March 12, 2014

Boren's Tax-Cut Opposition Is Inappropriate and Wrong

[Guest post by Richard Vedder, director of the Center for College Affordability and Productivity. Dr. Vedder, a Distinguished Professor Emeritus of Economics at Ohio University, helps Forbes compile its annual college rankings.]

In better universities, ideas flow without interference between members of the campus community, but the institution itself remains neutral, not taking positions on issues.

I was surprised, then, when I read not only an op-ed but also full-page ads by University of Oklahoma president David Boren in some Oklahoma newspapers recently. It is appropriate for university presidents to argue for more funding, but to enter the political fray on such tangential issues as the progressivity of the Oklahoma income tax seems to suggest President Boren thinks he is still Senator Boren, a role he eschewed two decades ago.

I think the Boren commentary is either inappropriate or wrong on at least six counts.
  1. Boren engages in shrill apocalyptic language, telling Oklahomans that “their future is at risk.” Does he really believe a small reduction in the state income tax and some cut in OU state appropriations will fundamentally risk the future of the Sooner State? Good academicians are usually far more measured in their rhetoric. 
  2. Boren implies Oklahoma’s universities are being starved for resources. My analysis of instructional spending per full-time-equivalent student shows Oklahoma spends more than four of its six neighbors, and has total enrollment-adjusted staffing above the national average.
  3. Boren ignores that spending on higher education was sharply reduced in many other states, not just Oklahoma, because of the Great Recession.
  4. Boren implies that more higher education spending will help economic growth, while tax reduction would hurt it. I have studied the tax-growth relationship for decades and a majority of the evidence suggests income-tax reduction enhances, not subtracts from, incomes. Zero-income-tax Texas is prospering relative to fairly-high-tax Oklahoma.
  5. Perhaps Oklahoma would benefit by “doing more with less.” Why, for example, does Oklahoma have two Ph.D. in finance programs located 78.7 miles apart? Data provided by Oklahoma State University suggest one finance professor made more than $264,000 in salary and benefits in 2011-12 — and taught two classes with a total of 13 students. Down the road at OU, an assistant professor in the same field made more than $285,000 in salary and benefits, teaching students just one semester (four months) a year. Is this sort of expensive duplication necessary, especially, when neither program is considered among the nation’s top 75 schools in the Arizona State finance research rankings?
  6. Is Oklahoma higher education suffering from administrative bloat relative to faculty staffing? National Center for Education Statistics data suggests that the proportion of faculty among the staff in Oklahoma’s four-year universities in 2011 is below the national average and that in four of six neighboring states — and the national average is nothing to brag about.
The reality is that Oklahoma’s higher education spending is not abysmally low, but that its tax climate is not particularly good. Oklahoma, for example, ranks a mediocre 35th on the 2014 Business Tax Climate Index of the Tax Foundation, below all but one of its neighbors — and big neighbor Texas ranks a strong ninth.

Oklahoma needs to compete not only with zero-income-tax-rate Texas but also with neighbors like Kansas, which is cutting its top rate aggressively to 3.9 percent by 2018. As a longtime university professor, I know directly that higher education is extremely inefficient, and moving resources from that sector to the competitive market-driven private sector via tax reductions almost certainly will have positive economic effects.

It is President Boren’s job to make the case for public support of universities, but it seems inappropriate for him to engage in hysterics and hyperbole, going beyond appropriate levels of political involvement for a university president. David Boren was Governor in 1978; Mary Fallin is in 2014.

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