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Research: Higher-ed improvements would help Minnesota more than most states

Date Published: 08/23/2012

Author: Dane Smith, President

ST. PAUL LEGAL LEDGER CAPITOL REPORT

If you’re a sparsely populated rural state with little going on in your economy besides farming or fossil fuel extraction, and you also have low taxes or no income taxes, then putting a top priority on higher education completion might not make a huge difference to your economic health and state budget.

But if you’re a state with a large metropolitan area harboring lots of professional, high-tech and skilled jobs, along with a relatively progressive tax-and-budget structure, it makes a lot more sense to double down on increasing the educational attainment of your workforce. And you probably want to set a new and specific goal for hiking those rates of postsecondary completion.

Minnesota is that latter state. And a compelling new study ranks Minnesota 6th highest among the 50 states in projected economic benefits — higher incomes, more tax revenues generated, lower state correctional and human services costs — resulting from increased higher education attainment in our state.

The new report, published by researchers at the National Center for Higher Education Management Systems, calculates the total dollar benefit to each state from an additional 100 four-year degrees, 100 two-year degrees and 100 postsecondary certificates. The report, “Increasing College Attainment in the United States: Variations in Returns to States and Their Residents,” is available at www.changemag.org.

In Minnesota, the additional benefit from those 300 credentials comes to nearly $1 million a year, compared with less than $500,000 per year in states that tend to have rural economies or no income taxes. Other states with knowledge-based economies and higher income taxes, such as New York, California and Connecticut benefit the most from more degrees.

The key drivers in the states that benefit the most, say researchers, are “the extent to which the state’s economy … is knowledge-based,” and the manner in which the states tax the income generated by the higher education advantage.

The explanation in the report for Nevada’s low ranking is instructive. The authors note that the Nevada economy “is primarily driven by the entertainment and construction industries, so large numbers of its residents are working in jobs that traditionally do not require or give an employment advantage to college graduates. Meanwhile, the state’s tax policies do not effectively capitalize on any increase in wages that do result from increased college attainment.”

All states would benefit from higher postsecondary completion, and the report does not calculate the value reported by many other social scientists that correlate with education, such as better health outcomes and a more informed and engaged citizenry.

We are rather famous in Minnesota for being both educated (the phrase popularized by Garrison Keillor is “above average”) and progressive in the way we collect revenue and invest in human capital. We also have been lucky to have a balanced and versatile economy, a blend of urban and rural, with no sector clearly dominant over others, and no powerful cartel that dictates public policy.

But if the water that thundered over St. Anthony Falls once drove our milling industries and powered our early growth, economists and business leaders long ago reached a consensus that it’s brainpower that drives our economic engines now, and that feature stands out as our dominant asset and product.

An increasingly educated Minnesota (especially since income taxes were raised for improving public education in the 1930s) and a growing supply of educated human capital have earned Minnesota a reputation for creativity, productivity and innovation in a world that increasingly pays a higher premium for those with the most knowledge and skill.

We’ve been arguing for several years now that Minnesota ought to double down on that asset and set a specific goal for postsecondary attainment by the end of the decade. The Star Tribune recently validated that priority in their main Sunday Opinion article and supported the setting of a specific goal.

The editorial said that graduating more students was “the most important item” among the recommendations in a recent Itasca Project report on higher education, and also “the most challenging. It puts more business heft into a call several years ago by the progressive think tank Growth & Justice for a 50 percent boost in the share of young adults who have attained a postsecondary certificate or degree by 2020.”

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The authors of the new report note the growing popularity of national goals for college completion such as those established by the Obama administration and by large philanthropic organizations such as the Lumina Foundation and the Bill and Melinda Gates Foundation.

The Lumina Foundation says that “the first step to increasing attainment is to set a specific state goal that can be used as a basis for all future decisions affecting higher education in the state. Tennessee, Ohio, Texas, Arizona, and Oregon have all set state goals for attainment, and these states are already seeing a dramatic shift in the way higher education decisions are framed and addressed.”

None of those states rank as high as Minnesota does on the anticipated payoff from better completion rates. Our governor, our Legislature and a broad alliance of business and community leaders need to come together around setting and achieving that goal.

The authors of the “Increasing College Attainment” report observe that stakeholders in the states that are setting attainment goals are trying hard to convince policymakers and the public that meeting the goals will “lead to more prosperity: higher wages for struggling workers, an improved ability to address a variety of middle- to high-skill shortages in the employment market, and more competitive knowledge-based economy that will foster job growth from within and attract business and industry from outside the state.”

No other policy objective has such widespread ideological and partisan consensus. Let’s just do it: Set that higher education long-term goal, and work every day toward achieving it.

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A version of this column originally appeared in the St. Paul Legal Ledger Capitol Report on Thursday, August 23, 2012.


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