PROFESSOR URGES SLOWER HIGHER ED GROWTH
The Granholm administration has urged that the state find ways to
increase the number of college graduates as a way to improve the state's
economy. And many have taken that call a step further, seeking
additional state funds for colleges and universities to provide spaces
for those potential graduates.
But Richard Vedder, professor of economics at Ohio University and a
member of the Center for College Affordability and Productivity, told
those gathered for the Mackinac Center for Public Policy Issues and
Ideas Luncheon that such a funding increase for higher education could
actually hamper economic growth.
Mr. Vedder said his review of state spending for colleges and
universities over the past 30 years has shown that those states that
more rapidly increased those appropriations saw their economies grow
more slowly or decline compared to states that were less generous to
"I beat this model up every which way I could and I continue to find no
positive correlation between university spending and economic growth,"
Mr. Vedder said.
And he said a boost in higher education appropriations also does not
appear to show a long-term payoff. He said he checked states for
delayed growth based on a spurt in higher education spending and could
Among his comparisons, he said North Dakota and South Dakota have
nearly identical demographics but, during the 1977 to 2002 period he
studied, the former increased its university spending and saw its
economy slow while the latter slowed its higher education appropriations
and saw its economy grow more quickly.
He said he found the same comparisons among Michigan, Illinois and
Ohio. Michigan grew its higher education appropriations more quickly
between 1980 and 2000, yet saw its economy grow more slowly than its two
similar neighbors. And he said that corrected for other economic
differences between the states.
Mr. Vedder said there are statistics that would, at first glance,
appear to support those calling for more university funding. "They
very factually point out that college graduates earn a great deal more
money than high school graduates do," he said of those urging both more
graduates and more funding for higher education.
But he said the argument assumes that the earning potential is tied to
the degree. "It ignores that much of the productivity of college
graduates is not from the degree but from personal attributes," he
Mr. Vedder argued that most of those who have college degrees would
earn more than those who currently hold only a high school diploma
because they have greater motivation and innate intelligence.
And he argued the current push for more college students and college
graduates may bring in students to higher education who are not prepared
to succeed. "Low-income kids don't do very well in college in all," he
said, also arguing that universities should, at a minimum, look to
contract out the remedial courses that are becoming a growing part of
the college experience.
Even if the earnings are tied to the degree, he said more spending will
not necessarily mean more graduates, or more graduates in the state.
Once students have a degree, there is little to tie them to the state
where they earned it.
"Educated people are more migratory anyway," he said. "High economic
growth states get college graduates."
But he also noted there is little data tracking where students go once
they graduate and how long they stay either in their home state or in
the state where they attended university.
Mr. Vedder argued it is also a fallacy to argue that more state
spending for higher education will mean more access to higher
"The best I can tell, 30 cents of every new dollar in state
appropriations ends up in tuition relief for students," he said. "It
doesn't really mostly go for lowering costs or increasing access."
And he said it would take a substantial change in state appropriations
to make a noticeable change in the number of college students. For
each 20 percent increase in state appropriations, 1 percent of those not
now attending higher education would be able to go.
"I think it is time for us to show some tough love for the
universities," he said. "The state's that neglect their higher
education systems are not going to face the difficulties the university
people would have you think," he said.
But he also balked at the idea of eliminating all state funding.
"That would be a radical experiment that I wouldn't want to do," he
said. "I think it would be a risky move in the short run and in the
He argued for academia to begin showing some performance in terms of
graduates and the quality of those graduates for the money it gets.
Mike Boulus, director of the Presidents Council, State Universities of
Michigan, said the schools have been concentrating on graduation rates.
"We don't talk about the role of appropriations. We talk about the
role of educational attainment," he said.
But he also said that the recent cuts and flat budgets, combined with
increasing enrollment, have affected access to higher education for
some. "You don't lose $250 million in state aid and not have it impact
operations and tuition," he said.