Higher education investment can reap big dividends

Nevada has the opportunity to make investments that billionaire Warren Buffett would envy.

But for decades, the state has not committed enough resources to education, especially higher education.

In his State of the State address last month, Nevada Gov. Brian Sandoval called on the Legislature to invest $882 million in education. He used the words “invest” or “investment” 15 times in relation to education.

The word “invest” was appropriate, because education is the rare expenditure where government dollars generate a positive return on investment.

Some critics of government often call for it to act more like businesses. Any successful business invests money in research and development to improve its employees and products. Education is the primary area where a state can invest in research and development.

Gov. Sandoval said this well in his speech: “Improving our public education system must therefore begin with modernization, and modernization requires investment.”

A skilled workforce is a key to growing current companies and attracting new ones. The Las Vegas Global Economic Alliance, an organization tasked with attracting new businesses to Clark County, reports that of the companies it unsuccessfully recruited, the No. 1 reason companies cited for going elsewhere was the lack of a skilled workforce.

In 2015, Nevada and its local governments will spend more than $24 billion, but only 24 percent of that will be allocated to education. That ties with California among Western states for the lowest percentage of government dollars spent on education. Texas, New Mexico and Utah, states Nevada competes with to attract new jobs, spend more than a third of government dollars on education.

The proposed UNLV medical school is a prime example of how government spending can generate economic output and increased tax dollars.

Currently, Nevadans spend more than $2 billion annually on health care outside of the state. This isn’t just Nevadans with rare conditions seeking world-class experts in other states; Nevada ranks 46th in the country for the number of primary care physicians per 100,000 residents. Las Vegas doesn’t even have the capability to perform transplants that are now common in most major metropolitan areas. A UNLV medical school will increase the number of Southern Nevada doctors, allowing the region to retain some of that $2 billion.

UNLV is asking for $27 million over the next two years to open its medical school. At full capacity, the medical school will produce more tax dollars each year ($60 million) than the state will have to contribute in the first decade the school is open ($45 million). By 2030, the school will generate more than $1 billion annually for the economy.

This favorable return on investment is not unique to the medical school. UNLV already produces $1.77 billion annually in the Southern Nevada economy and creates almost $12 for every state dollar it receives. UNLV produces this economic impact without even being a top research university. Nevada and Idaho are the only two Western states without a top-tier research university.

Since the Great Recession, state spending on higher education decreased while enrollment grew. In the ensuing years, Nevada students and their families have had to increase their share of the higher education burden. In 2001, Nevada students contributed just 14.55 percent of the cost of attending a Nevada college or university; this year, they are contributing 26.48 percent.

Every Nevadan benefits from an educated workforce, yet a small percentage of Nevadans are now bearing a larger share of the cost.

Increasing spending for education is not a Democratic or Republican issue. It’s merely good business and the best investment our state can make. There is no better, more efficient or responsible way to spend tax dollars than to invest in education.

Trevor Hayes is the District 2 regent for the Nevada System of Higher Education.