Leveraging higher ed

April 29, 2012
| By Pete Daly |
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The Michigan Turnaround Plan, as presented by the statewide group Business Leaders for Michigan, includes higher education as one of its key building blocks — the focus of a May 7 BLM leadership summit in Lansing called Growing a Higher Education Marketplace.

One way higher education can help Michigan build a strong new economy is by attracting and producing the talent Michigan needs to be competitive.

“Michigan is going to experience a talent shortage of over 1 million college-educated workers over the next 10 to 15 years,” said Doug Rothwell, president/CEO of Business Leaders for Michigan. “Attracting more out-of-state students to attend Michigan universities, so long as there is no loss of access for in-state students, benefits our state in two ways: They will help us create more jobs in Michigan because they can help us fill jobs we can’t by relying on Michigan talent alone, and they will bring hundreds of millions of dollars into our state each year” in paying for an education in Michigan.

Jim Hackett, president/CEO of Steelcase, will be facilitating one of the panel discussions, “Higher Education – The Talent Engine.” He notes that the new push to recruit more out-of-state students to Michigan universities “comes from the effect of the state funding (for higher education) declining.”

A graduate of the University of Michigan, Hackett noted that state appropriations to U-M “have been reduced dramatically from 10 years ago” — and he added that all of the state’s higher education institutions are in the same boat.

Hackett said the only way Michigan colleges and universities can protect resident students from “super-inflated tuition is to balance it with out-of-state tuition.”

“For the universities to perform at their highest level possible, they are going to need this (increased) ratio of out-of-state students in order for that to happen,” he added.

In other states, he noted, such as North Carolina and Georgia, “there’s a much higher ratio of support by the state” for higher education.

Hackett agrees that the state of Michigan suffered mightily in the recession and that it is understandable why all sectors of government are under pressure. But, he said, “we can’t be cutting our future” because of short-term budget realities, and he added that the higher education cutting was going on long before the financial crisis hit Michigan’s state government.

Hackett said it “frustrates me deeply that the legislature is losing track” of what it takes to compete in the new knowledge-based industries and the reasons universities need to be supported.

“If you are producing knowledge workers for the future industries, you have a shot at competing,” he said.

Panelists on “Higher Education – The Talent Engine” will be Dewayne Matthews, vice president of policy and strategy at the Lumina Foundation; George Ross, president of Central Michigan University; and Timothy Nelson, president of Northwestern Michigan College.

The higher education summit meeting, which will run all afternoon at the Lansing Center, will be kicked off by J. Patrick Doyle, president/CEO of Domino’s Pizza. Doyle, who has an MBA from the University of Chicago and an undergraduate degree in economics from Michigan, will focus on why higher education is such a powerful potential growth engine for the new Michigan. Before joining Domino’s in the late 1990s, Doyle was a vice president and general manager at Gerber Products Co.’s U.S. baby food business.

Along with being a talent engine, higher ed is also an innovation engine. According to BLM, the research conducted at America’s universities has produced some of the greatest innovations over the last 50 years, including computers, the Internet and MP3 players. The second panel, facilitated by Mary Sue Coleman, president of the University of Michigan, will explore the leading role Michigan’s universities play in driving innovation that is critical to economic recovery and long-term prosperity. Panelists include André Dua, senior partner and co-leader, education practice in North America, McKinsey & Co.; Hunter Rawlings, president, Association of American Universities; and William Weideman, executive vice president and CFO, Dow Chemical Co.

The final panel of the day will be filled by three noteworthy representatives of higher ed: William Goetz, chancellor of the North Dakota University System; Thomas Ross, president of the University of North Carolina System, and Thomas Haas, president of Grand Valley State University.

According to the BLM, Michigan’s universities make a significant contribution to the state’s economy, with a correlation between educational attainment and personal income growth that is well documented. Yet Michigan has dramatically cut its annual investment in the higher ed asset over the past decade, and public attitudes about the value of higher education remain mixed. This panel will explore the strategies employed in two states — North Carolina and North Dakota — to increase higher education’s economic impact in those states and what Michigan needs to do to grow the economic impact of its universities.

With support from the BLM staff, McKinsey & Co. produced a report in December entitled “Growing the New Michigan – Higher Education Marketplace.” It concludes that Michigan can leverage its competitive research universities to develop a higher education marketplace, because the state’s research universities are already recognized nationally and internationally in their educational excellence and research capabilities.

The report notes that the states outperforming Michigan in projected GDP growth in higher education from 2010 to 2020 include Nevada at 9.25 percent and North Carolina at 2.64 percent. The lowest in the top 10 states in this category is South Carolina at 1.59 percent. Michigan’s projected GDP growth in higher ed is a paltry 0.43 percent, according to McKinsey & Co.

McKinsey outlines four opportunities in which Michigan can grow university enrollment and expand its higher education marketplace:

**Become a leader in science and technology education;

**Attract and retain the best out-of-state and international students;

**Be the preferred research partner for federal institutions;

**Drive commercial impact of innovation.

According to McKinsey, less than 7.7 percent of freshmen at Michigan’s higher ed institutions come from out of state, compared to the national average of 20.1 percent. At least six states have a percentage rate higher than 40 — North Dakota’s is 44.7.

“Out of state and especially foreign enrollment is a growing economic opportunity” for Michigan, according to the report.

According to Rothwell, BLM is determined to persuade the state government to ensure that Michigan’s higher education system is able to rank in the top 10 among all the states. A key step toward that goal, he said, is to restore the $1 billion in funding that was whittled away from the higher ed budget in Michigan over the first decade of the new millennium.

Rothwell said higher education can be an economic engine in and of itself if we increase our out-of-state enrollment.

“We are under-enrolled in our out-of-state students,” he said, adding that an additional $2 million in tuition revenue flowing into Michigan colleges and universities each year from out-of-state would increase the state’s GDP by 2 to 4 percent.

Over the years since the Michigan economy began to stall after 2000, Michigan higher education faced budget cut after budget cut, and absorbed those cuts. Now, said Rothwell, tuition is rising to cover some of that lost state funding, with the result that “it’s the middle-class kids seeing their debt load (for an education) skyrocket,” and the universities can’t do anything about it.

Hackett told the Business Journal that he would not leave K-12 education out of the equation.

The BLM, he said, is also concerned about the loss of traditional factory jobs to other parts of the world where labor costs are lower. K-12 education now must ensure that everyone is as well prepared as possible for higher education.

“The obligation we have is to look at trying to employ those folks in ever more demanding jobs, in terms of learned capabilities. The simple fact is, if (a factory job) doesn’t require any kind of special skill, then the competition for that” will be based solely on the lowest cost of labor — and some other part of the world will get the work.

“So we want to commit to that work force that we can help them continue, as a youngster, to get better K-12 educations, if they are not going to go into creative-class jobs,” he said, because the factory jobs that do remain in the U.S. are predicted to entail increasingly more engineering and precision technology that requires math, science and reading.

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