The state government general fund shortfall in the current fiscal year is projected to be between about $550 million and $1 billion. This shortfall will need to be eliminated through spending cuts and/or revenue enhancements. The Legislature has demonstrated a preference for spending cuts. However demand does not decline during a recession for most public-sector services, including university services. Any reduction in funding for universities will have a negative and direct effect. A reduction in state government spending for universities of around $200 million would cause direct and indirect job losses of approximately 4,000. A substantial decrease in state government funding for universities will have negative consequences beyond these short-term effects.

The analysis of the value of higher education contained in this report represents an important dimension of the P3 research agenda since measuring the value of educated workers can provide empirical context for understanding the importance of an educated and skilled workforce in a modern economy. In this report, the increases in individual earnings realized from enhanced educational attainment are measured and the benefits to the economy and society in general that are provided by a highly educated workforce are examined.