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.