Governor's 2010–11 Operating Budget Hearing

Dear Colleagues,

On Friday, the presidents of the other three University System of New Hampshire campuses and I, along with Chancellor Steve Reno, Chancellor-Elect Ed MacKay and Trustee Chairman Ed Dupont, presented the University System’s FY 2010 and 2011 biennial operating budget request to Governor Lynch and his finance staff. This is the first step in a process that will likely continue through June 2009. Below is the text of my testimony.


November 21, 2008
President Mark W. Huddleston
University of New Hampshire

I appreciate the opportunity to be here today with my colleagues to present the University System’s biennial operating budget request.

I understand what an extraordinarily challenging time this is for our State. We all know that New Hampshire has not been insulated from the turmoil that has beset the global economy. State tax revenues have been in a free-fall at exactly the moment when our neediest citizens—those without adequate food, shelter and medical care—most need our help. Clearly, painful choices lie ahead.

Indeed, painful choices also lay behind us. In an effort to address the State’s budget problems, the University System has already agreed to return $7 million this year—7% of our state appropriation. Carving out UNH’s share of that give-back will mean holding faculty lines vacant, not filling key staff positions, deferring yet again needed maintenance for our facilities, and taking a pass on some important research opportunities. However, in the spirit of good old-fashioned Yankee ingenuity, we will make do with what we have and do our best to keep UNH a strong place and an attractive college choice for prospective students and their families.

I would be more than remiss, however, if I left you with the impression that we can continue indefinitely conjuring something out of nothing. Sooner rather than later, quality will suffer. And sooner rather than later, the cost-shifting onto the backs of students and their families that diminishing public support for higher education has entailed will become unsustainable.

Let me explain why both these things are public policy issues worth worrying about.

New Hampshire has a very practical stake in the health of its institutions of higher education. New Hampshire is already a knowledge-driven economy. Businesses are started here or drawn here in no small part because we are well-positioned to provide the knowledge-workers and the knowledge-capital that the knowledge-driven economy demands. Economists are famously divided on almost every imaginable topic. Here’s one, though, on which they agree to a person: The rest of the 21st century is going to be even more knowledge-driven. We will not be able to continue to produce knowledge-workers or generate knowledge-capital if we beggar the institutions of higher education that are their well-spring. As higher education goes, so goes the New Hampshire economy.

I recently asked UNH professor Ross Gittell to quantify the impact the University of New Hampshire has on New Hampshire’s economy. Here is some of what he found:

• By even the most conservative accounting standards, UNH annually contributes over $1.3 billion to the State's $50 billion economy. UNH’s contribution to a skilled NH workforce is estimated at $562 million.

• At least 1,000 UNH alumni have started companies in New Hampshire, employing thousands of our fellow citizens, many of them in high skill, high tech jobs.

• In a survey of 500 New Hampshire executives representing nearly 300 companies, more than 75 percent of responders said that UNH played an important role in providing their companies with access to a skilled workforce; over half indicated UNH played an important role in providing professional advice and assistance; just under 40% credited UNH with an important role in their profitability; and just under one-third indicated that UNH played a critical role in keeping their company in New Hampshire.

The bottom line? Higher education offers a return on investment like no other. Indeed, in the face of looming 21st century global economic challenges, it is an investment that New Hampshire literally cannot afford not to make.

While maintaining quality is critical to the State’s economy, keeping higher education affordable is vital for our students and their families. Affordability, in turn, is a function of two major variables—overall costs and the assignment of responsibility for paying those costs.

As to the first variable, overall costs, a whole mythology has arisen about out-of-control spending by America’s colleges and universities. This mythology is sustained by a handful of examples of genuine excess. It is possible, to be sure, to find some palatial residence halls, gilded athletic facilities, and stratospheric salaries on American campuses. But that is certainly not the world of higher education I’ve lived in during my career. The world I’ve lived in has been one where every year people have been asked to do more with less, where budgets have been cut to the bone, and where spending has been particularly hostage to dynamics beyond our control—to spiraling health care costs, inflated energy markets, and burgeoning demands in information technology. I’d be happy to talk about these pressures in more detail on another occasion. For now, suffice it to say that the steep rise in higher education costs has come despite very real cost-containment efforts by the overwhelming majority of colleges and universities in America, not least those in the University System of New Hampshire.

The second variable in the equation, though, has been equally troublesome. As costs have risen, we as a nation have decided to shift the burden of bearing those costs increasingly to students and their families. We have, bit by bit, redefined higher education from a public good to a private good: You want it, you pay for it. While this is not the time to debate the wisdom of that redefinition, I will note that unless one rejects the truth of the earlier observation that we live increasingly in a knowledge-driven economy, one in which we all prosper or molder together in reflection of our investments in higher education, then I am hard-pressed to understand how this has been a smart strategy.

Arguably we’ve gotten away with this strategy so far because prospective students and their parents have calculated that even paying the ever-higher-than-fair share is worth the price—and because we’ve had mechanisms at hand, widely available student loans and abundant home equity, to finance those decisions.

But the day of reckoning is upon us. We all know what has been happening to the credit markets. Who among us is ready to bet that resurgence in home equity will pay for our children’s college education in the next few years?

Even if there were to be such resurgence, I would draw your attention to what I call “the wedge.” To understand “the wedge,” imagine a simple graph, one that displays two cost curves. One curve describes the rising cost of college. The other displays projected increases in median family income. “The wedge” is that V-shaped—widening—gap between those two curves. Right now, the average family of four in New Hampshire has to devote approximately a quarter of its total pretax income to send a single student to UNH. That’s a lot. But given even conservative estimates in higher education inflation and relatively robust projections in income growth, both unrealistic I fear, in twenty years that same New Hampshire family will have to spend over a third of its gross income on one student at UNH. And it gets worse every year after that—and will until we decide to revisit the question of who benefits in what measure from an educated citizenry.

On behalf not just of the University of New Hampshire and the University System of New Hampshire, but on behalf of all those who have a stake in our state’s higher education, which is to say all of the people of New Hampshire, I urge you to find the means to make this critical investment in our common future.

Thank you very much.