How did State U. get so expensive? A leading culprit is reduced state support. Since 1987, the typical student at a public college or university has seen the government subsidy for her education drop by $2,337, or roughly one quarter. And in prior research, the author found that every $1,000 in state divestment leads colleges to raise tuition by about $300. But what explains falling state support? In this analysis, the author looks at state spending decisions over the past 30 years to determine the relationship between state higher-education funding declines and increases in other categories. While we cannot account for every dollar of tuition increases, we can track state spending to see which programs are getting state and local tax dollars, and how that has contributed to declines in higher-education support. The author finds that state and local public-welfare spending is easily the dominant factor driving budget decisions, with a $1 increase per capita associated with a $2.44 decrease in per-student higher-education funding--enough to explain the entire average national decline. In particular, this analysis finds that state Medicaid spending is the single biggest contributor to the decline in higher-education funding at the state and local level.