PrintPrintEditor’s note: This speech was delivered by College of Charleston President George Benson at the 2009 Economic Outlook Conference on March 26. It has been edited because of space constraints. The full text can be found online.
Published April 13, 2009
I was working on this speech during a recent trip to Europe when the in-flight movie began. The movie was a remake of the early 1950s science-fiction classic The Day the Earth Stood Still.
The symbolism of a particular scene really hit home. An alien has come to Earth to exterminate all humans because he believes they are destroying their planet. But a scientist he meets insists that humans will eventually alter their bad habits if facing extinction. And the scientist says: “It’s only at the edge of the precipice that we change.”
For me, that quote captures where South Carolina now stands in terms of its lagging financial commitment to higher education. Historically, our state has undervalued and underfunded its colleges and universities.
Making higher education a top priority will only happen when our political leaders recognize two truths: First, higher education is the one lever they control that is capable of boosting economic and social indicators virtually across the board. And, second, if we don’t make this commitment soon, we risk falling so far behind that we’ll never catch up to our neighboring states. Higher Education in South Carolina is at the precipice. We must change.
Ingredient for economic growth
The fact that universities are the key ingredient for economic growth has been known for decades. And in today’s knowledge economy, where innovation is so critical, higher education is even more important.
Fostering innovation requires educated workers. According to the Kauffman Foundation, states with strong higher education systems rank highest in level of work force education and number of knowledge jobs. Conversely, states that invest less in education rank near the bottom. South Carolina has made slight gains in these areas, improving from 39th place in 2007 to 36th in the 2008 report.
Unfortunately, South Carolina lost ground in another important measure reported by the Kauffman Foundation: South Carolina ranked 47th in “economic dynamism,” down from 44th in the 2007 rankings.
Economic dynamism is a measure created from six key indicators including the number of jobs in fast-growing firms; the number of entrepreneurs starting businesses; and the number of patents issued. Again, states with stronger higher education systems generally outscored others.
This year, South Carolina ranks 33rd for appropriation of state funds for operating expenses for higher education, placing us behind Mississippi, Arkansas and Louisiana. Georgia and North Carolina are 7th and 4th, respectively.
I want to make it absolutely clear that I’m not here today to whine about recent state funding cuts to higher education. They are just the latest round of a long-running decline in state support for higher education. In 1998, the state appropriated 16.4% of state revenues to postsecondary education in South Carolina. That has been on a downward trend ever since. Last year, the state appropriated 13.7%, according to the Commission on Higher Education.
North Carolina realized long ago that investments in higher education pay dividends far beyond college and university campuses. In the late 1950s, North Carolina Gov. Luther Hodges sought a way to stop the “brain drain” that was occurring as college graduates left in search of jobs. He envisioned using the state’s universities as platforms to create and support a cluster of innovation. The state bought in and, 50 years later, the most visible outcome is Research Triangle Park, home to more than 150 research and development facilities and 42,000 full-time knowledge workers.
A recent report from a study committee of our Commission on Higher Education, chaired by Dan Ravenel, noted that “In 1960, South Carolina’s per capita income was 48th in the U.S., and North Carolina and Georgia were ranked 45th and 42nd, respectively.”
North Carolina and Georgia emphasized higher education as a cornerstone of their economic development strategies, and in 2007, North Carolina’s per capita income had risen to 36th, Georgia’s to 38th. South Carolina ranked 47th in 2007.
South Carolina has made some progress in recent years. The S.C. Research Authority has established partnerships with the Medical University of South Carolina and Clemson to help launch high-tech startups. The authority is in the process of developing another business incubator in partnership with the University of South Carolina. And the General Assembly authorized state funds in 2002 to create the Centers of Economic Excellence, focused on research and the recruitment of endowed chairs at MUSC, Clemson and USC. This is important work, but it’s not enough.
We still possess the ability to raise all of South Carolina’s economic and social indicators. It can be done, but only through higher education. Yes, we need significant improvements in K-12, but the driving force of the entire education system is our colleges and universities. They prepare the teachers that can raise student performance in our schools. They produce the educated parents who are more likely to be involved in their children’s schools. Education is a system, and higher education is the system’s engine.
Charleston’s economic potential
Here in Charleston, we have so much economic potential, but it’s never been fully realized.
