Does NMSU-Carlsbad Support Innovation, Economic Growth?

New Mexico’s ongoing budget crisis requires wisdom and fortitude in making hard decisions about where to cut the budget to ensure the best possibilities for the public’s welfare now and in the future. Higher education must be part of the budget conversation since it represents a sizable portion of the state budget and wasteful expenditures have negative derivative effects on the state’s economy when New Mexicans invest in educations that have low or negative returns. In the last five years, postsecondary expenditures have increased by more than $200 million; we ask if there is a corresponding increase in value to students and taxpayers.

The Rio Grande Foundation has produced a study that shows highly differential costs between different institutions, with high cost institutions almost double the expense of the low cost institutions. The obvious question is why these large differences exist, and then how to reduce costs in favor of programs and policies that generate the highest returns to public per dollar expended.

New Mexico State University at Carlsbad has some of the largest per student increases of any state postsecondary institution. In a ranking of 24 universities and colleges, it had the third highest increase, over $2,000 per student. While it lost about 8 percent of its students, the college’s total budget increased over 40 percent (accounting for 10 percent inflation).

Of the four community colleges affiliated with NMSU, the Carlsbad campus has both the highest increase and the highest per student costs. It costs $2,500 more than NMSU-Doña Ana, which is the state’s low-cost leader in terms of per student costs. In fact, Doña Ana went in the opposite direction, reducing costs by $346 per student.

There are a host of potential explanations for why Carlsbad appears to be doing so badly. It may simply be that budget allocations are sticky and Carlsbad administrators spend what they are given. But, from a public interest perspective, this is not really how we want government to work. It is imperative to explore how much the school expends on its physical facilities, faculty, and administrative staff and to evaluate the value of particular programs. But, first, it is important for us to remember the purpose of education.

Rather than thinking of education in the aggregate sense, as if there is a large block of uniform students who will be pushed through the system en masse, we should consider it from a market perspective. There are many individuals, each with particular skills, financial concerns, and future dreams.

There is simultaneously a group of entrepreneurs who are prospecting for potential employees and making investment decisions based upon the returns they can expect to receive based on their comparative ability to supply what is demanded. We should think about the many educations (education with an ‘s’) and how these educations will connect the aspiring student with potential entrepreneurs.

While the per student costs are individually only a couple thousand of dollars, these dollars add up to a great amount in terms of public expenditure (both tuition and state subsidy). The disparities between various institutions in terms of per-student expenditures are a signal that inefficiencies may exist.

Just as the state legislature must look at higher education as a whole, the residents of Eddy County should look at what kind of education services (and at what cost) they would like from their local community college. In order for the state legislature to get the overall picture right, the policy makers must hear from concerned citizens, students, and college employees who are knowledgeable of the local challenges and opportunities.

Kevin Rollins is an adjunct fellow with New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.


Target Higher Ed Inefficiency


It is no secret that, despite significant tax hikes passed during this year’s special legislative session, New Mexico’s budget picture remains bleak. The good news is that through greater efficiency and modest spending cuts, policy-makers can avoid further tax hikes.

One area that must be in focus is higher education, an area the Rio Grande Foundation research has found to be the most bloated in terms of employment in the nation.

In the last five years, the cost of running New Mexico’s colleges and universities has increased almost $200 million, with total budgets for postsecondary institutions rising from $850 million to over $1 billion. An analysis of budgets from 2004 and 2009 shows that per student cost increases account for at least $60 million of the total increase. This total increase was slightly mitigated (about $14 million) by per student cost decreases at some schools.

In Albuquerque, home to the two largest public institutions of higher learning in New Mexico, we have representatives of both the profligate and the thrifty. At the University of New Mexico, the state’s largest institution, the total costs per full-time student has increased $1,397 over the last five years, at a rate double inflation. On the other hand, the state’s second largest institution, Central New Mexico Community College has moved in the opposite direction, reducing costs by $531 per student.

Out of 23 institutions, UNM had the sixth highest increase while CNM had the fifth highest decrease. UNM’s per student cost increases add up to $29 million, while CNM’s reductions save $7 million.

