We’ve heard the assertion a thousand times: higher education IS the engine of economic growth. An educated population IS the foundation on which to build the knowledge economy of the 21st century. Such thinking has been behind North Carolina’s historically high levels of spending for colleges and universities. During most of the last thirty years, the state’s financial investment has consistently exceeded neighboring states as well as the national average. While North Carolina has experienced significant economic growth during the last ten years, it is also important to note, tuition has skyrocketed, graduation rates have fallen and operating expenditures for the UNC system have increased 87 percent. It’s time to ask: Are North Carolina taxpayers getting a fair return on their investment in higher education?
Not according to a new report released last month by Andrew Gillen and Richard Vedder of the Center for College Affordability and Productivity titled; North Carolina’s Higher Education System: Success or Failure? The report marshals an impressive array of statistics detailing North Carolina’s strong commitment to public higher education. For example, in 2005, North Carolina spent $303 per capita on higher education, far above the national average of $213 per capita, and much higher than neighboring states Virginia ($196 per capita) and Georgia ($209 per capita). On average, states spend about 4.3 percent of all state and local expenditures for higher education, in North Carolina 6.7 percent of state and local expenditures are devoted to higher education.
No doubt higher education has contributed to North Carolina’s 59 percent growth rate over the period 1980-2005, the highest in the southeast and significantly higher than the U.S. average rate over the same period of 43.8 percent. University sponsored research is often the incubator for many business start ups. The Research Triangle has brought lots of new businesses and jobs to North Carolina, many tied to higher education and often requiring additional education. Still, despite the steady growth and heavy investment in higher education, North Carolina is lacking in results.
Simply put, the point of investment in higher education is to produce an educated population. With such an enormous investment in higher education, you would think North Carolina’s population would be highly educated. That is not the case.
Gillen and Vedder point out that while it’s true North Carolina spends more on higher education, it also enrolls more of the 18-24 population in college than any of its neighbors. That said, the percentage of the 18-24 population enrolled in colleges in universities in North Carolina is still below the national average.
Educational attainments rates in North Carolina have lagged the national average every year all the way back to 1989 and back to 1960 for every year data are available. Yes, absolute percentages have increased, but the fact remains only one in four North Carolinian adults possess a college degree — slightly below the national average of 27 percent.
Why our investment in public education is falling short is a subject for another column — or a book for that matter. Disappointing graduation rates are certainly part of the story. Six year Graduation Rates — yes, I said six year – vary widely and are woefully low at many public colleges. According to the South East Regional Education Board, 59 percent of students in four-year public institutions in North Carolina graduate in six years. The U.S. six year graduation rate is 54 percent. Six-year graduation rates range from 83.8 percent at UNC Chapel Hill and 71 percent at NC State to 49 percent at UNC-Charlotte and 39.5 percent at North Carolina A&T. These figures underscore the need to better prepare students for college. They also force us to ask: If a 70 percent graduation rate is not acceptable at the high school level should 59 percent be acceptable at the college level?
According to Gillen and Vedder the high investment and low return points to waste and inefficiencies in the education system. The waste shows up in variety of places: faculty salaries (many of which are not pegged to course load or productivity), institutional subsidies (which in reality work to raise the real costs of education) and ballooning non-instructional expenditures (e.g. research, auxiliary enterprises, administrative staff, etc. etc.) The waste is expensive. And, as a practical matter means North Carolina spends more than its neighbors to maintain high levels of educational attainment. The authors calculate North Carolina spends $10.64 per capita on higher education for every 1 percent of population possessing bachelor’s degree. Virginia and Georgia can do the same for $6.64 and $6.61, respectively.
What now? Certainly no one is arguing for suspending investment in public higher education. Still, these developments should help us re-think our rational for public subsidies. Do we want to continue to generously subsidize institutions that prove costly and inefficient and frequently fail to deliver the expected level of individual and societal benefits? A variety of recommendations outlined in the report help to address these concerns.
Education can be an important component to spurring economic growth. Nevertheless, spurring economic growth is far more complicated than merely increasing funding for universities. Economic growth is a by-product not only of quality schools and high cognitive skills but also of other factors including secure property rights, open economies, innovation, access to technology, respect for law and societal norms as well as stable and efficient institutions. Gillen and Vedder point out how inefficiencies within our colleges and universities are shortchanging students, taxpayers and all those who invest in postsecondary education in the Tar Heel state. We’d do well to consider their work a starting point in reforming higher education in North Carolina.