More Higher Ed Spending Questionable

As state politicians are primed to deliver $82 million more this year to state higher education institutions, it is appropriate to ask what taxpayers will get for this spending.

Unfortunately, there will not likely be much to show for it.

The only direct reward for state taxpayers is a promise that tuition will not increase on Michigan residents as much as it might otherwise. That's not to say that tuition will decrease because of the extra 5.7 percent in state spending. Institutions will just be limited to increases at double the rate of inflation if they want to be eligible for extra "performance funding."

Even so, a small number of Michigan residents will be directly affected by this because only a small number of Michigan residents go to state universities. There are 255,657 Michigan residents in its state universities, or 2.3 percent of the state population. This is a large payment for a limited constituency. And that constituency tends to be well-off already. Only 28.2 percent of Michigan university students receive the federal needs-based Pell grants.

Nor are there guarantees that university appropriations will lead to more college graduates. This is especially important when only 60.7 percent of Michigan public university students graduate within six years. Some funding is now based on graduation rates among other variables, but such encouragement may not deliver on their intentions.

Nor are obtaining college graduates the key to economic growth. There is no apparent relationship between the states that are successful in increasing their college graduate populations and those growing their economies.

Spending more on higher education might be appropriate if there were large spillover effects from the increase. The benefits are not seen in the data, however. A 2006 study by Richard Vedder found a negative association between state appropriations for higher education and state growth.

Some of the reasons for the pressure to increase state university funding are understandable. Universities are scattered around the state and are a large presence where they are located. During Michigan's decade-long recession, state appropriations to universities were cut. Now that the economy is recovering, legislators are letting state universities share in the gains.

But this does not justify spending additional taxpayer money, especially at a time when legislators are struggling to perform some core functions. Unless legislators can get a clear idea about what state university appropriations will actually do, they can get a bigger bang for the public buck elsewhere.