CNM doesn’t just beat out UNM, a four-year research university. It also does well when compared to its peers. CNM is the fifth least expensive community college in the state, only $700 more per student than least-cost NMSU-Doña Ana, whereas the worst-performing community college has per student costs twice as high.

The wide differences suggest that New Mexico is getting less for its education dollars than it could if higher education budgets were more like CNM’s and less like UNM’s. Inefficient schools don’t just waste taxpayer dollars, they use those dollars to lure students who otherwise might enter the workforce or shop around for cheaper tuition. Too many students find out after graduation that even with their heavily subsidized educations, supplemented by student loans and money from parents, that they cannot find a job commensurate with their investment. This is directly tied to the problem of inefficient higher ed.

In a normal market, customers look for combinations of price and quality that are affordable and offer a positive return — benefits are greater than costs. Different institutions offer competitive packages, either more quality for the same price, or a lower price, with a different quality, but greater return per dollar. This market process reduces costs while at the same time helping match needs to abilities, using prices to bring these into coherence. In a free market in higher education, the schools would provide educations that would simultaneously serve students and potential employers.

But schools often use state money to pursue an increasingly long list of “goods” that they say they cannot do without and then wind up in budget crises. This problem is the direct result of a failure to properly prioritize spending projects.

One possible way to make higher education more market-like is to offer vouchers that students could use at New Mexico higher education institutions. The dollar amount of the vouchers would be fixed, and tuition would make up the rest of the cost. If the voucher was more than the tuition, some of the money could be paid back to the students upon completing their educations. This would incentivize the students to be better shoppers and the schools to think carefully about their price-quality mix.

Some might argue that more spending is justified to maintain educational standards, provide competitive pay for faculty, or to support exciting new programs. This could be true. Are these costs worth it? We put the burden of proof on those schools, like UNM that have generated large per student cost increases. It seems more likely that because higher education funding is not tied to performance, New Mexico schools have simply heedlessly continued to spend despite ongoing trouble in the economy. We want to encourage schools to be like CNM in their forward-looking management, not continue to bail out inefficient institutions.

Kevin Rollins is an adjunct fellow with New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.


Smaller Schools Make Fiscal, Education Sense


The 2010 legislative session is right around the corner and, while solving New Mexico’s difficult budget problems — hopefully without raising taxes — will likely be the Legislature’s primary task, reforming K-12 education demands attention as well. First and foremost, those who have supported higher taxes for education will need to understand that the economy simply can’t handle it.

However, there are reforms that can be enacted at no additional cost to taxpayers that will address the serious shortcomings in a system that is failing too many children. Last year, the respected “Diplomas Count” report found that only 54 percent of New Mexico kids graduated in four years, although the state reports a slightly higher number. The bottom line is that New Mexico’s K-12 education system is in need of serious reform.

One important reform is to shrink the size of the schools our children attend. Although it is unusual for us here at the Rio Grande Foundation to agree with Think New Mexico, there is one point on which they are right: Smaller schools make economic as well as educational sense.

The conventional wisdom is that the bigger you build a school, the less expensive it is per student.

Yet the data do not support that assumption. An analysis of the construction costs of all new schools built in New Mexico since 2003 (the year the New Mexico Public School Facilities Authority began systematically collecting this data) shows that school construction cost per student has no consistent correlation with school size.

In other words, it costs no more per student to build a school for 500 students than it does to build a school for 2,500.

The data shows that most schools built recently in New Mexico cost $20,000 to $50,000 per student to construct. The most expensive schools have tended to be the very largest or the very smallest schools, with the less expensive schools ranging from about 300 to 800 students.

This analysis demonstrates that both large and small schools can be built very expensively or very inexpensively. One 482-student school in Gadsden cost only $25,975 per student, while a 2,200-student school in Albuquerque cost $47,705 per student.

The numbers on school construction cost have been vetted by a team of graduate students at UNM’s Anderson School of Business. Their statistical analysis found, with 95 percent certainty, that there is no correlation between a school’s size and the cost per student to construct it. They concluded that, contrary to the conventional wisdom, larger schools are not always less expensive to construct — indeed, they are just as likely to be more expensive on a per-student basis.

