Not long ago, forecasts for state appropriations to higher education were gloomy as the credit crisis, a slumping housing market, rising energy costs and unemployment, and sagging consumer confidence took their toll on state finances. The budget news emerging from many statehouses for colleges and universities has been better than expected. This article reports that in many states, higher education has been spared the deep cuts being required of other state agencies. In some states, lawmakers are even providing increases. Unlike in previous economic downturns, cuts in state-university budgets have mostly been proportional to those in other areas. In some statehouses, reductions in colleges' operating budgets have been accompanied by increases in their capital budgets, or in student aid, to lessen the pain. The economic downturn is certainly pushing state budgets into the red: 16 states are facing a combined budget gap of $12-billion for the current fiscal year, which ends on June 30 in most states, and 23 states are predicting shortfalls that are projected to total at least $26-billion for the 2009 fiscal year, according to a 50-state survey released in late April by the National Conference of State Legislatures. In response, some governors and legislators have proposed significant cuts in support for higher education.