Blogs:

As we look at the data, we find that most states have allotted a very small amount towards financing public higher education. With the obvious fact that only states with a good higher education is able to move ahead, is this foolhardy?

States with very little education have always fallen behind and suffered. So, is it actually imperative for them to realize the importance of allocating enough funds and ensuring that it is used in the proper manner to impart education for its citizens?

Is it short sightedness or irrationality on the part of politicians and taxpayers to reduce income proportions for state universities financing? Empirical evidence does not conform to our President’s and other foundation leaders, university leaders and opinion maker’s notion that in order to ensure the prosperity and growth of our nation, it is essential to offer best quality higher education for our citizens.

According to data released by the Bureau of Economic Analysis, the ten fastest growing states in our nation are New Hampshire, Mississippi, Massachusetts, Maryland, Maine, Connecticut, Virginia, Vermont, South Dakota and North Dakota and states that have seen very minimal growth include Ohio, Nevada, Michigan, Indiana, Idaho, Hawaii, California, Arizona, Alaska and Oregon.

As compared to states that has seen higher growth; the lower growth states have spent at least 22.3 percent of their incomes on higher education. Proportion of income spent after 1980 on higher education was greatly reduced in both the groups. In the year 2011, we see that lesser amount of money has been spent by states that has shown greater growth. This essentially means that higher spending is associated with lower growth.

So, what does all this prove? As we summarize the evidence, we find that there is no significant and meaningful connection between economic growth of our country and higher education spending. This is however a highly optimistic view. We can say with confidence that the relationship is negative rather than saying it is conclusive.

Explaining this trend, we can analyze and conclude that increase in college graduate numbers is not guaranteed with higher spending on schooling. In fact, the relationship between adult graduation rate and higher education spending is very weak.

Universities spend their incremental income on aspects such as larger administrative bureaucracies, research and higher salaries. Another aspect is that non-education spending in private sector goes down when there is an increase in higher education spending that is government supported.

Economic growth and productivity is affected to a great extent by resource reallocation from a highly competitive and productive private sector that is market disciplined to a lesser market disciplined, less competitive and less productive public higher education sector.

There is enough evidence to show that in the sector of higher education, we have over invested. More numbers of college graduates now are forced to take up post graduate jobs that were hitherto opted for by the low skilled workers who only had a high school education. So, where is the solution and what should be done about this? It is time to put our heads together and work out a compromise before it is too late.