Link between higher education and economy gains recognition

State legislators are increasingly agreeing with an argument, long advanced by university officials, that investing in higher education will ultimately benefit the state's economy and help the state dig out of a recession.

In an effort to hold on to the minor funding increase Gov. Martin O'Malley (D) allotted the university system for 2010, officials are promising tangible economic returns, such as new companies and jobs. Citing projects that incubate small businesses and university research successes, they are making the same case for an ambitious 10-year public university funding plan that aims to rank the system among the country's best, and will require more than $700 million along the way.

University officials say legislators are more excited about higher education than ever before, an attitude they attribute in part to O'Malley's emphatic support and in part to increased understanding of how to grow the state's knowledge-based economy through investments in its colleges and universities.

Mote has long made this argument, which is similar to one O'Malley frequently makes. O'Malley is fond of citing Richard Florida's book The Rise of the Creative Class, which argues that highly educated professionals and creative types are key to economic growth.

"In my 10 years, I've never seen anything like it," said university President Dan Mote. "The state legislature has come to a point where they're very receptive to what we've been saying. It's amazing and inspiring."

At a hearing for the public university funding model - the end result of two years of study by a commission chaired by Del. John Bohanan (D-St. Mary's) - on Friday, Senate Budget and Taxation committee chairman Sen. Ulysses Currie (D-Prince George's County) gave a rousing and unprompted speech to his fellow legislators that awed the academics gathered to testify.

"If you look at where we are with our budget, with our environment, even health care, only through higher education are we going to be able to resolve those issues," Currie said. "It makes sense for our deficit, too. Highly educated people get in a higher tax bracket. It's how we will grow revenues."

Mote called it the best hearing he had ever been to. University officials were initially dismayed with the timing of the roll-out of the Bohanan Commission, which commits the state to funding higher education more than do three quarters of the states it competes with for jobs. When the recession was declared in October, many felt the price tag precluded the model from state support. But curiously, the economic downturn emphasizes the need for strong universities, Mote said.

"How are we going to come out of this recession? With new jobs," Mote added. "Where do the new jobs come from? New companies. And who is going to create those companies? Our graduates."

Although the model won't be funded this year, it would be a positive step if the state adopts the commission's findings as policy while they are still fresh, said university lobbyist Ross Stern."It's an exciting time for us in Annapolis right now," Stern said. "The speech by Sen. Currie set the tone. It's what we've been waiting to hear."In testimonies before the General Assembly, Mote typically highlights the small business incubators and development centers on the campus, which deliver big economic impacts with small start-up costs. Mote led a governor-appointed task force that researched how the university system can directly affect economic development whose the findings were released in late January. In that vein, the system is also considering a commitment to create 325 companies during the next decade.

Mote often brings up Zymetis, a biofuels company founded by university professor Ron Weiner. The company hopes a biomass it found in the Chesapeake Bay can eventually be turned into a low-cost substitute for gasoline.

Mote said his arguments are gaining traction with legislators and that he likes to think he has had an influence on their thinking. Both the funding model policy and the university system's budget have favorable odds in the General Assembly.

"It is all being very well received," said Bohanan, who chairs the House Appropriations' education and economic development subcommittee.

The legislature's increased support for higher education is a natural progression after mandates for K-12 education gave Maryland the distinction of being the No. 1 school system in the country. Now, officials are aiming to stop the brain drain of the state's most talented students in order to strengthen Maryland's economy.

"When I was growing up, it was all about the neck down, the ability to work," Currie said. "Now, it's about the neck up."

But not everyone buys into the theory that investment in higher education eventually will stop the economy from the dive. Analysts, as well as top-ranking legislators such as Senate President Mike Miller (D-Calvert and Prince George's), have called for O'Malley to reconsider the tuition freeze and increased university budgets in light of the economic downturn. Neal McCluskey, an associate director at the Cato Institute's Center for Educational Freedom, said there is no proof state spending yields higher achievement, which is often because of poor use of the funds. He cites economist Richard Vedder, who conducted one of the few studies that examines state higher education spending, and found that economic growth decreased the more a state spent on its colleges and universities.

"When universities petition the government for money, they talk about the jobs that would be created with the money or the buildings that would be built, basically, what you can see," McCluskey said. "It's a flawed equation because nobody looks at how taxpayers would have used the money if they kept it. They could have saved, invested or spent it."

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