Public colleges and universities face many compelling challenges in the 21st century, including increased demand for institutional accountability and affordability, as well as a decrease in financial resources. Although tuition and fees are increasing, institutions are still experiencing financial difficulties and public opinion of higher education is disparaging. Leaders within institutions are tasked with developing new and creative strategies to improve the management of both institutional expenditures and financial resources. This paper will explore some of the financial challenges facing higher education institutions, with a focus on cost containment initiatives as a practical option to address budgetary obstacles associated with rising expense costs and reduced financial resources for higher education. Particular attention is given to evidence supporting cost containment practices, and two case studies of institutional leaders took control of their operating costs through the successful implementation of cost containment initiatives. Financial Challenges Over the course of nearly four decades, higher education institutions have felt the impact of progressively subsidizing government funding. In 1980, community colleges received 48 percent of government funding allocated to public higher education, compared to 34 percent in 1995 – a difference of 14 percent over a 15-year period (Gumport, 2003). The regression of public funding for all public higher education went from 44% in 1981 to 32% in 1997 – a difference of 12% (Gumport, 2003). Schmidtlein and Taylor (1996) explain that the state share of support for public higher education has decreased by 6% compared to paper funding. Sectors such as security, K-12 education, and healthcare have begun to gain more attention from government officials, helping such sectors receive a larger share of the government-funded pie (Goldstein, 2005). AASCU (2012) reports that states are feeling pressure from Medicaid programs, employee health programs, state employee pension programs, unemployment insurance programs, and funding commitments for K-12 education. It is estimated that in fiscal year 2012, Medicaid achieved a 29% increase in funding compared to the previous fiscal year (AASCU, 2012). Figure 1 shows the decline in nationwide state support for higher education in fiscal years 2008 through 2013. The largest reductions occurred in fiscal 2011-12, dropping from $78.383 billion in fiscal 2010 -11 to $72.001 billion, a slightly higher reduction 8,1%..