Higher Education Cuts Hurt Economic Development

With most state budgets in shambles, higher education has received its share of budget cuts. What is the overall effect of these cuts on economic development? It hurts our ability to grow the knowledge economy here in U.S. communities. It leaves us even more susceptible to international competition for knowledge jobs and businesses.

A receny New York Times article explores these issues further. Click here to read it. (Registration at the NYT website is required.)

More than seven million students are enrolled as undergraduates in four-year colleges and universities in the United States, and nearly 70 percent of them attend public institutions, which depend on taxpayer money allocated by legislatures for the majority of their funds. The percentages are similar for the 1.8 million graduate students; 60 percent attend public universities.

Higher education, it turns out, comes under the rubric of discretionary spending, which is easier to cut than outlays for kindergarten through 12th grade or programs like Medicaid. And states are taking this easier path, according to the National Conference of State Legislatures. During most of the 1990's, outlays for higher education in the 50 states rose substantially. They even inched up 0.7 percent, to $58.2 billion, in the 2003 fiscal year, which ended on June 30, although that was the first year of drastic cutbacks in many states.

This year, the downward pressure is unmistakable. So far, 43 states have approved budgets for the 2004 fiscal year, the National Conference reports, and higher-education outlays have dropped by 2.8 percent, to a total of $37.7 billion, from $38.8 billion last year. The final tally for all 50 states may be slightly higher than last year's, but by a minuscule amount.

Be careful with that budget-cutting knife. It could hamper growth in your state in the future.