State support per pupil was lower in a majority of states—29—in academic year 2016 compared with 2008,

Complete report

Nearly 10 years after the end of the Great Recession, state governments have put the worst behind them. But the deepest downturn since World War II also has lived up to early predictions that states would face a “Lost Decade” because of missed economic and revenue growth.¹
The legacy of the lost decade is easily overlooked given the second-longest U.S. economic expansion on record, arguably the longest bull market for stocks in U.S. history, unemployment at near-historic lows, and a recent spurt in the growth of state tax revenue. Although the 18-month recession, which ended in June 2009, may seem long ago, a closer look reveals that many states are still coping with lingering—maybe even lasting—effects on their finances.
Like a family that suffered a job loss or pay cut during the recession, states missed out on billions of dollars in tax revenue. Even if a family’s earnings are now back to par, the household faces consequences from those years when it was unable to save for college, add to retirement accounts, or fix the roof.
Likewise, even though total state tax revenue recovered nearly six years ago from its losses in the downturn, many states are still dealing with fallout from the tough choices they had to make to fill budget holes during the recession, including recent strikes by teachers who went years without pay raises, higher tuition at public universities, complaints from local governments living with less state aid, mounting repair bills for public infrastructure, and smaller state workforces. State policymakers also feel pressure to replenish rainy day funds for the next inevitable downturn, even though their budgets are squeezed by higher health care costs and unfunded pension liabilities.
To be sure, most states’ annual finances were better off heading into 2019 legislative sessions than they had been in 10 years. As The Pew Charitable Trusts’ Fiscal 50 tool shows, states’ combined inflation-adjusted tax revenue was more than 13 percent higher than at its 2008 peak, just before receipts plunged and the lost decade began. States’ rainy day funds collectively held more money than in any year on record. And many governors in 2019 proposed spending increases to help fill some of the holes gouged by the recession, including about 20 seeking pay raises for teachers and at least 17 requesting extra dollars for higher education to curb the need for tuition hikes.²