Removing Barriers in Nebraska Part Four: Taking Lessons on Education Options

Education is one of the most important investments state and local governments make, and the most costly. Nebraska needs its citizens to be equipped with skills that enable them to be productive members of our workforce and positive contributors to their communities.  This brief will take a look at what education choice and policies each of our identified competitor states offer their residents and see how Nebraska’s education policy measures up to Arizona, Colorado, Florida, Iowa, and Texas.

We can learn more about what Nebraska can offer students and families by studying our key economic rivals, since most are growing faster or gain substantial population and income from Nebraska.

In our previous brief, we discussed how Nebraskans pay substantially higher tax bills than citizens in our competitor states on average, and that higher state and local spending is the primary cause of this difference.
 

It shouldn’t come as any surprise, then, Nebraska’s taxpayers have been very good to the state’s education system, providing generous funding for students and educators alike. On a per pupil basis, Nebraska’s taxpayers spent $11,638 on public K-12 education in 2014[i].
 

All of Nebraska’s key competitors spend less per pupil on public education. On average, Texas, Florida, Arizona, Colorado and Iowa spent $8,906 per pupil in 2014.



Figure 1:

Many people would assume states that spend more on public education would produce better results in student achievement. But according to the National Assessment of Educational Progress, also known as the nation’s report card, Nebraska’s public education outcomes share many similarities and challenges with our rivals.

While students eligible for free and reduced lunch programs meet similar levels of proficiency in math and reading in all of these states, larger gaps in achievement can be found between black and Hispanic students and their white classmates.  Overall, when comparing Nebraska’s primary school achievement with that of its economic competitors, there isn’t much difference in terms of proficiency.[ii]

Since a family choosing to live in these other states will have a similar quality of K-12 education for their children on average, it would be difficult to conclude that Nebraska offers something these states do not.
 

On the other hand, Texas, Florida, Arizona, Colorado, and Iowa offer other education options that may strengthen their advantage for families who consider education a high priority in their relocation decisions.  Nebraska is one of the few states in the nation that still does not offer parents school choice options beyond the traditional public schools[iii].

 

Figure 2


 

While each of our rival states offer public charter school options that may be initiated by nonprofit organizations or school boards, the majority also provide private school choice programs that enable parents to afford a private school or homeschool learning environment for their child.

Arizona and Florida have been national leaders in offering tax credit scholarships, which help raise private money for scholarship funds for families in need of assistance. Florida’s tax credit scholarship program is the country’s largest, educating over 78,000 students from low-income families. In recent years, Iowa’s legislature initiated its own tax credit scholarship program with bipartisan support. Other states bordering Nebraska like Kansas and South Dakota have joined them.

Tax credit scholarships are now available in 17 states, and at least one new state has created a program 8 of the last 10 years.

Florida and Arizona were also on the cutting edge of introducing education savings accounts (ESA’s), which started as  publicly-funded programs to benefit special needs students and has since expanded to include children of active duty military, foster children, and children attending failing schools[iv].  ESA’s allocate funds to a parent-managed account. The funds may be applied to tuition, purchasing curriculum or educational therapies, and any remaining funds may be rolled over to future school years. Just as other states have embraced tax credit scholarships, education savings accounts are increasing in popularity. In 2015, Mississippi and Tennessee passed ESA legislation and Nevada became the first state in the country to make education savings accounts available to all public school students[v], a near-universal education choice option.
 

The data show Nebraska can compete with other states in higher education. Approximately 65 percent of Nebraska high school graduates attended a degree-granting institution within a year of high school graduation[vi].  Of that amount, over 50 percent choose to attend Nebraska colleges or universities.  If we look at first time degree seeking students as a whole, we find that 85 percent attending either a public 2-year or 4-year institution in Nebraska are residents[vii].
 

This participation in higher education by residents has translated into a highly educated workforce.  When comparing the share of the population that has either an Associate’s or Bachelor’s degree, only Colorado has a larger percentage of college educated workforce than Nebraska.  In fact, the remaining four states all have lower shares of their populations with higher education degrees when compared to Nebraska.
 

Figure 3


And other than Iowa, all other states have lower percentages of their workforce with a high school degree or higher.  While it is a positive outcome for Nebraska to have a high level of educational attainment, from a competitive economic perspective, Nebraska’s rivals have been able to achieve greater economic growth without achieving this level of educational attainment.  That’s not to say education isn’t a factor in economic growth, just that it is obviously possible for Nebraska to be a successful, fast-growing state as well, without necessarily increasing college graduation rates further[viii].
 

