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James Socas column: Fund higher education
Investing in the future

James Socas column: Fund higher education

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More than 200 years ago, Thomas Jefferson had budget problems. On Jan. 25, 1819, the Virginia General Assembly voted to make his vision of a state university a reality but failed to provide adequate funding.

Jefferson observed that, “We shall fall miserably short in the execution of the large plan displayed to the world, with the short funds proposed for its execution.” He complained the legislature was “higgling without the heart” to spend money at the expense of his beloved Virginia. “All the States but our own are sensible that knowledge is power.”

In the end, Virginia did find a way not only to fund “Mr. Jefferson’s University” but also establish a highly ranked higher education system that today includes 23 community colleges and 16 public colleges and universities. But the “higgling” over funding continues.

Virginia is one of the wealthier states, ranking 11th in median household income, but sits near the bottom in state support of higher education. The most recent State Higher Education Finance report, for fiscal year 2019, showed that with more than 300,000 full-time equivalent students in state-funded colleges and universities, Virginia provided $5,805 per student, a figure lower than it was 10 years before.

Only eight states provided less. In contrast, North Carolina appropriated 1.9 times that amount, at $10,896 per student; Tennessee provided 1.6 times more at $9,291; and Maryland provided 1.3 times more at $7,824.

As Virginia’s state-funded colleges and universities receive less of their total funding from Richmond, they are forced to fill the gap with tuition. One way is to increase tuition rates, making college less affordable.

Another option is to admit more out-of-state students who are charged a higher tuition, but that shrinks the spots available for in-state applicants. Neither choice is good, and both are happening.

As reported by the State Council of Higher Education for Virginia, the average in-state tuition cost at a four-year institution now eats up almost 50% of Virginia’s average per capita disposable income.

Virginia’s higher education net tuition revenue — which combines dollars from tuition increases and changes in the in-state/out-of-state mix — went up almost 50% since 2009, the 10th highest increase of any state.

Although recent budgets made progress, Virginia’s appropriations to higher education have, in fact, never recovered from where they were prior to the global financial crisis in 2009.

These trends take Virginia in the wrong direction at the wrong time. In today’s economy, education immensely improves earnings power and employment prospects. Recent Bureau of Labor Statistics analysis shows that a worker with a college degree makes 70% more than one with only a high school degree, and a worker with a professional degree makes two-and-half times as much.

Likewise, higher education leads to a substantially lower risk of unemployment, with high school educated workers facing a 3.7% unemployment rate versus 1.1% for those with a doctoral degree and 2.2% for those with a bachelor’s degree.

The importance of higher education will increase with greater adoption of information technology, particularly data science, machine learning and robotics.

The World Economic Forum’s Future of Jobs Report 2020, released in October, predicts almost 50% of all employees will need reskilling by 2025 as work become more knowledge-intensive and higher order cognitive skills such as creativity, critical thinking and advanced problem-solving become more important.

In addition, the global business consulting firm McKinsey has estimated that 49% of time currently spent on work activities worldwide could be automated using existing technologies, putting many jobs at risk.

By creating or expanding programs that address skills gaps and target emerging opportunities, colleges and universities can ensure Virginians are positioned for success. Examples include George Mason University’s and James Madison University’s programs in cybersecurity; the University of Virginia’s (UVA) initiatives in data science; and Virginia Tech’s genomics sequencing center.

Colleges and universities also help to future-proof Virginia’s economy by spurring innovations that generate future wealth. For example, in 2019 alone UVA reported almost 130 new patents, 80 new licensing deals, and 10 new businesses formed through technology transfers and licensing of UVA intellectual property.

There will be tough budget choices in the months ahead as COVID-19 continues to impact Virginia’s finances, but properly funding higher education must be a priority.

Jefferson’s observation 200 years ago that”‘knowledge is power” is even more true in the modern economy. Preparing Virginia for the changing nature of work will not get easier or less expensive as time goes by.

James Socas served two terms on UVA’s Board of Managers for the Alumni Association. He invests in technology businesses for The Blackstone Group. Contact him at: james.socas@gmail.com

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