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Plugging Brain Drain

Meeting the academic mission and the community's economic development needs at the same time is the goal for a growing number of higher ed leaders.
University Business, Feb 2006

North Dakota had a problem. Young people were leaving because there were no jobs, and employers were reluctant to expand because they might not find qualified workers. The state university system offered programs that were popular with students but for which there were few job openings in the state, helping North Dakota's brain drain along. Taxpayers believed that they were paying for a system that helped their children move away. State legislators were annoyed by requests for money for the universities, and by the level of administrative oversight that made university leaders reluctant to try anything new.

By 1998, the situation had become a crisis. As a cost-saving measure, a referendum to close several campuses was put on the ballot. But it failed. As frustrated as they were, the citizens of North Dakota wanted their university system.

So the state legislature organized a roundtable on the higher education system. The group included 21 state legislators, 14 business leaders, eight members of the state board of higher education, six college presidents (including representatives from private and tribal institutions), six government leaders, five faculty members, and two students. The goal was big: "To enhance the economic vitality of North Dakota and the quality of life of its citizens through a high quality, more responsive, equitable, flexible, accessible, entrepreneurial, and accountable University System."

The North Dakota Roundtable on Higher Education participants had to figure out how to stem the state's population loss, improve its per capita income and quality of life, and compete in the new information-based economy. Only once the outcomes were determined would the funding and structure of the state universities be addressed.

The university system was given increased flexibility over its budget, but only as long as it could meet measures on economic development, educational excellence, and accessibility. "We had to be the land-grant university that North Dakota needed, not the one it could afford," North Dakota State University President Joe Chapman told attendees at a November 2005 conference on higher education sponsored by the Federal Reserve Bank of Chicago.

The process was painful, but it paid off. Statewide, university enrollment increased from 32,000 to 43,000 between 1999 and 2005. Research dollars increased from $60 million to $100 million in the same period. Faculty salaries went up, too. Funding was directed toward a research and development incubator associated with NDSU that has attracted employers while creating internship and employment opportunities. And, 63 percent of university system graduates who attended North Dakota high schools remain in the state within one year of graduation, an indication that the brain drain has been staunched.

That's what can happen when all parties come together to remake a university system with economic development as the goal.

In many cities across the U.S., the local institution of higher ed is the largest employer, and its potential to contribute to the economic health of the region huge. The demand for the highly skilled knowledge workers that universities produce is strong. Furthermore, IHEs are often considered to be a neutral party in business and political circles. Unfortunately, academic researchers and administrators are sometimes thought of as out-of-touch elites. If an institution wants state support for its initiatives, it has to base its case on a measure of what the state's citizens want and need for solid economic development. In addition, the process has to be led by leaders outside of the academy.

"You seek out the political and business leaders in your state to help you get started and get your agenda," says Larry Isaak, president of the Midwestern Higher Education Compact. "This is an effort that is not about higher education," adds Isaak, who was chancellor of the North Dakota University System during the roundtable process. "It's about developing, maintaining, and expanding a workforce that will support a vibrant economy in this day and age."

Naturally, academic researchers have studied the value of academic research. In the book Measuring the Gains from Medical Research: An Economic Approach (University of Chicago Press, 2003), economists Kevin Murphy and Robert Topel point out that the United States generates $2.6 trillion a year in wealth from the approximately $18 billion spent each year on research through the National Institutes of Health, most of which is funneled through universities and teaching hospitals.

In 1997, BankBoston released a study on the economic power of the Massachusetts Institute of Technology that revealed MIT graduates had started 4,000 companies, created 1.1 million jobs worldwide, and generated annual sales of $232 billion.

And more recently, the Campaign for College Opportunity released a study conducted by University of California, Berkeley, researchers Henry Brady, Michael Hout, and Jon Stiles, who found that California gets back $3 for every $1 spent on its university system in the form of increased tax revenues and decreased spending on social services and incarceration. If that weren't enough good news, the November 2005 study found that the average graduate of a California university repays the state's investment by the age of 35.

Unfortunately, IHEs need support from people who are not college graduates. Only 24.4 percent of Americans over the age of 25 held a bachelor's degree or higher in 2000, according to the U.S. Census Bureau; that number is considerably lower in many states, especially those with economic development issues. In Michigan, for example, the proportion of residents who have completed college is 21.8 percent. (It's 22 percent in North Dakota.)

