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Short-sighted solution, long term detriment

This part of the budget deal may be the greatest threat to Oklahoma’s economy

Overwhelmingly, the states where residents earn the highest wages also have the best-educated workforce. Both productivity and median wages in a state are strongly correlated with the percentage of residents with a college degree. At the same time, overall state tax levels show no significant correlation with median wages. Plenty of states — including Oklahoma — have relatively low state and local taxes and relatively low wages, but there are no states with a well-educated workforce and low wages.

The link between education levels and state prosperity is clear. That’s why it is especially troubling that the long-awaited budget proposal from the Oklahoma Legislature and Governor Fallin decimates funding for higher education. The budget cuts $153 million from higher education, a nearly 16 percent drop from initial 2016 funding levels. In total dollars, the cut to higher education is by far the largest cut to any agency.

These cuts come on top of years of cuts in Oklahoma that have already reduced per-student-funding for higher education by 21.7 percent, or $2,081 per student after inflation, compared to 2008 levels. Last year Oklahoma made the 5th deepest cut to higher education in the nation, at a time when most states have begun to restore funding lost during the Great Recession. Over that same period from 2008 to the present, average tuition at Oklahoma’s four-year colleges has jumped 30.5 percent after inflation.

Even with the recent tuition hikes, Oklahoma’s four-year universities have managed to keep tuition and fees relatively low compared to the national average ($6,227 for undergraduate resident students at four-year institutions in Oklahoma, compared to a $9,410 national average). However, the student costs at Oklahoma’s two-year institutions of $3,620 actually exceeds the national average of $3,435. And over the past decade, student tuition and fees have gone from 36.1 percent to 47.7 percent of total revenue for higher education, surpassing state funding which fell from 50.8 percent to 35.7 percent of total revenues.

There’s wide agreement among Oklahoma’s business community that we need more college graduates in our state workforce. Yet the state has dis-invested and college has become more expensive for students. Instead of increasing our education levels, total enrollment in Oklahoma public colleges and universities has fallen for the past four years. In the 2014-2015 school year there were nearly 25,000 fewer students enrolled in Oklahoma public higher education institutions compared to 2011-2012, a 9.6 percent drop in enrollment.

Tuition increases are especially likely to deter students in low-income families from enrolling, even those high-achieving students who could likely obtain a scholarship. A Brookings Institute study found that high-achieving, low-income students commonly do not apply to selective universities due to concerns about cost. Even when financial aid programs could ease the cost burden, these students are less likely to have parents or school counselors who can guide them through complex financial aid applications. Instead, they apply to two-year colleges or non-selective four-year colleges — a decision that could dramatically reduce their earnings over a lifetime.

Students from all backgrounds are likely to face higher debt burdens for getting an education, which can damage the economy for years to come, as deeply indebted students postpone buying a home or starting a new business. Putting more of the burden on students to fund their own educations in this way doesn’t make economic sense. Oklahoma lawmakers are saving a few dollars today by holding back the growth of those we’ll depend on to fuel our economy for years to come.

Gene Perry is a policy director for Oklahoma Policy Institute .
Find this story and more at okpolicy.org.