In addition to costing no more to construct, smaller schools cost less to operate than larger schools. The research demonstrates that schools larger than about 900 students incur higher costs in administration (because they require more levels of bureaucracy to run them), transportation (because they must transport students from far beyond the immediate neighborhood), and security (because the number of violent incidents per student goes up sharply as school size increases).

Building smaller schools will not (and we would not support if it did) require an extra penny in new spending. Instead, legislation to be introduced in 2010 would amend the existing Public School Capital Outlay Fund so that the school construction dollars New Mexico spends every year are spent more wisely on smaller schools.

The best news about smaller schools is that they represent a “choice” mechanism. Smaller schools mean more options for children and parents. Thus, it is no surprise that smaller schools have been correlated with both higher academic performance and a reduction in criminal behavior in the schools as well.

The benefits of educational choice are why the Rio Grande Foundation has and continues to support education tax credits, which would allow individuals and businesses to take a credit against their New Mexico taxes and donate that money to a scholarship organization that would help the state’s poor children by giving them choices as to where they want to go to school. This can be done without hurting the existing government-run schools.

More money has not been the solution for New Mexico’s education woes in the past, and money alone — even if we had it right now — will not solve the problems in the near future. It’s time for the Legislature to get creative by embracing education tax credits and smaller schools.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

Education RGF Events

Dr. Matthew Ladner Presentation on “The Florida Model for Education Reform”

Dr. Matthew Ladner of the Arizona-based Goldwater Institute presented on “The Florida Model for Education Reform” at the 2009 New Mexico Turnaround Conference last week. His powerpoint presentation provides a clear path forward for New Mexico. The answer: implementation of reforms undertaken in Florida including vouchers, tax credits, clear and firm state standards, a ban on social promotion, and alternative teacher certification (among others).

The results in terms of achievement have been astonishing and should provide a blueprint for New Mexico policymakers.

Education Tax and Budget

The Governor’s Unconstitutional Spending of Public Funds

Since 2003, Governor Bill Richardson has been spending tens of millions of dollars of public funds without Legislative authorization. These funds have been received into the state treasury under Federal economic relief and stimulus bills. Richardson has unilaterally been deciding how these funds should be spend, in violation of the state constitution which rests the power to appropriate public money solely with the Legislature. Rio Grande Foundation investigative journalist Jim Scarantino looks into these expenditures and compares reality with constitutional prescription.

Full text of Scarantino’s report can be found here.

Education Research Tax and Budget

Tuition Tax Credits in New Mexico: Saving Money, Creating Educational Opportunities

It is no secret that New Mexico’s educational system is failing. Unfortunately, despite tough economic times and a $600 million deficit for FY 2010, many view reform as being too expensive.

Thankfully, as Rio Grande Foundation Adjunct Scholar Sarah McIntosh points out in her new study, “Tuition Tax Credits in New Mexico: Saving Money, Creating Educational Opportunities,” New Mexico politicians should consider adopting a system of tax credits which would expand educational opportunities for low-income and needy children throughout the state while not costing taxpayers any additional money or even saving money.

The full study is available here. 

Education Tax and Budget

Demand Honest Results First


Legislators in Santa Fe are seriously considering a proposal that would increase New Mexico’s onerous gross receipts and personal income tax in order to fund a massive increase in education spending.

While increasing the tax burden on New Mexico workers and businesses by half a billion dollars would be questionable in the best of economic times, such a mammoth tax hike in today’s difficult economy would be especially unwise. Worse, New Mexico schools – including those in Socorro County – aren’t being upfront about their results or lack thereof.

An analysis by the Rio Grande Foundation found that achievement test proficiencies reported by New Mexico’s Public Education Department’s SBA tests exaggerate the numbers of children who are at or above grade level as compared to those estimated from the well-respected National Assessment of Educational Progress (NAEP). Though better known as the Nation’s Report Card, the NAEP reports that approximately 17% of New Mexico’s public school children are proficient- at or above grade level in both math and reading. But the state claims about 36% as proficient- 110% above the NAEP number. One wonders, “Is this inflation a cosmetic used to improve the looks of public schools while real reform is ignored?”

