Michigan politicians starve the engines of economic growth: universities

While we consider Gov. Rick Snyder's budget message – to be delivered Thursday -- we might want to look at some facts underlying our economy.

The (persistently) bad news: Since 2008, Michigan has slashed state support for public colleges and universities by 21.5 percent.

The (sort-of) good news: We rank only 11th among states in cutting support for higher education. The top cutters in order were Arizona (down 36.6 percent), New Hampshire (down 35.7 percent) and Louisiana (down 31.2 percent).

I used to think Michigan topped the list of states cutting support for universities; it's nice to know we're only 11th. I'm afraid that won't cut much ice with Michigan families. Though, who have had to pay sharply increased college tuition and incurred skyrocketing student debt, the direct result of reduced state appropriations.

Nationally, states are spending 10.8 percent less on higher education than they were five years ago, when the recession began.

All these data come from Illinois State University's Center for the Study of Education, recently published at atlantic.com.

The ISU report shows two other ways to look at state spending on universities: per capita and per $1,000 in personal income. Here's how we stack up in comparison with some of neighboring competitive states:

Michigan: Total spending: $1,596,000,000

Spending per capita: $161.52

Spending per $1,000 personal income: $4.33

Ohio: Total spending: $2,040,000,000

Spending per capita: $176.71

Spending per $1,000 personal income: $4.50

Indiana: Total spending: $1,555,000,000

Spending per capita: $237.91

Spending per $1,000 of personal income: $6.44

Minnesota: Total spending: $925,000,000

Spending per capita: $238.93

Spending per $1,000 of personal income: $5.22

We spend less per person and less per $1,000 in personal income than our nearby competitor states. Indiana, which adopted Right to Work legislation two years ago, is more likely to benefit more from support for its universities than any changes in its labor law.

So do states benefit from spending on higher education, particularly for research universities?

You bet.

The University Research Corridor, a consortium of the University of Michigan, Michigan State University and Wayne State, generated $15.5 billion in economic activity in 2011, up 20 percent since 2006, according to a recent report by Anderson Economic Group. This translates to 74,000 direct and indirect Michigan jobs and $375 million in increase d state tax revenue for 2011.

The AEG report shows for every dollar the state invested in the three URC universities, it saw $17 in economic benefits. Since 2002, URC universities generated 149 start-up companies, including 18 in 2011.

Doug Rothwell, President and CEO of Business Leaders for Michigan, told me that "Michigan is projected to need about 1 million college graduates in the next decade. To grow the economy, we must make it more affordable for students to get the education they need.” That means increasing state funding based on performance, something that began last year and needs to accelerate.

For more than a decade, there has been a remarkable disconnect between the fact that our universities contribute enormously to Michigan's prosperity and skeptical attitudes toward them in the minds of our resource allocators. As politicians thinking about running for governor and Legislature begin the process of planning their campaigns, they might want to focus on what investments most directly contribute to Michigan's prosperity.

Editor’s note: Former newspaper publisher and University of Michigan Regent Phil Power is a longtime observer of Michigan politics and economics. He is also the founder and chairman of the Center for Michigan, a nonprofit, bipartisan centrist think–and–do tank, designed to cure Michigan’s dysfunctional political culture; the Center also publishes Bridge Magazine. The opinions expressed here are Power’s own and do not represent the official views of the Center. He welcomes your comments via email.