The false promise of ‘investing’ in higher education, and other NSHE thoughts

Victor Joecks

I'm currently watching the NSHE Board of Regents meeting and just heard a statement from Chancellor Dan Klaich to the effect of, "The link between economic diversification and a state's system of higher education is virtually indisputable."

That sentiment was a general theme of the recent Nevada 2.0 conference, and many of Nevada's politicians hold a similar belief.

This sentiment is always forward-looking: "If only Nevada would make (or maintain) this investment." This belief is forward-looking because even the most basic knowledge of Nevada's recent history disproves this assumption.

Nevada has increased its subsidy to NSHE from $306 million in Fiscal Year 2000 ($378 million, adjusted for inflation) to a high of $623 million in FY 2009. The NSHE's overall budget went from $833 million in FY 2000 ($1.027 billion, adjusted for inflation) to $1.694 billion in FY 2009. And Nevada now has the highest unemployment rate in the country.

A $245 million increase in the state's subsidy and a $667 million increase in the operating budget of the Nevada System of Higher Education should have put Nevada on the path to economic-diversity bliss. Except … Nevada's economy now has the highest unemployment rate in the nation, in large part because its economic base is so narrow.

Now, does this mean that subsidizing higher education will lead to higher unemployment? No. Nevada's economy is affected by innumerable factors, including taxes, energy rates, government regulations, access to water, the global economy, K-12 and higher education, policies of the Federal Reserve … I could go on and on.

But Nevada's history does disprove the simple assertion that "investing in higher education will diversify Nevada's economy."

Beware of the many smart, "educated" individuals (many of whom work in higher education – imagine that!) who are endlessly repeating this mantra. If government subsidies were all it took, we would have achieved a diversified economy by now.

Education is certainly a factor, but spending isn't the same as achieving results.

Other thoughts on the meeting:

Chancellor Klaich is doing a much better job noting that Gov. Sandoval's proposed budget reductions only impact the subsidy Nevada gives NSHE. And that this subsidy represents only a portion of the operating budgets of UNR, UNLV and Nevada's colleges – roughly 30 percent of each institution's operating budget. In total, Gov. Sandoval's proposed reductions would be less than a 10 percent reduction to the total NSHE operating budget.

I wonder if UNLV President Neal Smatresk is taking notes on how Chancellor Klaich is accurately describing the budget. Let's hope this clarity on the scope of the budget reductions (less than 10 percent of NSHE's total operating budget) is a continuing part of the debate. Why am I not hopeful?

Also hilariously, Chancellor Klaich admits that higher-education officials have been guilty of hyperbole in the past (I wasn't fast enough to type the exact quote, but that's the essence of what he said).

One last thing to remember, via Chancellor Klaich: "[Higher education] budgets are being cut elsewhere. Fees are being raised."