UNC system does more with less.

• Author: Hood, John
• Position: FREE&CLEAR - University of North Carolina

That the UNC system is getting more efficient is a promising development for students, taxpayers and employers, but it leaves at least one group in the state muttering in disgust. That would be fiscal liberals, the polar opposites of fiscal conservatives. When it comes to higher education, fiscal liberals believe that the state's traditionally high level of subsidy was a good investment in economic development and that, even before the Great Recession, the UNC system didn't get enough state money.

Fiscal conservatives believe that Our long history of doing that has not paid sufficient economic dividends to justify the cost. They point out that North Carolina doesn't have higher rates of college attainment than comparable states without generous subsidy and that the full cost of instruction at UNC schools--whether paid for by tuition, taxes or other revenue--was 20% higher than the national average as recently as 2010.

The debate between fiscal conservatives and liberals hasn't been about whether the state should pay for higher education. The debate is about how, and how much. Many of our competitors have successful, highly regarded university systems that cost much less than UNC. (Again, I'm talking about full cost, not just the sticker price.) North Carolina's high-subsidy policy is neither necessary nor sufficient for delivering excellent higher education. If you remove research, physical plant and ancillary enterprises such as teaching hospitals from university budgets to produce an apples-to-apples comparison, tuition covers about 50% of direct student expenses in the system. The national average is 91%. It's hard to argue that reducing overall costs, and striking a better balance in sharing those costs among direct beneficiaries and taxpayers, would harm North Carolina when it clearly hasn't hurt Virginia, Michigan, Ohio, Texas or Pennsylvania--all with highly ranked public universities and far lower levels of subsidy.

More to the point, there have been 25 peer-reviewed studies published in the past two decades examining the economic impact of state funding for universities. In two-thirds of them, higher university funding had either no statistically significant effect on state economic performance or a negative effect (that is, the costs of the necessary state taxes exceeded the measurable benefit).

While recessionary state budgets and the election of cost-conscious Republican politicians in 2010 and 2012 have elevated the issue of...