‘Fact Check’ on Higher Education Piece Falls Flat

State aid for colleges still wasteful

In a recent piece in Bridge Magazine, I made two key points: 1) By subsidizing public universities, Michigan taxpayers are redistributing money upward — from middle-class and low-income families to the well-off and educated; and 2) Many Michigan universities are not doing a particularly good job with the money they receive from taxpayers.

On the first point, I focused on the University of Michigan, which receives the most money per student from Michigan taxpayers. I write:

The vast majority of students at the University of Michigan come from wealthy families. Less than 20 percent of students hail from families with a household income below $60,000 while more than 60 percent of students are from families that make more than $100,000. And the university has an endowment of nearly $10 billion – which has helped it continue to cut the cost of a degree even through the Great Recession and state budget cuts.

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As [U-M President] Schlissel has said, “If you come from a family that makes less than $70,000 a year, U-M is free. You don’t pay tuition.”

U-M’s efforts to make college degrees more affordable for low-income families are worthy of praise. But the fact remains that the university primarily benefits students from high-income backgrounds. So the question remains: why should the average Michigan household, which suffered a nearly 20 percent loss of income during the “lost decade,” have to pay higher taxes for universities like U-M that mainly serve the already well-to-do?

A higher education lobbying group responded saying universities have not changed in nearly 1,000 years in their “teaching of and searching for the truth.” The Michigan Association of State Universities called my article “dogma” which “got so many facts wrong.” Below is what the article claims I got wrong and my response.

Wrong Data on State Appropriations: “The state funds colleges at wildly different rates, ranging from about $2,700… to around $11,500 per pupil…”

  • NOT TRUE. The state appropriated a range of $2,711 to $8,568 per student in FY2016. The Mackinac Center decided to leave out select students when they made their calculations and didn’t disclose that in their column. In doing so, they overstated the highest per student funding by 34%.

When doing the analysis to find the cost per student, I only used students from Michigan in the calculation, leaving out students from other states. This makes sense, since Michigan taxpayers should care most about the funding of higher education on behalf of students who are from Michigan. Given that context, my figures are correct. Instead of just labeling them “not true,” the article would have done better by explaining why out-of-state students should be included in this calculation.

Wrong Analysis of Graduation Rates: “The typical Michigan university struggles to graduate more than 60 percent of its students.”

  • MISLEADING. According to the State of Michigan, 67% of students at Michigan public universities graduate within the national standard of six years. Only 44% of these students are even attending full-time, making our state university graduates’ successes even more notable. Universities aren’t mandatory K-12 schools—our students aren’t dropouts if they transfer to another institution or if don’t finish in a set time period; instead, they often continue to take classes on their own schedule. Our students include single parents, adults seeking retraining for the new workforce, and students working full-time.

The numbers I cite in the piece are from 2011, which show that only four of the 15 public universities in Michigan graduate more than 60 percent of its students. The numbers this article cites uses a little bit different measurement. The state of Michigan citation considers it a graduation if a student completes a degree anywhere within six years.

Still, the most recent numbers from 2015 show that six public universities achieved a graduation rate above 60 percent while seven graduated less than 60 percent of their students and two didn’t report. Even given this preferred data used in this rebuttal to my piece, my statement that the “typical university struggles to graduate more than 60 percent of its students” is justified.

Wrong Attributions: “According to MIRS News, University of Michigan president Mark Schlissel said, ‘This isn’t really conservatism, this is radicalism.’ (The income tax cut would have been small enough that the state budget was projected to grow even without this additional revenue.)”

  • NOT TRUE. This refers to the recent showdown in the Michigan House of Representatives over a complete repeal of the state income tax, which was later negotiated down to a tax cut before the vote failed. President Schlissel, and other university presidents and chancellors, spoke with members of the House and was quoted above, on Feb. 21, 2017—almost two days before the 2 AM vote on the amended HB 4001. The Mackinac Center incorrectly attributes President Schlissel’s comments on the original version of HB 4001 to a later draft of the bill that did not even exist at the time. Meanwhile, HB 4001 in its original form would have led to the complete repeal of the income tax without a replacement, nearly wiping out the state’s entire general fund. And that is radicalism, at best—I’d go further and call it nihilism.

Here is President Schlissel's full quote regarding an income tax cut: "My concern is the magnitude of resources that we're talking about -- over $1 billion over the next year or so -- considering the size of the state budget, it's hard to imagine higher ed not being affected with such a drastic, dramatic cut. This isn't really conservatism, this is radicalism."

Based on the full quote, it appears that President Schlissel was in fact referencing the impact of a limited reduction in the income tax rate. The Senate Fiscal Agency said the proposed reduction in the income tax cut rate would have cost the state budget $680 million in year one and $1.12 billion in year two. It’s possible that President Schlissel thought that eliminating the income tax completely would only amount to $1 billion of foregone revenue, but I doubt it.

Wrong State Budget Data: “Since [2007], the state budget has increased by more than $10 billion - significantly more than inflation.”

  • NOT TRUE. Here it is in glorious color: data from the nonpartisan Senate Fiscal Agency shows the size of the state budget from FY2007 to FY2017. And guess what—when you adjust for inflation, that’s only a $4.5 billion increase in the budget. Further, one can plainly see that the increase is almost all federal funding.

I’m honestly confused about why my statement was labeled “not true,” when the link the author points to shows that the Michigan budget has increased from $43.6 billion to $54.2 billion since 2007. It’s true that the $10 billion is nominal (which I indicate by adding “significantly more than inflation”) and that federal dollars in the state budget have driven this increase. But those facts do not make my statement “not true.”

The key points to my original piece stands: “The state spends $1.5 billion, mostly out of the general fund, on higher education. The evidence shows that this contributes to higher tuition without leading to more college graduates overall, reducing the number of educated residents leaving the state, or producing economic growth. Much of this money could be better spent elsewhere.”

Related Articles:

Giving More Taxpayer Dollars to Universities Won’t Make Michigan More Educated

A Better Way to Fund Universities

Getting More College Grads Won’t Improve State Prosperity

Productive Skills, Not College Degrees, Key to Economic Prosperity

State Funding for Universities Continues Upward Climb