Higher education also comes at a cost to Nebraska taxpayers.  Nebraska spends $235 per capita, or 22 percent more, than the average of the competitor states on higher education[ix]
 

A better use of less expensive educational methods like those used in community and technical colleges can be one method of lowering education costs and promoting economic activity. Omaha’s Metropolitan Community College culinary program, for example, has been credited with boosting the local restaurant scene and the availability of agriculture for farm‐to‐table.  Relative to the comparison states, Nebraska fares well at the trade-skill or associates level of educational attainment, with only Iowa having a larger share of its population with an associate degree.
 

Nebraska’s key competitive challenge relative to our rivals is retaining graduates from our state by creating opportunities for them.  A great example of a state that has achieved this goal is Washington State.  According to Forbes[x], Washington is the state doing the best job of holding onto its top public university graduates. Approximately 74 percent of University of Washington graduates remain in the state after graduation.  In contrast, West Virginia University performs the worst, with only 28 percent of its graduates remaining in the state.  The difference is clear. Historically poor performing economies, like West Virginia, do not keep graduates due to the lack of jobs available for this educated workforce. Top-growing economies[xi], such as Washington, retain more graduates and as a result, are home to companies such as Microsoft, Starbucks, and Amazon.
 

In order to reverse the trend that many have coined a “brain drain”[xii], Nebraska must change its policies to make the state more conducive to creating higher-paying jobs.  Nebraska has proven that higher education is valued by its residents, and Nebraskans are highly loyal to the state’s university and college systems.  But K-12 school choice options are lacking, and similar quality educational opportunities are available in our rival states at a lower cost to taxpayers, providing a motivation for families to look for employment elsewhere. Because of this migration to Arizona, Colorado, Florida, Iowa, and Texas, it appears that even when Nebraska’s education system does an excellent job preparing students, many of the benefits of those learning gains are realized in other states students relocate to after graduation.
 

Some have tried to remedy this problem by implementing targeted economic development plans.  Our next brief in the Removing Barriers in Nebraska series will evaluate economic development programs and see if they are really helping Nebraska compete for economic growth.
 

Part five in the the Removing Barriers in Nebraska series Economic Development vs. Economic Growth, will be released on September 14. Click here to return to the series main menu.

 


[i] Governing Data, “Education Spending per Student by State”, http://www.governing.com/gov-data/education-data/state-education-spending-per-pupil-data.html, accessed August 16, 2016.

[ii] Conclusions were drawn from comparing 4th and 8th grade math and reading proficiency of Nebraska to the average of comparison state group.  All data were taken from the National Center for Education Statistics using the NAEP Data Explorer, queries were performed on August 12, 2016.

[iii] Friedman Foundation, https://www.edchoice.org/school-choice/school-choice-in-america/, accessed August 16, 2016.

[iv] Prothero, Adriana, Education Week, “Some states put parents in charge of student spending”, February 24, 2015, http://www.edweek.org/ew/articles/2015/02/25/some-states-put-parents-in-charge-of.html.

[v] The Friedman Foundation for Educations Choice, “Poll shows nationwide support for emerging school choice program”, June 30 2015, https://www.edchoice.org/wp-content/uploads/2015/06/Press-Release.pdf.

[vi] Coordinating Commission for Postsecondary Education , “2015 Nebraska Higher Education Progress Report”, page 69,  March 12, 2015, http://www.nebraskalegislature.gov/FloorDocs/104/PDF/Agencies/Coordinating_Commission_for_Postsecondary_Education/474_20150313-111753.pdf.

[vii] Data was gathered from the Integrated Postsecondary Education Data System (IPEDS), query used ‘first-time degree/certificate seeking undergraduate students’ from US total, Outlying areas total, and from Nebraska for 2014.  The percentage difference was calculated by the author.

[viii] This point is argued by economist William Baumol, see Baumol, William J. “Education for Innovation: Entrepreneurial Breakthroughs vs. Corporate Incremental Improvements,” NBER Working Paper 10578 (June 2004).

[ix] U.S. Census Bureau State and Local Government Finances 2013, http://www.census.gov/govs/local/.   

[x] Badenhausen, Kurt, "Will You Want A Job In That State After College?" Forbes on line, March 2009, http://www.forbes.com/2009/03/04/jobs-states-college-leadership-careers_graduates.html.

[xi] “America’s Top States for Business 2016 – A scorecard on state economic climate”, CNBC, http://www.cnbc.com/2016/07/12/americas-top-states-for-business-2016-the-list-and-ranking.html.

[xii] Cordes, Henry, Omaha World-Herald, “College Graduates again leaving Nebraska behind”, January 19, 2014, http://www.omaha.com/news/college-graduates-again-leaving-nebraska-behind/article_138dfcb6-ab17-567d-ae06-871b02022d05.html.

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