One state increased higher ed funding by 60%. Here's why.

A little bit of oil and a healthy dose of 'enlightened self-interest'

North Dakota is bucking the national trend by making the economic case for big investments in higher education, writes Jon Marcus in the Hechinger Report.

North Dakota alone has spent over $250 million on new facilities in recent years, and it is also expanding programs—like engineering—that feed workers into the state's thriving oil sector. Experts say education advocates have been more successful in the state because they have made a clear connection between education and economic development.

David Bergeron, vice president for postsecondary education at the Center for American Progress (CAP), says the investments are "enlightened self-interest." CAP released a report in October that found the decline in support for higher education nationally is holding down wages, stifling the creation of new businesses, and—in the long run—hurting tax revenue. "If you want to have a vibrant economy in your state, you have to invest in your people," he says, "That's what North Dakota and Alaska have recognized that other states are slow in recognizing."

A funding crisis

North Dakota's example is not typical. The Center on Budget and Policy Priorities found states have decreased funding for higher education an average of 23% since the recession. Some states—such as South Carolina—have cut spending by more than 40%.

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In contrast, North Dakota and Alaska have increased spending 61% and 20%, respectively, since the economic downturn. Both states have enjoyed an economic boom from increased activity in the oil sector, but the investments also come from a recognition that they are important for economic development.

Economics 101

North Dakota has 25,000 job openings, according to numbers released by the state government. Many of those positions are for high-paying jobs—such as petroleum engineers—that require an advanced degree. Currently, the state is importing thousands of out-of-state workers to meet the demand.

"The business community gets it. We understand that 70% of all jobs are going to require a college education by somewhere around the year 2020, and we’ve got to grow our own," says Andy Peterson, CEO of the Greater North Dakota Chamber of Commerce.

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Four years ago, the University of North Dakota launched a program in petroleum engineering. The inaugural class had four students; today—thanks to increased funding—that number is 285. Hesham El-Rewini, the university’s dean of engineering, says the investments are not just about meeting the current demand. "You need the engineers and the scientists to contribute to the economic development of the state, not just now but for years to come," he says.

Making the case

Dean Bresciani, president of North Dakota State University—who wrote his doctoral dissertation on state support for higher education—says being comfortable making an economic case for higher education is key to gaining support. Often, college presidents "back away from talking about economic development, because they see the purpose of higher education as broader, and it is," he argues. However, he adds "if you can’t make that argument about economic development, you never get to the rest of the story."

Faculty and administrators in North Dakota have taken that message to heart. Every year, El-Rewini and several colleagues make a state-wide bus tour pitching the value of higher education, and Bresciani often writes op-eds with titles like "Why North Dakotans Win with Research Universities."

Signs of a shift

Most states are still far behind their levels of funding for higher education in 2008, but things are starting to shift. For instance, Florida and California have both made double digit increase in education funding this year.

However, there are large barriers to adequate funding over the long term. George Pernsteiner, president of the State Higher Education Executive Officers Association, says most policy makers understand the importance of higher education funding, but politics can get in the way. "The problem is that having to deal with all of the other things they have to spend money on, you wind up being unable within the structures of our political system to make the kinds of investments you know you need to make," he explains.

Not so in North Dakota. The state legislator has proposed making tuition free for all students that maintain adequate grades. As to other states that do not see the value in higher education, its "economic nonsense," says Bresciani (Marcus, The Hechinger Report, 11/24).  

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