"We had to be the land-grant university that North Dakota needed, not the one it could afford."-Joe Chapman, president, North Dakota State University

Many voters and taxpayers don't see the value of higher education for themselves, and they are unable to discriminate between a major research institution and a local comprehensive college. "Folks out here don't have a lot of sympathy for higher education, when you look at the salaries we pull down," says Eddie Dunn, vice chancellor for Strategic Planning at the NDUS.

It's a safe bet that few of the 75.6 percent of U.S. adults who are without a college degree are putting Thomas Friedman and Richard Florida on the bestseller lists. When people see job losses, they'd rather blame the North American Free Trade Agreement than go back to school; they see more long-term economic benefits from tax relief than from spending on K-16 education. A state university that produces Nobel laureates looks like a ridiculous frill to someone facing a loss of livelihood and pension.

North Dakota's wholesale makeover of the funding and administration with new goals in sight is one approach. Elsewhere, IHEs are promoting economic development through less comprehensive, but effective, methods. These involve breaking down fiefdoms, connecting community stakeholders, and making a case that voters understand.

Although universities compete for students and faculty, the average person sees even a private institution as a public good that's above such pettiness. That's why university coalitions have spurred development in many areas. The Florida High Tech Corridor Council, for one, is an economic development partnership of three universities and 23 counties. University of Central Florida, University of Florida, and University of South Florida work to promote workforce development, matching grant programs, and high-technology research projects. Regional institutions also participate; the Florida High Tech Corridor website is maintained by Seminole Community College. This cooperation makes the entire region attractive to employers, says Carol Ann Dykes, chief operating officer of the UCF Technology Incubator, one of the projects supported by the High Tech Council.

Universities bring leadership skills, training, and support services that can help connect economic development programs within a region because universities are perceived to be neutral. That's what Jerry Smith, director of the Center for Regional and Community Development at Arkansas State University, Jonesboro, and president of the University Economic Development Association, has found. "They're just interested in getting out new knowledge and better students," he says--meaning more work can get done faster. That's one reason that ASU's economic development program acts as a conduit for federal funding for projects in the Jonesboro area.

Bridges should be built between public and private institutions as well. The North Dakota Roundtable included representatives from private and tribal colleges. And in Illinois, the University of Chicago is adding scientists from Northwestern University and University of Illinois on its science advisory board when re-competing for the contract to manage Argonne National Laboratories. The laboratory's managers realized that a broader group of researchers, including some with a more entrepreneurial spirit, was needed to make the lab competitive with other national laboratories.

Finally, successful university-led economic development programs are made relevant to the people in the community. "The key is aligning what the university's resources are with the needs of the region that it's in," says Smith. In the vicinity of Jonesboro, that means developing programs that suit the needs of retail start-ups rather than high-tech companies.

For Michigan State University, meanwhile, explaining how the extension service helped ordinary people has been a tactic used to get the public to care; citizens don't always understand agricultural research, but they often need help getting raccoons out of attics.

And in North Dakota, stemming the loss of people from the state was crucial, says Isaak. People realized that a university system meeting the needs of businesses would keep their families from moving away.

The man who is now the richest in America founded what is now the largest company in America in his undergraduate dorm room. He promptly dropped out, joining that majority of Americans without baccalaureates.

While a residence hall was Bill Gates's incubator, a more traditional one can help students as well as businesses. At University of Central Florida, business administration students take part-time jobs with incubator companies, gaining valuable experience with start-ups. "The students get a real-world education," Dykes says; after graduation, some continue with the incubator client while others are inspired to try their own entrepreneurial ventures.

A state university that produces Nobel laureates looks like a
ridiculous frill to an average citizen facing a loss of livelihood
and pension during tough economic times.

The North Dakota State University Research and Technology Park, meanwhile, has attracted many agribusiness clients, connecting a popular student major and the state's largest industry with high-tech clients.

That state's higher ed system is adding guidance counseling to its charter. Working with the business partners on the roundtable, a forecast is prepared each year that lays out the jobs expected to be in demand in the next five years. This way, high school seniors can begin thinking about courses that will help prepare them for careers. In addition, businesses in the state have created internship programs to help recruit students upon graduation.