It’s a national phenomenon. Worst is Mississipi- artificially elevating student proficiencies by 300% over the NAEP. Least bad is Massachusetts- only increasing them by 25%. The median states increase them by about 100%. New Mexico pushes them up 110%. Reviewing the various states’ NAEP proficiencies reveals the unpleasant fact that the inflation tends to be higher when the NAEP numbers are lower. It appears that the greater the embarrassment to disguise, the greater the inflation applied. Not much integrity here.

Recently, we developed a method to estimate how individual schools and districts would have performed on the NAEP- necessitated by the fact that it does not report proficiencies locally. These improved estimates for New Mexico schools and districts are now available. Of particular interest are the lowest and highest performing schools within Socorro County.

The Table shows the percentages of students who are proficient at the best and worst schools here in Socorro County. We show the proficiency percentages from both the state’s inflated SBA examinations and our NAEP estimation procedure.




NAEP Estimates for Socorro County Schools Showing Worst And Best Performers’








Worst or Best?


SBA Proficiencies


NAEP Proficiencies


























Generally, the NAEP estimates for 4th and 8th grades have been found accurate to within 5%


























Generally, the NAEP estimates for high school have been found accurate to within 10%



























Conclusion: All Socorro County schools perform at levels lower than usually thought.

Sadly, public schools are unlikely to make the needed reforms as entrenched teachers’ unions fight any changes that could improve labor productivity. Yet, they are more than willing to demand still more from already struggling taxpayers.

Rather than pouring even more mone into government-run schools that are clearly not doing an effective job of educating our children, reforms that include tax credits that allow educational choice, smaller schools, and restoring local control should be tried. Absent real reform, New Mexico education authorities should at the very least consider giving the SBA tests a dose of integrity by requiring rough alignment with the Nation’s Report Card. That’s the least they can do.


Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

Education Research

New Mexico’s Local Public Schools And Districts Would Underperform on the Nation’s Report Card

New Mexico’s test of school students take an assessment test called the Standards-Based Assessment Test. Unfortunately, as David Anderson proves in his new study which can be accessed in the following link, this test is designed in a way that inflates results relative to what New Mexico’s students would do on the nationwide National Assessment of Educational Progress.
The first two items contain the detailed report and its accompanying spreadsheet tables of the estimates for all New Mexico public schools and districts (that had also reported SBA proficiencies). The third report presents this same work in an abbreviated form.
1.       Full Report
2.       Full Report Statistics
3.       Summary Report

Truancy’s Root Cause

Imagine that your company gives away its only product. Many consider your product the very key to a better life and yet, ultimately, 50 percent of your potential clients fail to take full advantage of your product.

This is the case right now in New Mexico’s schools and the truancy portion of the crisis has been receiving increased attention recently (including an article in the Daily-Times on June 8th). Although taxpayers pay more than $8,000 per student annually and students’ families are charged nothing to attend, increasing numbers of students are dropping out or going truant.

New Mexico’s real high school dropout rate – the number of children who enter but do not finish high school – is close to 50 percent. The truant crisis is a similar, related problem and unfortunately all too many regular truants are at risk of dropping out altogether.

So why are schools having trouble keeping children in the classroom? If the schools were like most businesses that had to serve and keep customers (as opposed to being a government monopoly), they would be in danger of going out of business.

First and foremost, there is no real competition in education. While some students do attend private schools, this is not really an option for many parents. More importantly, even if significant numbers of students leave the system to attend private schools, the school faces virtually no negative repercussions in the form of lost revenues.

Undoubtedly, parents bear significant responsibility for keeping their children in school and part of the blame must be laid at the feet of irresponsible parenting. This is why punitive truancy laws exist. Nonetheless, using the force of law to keep kids in school is not a viable long-term solution to our truancy or dropout problems.

