| June 2, 2011

Oklahoma Higher Ed Needs Reform, Not More Taxpayer Money

With Oklahoma facing budget challenges during this year’s legislative session, higher education appropriations took a 5.8 percent cut. Predictably, this triggered a harsh response from leaders of the state’s universities, who claim that the cut will harm future economic growth. Yet, as we detail in our new report, “Oklahoma Higher Education: Challenging the Conventional Wisdom,” such claims are unfounded.

Indeed, the empirical evidence shows that state appropriations for higher education neither positively affect economic growth nor lead to a higher percentage of college-educated citizens in one’s state. In other words, cutting appropriations for higher education will not hamper economic growth nor will it lead to a less-educated workforce. These findings challenge the conventional wisdom, but four points help to explain our findings.

First, Oklahoma’s public colleges and universities have actually done well financially in recent years. Despite higher education funding cuts nationwide, revenues at Oklahoma’s public four-year colleges and universities increased by an average of 21 percent between 2003 and 2008, even after controlling for inflation and enrollment growths. Likewise, expenditures rose more than 25 percent. It appears Oklahoma colleges have pursued a strategy of raising as much money as possible, and then spending it all in order to seek ever more money the next budget year.

Next, much of the money that universities spend is not used to teach students anyway. In fact, on average only about 41 cents of every dollar spent by an Oklahoma public university goes toward instruction. This trend has worsened; in the period from 2004 to 2009 instructional spending across the state grew at a much slower pace than universities’ administrative and research components. This suggests that only a minority of any new monies appropriated to Oklahoma universities would actually be used to benefit student instruction.

Third, a majority (66 percent) of those starting college in Oklahoma do not even graduate within six years—and many simply never earn a degree. Even at the state’s two finest public institutions, the University of Oklahoma and Oklahoma State University, typically fewer than one-third of students graduate within the traditional four years [see table on page 11].

Finally, a large portion of Oklahomans who actually do graduate from college leave the state. Between 1994 and 2008, Oklahoma lost a net of 145,000 college graduates. The evidence suggests there is a general lack of labor market opportunities for educated individuals in the state. This trend is likely to persist. The state’s labor market projections indicate that through 2018 Oklahoma will have 4.55 times more non-college-level job openings than positions requiring a college degree.

Oklahoma higher education does not need more money, but rather structural reforms that focus on instruction and ensuring student success. Rather than pouring more money into the current system, state leaders would be wise to explore policy alternatives to create new jobs that will keep college-educated workers in Oklahoma. More funding for higher education is not an economic panacea, and state leaders would be wise to question that conventional wisdom.

Matthew Denhart and Christopher Matgouranis serve respectively as administrative director and chief research assistant at the Center for College Affordability and Productivity (CCAP), an independent research center in Washington, D.C. Their new report, “Oklahoma Higher Education: Challenging the Conventional Wisdom,” is a publication of OCPA and CCAP.

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