Hmmm, given that graph, state appropriations appear to be dropping. I’d bet that in constant dollars they are rising, just not as fast as total costs.
That's why I posted two graphs. The first graph shows that the total cost to educate an undergraduate at Michigan State University has gone up $65 from the 2001-2002 school year to the 2012-2013 school year, but the state appropriation per student has gone down by half. And MSU's total enrollment has gone up 10$% in the same time period.