Econ prof tries to teach Gibbons some economic realities on higher ed

Thursday, Feb. 12, 2009 | 3:16 p.m.

Elliott Parker at UNR says the governor's podcast is misleading. Shocker:

Dear Governor Gibbons:

I just read the text of your podcast, and I am afraid that I must say it is misleading. You said that “Nevada spends more general fund tax dollars on higher education than most other states,” but this is not actually true.

A poor man spends a bigger portion of his income on food, but that does not mean that he eats more than others. Nevada’s higher education system gets a larger portion of its budget from the state, but that does not mean it spends more to educate its students. As a share of state GDP, Nevada has the smallest general fund in the country. Nevada is also 50th in the country in higher education spending as a share of state income, 50th in the country in the number of higher education employees as a share of population, at the bottom in the number of students who attend college, and below the national average in higher education spending per student, even though our cost of living is relatively high and smaller states typically spend more per student than big states.

You said that higher education has the ability to raise its own revenue, but this is misleading as well. It is true that our tuition is relatively low, and this has been a long-standing policy of the state as it tries to move up from the bottom in the number of students who attend college. The Regents can raise tuition, but if we tripled it next year we would not come close to filling the gap, as we would push out many of our students. Other revenues – like dormitory fees, tickets to sporting events, et cetera – go to pay expenses associated with those revenues, and do not generate substantial residuals. Research grants go to fund research expenses, and if we tried to spend those funds on instructional costs somebody would have to go to jail. Your budget would not increase those other revenues, but instead would decrease them. It will cost us our most productive researchers who bring in the most outside funding, it would scare away potential donors, and it will encourage our best students to go elsewhere.

You said that you are proposing only a 36% cut, not a 50% cut, but this is also somewhat misleading. Yes, there is a 36% cut in the total NSHE general fund budget, but some programs within NSHE are left relatively untouched. Athletics, for example, did not have its budget changed much at all. But the cuts you proposed for the main campuses of UNR and UNLV are much, much larger than the average for the system as a whole. Relative to our total state GDP, the cuts are tiny – roughly a quarter of one percent – but relative to the total amount the university has to spend on instruction, the cuts are simply devastating.

To survive and prosper in a knowledge economy, Nevada must better educate its citizens. Regardless of your political disagreements with our Chancellor, you must see that a good university system is crucial for our future.

Sincerely,

Elliott Parker

Professor of Economics

University of Nevada, Reno