REGENTS REPORT

NO. 48, June 21,1996 South Dakota Higher Education: Good Investment. Great Future.

Benefits of Investment in Higher Education

Higher Education and Workforce Productivity

Public higher education is an investment that can benefit everyone in South Dakota. A previous Regents Report looked at the positive outcomes of higher education--greater lifetime earnings, reduced likelihood of unemployment and welfare recipiency, and increased civic participation. A recent study took an historical look at individual state's investments in higher education and their growth in workforce productivity. This study offers evidence that the input, or initial investment, in higher education has a positive and substantial impact on subsequent growth in workforce productivity. How does South Dakota compare to neighboring states for investing in public higher education? How does South Dakota compare in productivity growth?

Investment In Higher Education

One measure of investment in higher education is a state's spending per student for public higher education. Following is a graph showing expenditures per student in 1980-81 for North Dakota, Nebraska, South Dakota, and the national average. South Dakota invests less in higher education than North Dakota by 16%, and South Dakota is below the national average by 19% for investment in higher education.

SOURCE: Research Associates, Washington DC
This document was produced by the South Dakota Board of Regents. For more information, contact Zachary Ainsworth at (605) 773-3455 or Email: zacha@bor.state.sd.us

Workforce Productivity

Workforce productivity can be measured by Gross State Product (GSP), or the value of goods and services attributable to labor and property located within the state. Below are the GSP growth rates for North Dakota, Nebraska, South Dakota, and the US Average from 1980 to 1989. North Dakota's GSP growth outstripped South Dakota's growth by 290%, the national average state GSP growth was 190% over South Dakota's for the decade from 1980 to 1989.

SOURCE: Bureau of Economic Analysis, US Dept. of Commerce

What About the Future?

What do these numbers have to do with productivity? Historical analysis has shown that one outcome of educational investment is increased growth in productivity. North Dakota, Nebraska, and the nation as a whole averaged higher initial investments in higher education than did South Dakota. And North Dakota, Nebraska, and the nation out-performed South Dakota in Gross State Product growth in the following decade from 1980-89.

In 1993-94 South Dakota's educational investment, or expenditure per student, was 26% below the national average and over 8% below North Dakota's investment. Using history as our guide, this may indicate that South Dakota will continue to have below average GSP growth over the next decade.

Conclusion :
It is important to remember that investment in higher education has many outcomes that benefit the entire population. One of these benefits is growth in workforce productivity. As with any investment, the future returns of investment in higher education, are to some extent, reliant on the amount invested and the commitment to achieve lasting long-term benefits.

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