Higher Education

Issue

How can Minnesota maximize its investment in higher education to educate and prepare the workforce to meet the needs of the economy?

Policy

Create an effective marketplace for higher education in Minnesota.  During the next decade, Minnesota will experience significant demographic shifts. At the same time the baby boomers are retiring, the number of high school graduates – the future workforce for the state – is shrinking. The state will experience a significant drop in the number of white, middle- and upper-class students that will be offset by an increase in first-generation, minority and lower-income students – groups of students that have not always experienced educational success in Minnesota. The net result will be fewer students graduating from high school and a greater percentage of students that Minnesota needs to transition from high school to college coming from families who cannot access college on their own. To increase the college success rate for these students, and to build the workforce that Minnesota needs to have a strong and vibrant economy and to compete globally, we must take advantage of the strength of the state’s higher education infrastructure – which includes both public and private institutions. We must support students in their academic efforts, and we must realize that a well-trained and educated citizen who is engaged in building Minnesota’s economy is the best thing for the state. It does not matter what type of institution that person attends, but rather that the person is able to gain the skills necessary to effectively participate in the state’s economy.   

Given the challenges Minnesota faces, the state’s current pattern of investment in higher education does not provide adequate incentives for colleges and universities to deliver services in an efficient manner that responds effectively to the needs and demands of the state and its economy. Nor does it concentrate public resources in the hands of the citizens who are least able to afford a personal investment in higher education. Instead of letting legislative bodies or public bureaucracies make most of the decisions about how state funds are invested in higher education, the majority of public funds should be put directly in the hands of the citizens – the consumers – who are looking for education and training. This will shift the decision-making power from central bureaucracies to local campuses servicing individual consumers, and thereby strengthen the ability of public colleges and universities to compete by freeing them to determine their own futures rather than having their futures based on political concerns.

To accomplish this, the Minnesota Chamber of Commerce recommends:       

• Invest in “the public” rather than “public institutions”. Minnesota should invest 30 percent of the state higher education appropriation in programs that distribute resources directly to consumers, thereby giving them access to the higher education opportunity that best fits their individual needs.  The best way to give consumers choice in higher education is to allocate the revenue to the Minnesota State Grant Program – the state’s need-based aid program – to help lower- and middle-income students access and afford a college education or additional training beyond a high school diploma. The remaining 70 percent of the appropriation should be invested in the public institutions.  The state should expand the parameters of the Minnesota State Grant program whenever Congress expands Pell grant funding to maximize grants in Minnesota.

• Separate appropriations for student subsidies, institutional support, and research. Research conducted by Minnesota’s colleges and universities adds significant value to the state’s economy, and Minnesota has a long history of supporting research through state appropriations. Given the limited resources now available for higher education, the public should be aware of how current dollars are being spent.  As a result, public funding will be more transparent so the public can understand and evaluate the state’s postsecondary priorities. 

If the Legislature accomplishes these policy changes, the higher education system would provide more support for those students that are most needy and least likely to succeed.  Funding priorities would focus more on the student rather than the institutions, and the state’s support for public institutions’ tuition subsidies, operations, facilities and research would be clearer.

Business Impact

Maintaining a highly skilled and well-educated workforce is essential to a strong economy in Minnesota.  It is important that Minnesota’s higher education system retains its current residents and attracts students from outside Minnesota so businesses have an educated workforce to support their growth.  As the baby boomer generation enters retirement, policy-makers need to anticipate the change in demographics by acknowledging that an increasing percentage of the workforce will need a postsecondary education. 

It is important to the business community that institutions become more responsive to the needs of the economy.  The Minnesota Chamber policy creates a balance among an academic pursuit, institutional stability and student choice.  The $2.8 billion that goes to the institutions finances their basic operations and many special programs.  The $281 million in State Grant money that follows the student not only makes the institutions sensitive to the more immediate needs of students and the economy but also improves accessibility.  From the business community’s perspective, that’s a good mix of meeting immediate needs and preparing for the future.

The business community encourages post-secondary education to make improvements through wiser and more efficient spending.  There are multiple opportunities for streamlining operations, especially with respect to labor and facility costs.  Improving education benefits the state and businesses within the state.  Additional public financial support is not the only way to pursue improvements in higher education.  Businesses continually look for improvements and increased efficiencies as a part of improving customer service and remaining competitive.  Education needs to embrace the same mind-set.