The University as Economic Engine: Case Studies of State Investment in Higher Education

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The University as Economic EngineCase Studies
of State Investment in Higher Education

• A presentation by
• President Michael T. Benson
• Snow College Ephraim, Utah

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Snow College

• Founded in 1888 (2nd oldest in Utah)
• 65 Female 35 Male
• 75 of Students transfer to 4-year institutions
• Utah, Utah State, Brigham Young
• UC-Berkeley, UCLA, Southern Cal
• Oberlin, Cornell, MIT, Boston College

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Snow facts (cont.)

• 2nd largest employer in Sanpete County (5th
  poorest county in Utah) Moroni Feed and turkey
  farming
• Rural setting Ephraim population 5,000
• Recent collaboration to construct a new
  College-County Library (private donor, state,
  county, city, and federal)
• Cultural, intellectual, social, and athletic
  epicenter for all of central Utah

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Eccles Center for the Performing Arts
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Jorgensen Hall Snow College
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Barrett Lobby Eccles Center
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Snow All Steinway School
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Bill Gates

• Best way to ensure the economic viability of his
  home state of Washington Support your local
  University.
• Two former governors, Evans and Gardner, urged
  Washington to bond an additional 1.7 billion for
  higher education

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M.I.T. The Impact of Innovation (March 1997)

• MIT graduates and faculty formed their own
  independent nation 24th largest economy in the
  world
• 4,000 MIT-related companies employ over 1.1
  million people with annual sales of 232 billion
• Gross Domestic Product (GDP) of 116 billion
  (higher than Thailand)

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MIT Study (continued)

• First of its kind to measure the job creation
  impact of single research institution
• 80 of jobs are manufacturing related
• Massachusetts is importing company founders
  because of MIT 9 of MIT grads from
  Massachusetts, but 42 of biotech, software, and
  electronics firms are located in the State

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Some MIT-related companies

• Hewlett-Packard (W. Hewlett, 1936)
• Rockwell International (Rockwell, 1908)
• Raytheon (Bush, 1916)
• McDonnell Douglas (McDonnell, 1925)
• Texas Instruments (Green, 1923)
• Campbell Soup (Dorrance, 1895)
• Intel (Noyce, 1953)
• Gillette (Nickerson, 1876)

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Letter from a Prominent Scientist to the
President of the United States

• Future of scientific technologies depends upon
  the funding of colleges and universities
• Is this a recent assertion?

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• Vannevar Bush (MIT class of 1916) to President
  Harry S. Truman in 1945
• Establishment of the Atomic Energy Commission and
  the National Science Foundation

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Science, the Endless Frontier(1945)

• V. Bush advocated for increased government
  support of basic research resulting in
• 1. Strong national defense capability (Eisenhower
  and the military-industrial complex
• 2. Enhanced health of our citizenry
• 3. Positive impact on national economic
  performance resulting in high-quality jobs

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Bushs report

• James McGroddy (retired senior v.p. of research
  for IBM) in 1998 Congressional testimony
• No serious student of history would
  substantively revise Bushs rationale or
  conclusions in any major way. . .

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Harry S. Truman

• To the American Association for the Advancement
  of Science in 1948 Science has no political
  affiliation. . . More aid should be granted to
  universities, both for student scholarships and
  for research facilities.

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Significant Discoveries (AAU)

• Global Positioning System (Columbia, Harvard, and
  MIT)
• First digital computer (Iowa State and University
  of Pennsylvania)
• Salk polio vaccine (U of Pittsburgh)
• First automated DNA sequencer (U of Nebraska)

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Advancements (cont.)

• First open heart surgery (Case Western Reserve)
• First artificial knee joint (U of California,
  Irvine)
• Child-proof safety cap (Duke)
• Research techniques for modern public opinion
  polling (U of Iowa)
• www.aau.edu societal contributions

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Fed Chairman Alan Greenspan in 1999 (ACE annual
meeting)

• Transforming knowledge into economic value
• Overwhelmed with the increasing scientific
  knowledge base . . . we must struggle to prevent
  the liberal arts curricula from being swamped by
  technology and science.

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President Bill Clinton (December 2000)

• Partnership between government and our public and
  private research universities to conduct research
  that
• Improves our economy, health, and national
  security
• Trains our future science and technology workforce

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Economic Impacts

• Route 128 in Boston (Harvard and MIT)
• Silicon Valley (Stanford and U of California,
  Berkeley)
• San Diego (UCSD, San Diego State)
• Austin (U of Texas)
• Research Triangle (Duke, NC State, and UNC-Chapel
  Hill)

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Bayh-Dole Act (1980 and 84)

• Colleges and universities developed and
  strengthened internal expertise for the purposes
  of patenting and licensing inventions
• Association of University Technology Managers
  (AUTM) 113 members in 1979 over 800 members in
  1999.

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Rise of the Creative Class by Richard Florida

• Brain Gain Cities in North America Seattle,
  Austin, Atlanta, Boston, San Diego, San
  Francisco, and Washington, D.C.
• Two common denominators
• High percentage of college graduates
• Proximity to a major research institution

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National Association of State Universities and
Land-Grant Colleges (NASULGC) 2001

• Importance of reminding public officials and
  taxpayers of the return on their investment in
  public higher education, particularly during
  periods of economic uncertainty
• What exactly is that return?

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NASULGC (cont.)

• For every 1 invested, average return is 5
• 2 out of 3 students remain in their states upon
  graduation
• What are states currently doing?

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Recent Investments of States

• Alabama 90 million for biomedical research
  facility at UAB formation of Alabama Research
  Alliance (state, business, and universities)
• Florida 300 million for Brain Institute at the
  U of Florida
• Georgia Georgia Research Alliance enterprise
  has more than doubled to 800 million since 1990

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Examples (cont.)

• Illinois 123 million to U of Illinois
  Ubrana-Champagne for 3 high-tech research
  facilities
• Michigan 700 million on life sciences institute
• North Carolina 5.1 billion in bonds for new
  facilities

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Michael Crow and Arizona

• Approach is certainly instructive for Utah
  (Research I institutions Utah and Utah State)
  research overhead
• Sea change in approach with the legislature
• Get NAU and U of A on board
• Invest in higher education now so it will be less
  dependent in the future

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Arizona (cont.)

• 450 million bond for basic research space
  (divided among ASU, U of A, NAU, and Arizona
  Western College)
• Called incubators of innovation
• Headline from May 29, 2004
• Governor approves 7.36 billion budget big
  winner is education
• Net increase at ASU was 23.5 million

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Governor Napolitano

• Many other states cut funding to public
  universities and community colleges last year,
  but we did not. We recognize that higher
  education is the economic engine of the
  knowledge-based economy we are seeking to build
  in Arizona.

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Napolitano (cont.)

• My budget recommendation for this year will
  continue to invest significantly in Arizonas
  universities and community colleges so that they
  can continue to grow into their new and more
  vital 21st century role.

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Conclusion

• Chairman Greenspan in 2002
• What colleges and universities produce is highly
  valued in todays economy
• Rise in that value is reflected in the widening
  spread in compensation for those with college
  degrees and those with less education
• Better paying jobs mean more payroll taxes (on
  average, 1 million more in salary for college
  graduates vs. high school grads)

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• Increased investment in college-trained human
  capital has resulted in a flow of labor input
  into the economy
• This input has made an important ongoing
  contribution to the U.S. economic growth
• Investment in human capital (Florida greatest
  resource in ANY nation)

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Benjamin Franklin

• An investment in knowledge always pays the best
  interest.

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Thank you for your consideration!
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