On the Chopping Block: Rising State Pension Costs Lead to Cuts in Higher Education
JMC Fellow Daniel DiSalvo coauthored a report for the Manhattan Institute on the growing cuts to higher education due in part to rising costs in public pensions. Daniel DiSalvo and coauthor Jeffrey Kucik are Professors of Political Science at the Colin Powell School for Civic and Global Leadership at the City College of New York. Professor DiSalvo is also a Senior Fellow at the Manhattan Institute. His scholarship focuses on American political parties, elections, labor unions, state government, and public policy. He is the author of Engines of Change: Party Factions in American Politics, 1868–2010 (2012) and Government Against Itself: Public Union Power and Its Consequences (2014). DiSalvo writes frequently for scholarly and popular publications, including National Affairs, City Journal,American Interest, Commentary, The Weekly Standard, Los Angeles Times, New York Daily News, and New York Post. He is coeditor of The Forum: A Journal of Applied Research in Contemporary Politics. DiSalvo holds a Ph.D. in politics from the University of Virginia.
DiSalvo and Kucik have also published their conclusions in an editorial in US News and World Report.
America’s public colleges and universities have long served as engines of upward mobility, intellectual innovation, and economic growth. But these critical institutions are increasingly under financial stress. From 2000 to 2016, public universities lost 25% of their state funding per student. During the same period, tuition and student debt skyrocketed.
Spending on public-worker pensions is driving these budget cuts. In the wake of the Great Recession, all 50 states enacted pension reforms of some kind. Unfortunately, these reforms didn’t go nearly far enough, and pension debt has continued to rise steadily since 2008.
Over the past several years, total state expenditures have increased, on average, across the U.S., and pension expenditures (and liabilities) have increased the most—by an average of 61% between 2008 and 2015. But states decreased per-student higher-education spending by an average of 22.4% over the same period. State funding for higher education is nearly $10 billion (adjusted for inflation) below what it was in 2008.
Squeezing higher education to fund pensions is not a trend confined to red states; the trends are similar in states governed by Democrats. As a result, states are confronted with a choice between generations: students and retirees. This report argues for rebalancing. States should reprioritize pension reform in order to boost higher education, for the good of younger Americans—particularly those from families of modest means—and for the good of the nation’s future economic health.