That last asset is critical but is sometimes overrated and over-exploited. You often hear people talk about the magnificent quality of life here in the Lowcountry and how it is a function of the history, architecture and natural environment. But if we don’t actively develop the other dimensions of our economy, we will be left with a strong hospitality and tourism industry, but little else. We do have many of the right ingredients for economic growth, but not all of them. Charleston’s higher education infrastructure is still lacking. It has not achieved its potential.
Evolution of S.C. higher education
Interestingly, the College of Charleston, with its early start, could have evolved into a major public or private research university or a top-notch private liberal arts and sciences university, but it didn’t. Or, the Medical University of South Carolina, the College and The Citadel could have been combined decades ago and encouraged to evolve into a major university. But that didn’t happen either.
What held back the evolution of higher education in Charleston? There are several things.
The College of Charleston was held back by its municipal status. It was taken over by the city in 1837. For the next 125 years or so, the college served almost exclusively residents of Charleston. For example, of the 60 graduates in 1950, only 2 were from outside the state.
Our municipal status narrowed the scope and the vision of the College. Its focus was Charleston, not the Lowcountry, South Carolina or the Southeast.
Also, for most of the 20th Century, Charleston relied on an abundance of jobs associated with the U.S. Navy. Our sustained dependence on the federal government for jobs caused us to miss the economic development boom of the 1950s through the 1980s.
There are also statewide issues that have kept South Carolina from fully embracing higher education as neighboring states have done.
Part of this stems from an old ideology that higher education should be reserved for the children of the planter class, which, of course, excluded most whites as well as all African Americans.
Charleston and South Carolina have made progress despite these obstacles; still, they kept us from our full potential.
Behind the veneer
Outwardly, Charleston appears to have a well-supported academic community. But don’t be fooled by the veneer. All of these institutions are underfunded and overregulated, as are all public universities in South Carolina.
Earlier this year, my counterpart at Clemson University, Jim Barker, pointed out the following comparisons to House lawmakers: Over the past decade, South Carolina invested roughly $250 million in capital and infrastructure for the facilities of its universities. During this same period, Georgia pumped $2 billion into its higher education facilities. And North Carolina invested $5 billion.
Another example: 10 years ago, about 30% of the College’s budget was provided by the state. Last year it was 17.5%. Today, it stands at 13.25%. A tuition increase of $2,500 is sufficient to replace the state’s contribution to our operating budget.
What makes this underfunding by the state even worse is that we are simultaneously fully regulated by the state.
As Lt. Gen. John Rosa, president of The Citadel, likes to say, “We’re controlled by a minority shareholder.”
We are subject to the state’s human resource policies, its procurement policies and its capital expenditure and construction policies. We must obtain eight separate approvals to construct a building: four architectural approvals and four construction approvals. The process can take up to nine months and can require additional approvals to spend more of the university’s money if building costs escalate during the drawn-out approval process. This level of regulation contributes to inefficiencies and higher costs.
What is needed?
So, how do we keep from stepping off this cliff?
Foremost, our universities need new financial models that make them much less dependent on state funding. That requires an examination of alternative funding sources. And any increases to tuition should be accompanied by significant increases in discounts, to ensure access for deserving students.
Here in Charleston, our universities and their budgets can benefit from the centralization of certain administrative functions. The Citadel, the College of Charleston and MUSC are aggressively exploring such possibilities as we speak.
Some of my earlier comments about research universities might lead you to believe that I am advocating the development of a comprehensive public research university for Charleston. I’m not. The state can barely afford the two it has. I am suggesting that existing Charleston universities cooperatively engage in more research in a few handpicked fields that support growth in our regional economy.
Finally, and related to the last point, the business, government and university communities in Charleston need to create true partnerships to nurture each other and the region’s economy. A recent example is Tucson, Ariz. The University of Arizona has targeted the betterment of the local community and the state in its strategic plan. And Tucson’s strategic plan targets the betterment of the University of Arizona. That’s a true partnership, one in which the partners help each other achieve their respective goals. We need that kind of thinking in Charleston.
Changing course
Let’s end where we began. Like the scientist in The Day the Earth Stood Still, I believe we can change. We can change the course of higher education in Charleston and in the state. But we must change now.
We are at the edge of the precipice.
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