Why We Shouldn’t Be Cutting Higher Ed

Reducing our investments in public colleges and universities — one of our great engines of economic development — may cost more than it saves.
by | June 4, 2012
 

In this month's issue of Governing, Peter Harkness explores what is happening in higher education as state colleges and universities raise tuition while funding from state government becomes a smaller and smaller part of their operating budgets. Some of them are attempting to become truly private and give up the state funding; others are becoming private in fact if not in legal terms.

The problem with all this is that the cost of the states' lack of investment in their higher-education systems may actually be greater than the amounts they're "saving" by cutting back on funding. Along with infrastructure, education is the other great engine of economic development — the "seed corn" from which future wealth will grow, especially in an increasingly global and technological world. States and localities collectively pour billions of dollars into economic development in search of jobs, while evidence shows that investment in education works better.

The GI Bill after World War II arguably was a major driver of the booming economy of the 1950s and '60s. California's enormous growth after the war was tied to what was then the nation's best system of public higher education. And the City University of New York has long been an engine of growth for New York City.

If these illustrations don't convince you, look at the data in a recent report done by The Economist for Citibank. "Hot Spots: Benchmarking Global City Competitiveness" points out that cities account for 80 percent of the world's GDP. The report, which focuses on 120 cities around the world, ranked New York City number one in global economic competitiveness. In a section of the report entitled "Talent, jobs, and the quality of life," the analysis shows a direct correlation between investment in human capital and economic competitiveness.

David Birdsell, dean of the School of Public Affairs at CUNY's Baruch College, told me that its master's in public administration program, one of the country's top such programs, has the lowest tuition in the nation. Last week it graduated 403 new MPAs, virtually all of whom will stay in New York City. That's a small part of what put the city at the top of that Economist list of globally competitive cities.

The New York Times reported recently on a growing divide among metro areas between those that attract a high percentage of college graduates and those that do not. People with college degrees earn far more than those without degrees, and young, talented, well educated people attract others like themselves.

Some city leaders are beginning to understand as never before the impact of an educated population on their cities' economic health. They are working to extend higher education to a greater proportion of their population and to keep the people they educate from moving elsewhere. They understand that there is no better long-term economic strategy than to invest in human capital. Governors and state legislatures need to get that message as well. No matter how bad times get, don't eat the seed corn.

Mark Funkhouser  |  Director, GOVERNING Institute
mfunkhouser@governing.com

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