Study Turns Higher Ed Debate Upside Down
Since 1960, states that tend to spend the most on their higher education system see less economic growth than those that invest less, according to a Mackinac Center study released today.
In a study that would seem to refute claims made by the Gov. Jennifer GRANHOLM administration and the public higher education community, Richard VEDDER and Matthew DENHART reported today on the hypothesis that more money spent on public universities does not promote economic growth.
The duo also report that contrary to higher education officials crying poor over the last several years, state universities have not experienced dramatic financial cutbacks despite state budget hardships. Rather, the success of a state's higher education system is based more on whether the graduating students emerge with "in-demand degrees" than "dollars in, dollars out."
"It would be a mistake for Michigan to rely on greater efforts in higher education as a primary means of promoting growth," reads the study Michigan Higher Education: Facts and Fiction," adding that claims that weak state investment in its public education system is contributing to Michigan's economic hardships are "overblown."
The study compared the money Michigan spent on higher education to neighboring states Illinois and Ohio. From 1980 to 2002, both states enjoyed higher per capita income than Michigan even though Michigan had the largest higher education spending commitment.
From 1977 to 2000, North Dakota spent between 2.78 to 2.88 percent of its personal income on higher education while South Dakota spent between 2.03 and 1.56 percent. Nonetheless, South Dakota showed considerably more economic growth during this period. The study also relied on United Van Lines data that showed North Dakota and Michigan had the highest proportion of outbound moves in the country.
From 1980 to 2000, the 10 states with the most rapid economic growth expanded their spending on higher education at a modest pace, 1.31 percent to 1.44 percent of personal income. Meanwhile, the 10 slowest-growing states reported higher education spending between 1.8 and 2.21 percent of personal income.
On the other point, the study showed that from 2000 to 2004, the University of Michigan at Ann Arbor showed revenue per student rising more than 30 percent as the state's economy sank. While research grants, hospital revenues and other non-academic funds contributed to this growth, the researchers say the evidence supports the notion that UofM-Ann Arbor was expanding operations while the rest of the state was stuck in economic stress.
The study came the same day as the Michigan Fiscal Responsibility Project, a coalition of groups supporting increasing state revenue, released a printed comparison of state spending on higher education among the 50 states.
It shows that only Colorado and Missouri has disinvested more from its public university system over the past five years than Michigan (10.1 and 9.9 percent compared to 8.1 percent). Only three states * Colorado (9.9 percent), Iowa (13.0 percent) and West Virginia (13.2 percent) * has increased its state spending on public universities at slower rates than Michigan (18.1 percent) over the past 10 years.
"As universities start to deal with tuition increases in the weeks ahead, it is important to have perspective on why those increases are needed," wrote David WAYMIRE. "Cuts in state appropriations force universities seeking to maintain quality to raise tuition more than if the state had made appropriate investments in this vital state service."
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