Using the Stimulus for Lasting Value in Higher Education

The Congress and the President wrote the economic stimulus bill to create jobs, prevent the loss of jobs, and create lasting value, a foundation for prosperity in the future. The governors surely want the same things, but they are arguing for more flexibility so they can spend the funds quickly on the high priorities of each state. Somehow flexibility has to be reconciled with accountability for wise spending.

It might help if we recognize that the state stabilization fund is a tourniquet, not a transfusion. The $39.5 billion allocated for education budgets in the states is only 7.4% of state and local education spending in 2006. Spread over three years, 2009, 2010, and 2011, it is likely to barely replace revenues lost from plummeting sales, income, and property taxes.

The stimulus money is not a cure for fundamental problems. It is money to buy time, manage a short-term crisis, and build a foundation for dealing with the fundamental problems. Part of the stimulus is designed to prevent lasting damage; we should use all of it to create lasting value.

To create lasting value we must focus on three critical questions.

What does the public need from higher education?

Fifty years ago we had a clear answer to this question. In the 1960s the states dramatically increased their investment in higher education in order to educate the baby boom. It was easy to get consensus in the 1960s; the number of 18-24 year olds was increasing rapidly, and Sputnik had recently been launched into space. Consensus is harder now because we need to educate a larger proportion of our population (a more difficult task) to cope with a less clear threat -- the loss of competitiveness in the global economy. Compared to the 1960s, all people must now be educated to an increasingly higher standard. The basic dynamics are the same, however - when there is a consensus about goals and priorities, investment will follow.

What can higher education do better with the money we have now?

The public has deep faith in the value of education, persistently expressed in public polls, political rhetoric, and the recurring pattern of recovery in funding for higher education. But too many in the public lack confidence that additional investment will generate the results we need. Additional spending is unlikely to produce better outcomes in higher education, without changes in how we allocate resources and how we approach teaching and learning.

The most important financial issue in higher education is not how incremental dollars are used, but the use of existing funding. The economic stimulus funding is critically needed to avoid the deterioration of higher education in this recession, but it is no cure. Money is necessary, but not sufficient for meeting the national need for greater educational attainment. The priorities and the incentives of the budget process in states and in institutions will determine the effectiveness of higher education far more than any amount of this emergency stimulus funding.

Where can strategic investments help us get the results we need?

While the use of existing budgets is critical, no business and no country have ever become more successful without making strategic investments. Money motivates action, and people with ambitious, shared objectives are willing to make strategic investments to achieve them. Defining shared objectives is critical. An economic crisis focuses the mind. It is an opportunity to re-examine our priorities and our strategies for the future. Let's not waste it. .