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Another Way Illinois Shoots Itself in the Foot When Defunding Colleges

It’s not just about educating students—colleges are proven to spur economic growth by their very existence.

NEIU students and professors protested the budget impasse last month.   Photo: Michael Tercha/Chicago Tribune

The governor got some heat the other day for telling a WLS host that his six kids “all have found their opportunities outside of Illinois” and that he talks to people who “don’t see their children and grandchildren having the future in Illinois that they had themselves.”

This got some side-eye because of the Rauners’ considerable privilege, but as Rich Miller noted, he hears the same thing, especially that “some of the parents I know are sad because they don’t want their kids going to an Illinois university.” Shortly thereafter, Northeastern Illinois announced that it was canceling classes for three days because it doesn’t have the money.

The state’s underfunding of its universities during the budget stalemate has been widely reported, and it correlates with poor enrollment numbers. But it’s been a problem for a while. While systemwide numbers have stagnated since the prior decade, Illinois’s neighbors have been adding students.

From 2006 to 2015, the state’s community-college enrollment also fell, from about 350,000 students to about 285,000, according to Illinois State Board of Higher Education statistics. But independent not-for-profit schools (everything from Northwestern to Moody Bible Institute to the School of the Art Institute of Chicago to the National College of Naprapathic Medicine) stayed steady at just under 214,000, while for-profit schools (DeVry, Kendall College, etc.) increased from about 35,000 to about 68,000.

Not all the state’s universities have lost students, but the big gains have gone to the state’s biggest schools.

State funding has been in decline for a while now, but the impasse has done tremendous damage. A couple months ago the Center for Tax and Budget Accountability ran the numbers, finding that from 2000 to 2015 funding had fallen by $1.4 billion (with inflation), and that from 2008 to 2015, Illinois’s per-student funding had fallen 54 percent. And then it got worse.

While all this is going on, people are calling attention to how universities are lifelines for their areas, like Noah Smith in Bloomberg View:

[O]ffering incentives to universities that upgrade and expand their branches in struggling regions is a great idea.

This is actually something the U.S. government has done before, with great success. The Morrill Acts of 1862 and 1890 established a system of land grant universities, dispersed throughout the U.S. Today, the places that received those grants are flourishing economically.

Or Lyman Stone, an USDA economist who writes well about migration and demographics:

For just two percent of what we already spend on federal government education spending, we could turn the population depressive trajectory of university-less towns around and launch them into the 21st century with universities that pioneer a new model of higher ed policies.

Smith and Stone disagree on the particulars—Smith thinks we should bolster existing universities in depressed areas, Stone thinks we should be building brand new universities—but broadly speaking, it’s the same idea. It’s grounded in results, as UIC’s Joshua Drucker found in the literature and in his own research, and it’s especially important outside major cities in places without robust industries:

Greater concentrations of graduate-level and science and technology degrees are advantageous for earnings growth. Spatial spillovers across neighboring regions indicate a relatively flat spatial gradient of university impacts. Despite the importance of higher education activities, non-university factors—agglomeration economies, industrial composition, educational attainment, and private sector entrepreneurship—generate larger impacts. Small and medium-sized metropolitan areas demonstrate greater earnings gains from university activities than large regions, confirming that universities can substitute for agglomeration economies in small regions.

The opposite is happening in Illinois. The enrollment gains in recent years have gone to its massive flagship campus in Champaign-Urbana (Champaign is the only fast-growing city in the state) and to the University of Illinois-Chicago, in the city’s thriving urban core. The University of Illinois system, which includes those two schools, also has an endowment equivalent to $26,000 per student as of 2014 (per CTBA numbers), over three times that of Southern Illinois, which has the second-highest per-student endowment of Illinois’s public universities.

It’s not just that universities create opportunities by educating students; they create opportunities by their very existence, especially in places without other major industries. As long as the budget impasse scares students and parents away from its schools, the state loses out on both.

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