On Monday, University of Nevada, Reno, announced which programs it intends to eliminate and shocked those who thought that another round of cuts could be made without significant harm to Nevada's first institution of higher education. Stellar faculty in good programs, some of whom bring considerable research funds into Nevada, are now looking for work in other states.
While I feel terrible for them, I feel sorrier for my state. The Legislature reduced the level of cuts, for which we are grateful, but we have still been left with no good choices.
Why do we need public universities in the first place? My colleague Maureen Kilkenny, an economist in a department now slated for elimination, points out that free markets are wonderful at giving more to those who already have. But to those who lack education, skills or family wealth, the free market offers very little. 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 new knowledge. The more people learn, the more they are able 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 generally earn more, and contribute in turn to the revenues necessary to run the state and educate others.
Most 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. Even so, most other states make a significant investment in their public universities.
As a share of national income, higher education spending in the United States tripled between 1960 and 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 four-fold, 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 operating budget for higher education, including state support and student tuition, was about 0.63 percent of our total state income. By 2005, this had risen to only 0.65 percent, still lowest in the country, and by next year this ratio will fall to about 0.50 percent. Enrollments have been a flat share of our population over the past couple of decades, while the share of college enrollments increased for the country as a whole, so the gap between Nevada and other states widened.
It takes money to make money, but in a budget crisis like this we do not make good investments. We cut salaries and positions, and then are surprised to find that our most productive people have gone elsewhere, and our students are receiving a poorer education. Unless they have little need for skilled labor, many businesses that might have been willing to relocate here to help us diversify our economy change their minds, since a good educational system is an essential component of the quality of life.
• Elliott Parker is professor of economics and chair of the Faculty Senate at the University of Nevada, Reno.