Updated May 27, 2013, 8:11 p.m. ET
By AMY SCHATZ
After cutting spending on public colleges and universities during the economic crisis, many state governments have begun to boost higher-education budgets once again.
Lawmakers in Indiana recently approved a $500 million funding increase over two years for state colleges and universities, a 14.6% increase, following four years of cuts. New Hampshire’s governor has proposed increasing the university budget for the coming academic year by $20 million, or 37%. And state lawmakers in Florida recently approved a budget that increases higher-education funding by $314 million, or 8.3%, following seven years of cuts.
The new funding reflects the brightening financial picture in many state capitals. Tax revenue in 47 states rose last year, according to Census Bureau data. Government revenue collections for all states increased by an average of 4.5%.
“It’s going to be a better year for higher education,” said Julie Bell, who oversees education issues at the National Association of State Legislatures, which represents state lawmakers.
The 2008 financial crisis and subsequent years of economic weakness have been challenging for state governments. Cash-strapped states across the country cut funding for public colleges and directed scarce resources to primary and secondary schooling, Medicaid and prisons. The budget squeezes sparked debate in state legislatures about whether public-university systems had been doing enough to control spending, including runaway administration costs at many schools.
Overall state spending on public colleges and universities has fallen for five consecutive years, according to data collected by the State Higher Education Executive Officers Association. All but two states—Wyoming and North Dakota, which both are benefiting from natural-resources booms—are spending less per higher education student this year than they did in 2008, after adjusting for inflation, according to the Center on Budget and Policy Priorities, a left-leaning think tank in Washington.
As subsidies fell, many state schools increased tuition, enlarged classes and deferred maintenance.
The turnaround began last year, when 32 states increased funding to public colleges and universities for the current academic year, up from 17 states the year before, according to data from an annual survey by Illinois State University. Many of those increases were modest: Ten states lifted higher-education funding by less than 1%. It isn’t yet clear how many states will increase funding for the coming academic year because many haven’t yet completed their budgets.
In California, where state officials announced a budget surplus, Democratic Gov. Jerry Brown proposed spending more on public community colleges and universities—anywhere from $1,503 to $2,491 more per student—through the 2016 school year.
“Historically, funding for higher ed tracks the economy,” said James Palmer of the Center for the Study of Education Policy at Illinois State University. “As the economy gets better, state funding for higher education increases. That’s been the pattern.”
The states that already have raised their higher-education budgets have various plans for spending the new money. In Indiana, about $388 million of the $500 million in new funds will be used for capital improvements at schools, mostly to refurbish older buildings, said Teresa Lubbers, Indiana’s Commissioner for Higher Education, who oversees funding for state colleges and universities.
When they approved the increase, Indiana state lawmakers told schools they expected tuition to increase by no more than 2% in the coming academic year. “If we’re going to recommend a significant investment in higher education, we have an expectation at keeping tuition [increases] to no more than the rate of inflation,” said Ms. Lubbers.
In Minnesota, lawmakers recently approved $250 million in new spending at public colleges and universities. About half will fund a two-year tuition freeze, with some of the rest going to tuition relief for low and middle-income students. Tuition and fees for state residents at the University of Minnesota have been rising rapidly for a decade, a period that also saw increases in administrative costs.
Florida, in addition to the $314 million of new funds, restored $300 million cut previously. It plans to allocate some of the additional money to address deferred maintenance, and some to create a new online-degree program.
“Over the past seven years, we’ve been tightening our belts,” said Kim Wilmath, spokeswoman for the Florida Board of Governors, which oversees public colleges and universities. “After so many years of cuts, to see targeted investments in quality is exciting.”
Not all states are increasing education spending. Budget hawks in some states argue university administrators haven’t cut wasteful spending enough and could do more. Others argue schools are doing a poor job of preparing students for life after college.
In Kansas, lawmakers are seeking to reduce higher-education spending by as much as 4%. But Republican Governor Sam Brownback is resisting, wanting instead to keep higher-education funding flat over the next two years.
In North Carolina, first-term Republican Governor Pat McCrory is pushing a $139 million budget cut for the state’s public-university system.
Earlier this year, Mr. McCrory complained on a national talk-radio show that the state’s public universities and community colleges aren’t preparing students for the job market. He advocated changing how schools get funding “not based on how many butts in seats, but how many of those butts can get jobs.”
University of North Carolina President Tom Ross responded that the school’s value to the state “should not be measured by jobs filled alone.”
Write to Amy Schatz at Amy.Schatz@wsj.com