The real problem is that schools, by there nature, are not keeping large numbers of children engaged because they are not designed with their diverse needs in mind. Rather, schools are institutions set up (and the tendency is reinforced by mandated testing) to treat all children the same. Teachers do the best they can to accommodate different learning styles, but sometimes it is simply not possible to accommodate all learning styles in a single classroom.

So, what can be done to keep kids in school? First and foremost, we must dispense once and for all with the notion that “schools” should be funded. Instead of funding schools themselves, we must fund students and their needs. This means that money should flow through the students instead of bureaucracies.

The idea of funding education through students as opposed to schools may sound like a radical one, but until schools must treat children and their parents as customers and compete for their business, children who don’t feel served by the system will resort to the radical and harmful steps of truancy and dropping out.

In an attempt to mitigate this problem, the Rio Grande Foundation is actively working with legislators to give individuals and businesses who pay taxes to New Mexico to take a credit against a portion of their tax burdens in order to give scholarships to allow children in low-income families to attend the school of their choice.

Such a program would be a huge step forward for many of New Mexico’s neediest children, but more needs to be done to address the dropout and truancy problems. We must focus on setting up a real education marketplace in which schools compete and innovate to attract students while making education interesting and useful enough to keep them coming back.

Education is important, not only for our children, but as a means of securing the economic future of New Mexico. It is time to fund the education needs of our children, not the schools that are failing them.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

Economy Education

Children are the Losers as Education Productivity Lags Overall Economy

There has been a lot of negative talk recently about the struggling American economy. Most of us are all-too-aware of falling house prices, slowing economic growth, and the possibility of recession.

While all of us should be concerned about the short-term economic prospects for our nation’s economy, the long-term track record of the American economy is very good. Productivity has risen consistently over the years and by any objective measuring stick, Americans are living better, more fulfilling lives than ever before.

This improved standard of living is the direct result of improved productivity. The fact that we as a society are able to bring more goods and services to more people using fewer resources – human or otherwise – is a big reason that we can afford better cars, bigger, better televisions, and other things that make life richer and more comfortable.

While productivity has grown exponentially in technology-intensive areas and other “cutting edge” areas of the economy, the gains have not been shared by other areas of the economy. In fact, in his new study, “Elementary Principles of Monopoly: Government-Run Schools Get Less with More,” Rio Grande Foundation fellow Dr. Harry Messenheimer, clearly shows that K-12 education in New Mexico and Hawaii is falling behind the rest of the economy due to poor productivity.

Messenheimer uses productivity data from the Bureau of Labor Statistics (BLS) and compares it with testing data from the National Assessment of Educational Progress and setting it against data on school funding and student populations. The contrast between our relatively free economy at large and our taxpayer-financed, government operated, K-12 monopoly is stark.

Since 1992, while productivity in our broader economy has grown by 41 percent according to BLS data, productivity in New Mexico schools has fallen by 22.4 percent.

Since improved productivity means doing more with less, declining productivity means that schools are doing less while consuming more resources. Since higher productivity makes us better off, lower productivity in our schools means that students are learning less than they were just 16 years ago.

So, what is the solution? The simple answer is to make our schools more like the rest of the economy. This can mean different things, but it probably does not mean that government should both provide the service in question (education) and have a taxpayer-financed monopoly.

One indicator of just how much government controls our schools is the fact that even in programs like food stamps the government doesn’t actually grow the food. Rather, it taxes the rest of us in order to provide a benefit for those who presumably cannot afford it otherwise. Food stamps are nothing but a voucher program for food. Vouchers are viewed as a “radical, free market” proposal in the realm of education.

Many free-market reformers might prefer to see our schools change in the freewheeling, innovative image of Google, but this is probably too much of a leap given the power of teachers’ unions and the inertia that has built up in our educational system over the years. “Google” might currently be unattainable, but market forces, particularly those that give parents and children greater control over education, must be adopted if we want to see innovation that increases educational productivity.

If the very nature of our education system is not changed, our lack of educational productivity will ultimately have an effect on overall economic productivity, thus making us all poorer.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.