College Spending No Guarantee of Economic Success

There is a surprising amount of variety in how states manage their public universities. Some, like North Carolina, have direct control over state universities, with tuition rates set through state policy. Michigan is toward the other end of the spectrum. While our public universities are state entities, Michigan gives them a lot of autonomy. One of the few policy discussions that happens every year, however, is how much taxpayer money to give them.

That is where the Mackinac Center can offer insight.

The case that university supporters have made for more money has been largely economic. My colleague Jarrett Skorup and I sat in on a presentation from the Michigan Association of State Universities. Its director, Daniel Hurley, said more taxpayer money for universities means more graduates and in turn higher incomes for all of us.

But neither assertion holds up under scrutiny, a fact we found out by looking at taxpayer support of state universities nationwide. States that distribute more taxpayer money to their state universities tend to have a smaller percentage of people with a college degree. And increasing the number of people with a college degree does not improve a state’s economic situation.

Trying to bring about economic prosperity by blanketing state universities with taxpayer dollars doesn’t work. It is, instead, a costly proposition that provides little return.

Some people want government to redistribute wealth. But while a degree can be the ticket to the middle class for some, our state university populations are heavy on students from middle and upper classes.

Our work may be catching on with policymakers. When officials found out that state revenues would not go up as much as they had earlier thought, lawmakers put the brakes on increases for higher education.

Many of our friends are financial supporters of their alma mater, and it is reasonable to consider a gift to an institution that has helped you succeed. State universities already act like independent institutions seeking voluntary support, and they should be encouraged to do so. But we should dial back the forced support from state taxpayers.