NV Education: Rocks and Hard Places

It’s hard to figure out how this is good news:  The “Money Committee” agrees students in Nevada’s institutions of higher education are going to be hit with a 13% tuition increase in the near future, but won’t be slammed with yet another 13% hike in the subsequent year.  And property tax money won’t be grabbed from already strapped Washoe and Clark county coffers to pay for higher education.   [LVSun]  This, in a political atmosphere in which it is evidently acceptable to the Governor to chant “no new taxes,”  and not offer any proposals by which there is to be some semblance of “shared sacrifice.”

If we follow the standard GOP rhetoric about fees and other revenue enhancements, then perhaps this decision could be rephrased as:  “Money committee votes to increase taxes on parents and students by 13%.”

The decision to increase the burden on parents and students is unfortunate for a variety of reasons.

First, there is a connection between the quality of the higher education services available and economic activity.  One of the prime reasons enterprises locate to a given area is the availability of research and business support provided by institutions of higher education.   It’s no big secret why new computer science companies are locating in and around Salt Lake City, UT.  Nor has it ever been a secret why Silicon Valley grew up in the shadows of Cal-Berkley, Stanford, et. al.  Or, why high tech companies have gravitated to the Research Triangle in North Carolina.  Any wonder why UCLA has a world renown school of theater, film, and television, and USC includes an equally well known school of cinematic arts? If Nevada doesn’t support its institutions of higher education why would we expect anyone else to get excited about the prospects of using their services to augment the success of their business enterprises?

Secondly, the user-fee theory of public taxation assumes that only those directly involved in higher education are the recipients of any economic benefit.  Wrong again.  In addition to the commercial applications of university research mentioned above, colleges and universities generate economic activity in the community.   Professors and students add their consumer spending to the local mix.   The entire spectrum of local business is improved by the addition of a college or university.  Teachers, staff, and students spend money — on housing, groceries, vehicles, utilities, restaurant meals, clothing, and so on.   To say that we can raise taxes on the consumers, but not on the businesses they support is to look very narrowly at only one side of the economic equation.

Third, we can extend the economic benefit by thinking of higher education from the perspective that the institutions provide pre-service training for the local work-force.  What’s more convenient for a company — having to conduct a nationwide search for an accountant? Or, having a School of Business Administration at hand?  Need to hire a graphic designer for an entry level position?  The personnel department would be pleased to find someone from a local School of Fine Arts, which would be far less expensive than looking elsewhere and everywhere.

The fourth reason this latest decision by the Assembled Wisdom is counter-productive is that the user-fee mentality is yet another assault on the American Middle Class — or what’s left of it.  In the interest of preserving a “good business atmosphere”  (translation: Very Low Taxes) the enterprises which benefit from higher education are inoculated from having to pay for the benefits at the expense of those who are providing them.

Exacerbating the situation further, student aid is becoming harder to obtain, and financial aid lags behind the increasing costs of an education.  [StLPDForbes described the situation this way:   “A record high of one out of every 10 students who graduated from four-year colleges and universities in 2008 (the most recent year for which data is available) owed $40,000 or more in loans, according to the Institute for College Access and Success. Overall more than two-thirds (67%) of students earning degrees from those institutions carried loan debt, owing an average $23,200. That’s nearly double the debt of the class of 1996, an average $13,200 per student. Nationwide, the institute says, average student debt is growing at about 6% a year.”    (emphasis added)

Nevada students have slightly less debt than the national average, one report stating that about 37% of the student population is in debt for college expenses, for an average of $16,742.  [SDP] Given the tuition hikes this result may not last.

This situation is also economically counter-productive because there is logically some wage-push involved:  Those who have higher levels of debt to pay off will naturally have additional incentive to seek higher paying employment.  The downward wage pressure from an employment situation in which there are several applicants for one job can often be at least partially offset by a “highest bidder wins the auction” for college educated new hires.

One of the common themes among conservatives of late has been the bromide that if a person is unemployed then the obvious route is to re-train for new jobs.   This would be all well and good but for the slashing of budgets for higher education, including Pell Grants for summer sessions, and the coterminous  demand that institutions do more with less.  If a budget cut means that there are a decreasing number of sections of a particular course available, then students are looking at an increasing amount of time to complete degree programs — at a possibly increasing level of indebtedness.

And, why is this yet another assault on the Middle Class?  The answer is relatively simple.  The ultra-rich top 2% of the nation’s income earners are the ones most likely to be able to save enough to secure the financing of their children’s education.  Average families, earning the mean income of around $56,000 per year — not so much.   The availability of student loans, the funding of Pell Grants, and the capacity to save money by attending a college or university close to home, are of far greater interest to a Middle Class family than to one in the upper reaches of the income spectrum.

Unfortunately, yet once more we’re looking at a No New Taxes mantra that drowns out the economic benefits of higher education for the state, its business enterprises, and the Middle Class families which might secure the expectations they had for their children.    Phrased less politely, it becomes ever more indisputable that in this political atmosphere the Middle Class gets to pay the freight while the upper income groups get an almost free ride.

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