North Dakota has only 630,000 citizens and an economy that is still centered on agriculture, so adapting to what citizens want and businesses need is easier than in Michigan, another state plotting the role of higher education for the state's future.

The automobile remade American life, and the wealth created by automobile manufacturing both funded Michigan's institutions and made it possible for people to enjoy a great life without a college education.

"The great disadvantage of the Great Lakes states is that we were the center of the world's wealth through much of the 20th century," says James Duderstadt, president emeritus of University of Michigan, Ann Arbor. "In the states that need it the most, that's a tremendous higher education challenge," he says. "There's a certain level of denial." Jobs and the companies that provided them in this state of 10 million are disappearing. The "Big Three" auto companies are struggling with health-care costs and layoffs; bankruptcy rumors swirl around General Motors and Ford.

No one knows what industry will replace automobile manufacturing. "The Michigan economy will evolve into a knowledge economy," says Duderstadt, but that's small comfort for the two million people currently making a living with a relatively low-skilled manufacturing job.

Duderstadt is director of the Millennium Project, an economic development initiative for Michigan. The project recently released "A Roadmap to Michigan's Future: Meeting the Challenge of a Global, Knowledge-Driven Economy," which contains harsh words to stop the denial of citizens used to paternalistic employers and global industrial dominance.

The report is designed to kick off a program aimed at increasing funding for the state's education system as it prepares people for the global economy's next phase. "The jury is still out about whether the state has the capacity to support a high-quality research institution," he says, but increased access to education is a start.

Ann C. Logue is a freelance investment services writer based in Chicago. She can be reached at

Tribal Colleges on a Mission

There's AT LEAST one higher education system in the United States that has economic development at its core: the 26 institutions funded under the Tribal College Act of 1978. These two-year and four-year colleges serve students in areas on or near reservations, which are often in remote and impoverished areas.

To say that many of these students are at risk is an understatement. In 1999, the most recent year for which reservation statistics are available, the U.S. Census Bureau reported that 36 percent of American Indians and Alaskan Natives living on reservation lands are living in poverty. Many reservation families have additional confounding factors, including alcoholism, poor health, and households run by single parents. Students at school operated by the Bureau of Indian Affairs Office of Indian Education Programs have a high school graduation rate of 57 percent; these K-12 students perform below national averages for proficiency in reading, language arts, and mathematics. And the majority attend schools that aren't making adequate yearly progress under the No Child Left Behind Act.

Hence, the tribal colleges are educating students who are not well prepared for higher education. They need to concentrate on educating students for the few jobs that exist rather than the entire range of knowledge, and they are also charged with preserving languages, arts, and a culture that are in danger of dying out.

It's a tough order, but they are rising to the occasion. The 1999 reservation poverty rate represents a decline from 47 percent 10 years earlier. And more students are enrolling in tribal colleges, according to data from the National Center for Education Statistics. In 2002, 15,837 students were enrolled in tribal colleges, a 16.6 percent increase from over student enrollment in the fall of 1997.

Some tribal colleges provide business start-up services through their tribal industries, figuring that it's faster and ultimately more effective to start their own businesses than to wait for employers to move in. At Fort Peck Community College (Mont.), which serves members of the Assiniboine and Sioux tribes, this means working to develop businesses through A&S Tribal Industries. One of those businesses will be handling programming for a major software developer that currently outsources some of this work to India.

But first, the college had to set up a training program, notes Robert McAnally, vice president for Student Services. FPCC has also set up a two-year hazardous-materials-abatement training program and now is helping some graduates set up a contracting firm to respond to disaster cleanup in Louisiana. "We work closely with the job service," he explains, referring to the Fort Peck Job Service, which is heavily used in the area. Unless there is a match between the graduates' skills and the work available, the college will be missing the mark of its mission.

Other tribal colleges have followed this match between program and industry. Saginaw Chippewa Community College (Mich.), for one, offers business and hospitality programs to train workers for the casinos and tourism businesses operated by the tribe.

Northwest Indian College (Wash.), meanwhile, has a natural resources management program for students working in the area's fisheries. The variety of programs complements the mission, notes Carrie Billy, deputy director of the American Indian Higher Education Consortium in Alexandria, Va. "It's so important to bring the American Indian people out of poverty."

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