Vol. 14 No. 3
Winter 2004-05

Utah citizens have elected a new governor, and the State now begins a new era of important initiatives and perhaps a reordering of priorities. Of all the competing demands, none is more important than growing Utah’s economy.

In recent years, Utah has experienced an economic downturn similar to other states and the nation as a whole. State revenues to support public and higher education, among other important State functions, have been limited. In higher education, state tax funds have dropped from $5,694 per student in 1999 to $4,641 per student in 2005. Similarly, higher education received 17.5 percent of state tax fund appropriations in 1992-93 but only 15.4 percent in 2004-05.

These trends persist despite rather remarkable efforts on the part of Utah taxpayers. The "Utah paradox" is that the state’s taxpayers make a considerable effort to fund higher education, yet the yield per student ranks Utah 45th among the 50 states. The difficulty in funding higher education results from the simple fact that tax revenue, given Utah’s present economy and tax structure, is not keeping up with current and projected needs. And the projected needs are significant and increasing.

Most estimates are that public education will grow by 145,000 new students over the next 10 years. Higher education will expand by 30,000 additional students. Additionally, the funding needs for Medicare, highways, water projects and public safety, among many other projects, are increasing rather than diminishing.

There is, however, room for optimism. Utah does have important assets. One of them is the growing number of people who are seeking a quality education. Investing in the education of existing and new students will be a key to growing Utah’s economy. This investment in educating our students is not simply one of many options to consider but rather must be a central element of any successful economic development plan. As noted in a recent plan adopted in Ohio, "There is no more valuable economic development tool than a reliable, ample supply of knowledgeable, highly skilled workers prepared to learn continually on the job and throughout their careers."

A second asset is the research and development capacity achieved by Utah’s two major research institutions. The University of Utah and Utah State University secured nearly $500 million of research and development funds during the year ending June 30, 2004. The University of Utah contributed $309 million to this total. This capacity to attract research and development funding has grown over the last several years. Added to the significant advancement of ideas and scientific knowledge has been the development of scores of new successful businesses, thousands of new jobs, and hundreds of millions of dollars of related economic activity.

Clearly, Utah can become an even more important center for scientific advancement and commercial innovation, following the success of other major centers for research, such as North Carolina’s Research Triangle and Georgia’s Research Alliance. As noted by the Milken Institute in 2002, "Research capacity building in science and technology is the most critical factor in deciding the economic fate of regional economies."

This component of economic growth will not occur without future investment. State policymakers, business leaders and the two research universities must collaborate in securing the funds and developing the strategies that will help Utah emerge as an important new center of entrepreneurship and commercial innovation.

As Utah invests in its key assets—educating students and expanding our research and development capacity—that investment will foster economic growth that will support all of Utah’s important priorities.

—Richard E. Kendell MEd’70 PhD’73 is Commissioner of Higher Education for the State of Utah.

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