Public Funding for the Arts: 2012 Update

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Government grant funding for the arts in the United States originates from three primary sources: federal appropriations to the National Endowment for the Arts (NEA), legislative appropriations to the nation’s state arts agencies, and direct expenditures on the arts by local governments. All three public funding streams have experienced declines in the past decade, reflecting a recessionary economy and stagnant (or in some cases even declining) public revenues.

2012 Funding Levels

FY 2012 continued the overall trend of decline. The federal government, states, and localities appropriated a combined $1.12 billion to the arts in FY 2012, for a total per capita investment of $3.58 billion. Comprising this total was:

• $146 million in appropriations to the NEA, a decline of almost 6 percent from 2011;
• $260 million in legislative appropriations to state and jurisdictional arts agencies, a decline of about 5 percent from 2011;
• An estimated $706 million in direct expenditures on the arts by county and municipal governments, a decline of around 3 percent from 2010.

Trends Over Time

Over the past 20 years, total public funding for the arts by federal, state, and local governments increased by 12 percent. Each layer of government, however, has displayed a slightly different pattern. These patterns are further illuminated by examining both 20-year and 5-year trends:

• Local government funding for the arts grew by 33 percent between 1992 and 2002 and reached an all-time high of $858 million in 2008. Since 2008, local government funding has decreased by 18 percent, close to 1998 spending levels.
• Appropriations to state arts agencies grew by 110 percent between 1992 and 2001, reaching an all-time high of $450.6 million in 2001 before decreasing to $354 million in 2008. Since 2008, state appropriations have decreased by 27 percent, close to 1996 spending levels.
• Federal funding for the arts has been the smallest part of the public funding total and has been less volatile over time. Although NEA funding has fluctuated since 2008, the 2012 budget is less than 1 percent changed from the 2008 budget. In 1996, Congress cut the NEA’s budget by more than 40 percent from the high point of $176 million in 1992. Federal arts support has not fully recovered from that decrease in the two decades since. The greatest percentage of growth over a similar span of four years was the 28 percent increase in arts funding built up between 2005 and 2010. In the past two years, small cuts have set the NEA budget back to its current level of $146 million.

In addition to exhibiting reductions in aggregate terms, public funding for the arts has not kept pace with the cost of doing business. When adjusted for inflation, total government funding for the arts has contracted by 31 percent since 1992; congressional appropriations to the NEA declined by an inflation-adjusted 49 percent between 1992 and 2012. State funding declined by 25 percent and local funding declined by 28 percent during that same period.

Future Outlook

When examined over the last 45 years, arts funding typically has rebounded in the wake of economic recovery. However, continued economic uncertainty, structural weaknesses in public financing systems, and political uncertainty complicate predictions for future public funding of the arts. Due to the well-documented lag of public-sector budget recoveries, few government arts agencies are expecting rapid resource rebounds in the near future. Federal trends can be affected by national fiscal policy, which has the potential to adjust dramatically in an election year. The prospect of federal budget sequestration further clouds the near-term horizon, since the ripple effects of federal sequestration will be felt across all three tiers of government.

Nevertheless, some modestly encouraging news is developing for public arts funding in 2013. State legislatures increased total appropriations to the arts by 8.8 percent for the new fiscal year, and 14 agencies expect budget increases of 10 percent or more. While this is potentially positive news for the sector, the median percentage increase for all states was 0.5 percent, meaning we’ll need more data before knowing whether or not this turnaround has momentum. Since both state and local government budgets have followed economic conditions as reflected in longitudinal data on public arts funding, a turnaround in 2013 local arts expenditures could signal a more robust recovery.

Overall, consideration of current data along with current economic and political situations reflects a time of uncertainty for future public funding for the arts. These considerations underline the need to ascertain not only public funding levels but also how federal, state, and local agencies have adjusted to funding cuts. Monitoring both funding trends and structural adjustments to arts agencies and organizations will allow the field to continue to understand the implications of public funding cuts over time.