by James A. Bacon
Virginia’s higher ed lobby is brandishing a new economic-impact study as it pushes an agenda for more state spending on… higher education.
The state’s $10.8 billion system of public colleges, universities and affiliated hospitals is an economic engine of the commonwealth, contends a new report issued by the Virginia Business Higher Education Council. As a VBHEC summary puts it, the state investment in higher ed “more than pays for itself.”
- For every tax dollar the state invests in public higher education, the result is more than $17 in increased economic activity (GDP).
- For every tax dollar the state invests in public higher education, the result is $1.29 in new state tax revenues.
Unsurprisingly, the Council uses these findings to bolster an array of state spending initiatives. Among the proposals that explicitly call for more state dollars in the Council’s “Grow by Degrees” policy agenda:
- Provide state funding for college-level programs that emphasize leadership skills, character development, personal and business ethics, and civic engagement.
- Provide enhanced state grants to reduce third- and fourth-year tuition costs for students who attend two years of community college, earn an associate degree and complete their bachelor’s degree at a four-year college or university.
- Provide incentive funding to enable Virginia’s public colleges and universities to give students the option to purchase four-year tuition guarantees.
- Provide state funding for student work-study programs as part of student financial aid packages.
- Reduce student debt by increasing state support of financial aid targeted at middle-income students and families caught in the “middle-class squeeze.”
Meanwhile, here’s the university agenda for restructuring, cutting costs and making higher education more affordable:
That’s right. The universities are proposing nothing. In a word, they want more state money so they can continue doing the same thing, the same way. Pathetic. The industry is in the midst of its greatest upheaval since the founding of higher education in America, and it’s business as usual. The political establishment and business community are so supine and unquestioning — Governor Bob McDonnell and the two candidates for governor, Ken Cuccinelli and Terry McAuliffe, all issued statements indicating that they are on board — that the higher ed lobby doesn’t even feel the need to provide a fig leaf of self-reform.
With such herd thinking, no wonder Virginia is losing its mojo. Sad, sad, sad.
Law of Diminishing Returns. Let’s get back to that economic impact study. There is no question that higher education makes a positive contribution to Virginia’s economy. It is an essential institution. However, the study never grapples with the law of diminishing returns — a concept I learned in Economics 101 at the University of Virginia but which appears to have gone forgotten in the hallowed halls of academia.
While it’s entirely possible that the first $1 billion dollars of state support generates an extremely high economic and social Return on Investment, it’s likely that expenditure of each successive $ billion generates a lower return. There is nothing in the study to support the notion that the expenditure of millions of dollars more on the likes of “character development” and “work-study programs” will generate a 17-to-one return.
Questions not asked. Equally important are questions that the higher ed lobby don’t ask: What would be the economic return if colleges and universities (a) trimmed top-heavy administration, (b) reformed the tenure system, (c) restructured academic offerings to weed out outdated disciplines, and (d) used technology and online learning to more aggressively restructure the 500-year-old practice of organizing classes around professors delivering lectures in classrooms?
Why is the onus on the taxpayers to cough up more money? Why isn’t the onus on the universities to innovate and restructure?
This “Grow by Degrees” initiative represents the raw self interest of complacent educrats dressed up as economic development, and nothing more. Members of the “Grow by Degrees” coalition — a Who’s Who of Fortune 500 companies, CEOs and former CEOs — should be ashamed of themselves for serving up this self-serving pabulum. And citizens should be alarmed that Virginia’s education-industrial complex can think of nothing more creative to advance the condition of higher education than calling for another raid on taxpayers.
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