Public Funding for the Arts: 2014 Update

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Public funding for the arts in the United States is most readily quantified through current and historical funding allocations to the National Endowment for the Arts (NEA), the nation’s state arts agencies, and direct expenditures by local governments. Investments in and through these agencies have been the primary mechanisms for direct public support of the arts for nearly fifty years.

Fiscal year 2014 marked a year of aggregate increases at all three levels: state, local, and federal. This is the first time in six years that all three public funding sources increased over the prior fiscal year. Long-term fiscal pressures on government budgets remain, and revenue gains vary widely by geography. However, recent aggregate increases in arts funding and better economic conditions point to an improved environment for arts funding.

2014 Funding Levels

Fiscal year 2014 is the third consecutive year of growth when combining all three primary public funding sources. The federal government, states, and localities appropriated a combined $1.23 billion to the arts in FY2014, for a total per capita investment of $3.84. Comprising this total were:

• $146 million in appropriations to the NEA, an increase of 5.3 percent over FY2013. (Note that this appropriation would have represented flat funding for the past three years without the sequestration reductions in FY2013.)
• $307 million in legislative appropriations to state and jurisdictional arts agencies, an increase of 10.2 percent from FY2013.
• An estimated $777 million in direct expenditures on the arts by county and municipal governments, an increase of nearly 6.9 percent from FY2012.

Federal, State, and Local Government Arts Funding, 1994–2014

Federal funding for the NEA this year was affected by the process of cuts to federal domestic and defense spending known as sequestration. These were mandatory, across-the-board spending cuts that affected all federal agencies, including the federal cultural agencies.

Trends over Time

During the past twenty years, total nominal public funding for the arts by federal, state, and local governments increased by 19 percent. State and local funding patterns have largely corresponded with periods of economic growth and recession. State arts agency aggregate appropriations reached a high point in 2001, and local funding reached an apex in 2008. Federal funding for the NEA has displayed incremental growth after sustaining large cuts in the mid-1990s.

Although the nominal increase over the past twenty-one years is positive, the landscape for public funding for the arts in this time period is much bleaker when accounting for inflation. In fact, after adjusting for inflation, public funding for the arts has decreased by more than 30 percent in this same period.

Despite these nominal increases, public funding for the arts has not kept pace with inflation. Using 1994 dollars, total public funding for the arts has actually decreased by 26 percent.

Federal, State, and Local Government Arts Funding, Nominal and Inflation Adjusted Dollars, 1994–2014

Note: Inflation-adjusted figures are represented by the corresponding dashed line below for each source. Inflation adjustments are calculated using Bureau of Labor Statistics Consumer Price Index (CPI) figures with a base year of 1994.

Future Outlook

Continued economic and political uncertainty complicates predictions for future public funding for the arts. Particularly worrisome is the continued flat funding pattern being seen at the federal level. Federal dollars help induce additional funds from public and private sources across the country. This relationship is directly observed through the 40 percent of the NEA’s program funds distributed to state arts agencies. In turn, many state arts agencies also provide decentralized funds to local arts agencies. The combination of these public funding sources and the many more matching private revenues that augment publicly funded arts projects and organizations contribute to tens of thousands of arts opportunities across the country. The lack of resource growth at the federal level hampers this ripple effect that could contribute to increased arts activities and their economic, educational, and civic benefits. Federal funding cuts also create a drag on different aspects of state and local budgets, which could lead to a more challenging fiscal climate for many services — including the arts — at other levels of government.

Preliminary data on FY2015 state arts agency budgets indicate a strong likelihood of continued growth in public funding for the arts next year. State arts agency revenues are projected to increase by more than 19 percent in FY2015. If the projection holds true, this would be the third year in a row that state arts agency appropriations have increased. Observed historical trends between state and local funding should predict continued increases for local government expenditures in FY2015. The political uncertainty in Washington, D.C., makes it difficult to forecast federal funding. Committees in the US House of Representatives have proposed major cuts to the NEA budget multiple times in recent years, but to date those proposals all have been overturned in favor of flat funding.

Although the current outlook is modestly positive, public arts agencies have experienced long-term cuts over many years, and the cost of doing business for artists and arts organizations has continued to rise. The result has been decreased grant budgets — and diminished leveraging power of those grants. The recent arts reinvestments by state and local governments are helping to address these issues in some areas, but rebounds are not occurring in every state and locality.

The potential effects of these trends on the larger arts funding ecosystem are complex. Government dollars always have contributed a relatively small portion of total arts dollars in the United States, but public funds comprise a much higher percentage of support received by small, underserved, rural and grassroots groups. The erosion of public grant dollars and their buying power may have a disproportional effect on those communities. Certainly government arts funding declines have led to the elimination of numerous grant programs for small and large grantees alike. However, the declines also may have accelerated the development of other types of beneficial services and policy leadership roles that government agencies are uniquely situated to play.

Beyond Grants

Government arts agencies play many roles that constitute a significant investment in the arts but take a form other than a traditional grant outlay. Among these are the development and implementation of cultural policies that can have a substantial effect on the arts over the long term. For instance:

• Managing public art and percent for art policies and programs to include artworks in civic spaces and public buildings.
• Providing incentives (tax, relocation or promotional) for artist-run businesses in arts and cultural districts.
• Setting and helping communities implement K–12 curricula to ensure that all students receive a meaningful arts education.
• Forging partnerships with other public agencies to link the arts with other public services: veterans affairs, health care, transportation planning, etc.

Such activities can be harder to quantify over time than grants, but they are an important part of the public sector arts leadership portfolio.

The mosaic of funding and policies that support arts activities and arts infrastructure will continue to evolve. Part in parcel of these evolutions, the NEA, state arts agencies, and local arts agencies should continue to exercise policy leadership and administrative nimbleness to steward public funding for the arts in the United States.