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October 21, 2014

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COMMENTARY:

Nevada undercuts its future with budget cuts in higher education

When the special session of the Nevada Legislature ended two weeks ago, the budget for the Nevada System of Higher Education was reduced by another 7 percent. Before our faculty and students had time to express our appreciation that the cuts were not much worse, we began to learn exactly which colleges, programs and positions were slated for elimination, and it took our breath away.

At UNR, our total operating budget has been reduced by 13 percent over the past two years, while our enrollments continued to rise. The first two rounds of our cuts applied to administrative and support functions, and now we are weighing proposals to close the College of Agriculture, Biotechnology & Natural Resources, shrink the College of Education, eliminate the French, German and Italian programs, and end many graduate degrees, among other things. These proposals must be reviewed by the faculty and approved by the president; however, if they aren’t implemented, other cuts will be proposed.

UNLV, College of Southern Nevada and other institutions have taken similar reductions and will be making similar decisions. The state’s contribution to the Nevada System of Higher Education budget has fallen by a third over the past two years. Increased student tuition and federal American Recovery and Reinvestment Act money have filled about half that hole.

There has been much hardship in Nevada and around the globe as a result of this recession (which I have argued elsewhere is technically a depression). After rising by an annual average of 9 percent over the previous 15 years, personal income in Nevada has dropped by 6 percent since the end of 2007, more than twice the decline of any other state.

Good people have lost their jobs as people have stopped spending, unemployment remains high, and the bad effects cascade. The Legislature did the best it could in a bad situation, and nobody thinks the state should be immune from cuts.

Before you assume I am just whining, let me explain that although I feel terrible for my colleagues, I am more concerned for the rest of us, and for our state. Our faculty are smart, productive people, and most of those whose departments are eliminated will land on their feet. In fact, some of them, especially those who bring considerable research money into Nevada, are being recruited by universities in other states.

So why do we need public universities in the first place? Free markets are wonderful at giving more to those who already have, and private universities such as Harvard and Stanford are among the best in the world. But as my colleague Maureen Kilkenny, a respected economist in a department slated for elimination, says, “markets can do nothing for people with nothing.” For those who lack education, skills or family wealth, the free market offers little hope for improvement. By paying taxes to provide education, we help to level the playing field.

Universities provide the best education to students because most of their faculty actually create knowledge. The more people learn, the more capable they are to make good decisions and find good jobs, and the easier it becomes to turn hard work into a better life. Those who become educated usually earn more, and contribute in turn to the revenue necessary to run the state and educate others.

Other states have a large number of private universities, which on average pay their faculty roughly 20 percent more than public ones, spend significantly more per student, and serve a larger share of those who already have. These same states make more significant investment in their public universities.

As a share of national income, higher education spending in the United States tripled from 1960 to 2005, rising to 2.9 percent of our total national income. Higher educational enrollments rose almost as fast. The number of degrees conferred grew almost fourfold, relative to population, and the share of graduate degrees doubled. This accumulation of human capital is one of the reasons our national economy has done so well over the long run.

How does Nevada compare? In 1985, the total Nevada System of Higher Education operating budget was about 0.63 percent of our gross state product. By 2008 B.C. (before the cuts), this ratio peaked at 0.65 percent, still the lowest share for higher education in the country.

When these cuts go into effect, this ratio will be at its lowest level in several decades. College enrollments have been a flat share of Nevada’s population over the past couple of decades, while the share of college enrollments increased for the country as a whole. The lead that other states have over us is widening.

It takes money to make money, but in the midst of this budget crisis, we are not making good investments. We are cutting colleges, classes, positions and salaries. It will hardly be a surprise when we discover our most productive people have gone elsewhere, and our students have received a poorer education.

Unless they have little need for skilled labor, businesses that may have considered moving to Nevada will surely change their minds, because a good education system is an essential component of their quality of life.

Elliott Parker is professor of economics and chairman of the Faculty Senate at UNR. This commentary is adapted from a version that appeared in the Nevada Appeal.

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