As businesses hunt for educated workers, states are loosening the purse strings for higher ed again
“Investing in our conveyor belt for talent.”
That’s how Gov. Gavin Newsom described a proposed spending hike for California’s public colleges and universities.
Those few words also help explain a principal reason many states are boosting their budgets for public higher education more than at any time since 2008 and proposing even higher allocations down the road.
Thirty-eight governors raised the topic of higher education spending during their state-of-the-state addresses, an analysis by the National Governors Association found. Collectively, they called for increasing it by billions of dollars over the next five years.
This comes after a decade in which state funding overall for public universities and colleges has languished at a level billions of inflation-adjusted dollars below what it was before the last recession — and at a time when public universities and colleges in many states are the targets of politicians waging culture wars.
But some of those same politicians now are focusing on the need for educated workers to compete in an economy that’s short of talent, an imperative as true in red states as in blue ones.
“Economic and workforce development have been disrupted, so proposals that link education and the economy are going to be priorities on governors’ agendas,” said Tom Harnisch, vice president for government relations at the State Higher Education Executive Officers Association, or SHEEO.
“The connection between education and the workforce has become more explicit, and the urgency has become much greater,” Harnisch said.
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Where the rhetoric around funding higher education has previously been about creating opportunity, much of the new money for public colleges and universities is now being aimed explicitly at training students for fields in which there are shortages of labor.
Some governors and legislatures want more alignment between education and industry. That’s the goal of the Utah Cluster Acceleration Partnership, which provides funding to public higher education institutions to develop programs that meet regional or statewide industry needs, and of the Wyoming Innovation Partnership, which encourages collaboration among community colleges, the University of Wyoming, state agencies and economic development groups to support the economy and workforce.
Colorado is proposing spending more than $95 million to bring school districts and colleges together to speed up training of the workers employers need.
“We must do more to align our state’s K-12, higher-ed, workforce and economic development efforts,” said Indiana Gov. Eric Holcomb. “There is power in their synergy.”
Other states are offering money to their public higher education institutions to bolster workforce training. Under the MoExcels program in Missouri, colleges and universities have begun competing for tens of millions of dollars for “employer-driven education and training programs” for example.
In Oklahoma, Gov. Kevin Stitt said: “We need to reward universities for producing graduates in critical areas.”
States are also directing growing amounts of financial aid to students who choose majors that can train them for in-demand jobs.
The new Future Ready Iowa plan, for instance, makes tuition free at community colleges and for certification programs for Iowans training for those kinds of jobs. New scholarships in Kansas are also being created for students in high-demand fields.
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Such programs “boost our economy and empower our people,” said Michigan Gov. Gretchen Whitmer about similar initiatives in her state.
South Carolina is making tuition at its technical colleges free for students who seek credentials in fields where there are labor shortages, including manufacturing, hospitality, construction, transportation, logistics and criminal justice.
“Access and affordability to higher education are essential to ensuring that our state has the trained and skilled workforce to compete for jobs and investment in the future,” South Carolina Gov. Henry McMaster said.
Mississippi is steering more money into training people for jobs in fields including commercial trucking, advanced manufacturing and welding. The governor, Tate Reeves, called it “a strategy that will meet the needs of employers and fill the vacancies for jobs that offer above-average wages.”
And Connecticut is increasing its spending tenfold for workforce development, including on tuition-free certificate courses “designed by businesses around the skills that they need,” said Gov. Ned Lamont.
Many states have put an emphasis on health care. Maine has proposed more money for universities and colleges to expand nursing programs; Georgia and Hawaii, to train more nurses and doctors; and Alaska, to increase the supply of doctors.
College and university officials are cautiously receptive to this approach, which not only means there will be money coming in again but affirms the importance of the credentials they provide.
“Having a more highly educated population in your state is going to be a good thing for your economy and society in general, in the long run,” said Paul Johnson, president of the Colorado School of Mines.
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On the other hand, said Johnson, “the slippery slope is when you get to the point where you start saying every credential that a university produces has to be directly aligned with some specific sort of occupational return on investment. Then you start to miss out on all the other things, the values, that go along with the experience of a college education.”
Still, seeing higher education funding rebound — whatever the reason — “is certainly much better than the opposite scenario,” he said.
Most states significantly reduced their support for public higher education in the recession that took root in 2008; by 2018, inflation-adjusted state allocations for colleges and universities remained $6.6 billion below 2008 levels, or down an average of 13 percent per student, the Center on Budget and Policy Priorities reports. In some states, per-student funding fell by more than 30 percent.
Now appropriations are starting to go up, according to an annual analysis conducted jointly by SHEEO and Illinois State University. In the current fiscal year, state support for higher education rose by 8.3 percent, exceeding a collective $100 billion for the first time ever. That was before so many governors and legislators began calling for even more spending in the fiscal year that in most states will begin July 1.
Some of this largesse is thanks to a 15 percent increase in state income tax revenues and federal stimulus funding, $7.2 billion of which went to public colleges and universities over the last three years.
That worries veterans of the whims of budget-making.
“When states have money, higher education tends to get its due,” said Dennis Jones, president emeritus of the National Center for Higher Education Management Systems, or NCHEMS, a nonprofit that provides consulting services to colleges and universities. “Then it’s the first thing cut when the states don’t have money.”
There’s also some concern about overemphasizing workforce training, including by using those targeted scholarships to steer students into careers that are in high demand when their interests might lie elsewhere. The people most likely to take up such offers are those from low-income families, while their higher-income counterparts can afford to study what they like.
“Turning out graduates to meet the workforce demand is only part of the challenge,” said Taylor Randall, president of the University of Utah, who pointed out that many states are rushing to retrain adults who need or want to change careers.
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“That’s one way to tackle the problem,” Randall said. “The other way to do it is to build that into individuals as they go through their first round of being undergraduates — to create a student who is marketable at the moment but can reinvent themselves in the future.” This, he said, requires a broader education that includes the humanities and other subjects. “There are skills you can learn across a lot of majors.”
So far the additional state spending on higher education hasn’t necessarily supplanted existing scholarship or funding programs, Jones said.
“This is an add-on,” he said. “I’m not seeing it as a replacement. What we’re seeing is a marginal bump focused on those things. But I don’t think that there’s widespread disinvestment in what higher education has historically been about.”
As for the underlying premise, that supporting higher education strengthens the economy, analyses by NCHEMS and others shows that it increases per capita personal income and tax revenue and lowers the cost of social services.
Even a 1 percent increase in the number of college graduates raises the standard of living for everyone, one study found, while another concluded that investing in institutions where graduation rates are low could help boost employment, median household income and gross domestic product. That’s according to a summary of research into the subject by the left-leaning think tank the Urban Institute.
Still, political leaders’ preoccupation with workforce development may be bad news for universities and colleges in one important way: States are also increasingly directing money to apprenticeships and high school-level career and technical education, or CTE, which in many cases allow students to sidestep college altogether.
Although Idaho Gov. Brad Little has proposed boosting spending for public universities, for instance, he also has asked for $10 million “to more rapidly stand up CTE programs that meet local industry needs” and $50 million for apprenticeships and other forms of job training. Further west, the $200 million Future Ready Oregon program will support not only community colleges but also local workforce boards and apprenticeship programs.
More forcefully tying education to economic results is one way to restore support for it, at least, said Jones — and transcends demographic and political divides.
“If you ask students why they’re going to college, 90-plus percent of them will say it’s to get a job,” he said. “So this all weaves together into something that speaks to students, it speaks to parents, it speaks to legislators. And it’s the selling point that crosses blue and red.”
This story about state higher education funding was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for our higher education newsletter.
