How Big is Higher Education?

In his budget proposal, Governor Gibbons claimed that Nevada pays a relatively high share of its General Fund expenditures on higher education, and so he proposes balancing the state’s revenue shortfall by cutting higher education spending by more than a third. The proposal cuts UNR’s instructional budget by half, and UNLV’s by more than that. Oddly enough, the Governor proposes hardly any cut for our athletics budgets, so our students will have football games to attend but no professors to take classes from.

One of my own professors once handed me a book called “How to Lie with Statistics.” The point of the book, of course, was to teach us NOT to do that, and how to recognize when it is being done by others. One of the lessons I remember was that if somebody wants to make a number look relatively big, they will divide it by a number that is relatively small. So when I heard the Governor’s statistic, I was skeptical.

First, how much are we talking about? During the last budget go-round, General Fund expenditures were roughly $3.3 billion per year, which sounds like a lot until you learn that the Gross State Product of Nevada was $130 billion dollars. State support of higher education totaled about $830 million, about 0.65% of state output. For those who claim higher education spending is out of control, two decades ago this share was 0.62%. Governor Gibbons now proposes a cut of 36% to this amount.

That is, to avoid having to come up with a tax equal to a fourth of a penny on each dollar we earn, Governor Gibbons is willing to destroy Nevada’s system of higher education.

And don’t kid yourself, because that is what this will do. Even if the proposal is dead on arrival in the Legislature, as I expect it will be, and even if he only made the proposal to poke a stick in Chancellor Rogers’ eye, Governor Gibbons has damaged us. Many of our faculty are distraught by this attack. We compete on national markets, and those faculty best able to find jobs elsewhere – our most nationally recognized scholars – will be among the first ones who leave. We have also been trying to keep our best students in Nevada, but now those who have been accepted at out-of-state schools will think twice before staying here, and when they leave, they won’t come back.

So what about the Governor’s preferred statistic? I already knew that Nevada has the smallest number of state employees as a share of state population, and the smallest share of state expenditures as a share of state output. But when I looked it up, I also found – for the most recent year that comparable data was available – that Nevada’s General Fund as a share of the state economy totaled only half of the national average, and was the lowest of the 50 states. Divide any number by something that small, and it will somehow appear bigger.

Let’s put the size of higher education in more meaningful proportions. As a share of our economy, our total expenditures on higher education are 50th in the nation. Because our net tuition revenue is relatively low (though California’s is lower), we are not actually the lowest in educational appropriations from the state, but these appropriations are still a fifth less than the national average. Relative to population, we are also 50th in the number of employees in higher education, and a third fewer Nevadans are enrolled in higher education than in the rest of the country. Take more than another third from that, as our Governor proposes, and we become a third world country. If you care about Nevada’s future, it is time to put your foot down and say, “enough!”

Elliott Parker, Chair-Elect



8 Responses to “How Big is Higher Education?”

  1.   Joel M. Lippert Says:

    I took a class in college called “Creative Statistics” (can’t remember if it was a pol.sci or marketing requirement, but I digress) so I have never been one to believe, on first glance, any statistic. Even good people get caught up in wanting to prove their point and can mold numbers to suit their cause. Then there’s Gov. Gibbons. He must have a banana stuck in his ear cause he sure isn’t listening to any voice of reason thinking that under-educated citizens are going to be able to help Nevada, or the country, or the world, solve any sort of problem that we now (or will later) face. Is he trying to follow GDub’s legacy as going down in Nevada history as our worst Governor? I can’t imagine it is an easy job for anyone, and sometimes hard choices have to be made, but to make stupid choices when all around you are screaming, “What, are you nuts?” is, well, stupid and arrogant.

  2.   Justin Zabriskie Says:

    It is no wonder that Nevada’s system of higher education received failing grades across the board from the National Center of Public Policy and Higher Education in 2008. The disappointing element to this discussion is the apathy or ignorance held about the entire situation from students and citizens in the community. Most students don’t realize how this can affect their education and their experience here at UNR and a lack of defense for the NSHE ensues. Students who are disenfranchised by the breadth of the UNR student body and by politics in general will wallow in ignorance and cause the minority of students who actually care to suffer by the majority’s inaction. That is, unless, as you have stated that this proposition don’t come to pass.

    Maybe there is a relation between this apathetic sentiment and a recent headline from a Reno-Gazette paper: ” What’s Reno’s newest dubious distinction? No. 1 DRINKING TOWN”.

    Regardless, I appreciate your article Professor Parker and will share it with others to gain support for the university’s future.

