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Original article URL: http://bridgemi.com/2013/02/michigan-politicians-starve-the-engines-of-economic-growth-universities/

Phil's column

Phil Power is founder and chairman
of the Center for Michigan.

Michigan politicians starve the engines of economic growth: universities

While we consider Gov. Rick Snyder’s budget message – to be delivered Thursday — we might want to look at some facts underlying our economy.

The (persistently) bad news: Since 2008, Michigan has slashed state support for public colleges and universities by 21.5 percent.

The (sort-of) good news: We rank only 11th among states in cutting support for higher education. The top cutters in order were Arizona (down 36.6 percent), New Hampshire (down 35.7 percent) and Louisiana (down 31.2 percent).

I used to think Michigan topped the list of states cutting support for universities; it’s nice to know we’re only 11th. I’m afraid that won’t cut much ice with Michigan families. Though, who have had to pay sharply increased college tuition and incurred skyrocketing student debt, the direct result of reduced state appropriations.

Nationally, states are spending 10.8 percent less on higher education than they were five years ago, when the recession began.

All these data come from Illinois State University’s Center for the Study of Education, recently published at atlantic.com.

The ISU report shows two other ways to look at state spending on universities: per capita and per $1,000 in personal income. Here’s how we stack up in comparison with some of neighboring competitive states:

Michigan: Total spending: $1,596,000,000

Spending per capita: $161.52

Spending per $1,000 personal income: $4.33

Ohio: Total spending: $2,040,000,000

Spending per capita: $176.71

Spending per $1,000 personal income: $4.50

Indiana: Total spending: $1,555,000,000

Spending per capita: $237.91

Spending per $1,000 of personal income: $6.44

Minnesota: Total spending: $925,000,000

Spending per capita: $238.93

Spending per $1,000 of personal income: $5.22

We spend less per person and less per $1,000 in personal income than our nearby competitor states. Indiana, which adopted Right to Work legislation two years ago, is more likely to benefit more from support for its universities than any changes in its labor law.

So do states benefit from spending on higher education, particularly for research universities?

You bet.

The University Research Corridor, a consortium of the University of Michigan, Michigan State University and Wayne State, generated $15.5 billion in economic activity in 2011, up 20 percent since 2006, according to a recent report by Anderson Economic Group. This translates to 74,000 direct and indirect Michigan jobs and $375 million in increase d state tax revenue for 2011.

The AEG report shows for every dollar the state invested in the three URC universities, it saw $17 in economic benefits. Since 2002, URC universities generated 149 start-up companies, including 18 in 2011.

Doug Rothwell, President and CEO of Business Leaders for Michigan, told me that “Michigan is projected to need about 1 million college graduates in the next decade. To grow the economy, we must make it more affordable for students to get the education they need.” That means increasing state funding based on performance, something that began last year and needs to accelerate.

For more than a decade, there has been a remarkable disconnect between the fact that our universities contribute enormously to Michigan’s prosperity and skeptical attitudes toward them in the minds of our resource allocators. As politicians thinking about running for governor and Legislature begin the process of planning their campaigns, they might want to focus on what investments most directly contribute to Michigan’s prosperity.

Editor’s note: Former newspaper publisher and University of Michigan Regent Phil Power is a longtime observer of Michigan politics and economics. He is also the founder and chairman of the Center for Michigan, a nonprofit, bipartisan centrist think–and–do tank, designed to cure Michigan’s dysfunctional political culture; the Center also publishes Bridge Magazine. The opinions expressed here are Power’s own and do not represent the official views of the Center. He welcomes your comments via email.

7 comments from Bridge readers.Add mine!

  1. Donna Anuskiewicz

    Thank you for an insightful analysis of cuts to higher education. My husband and I discussed this problem recently, noting how easy it had been for young people and their parents to pay for college when we were coming up. Donna Anuskiewicz

  2. Duane

    It is interesting how Mr. Power is always complaining about not spending enough taxpayer money, but he never seems to be interested in what value is being recieved for the money that is being spent.

    Does anyone really know what Mr. Power feels the taxpayer should be getting for their money? Does he think that post K-12 education should lead to jobs that return more than it cost to be educated for, or should it lead to jobs at all? Just as Mr. Power never describes what expectations he has for pre-K, K-12, and now not even for post K-12 education. I wonder if he just thinks that taxpayers money should be thrown at education because it sounds like ‘good intentions’.

    Mr. Power seems to believe that what is most important is in Michigan’s relative standing in spending money and has no interest in the quality of what we get for that money. In my community there are fewer kids ate prepared to go to college than ever and yet Mr. Powers wants us to pay more for colleges that they can’t get into.

    It only seems Mr. Power is all about money, spending, and taxing and never aboutholding those accountable for what they spend.

  3. Jeffrey L Salisbury

    “Michigan is projected to need about 1 million college graduates in the next decade. To grow the economy, we must make it more affordable for students to get the education they need.” —- never mind the mathematical impossibility of such a claim, just believe.

  4. Jeffrey L Salisbury

    In 2010 the percentage of 25-34 year olds in the US with some kind of post secondary degree rose half a percentage point from 38.8 percent to 39.3 percent. In Michigan, 434,937 people aged 25-34 had some kind of post secondary degree in 2010. That was 37.2 percent of that age group. The estimated population of Michigan in 2010 was 9,883,635. Starting to get the picture? A million MORE people with a COLLEGE degree? Mathematically impossible.

  5. Donna Sickels

    Looking over statistics we are spending more total spending, but less per capita. WHY? Where is the money going?What are the other states doing that they get more per capita then we do.? Maybe if this was looked into, something could be done?

  6. CES

    There are a few problems with Mr. Power’s suggestions that we spend more on public colleges and universities. One of the biggest problems is that more than 75% of the graduates from our largest universities leave the State. Unless we fix our State economy and make our cities more attractive for our graduates, we are spending more money to send students elsewhere. I believe that is what Mr. Snyder is all about although he often seems to be fighting an uphill battle in this regard. Secondly we might look at what our State colleges and universities are actually spending their money on. Has anyone seen the luxurious dining facilities in the MSU Brody complex or the luxerious dorms at GVSU? Maybe we should consider ramping up the much less expensive community college model if getting a higher percentage of our youth educated is the goal..

  7. David Kessel

    A visit to the metro Boston area shows the effect Universities can have on a city environment. Within the radius of perhaps 20 miles, we find MIT, Harvard, Boston University, Boston College, Tufts, the Massachusetts General Hospital, Harvard and Tufts medical schools, the New England Conservatory of Music and several lesser institutions. They bring billions of dollars per year into the local economy. Meanwhile, the Legislature continues to find new and inventive ways to starve the Universities in SE Michigan.

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