NCPA - National Center for Policy Analysis

State-Level Agenda for Higher Education Reform

July 16, 2013

The Great Recession has put state leaders in a bind. Governors and statehouses must simultaneously generate the economic growth that will replenish state coffers and avoid adding to significant budget deficits. Though tax revenues have rebounded some since 2010, for fiscal year 2013, 31 states still reported budget deficits, totaling $55 billion. In the midst of this new normal, state leaders must leverage existing investments to improve their states' economic outlooks, say Andrew P. Kelly and Daniel K. Lautzenheiser of the American Enterprise Institute.

States have often looked to their systems of higher education to help drive economic growth. America's research universities are among the best in the world, producing the innovations and skilled graduates that fuel state and regional economies.

  • As urban studies theorist Richard Florida has argued, colleges and universities tend to attract and employ members of the "creative class," helping to catalyze dynamic regional economies like those in California's Silicon Valley, the Seattle metro area and Route 128 in Boston.
  • Postsecondary institutions also provide the occupational training that allows state economies to retool in light of new demands, particularly in places that are continuing to shift away from manufacturing.

Beyond these transitioning economies, demand for postsecondary credentials (and not just four-year degrees, but certificates and associate's degrees) will only grow in the years to come.

  • The Georgetown Center on Education and the Workforce estimates that, by 2018, almost two-thirds of all jobs will require some level of postsecondary education.
  • Much of this growth will be in so-called "middle-skill" jobs, those that typically require short-term occupational training from a two-year college rather than a four-year degree.

Higher education is increasingly serving so-called "nontraditional" students -- learners over the age of 25 who are attending part time and juggling multiple commitments such as work and family. One-third of college students are over the age of 25. Nearly 40 percent of undergraduates attend part time, and one-third of part-time students report working more than 35 hours per week. These shifting demographics, combined with the technological advances that allow for distance learning, suggest a need to revisit many of the assumptions underlying the traditional place-based model.

Higher education will continue to compete for state funding with priorities such as health care and K-12 education. State leaders must seek out reforms that leverage existing investments more effectively and that put their higher education systems on a stable, sustainable path.

Source: Andrew P. Kelly and Daniel K. Lautzenheiser, "Taking Charge: A State-Level Agenda for Higher Education Reform," American Enterprise Institute, July 8, 2013.


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