    Official Education Report:
    http://nevadasagebrush.com/multimedia/NV.pdf
    http://nevadasagebrush.com/blog/2009/01/20/report-nevada-earns-failing-grades-in-higher-ed/

  3.   Patrick Says:

    Now now, Dr. Parker, we both know there is no statistically significant relationship between a state’s population and its government labor force as a percentage of total population – thus, we both know state’s don’t take advantage of economies of scale.

    Besides, most of the statistics you refer to in arguing we need to spend more assumes the very point in question, this is a fallacy.

  4.   Elliott Parker Says:

    Regarding the question of whether or not there is a correlation between the size of a state and the size, please see Figure 1 in my Dec. 1 memo, at http://www.business.unr.edu/faculty/parker/Parker_memo_12-1-2008rev.pdf. Tell me if you discern a trend.

    Regarding the correlation between state public enrollment and the cost of higher education per student, I have an unpublished graph I sent to Regent Knecht that shows a similar trend. If you just look at averages, the smallest ten states have an average cost that is 30% higher per student than it is for the largest ten states. I explained to Regent Knecht why I think that exists. The data I used is on my website. Calculate it yourself.

    Finally, I am NOT asking the state to increase our budget. I am asking them to please not CUT it, especially not by 36% (49.8% on UNR’s main campus). Is the distinction so hard to understand? We are making good progress as a university, and this will destroy us if it is implemented as the Governor proposed.

    I believe with all my heart in the value of public higher education. It is not my pocketbook I care about, it is my university. I, like others, compete in a national marketplace, and I am sure I would land on my feet elsewhere. But I love this place and don’t want to leave it, and I don’t want our best faculty to leave either.

  5.   elliott Says:

    Dear Patrick,

    By the way, I have been meaning to ask a question, and as an employee of NPRI you might be able to explain.

    A few weeks ago, Ty Cobb showed me a graph he received from NPRI showing real Nevada state government expenditures per capita, and it showed dramatic growth over the last couple of decades, with the caption of something “Enough is enough!” I’ll find it in my files if you don’t know the one.

    When I calculated the same thing, however, the trend was pretty flat. See Figure 1(B) in my Jan. 1 memo at http://www.business.unr.edu/faculty/parker/Parker_memo_1-1-2009.pdf. How did you calculate that graph you sent him? It looks to me like you forgot to adjust for inflation. I used the CPI. What did you use?

    Thanks,
    Elliott

  6.   Patrick Says:

    Dr. Parker,

    The relationship between a states population and the size of its workforce as a percentage of its population is not significant; in fact there doesn’t appear statistical relationship. I used the same data you did. The correlation coefficient alone (-3.8677014162374E-10) suggests we’d have to add 2.5 billion residents to reduce the size of government as a percentage of population by 1 percentage point – hardly an economy of scale advantage.

    As far as the 36 percent cuts are concerned, yes that is big. But the growth in appropriations for NSHE has also been massive. We’re talking about 10.5 percent growth per year since 2001-2002. A 36 percent cut is deceptively large when we toss how exactly how fast NSHE has been growing over the last few years.

  7.   Patrick Says:

    In regards to General Fund spending per capita the data I had only went back to the mid 90s the calculation you reference was prior to the December 1 economic forum update. When going from the mid 90s to today using the new numbers we see a large rise and then a fall (just as your graph does) and the per capita amount is slightly below just a decade ago. Buckley’s assertions were essentially incorrect until now (to be fair to her, she used data that was different from the Economic Forum). And yes, it was adjusted for inflation using the CPI (probably to 2007 when it was done earlier last year).

    Yes General Fund spending per capita is down since 1974 but so is the importance of the general fund I bet. Meaning that Nevada has increased other fund sources since that time. If you happen to get that data from Andrew Clinger (total budget appropriations and total general fund appropriations) please send it along. I bet you will find that over time per overall per capita funding is not down (and I disagree that this even matters: http://npri.org/publications/backsliding-from-the-abacus) and I also bet the general fund grows smaller and smaller as a percentage of the total budget over time.

    Thus looking only at general fund appropriations may be a poor way of examining government revenue. Just like saying Nevada’s residential tax burden as a percentage of per capita income is a deceptive statistic.

    Also, I have not looked at higher ed funding in regards to an alleged economy of scale advantage. I looked at K-12 funding and a state’s population size, again no statistically significant relationship. Both the r2 and adjusted r2 were pretty close to 0.

  8.   Patrick Says:

    Also the 49% cut is a cut in general fund appropriations, just a portion of the total budget appropriations to UNR.

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