: states increasingly sought to align higher education funding with public goals around access, completion, workforce readiness, and economic mobility.
New Jersey and the Push to Close Equity Gaps
One example of this work emerged in New Jersey, where Brian Bridges, Secretary of Higher Education (2020-2025), led the development and implementation of a new funding formula for the state’s public university system.
Developed amid the ongoing disruptions of COVID-19, the formula sought to address longstanding gaps in student access and success while creating a more equitable approach to distributing state resources.
New Jersey’s work reflected a growing recognition nationwide that funding policy could serve as a powerful tool for advancing equity and improving outcomes for underserved students.
2021-2023: A New Era of Adequacy and Value: Advancements in Post-Pandemic State Finance Policy
The Growing Focus on Adequacy from Illinois
Historically, higher education funding has rarely focused on adequacy, the idea that institutions should receive sufficient resources to fulfill their missions and support student success.
This lack of attention to adequacy has contributed to disparities in institutional capacity, educational quality, and student outcomes, particularly at under-resourced colleges and universities. Increasingly, policymakers and researchers are recognizing that equitable distribution alone is not enough without understanding what it actually costs to deliver a high-quality education.
Adequacy in higher education means ensuring institutions have the financial capacity to support students, retain faculty, maintain infrastructure, and offer relevant academic programs at a high standard.
While many states have explored pieces of adequacy-based funding, Illinois has emerged as a national leader in pursuing a more comprehensive approach.
Beginning in 2021, Illinois launched its Commission on Equitable Public University Funding to develop a funding structure that supports the state’s public universities in a more adequate, equitable, and stable manner.
To help guide these efforts, Robin Steans, President of Advance Illinois, and other advocates worked to advance a student-centered vision for higher education finance that aligns institutional funding with the real costs of serving students effectively.
Texas and the Rise of “Value”
While Illinois focused on adequacy, Texas advanced reforms that paired adequacy with outcomes-based measures and a growing emphasis on value.
Increasingly, states are asking not only whether institutions are funded sufficiently, but whether those investments lead to meaningful outcomes for students and the workforce.
Yet “value” is not always easy to define. Policymakers continue to wrestle with how to measure value in ways that reflect student success, economic mobility, workforce demand, and broader public goals.
In Texas, these conversations have shaped funding reforms that align state investments with student outcomes, workforce needs, and credentials that generate strong returns for learners.
Ray Martinez, President and CEO of the Texas Association of Community Colleges, has been a leading voice in these efforts, highlighting how states can combine adequate funding with accountability for meaningful outcomes.
Texas is not alone. Across the country, states are increasingly connecting funding systems to labor-market outcomes and credentials of value.
In North Carolina, the community college funding model known as Propel NC aligns funding more directly with workforce demand and high-return credentials.
Louisiana incorporates “4- and 5-Star Jobs” into its funding formula through the state’s Star Jobs Rating System, linking investments to employment growth and wage outcomes.
In Arkansas, the ACCESS legislation adopted in 2025 calls for integrating return-on-investment measures into statewide funding strategies.
Together, these efforts illustrate how states are redefining higher education funding around student success, economic opportunity, and workforce relevance.
2024-Present: Looking Ahead at The National Landscape
Clearly, a great deal has changed over the past 15 years. Higher education has weathered a major recession, endured a global pandemic, and adapted to sweeping demographic, economic, and technological shifts. Institutions and policymakers continue to navigate changing enrollment patterns, growing accountability pressures, and evolving debates about the purpose of postsecondary education in our economy and democracy.
Yet amid these challenges, states have made meaningful progress. Funding formulas have become more student-centered. Equity and outcomes have moved closer to the center of policy discussions. And states are increasingly exploring how to define and invest responsibly and adequately in value.
Still, the work is far from complete.
As higher education continues to evolve, state leaders are advancing funding strategies focused on affordability, completion, workforce relevance, and economic mobility. By aligning investments with outcomes that lead to better jobs and fuller lives, states are reshaping how higher education serves today’s learners and tomorrow’s workforce.
This future-focused vision is reflected in Lumina Foundation’s Goal 2040, which calls for 75 percent of adults from all backgrounds to hold a high-quality degree, certificate, or credential of value by 2040.
Meeting that goal will require renewed commitments to quality, opportunity, affordability, and student success across the entire postsecondary ecosystem.
To close this conversation, Michelle Asha Cooper, Vice President for Public Policy and Executive Director at Lumina Foundation’s D.C. office, offers perspective on the evolving concept of value and the steps states must take to align funding systems with meaningful educational opportunity and long-term economic mobility.
The Work Ahead
Our last video brings us to the current moment in higher education finance. Over the course of this series, we’ve explored how higher education funding has evolved over the past 15+ years. But the most important work still lies ahead.
As the nation faces rapid economic transformation, demographic change, and growing expectations for postsecondary value, the way we fund higher education will continue to shape who has access to opportunity and who succeeds.
Funding is not simply a technical policy issue. It is a powerful tool for advancing equity, strengthening institutions, and expanding opportunity.
The mission of higher education has always been rooted in creating pathways to a better future. Ensuring that promise holds true for every student will require thoughtful, student-centered investment and continued collaboration among policymakers, institutions, advocates, and communities.
Together, we can shape the next chapter of higher education finance in ways that meet today’s challenges and build a stronger future for all learners.
Thank you for joining us in this conversation and for remaining engaged in this important work.
Contact Us: If you would like to find out more or begin to engage in these critical conversations in your state, give us a shout!
