Higher ed funding debated

CHICAGO – States in the Great Lakes region that cut taxes rather than invest in higher education are “consuming the seed corn for (their) future,” former University President James Duderstadt said yesterday.

Duderstadt and other higher education leaders met yesterday at the Federal Reserve Bank of Chicago to address the role of universities in what is widely seen as an economic crisis in the region. The conference, titled Higher Education at a Crossroad, delved into universities’ role in saving the region – and perhaps the nation – from global competitors.

As the world moves toward an information-based economy, Duderstadt said, traditional low-skill manufacturing jobs in Detroit are becoming obsolete.

“Today, the economic giant of the great lakes region stands with one foot planted in a waning industrial era and its other foot striding toward the emerging global knowledge economy,” Duderstadt said in his speech.

The solution to the problem, he said, is higher education.

According to Duderstadt, the task of building the high-skilled workforce of the future lies with universities, and their ability to take on that challenge will largely rely on the support they receive from state governments.

The state of Michigan has been hit particularly hard with university funding cuts and subsequent tuition increases, Duderstadt said. The University’s recent tuition increases have been attributed to declining state funding.

“Why is our state not focused on making sure that all of our people have access to information?” University Regent Katherine White said. “Everything’s kind of falling apart. We have to get back to being the innovators.”

A major focus of the conference was finding a way to fortify the midwestern workforce by making a university education accessible for people at all income levels – an issue that has plagued educators and legislators alike.

“We cannot afford to waste talent,” said state Rep. Alma Wheeler Smith, a Democrat from Ypsilanti. “You can’t afford to assign people to lower incomes because they don’t have access to higher education. – We’re telling young people how important higher education is for them at the same time we’re making (it) less affordable. What kind of game are we playing?”

Efforts to address the accessibility issue may actually include higher tuition, said former University Provost Paul Courant, who also spoke at the conference.

“There’s no question that what the universities are up to is increasing tuition and turning around and putting that money back into financial aid,” Courant said. “It’s the right thing to do.” Courant said that while the tag price of college is increasing, the net price for individuals may actually be decreasing.

Duderstadt’s speech was well received at the conference, although some h-d lingering questions about returns on state investments in higher education.

Richard Vedder, a professor at the University of Ohio, offered a different view from what he called the “higher education love-fest.” Vedder said his research had led him to believe that states that dedicate large amounts of money to higher education actually fare worse economically than states that do not.

“The inefficiencies of the higher education community are legion – they’re pervasive. The neglect of students is legion and pervasive,” Vedder said. He added that unnecessary spending at universities creates a drain on state funds that outweighs the benefits it would gain from higher education.

Vedder contended that funding cuts would actually benefit the universities and the nation in the long run by forcing the institutions to trim unnecessary spending.

Jack McCue, a legal researcher for the Mackinac Center for Public Policy, also had concerns about state investment in universities. He said his chief concern about state investment in universities is that talent follows employment opportunities. If Michigan keeps its taxes low to attract businesses, he said, other universities could supply the talent pool.

But other legislators said the benefits of higher taxes – like a strong public university system – are more important for attracting businesses than low taxes.

“We cannot offer new businesses anything more important than an educated and skilled workforce,” Smith said. “We won’t get that without higher education.”

Lou Anna Simon, president of Michigan State University, said although concerns about Duderstadt’s plan may be legitimate, she hopes to see critics come up with viable alternatives.

“(Vedder) reflects viewpoints that we don’t like, but they’re still real,” Simon said. “(But) if you don’t like the Duderstadt answer, then what other answer?”

Neal McCluskey, an education expert at the Cato Institute, a libertarian think tank, is an advocate of a dramatically different position – the complete elimination of state funding for public universities.

“How do you justify people who didn’t have access or just didn’t go – paying for other people to go to college so that these other people can get that extra million dollars (in income that comes from higher education)?” McCluskey said.

But Vedder said it would not be feasible for universities to privatize, at least not within the next decade. He added, however, that he did see it as a possible long-term goal.

University President Mary Sue Coleman has expressed vehement opposition to the idea of privatizing the University. Coleman wrote in a guest column in Crain’s Detroit Business that privatization would make tuition skyrocket.

Democratic state Rep. Smith also voiced opposition to privitzation of universities.

“You’re going to leave school with a 20,000-dollar debt; at a private school, that’s the first year tuition,” Smith said. “I think it would be a terrible direction to go.” She added that it would tear apart previous efforts toward making higher education more accessible to underprivileged students.

But Wick Sloane, a visiting fellow at the Federal Reserve Bank of Chicago, said that as higher education funding continues to dwindle, some universities are effectively privatized already.

Sloane noted that today the state funds a relatively small percent of universities’ costs to educate a student.

“If you can afford to go to college, you will still go – it’s the poor students who are just as smart as you who won’t go,” Sloane said. “They’ll end up on welfare and Medicaid. It’s a public investment to give them an education and let them live a fulfilling life, just like you want to live.”