The Bipartisan Policy Center has called for a major federal investment in college affordability via block grants to states. One vital goal of this new initiative should be to prepare states to weather future economic downturns so that support for higher education affordability is not lost to recession-driven budget cuts. BPC proposes using a flexible federal block grant program that would split funding between new affordability dollars and rainy day funds that would automatically fill gaps in state budgets caused by a recession.
Such an approach raises policy design questions about the rainy day funds: how large do they need to be? How quickly could they be filled? Should funds be drawn solely from federal block grant funds or also from state matching dollars? BPC’s new rainy day fund modeling and interactive tool sheds light on these questions. You can test your own policy design with the tool, which calculates the impact of changes to policy parameters for your chosen state’s rainy day fund, including how long it would take to fill that fund. You can also download the data for all 50 states.
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