Sunday, November 13, 2005

What's the best way to leverage our higher education assets in Illinois?

Nate Kaufman's post to this blog from the Federal Reserve got me thinking about the best way to maximize the potential from our higher education system. We've got about a dozen universities and perhaps three dozen community colleges. Unlike other states that integrate their universities into one statewide system (like California, Wisconsin and Minnesota), Illinois essentially has nine or ten separate systems for universities and three dozen or so separately administered community colleges.

That can't be the most efficient way to do things.

There should be easier transferability between colleges, and we should probably be importing thousands of students from around the world to our campuses. I'm sure we get a bigger economic bang from a non-Illinois student choosing to live and learn in our state for four years than from an Illinois student going to one of our colleges.

Seems like we should be increasing the number of non-Illinois students at our schools. And then figuring out a way to develop more businesses from our universities. Urbana is one of the world's leading research universities (Netscape was created there ... I was using Mosaic back in the day before there was a Netscape), but we don't really create a ton of start-up companies with all that brain power. Why not?

It can't just be the weather.

And it can't be our super-low income tax either, as California has higher taxes than we do. So does Massachusetts (two states that do a better job at generating business from universities than we do).

Any ideas?


Nathan Kaufman said...

It would be interest for someone to do a study on "risk" preferences for people in IL vs. california. It is possible that people in IL are more risk-averse than people in CA. To get new business requires risk-taking. It requires failure and learning from failure. The current CEO of Google tried several things before Google. Now he is winning big (for the moment anyways).

Nathan Kaufman said...

"I'm sure we get a bigger economic bang from a non-Illinois student choosing to live and learn in our state for four years than from an Illinois student going to one of our colleges."

I am not 100% sure. You have to distinguish between public and private in this instance. Public universities are supported by tax dollars. People that own a business or that pay taxes for decades may someday send someone to a state university. An attractive state university system may be a good retention benefit for people to stay in state and pay taxes. It may also be a good incentive for people to move to a state to work (from another state or country).

Dan Johnson-Weinberger said...

That's interesting, but I still think a non-Illinois student generates a lot more revenue than an Illinois student. It's possible some people choose to live in Illinois because of the in-state tuition to a state university, but the people who make a decision like that are probably high enough income that they would likely not care whether they pay in-state or out-of-state tuition. There are lots of good state university systems in the nation, so no particular state probably has a retention advantage over any other based on in-state tuition.

Nathan Kaufman said...

I do not fully agree about the high-enough-income part. I can think of specific examples of extremely bright and well-to-do people to counter but am not going to post them to the blog.

In-state students have parents that pay all kinds of taxes to IL, many of them for years and generations. This may add up to more than out-of-state tuition revenue when you consider the time value of money and compounding. My dad was the third generation of immigrants and the first to attend a state university. The two prior generations probably worked 70+ years with no college degree and no high school degree. My dad strongly encouraged me to attend an in-state university vs. an out-of-state university. Cost was a factor.

Nathan Kaufman said...

Another thing to leverage higher education is broad-based gains in the endowments of the system. The U of C and Northwestern each have more than $3 billion. The University of Illinois recently crossed the $1 billion barrier. I do not know about the other state universities. Some sort of campaign to raise funding for state university endowments might help. To the extent this could be coordinated across multiple state universities, or encouraged by the state, it might help. Endowments can provide more professors, scholarships, and experiences for students.