Pa. #4 for college spending cuts since '08

Pennsylvania state government has cut 36% of its spending per pupil for higher-education (college) funding since the 2008 recession -- more than any other state except Arizona, Louisiana and Alabama, writes Tom Kozlik, municipal-bond strategist at PNC Capital Markets LLC in Philadelphia. On average, states cut higher-ed per-pupil spending by almost 20%. New Jersey cut 22%, Delaware cut almost 7%.

But squeezing college students wasn't enough to save Pennsylvania from poor fiscal performance: the state issues the third-most-expensive debt (and suffers third-worst Moody's rating) among U.S. states. Only Illinois and New Jersey have lower Moody's ratings and debt that they have to pay investors more to buy. (Delaware, with its Aaa credit rating despite its high debt load, shares with Georgia, North Carolina, Utah and Virginia the distinction of paying the nation's lowest bond rates.) 

By contrast: Pennsyvlania was one of just 16 states that boosted K-12 funding per student, up 1% since 2008, or less than the rate of inflation. (Oil-rich North Dakota was the only state to boost K-12 spending more than 10%. By contrast, Texas cut both K-12 and college spending, per pupil.)

Behind the cuts: Eight years after the financial crisis, state tax revenues through last year were barely above the levels of 2008, Kozlik concludes. (After the 2001 recession it took half that long to turn solvent; in prevoius recessoins, less than two years.) "Many state budgets (remain) strained," and states are feeling stronger pressure to boost spending than to boost taxes or fees to pay for it," Kozlik adds.

(Revised)