Thursday, October 29, 2009

An economist gets it right

Thirty years ago, the [University of Michigan] began going through the convulsions other public universities are now experiencing. Today, it is largely protected from Michigan’s plummeting economy. Only 7 percent of its budget is provided by the state.

The transformation of the University of Michigan’s finances began with Harold T. Shapiro. In the mid-1970s, Mr. Shapiro, then a professor of economics and public policy at the university, studied Michigan’s economy and predicted that the state would lose tax income compared with the rest of the country in coming decades. He was right.

While the state trimmed a third of its support for the university in the 1980s, Mr. Shapiro, as the university’s president, worked to build a more secure budget base. Michigan increased private fund-raising and developed a tuition structure that took advantage of a growing number of out-of-state students, who now pay $36,163 a year in tuition and fees — about the same as Princeton.
--Paul Fain, NYT, on one economist's prescience

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