State and local spending on prisons and jails have increased at triple the rate of funding for public education for preschool through grade P-12 education in the last three decades, a new analysis by the U.S. Department of Education found.
In spite of the overwhelming evidence of a skills deficit, a depressed middle class and growing inequality, the state of Illinois continues to underinvest in public higher education. But considering higher education funding as an investment that lowers state welfare and prison costs, generates tax revenues and leads to economic growth in the future – and not as mere consumption spending – could reframe the debate, according to an article by a University of Illinois expert in the economics of education.
In the face of recent dramatic examples, including the $300 million in cuts to the University of Wisconsin budget and, in Illinois, the failure to fund public universities and MAP grants for 2016 together with the governor’s proposed cuts for 2017, the investment-versus-spending distinction is a vital one, said Walter W. McMahon, an emeritus professor of economics and of educational organization and leadership at the University of Illinois.
“Since this curtailed investment in human capital would otherwise contribute heavily not only to a state’s economic growth and development but also in ways estimated in the article – to higher state tax revenue and lower Medicaid, child care, welfare and criminal justice system costs – it’s disheartening to see this disinvestment trend by our public officials,” said McMahon, also the author of “Higher Learning, Greater Good: The Private & Social Benefits of Higher Education,” published by Johns Hopkins University Press.
Published in the Journal of Education Finance, the article develops the total return of public education relative to the full costs to the state of Illinois, the key criteria for determining whether there is under- or over-investment for the most efficient statewide development.
McMahon concluded that public education in Illinois contributes to investment returns of 9.5 percent for K-12; 15.3 percent for community college; and 13.4 percent for university, respectively, for every dollar that’s spent – returns that are well above the 7.2 percent the money would have earned if invested in an index fund that tracked returns of the S&P 500, McMahon noted.