The following article appeared in several New Mexico news outlets on September 30, 2019 including the Las Cruces Sun-News.
Gov. Lujan Grisham has put forth a plan (set for debate and possible approval in the 2020 Legislature) for “free” college for New Mexico residents. For many families this may seem like an unadulterated good thing. And, as the parent of three who is pondering (and already saving for) the college educations of his three children, I totally understand that reaction.
But, from the viewpoint of an economist or even someone who is simply concerned about New Mexico’s future, there are several serious problems with this proposal.
Currently, the Governor and Legislature are salivating at the prospect of a $900+ million surplus in 2020. That number may be even higher due to the recent uptick in oil prices. The plan is for “free” college to cost “just” $25-$35 million annually. Unfortunately, we have nothing from the Lujan Grisham Administration to justify that cost. Given the tendency of government officials to underestimate the cost of new programs (the Rail Runner and Spaceport come to mind) it would seem that the real cost even at the beginning will be much higher.
Worse, unless some cost restraints are included in this legislation, colleges and universities located in New Mexico will have no incentive to constrain costs. On the contrary, they have every incentive to grow their bureaucracies and increase spending dramatically.
Another big problem with the proposal is New Mexico’s low-performing K-12 system. By nearly all indicators New Mexico’s students in K-12 are among the lowest academic performers in the nation. Is higher education really the problem when the K-12 system is failing?
It’s worth noting here that according to the State Higher Education Executive Officers Association (SHEEO) 2018 report on higher education finance, New Mexico already spends 2nd most in the nation (as a percent of income) on higher education. If higher education spending is such a great “investment” for New Mexico, why do we remain one of the poorest and slowest-growing states in the nation (albeit with somewhat better numbers due to the Permian oil boom).
The fact that New Mexico’s already large investment in higher education hasn’t done much for our economy begs the next question: “Will there be jobs available for these expected graduates or are we training future workers in Texas, Arizona, Colorado, and other faster-growing, more economically-diversified states?”
If the Gov. does take substantive action to reform New Mexico’s economy by reforming the gross receipts tax and generally taking action to make New Mexico more economically dynamic and attractive, perhaps then we can keep more of these young, educated people in the State. However, the University of New Mexico’s falling enrollment and available population data indicate that New Mexico is losing its “best and brightest.”
Finally, as if all of these arguments are not enough, it is notable that “free college” is “regressive” in the sense that a vast majority of the benefits will go to people of higher incomes. Currently, 27% of New Mexicans have four year college degrees. Generally-speaking it is the middle and upper classes that can attain that level of education.
While the Governor’s plan may open the path to a few more needy students, how many of the bottom 25% of income earning students in the State can take the time to go to college? How many of them are academically-capable? While a middle-to-upper class parent of three stands to achieve a veritable windfall from “free” college, it is hard to align this with principles of tax fairness and “progressive” policies so in vogue in Santa Fe.
These are just some of the many problems with the plan. Hopefully the Legislature instead considers some of the many ways to improve K-12 education in New Mexico and engage in much-needed economic reforms that will make our State more prosperous and thus attractive for young workers from all walks of life.
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.