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 academia. "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 find none. 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 said. 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 education. "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 long run." 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.