Does Increased Spending on Higher Education lead to Better State University Rankings?
Utah spends the most of its state budget on higher education at 15.5%. Its University of Utah is ranked 126 according to U.S. News 2009 College Ratings. New York spends the least of all states on higher education with only 5.4% of its budget yet its highest rated public school SUNY-Binghamton is ranked higher than Utah at 80. North Dakota is a close second in spending at 15.4% and its university's state ranking in education is Tier III. Tier III means it is ranked in the 50-75% of all national universities i.e. below average. 7 of the 10 lowest spending states on higher education have higher university rankings than high spending North Dakota. North Dakota does not get much bang for its buck.
High Spending States on Higher Education and University Rankings

North Carolina is third highest ranked state on higher education spending at 14.2% and has the highest rated public university of the high spending states with a rank of 28. This appears to be a positive spend to school rank association. Yet neighboring Georgia with a spend of 7.6% has its Georgia Institute of Technology rated 35. Georgia Institute of Technology is higher than every high spend state ranking other than North Carolina.
Alaska is the second lowest higher education spending ranked state at 6.1% and appears to get what it pays for. Its school is rated a bottom 25% Tier IV by U.S. News. Florida is the third lowest state in spend at 6.3% and appears to get very good returns with the University of Florida rated 47, higher than every high spend state other than North Carolina.
States with the lowest spending on higher education are primarily in the Northeast. 7 of the lowest 10 states are from the Northeast. They are, in addition to New York, New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania and Maine. Yet 4 of the states, New Jersey, New York, Pennsylvania and Connecticut have higher ranked schools than every high spend state other than North Carolina.
Low Spending States on Higher Education and University Rankings

We have reported previously on education spending and test results. See Does Spending More on Education Work?

I'm a resident of Utah. Although Utah spends a large portion of the state's budget on education, Utah is also 50th at the amount spent per student. In addition, Utah has a higher than average number of students that attend college, and is in the upper quartile on SAT scores. Utah is very unique, and may not be the best example to build a hypothesis between state spending as a percent of budget and quality of Colleges and Universities.
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Steve is right. If you look at the arguments made in this website, they seem to try to correlate figures that really have not causal relation. Steve points to Utah spending a high % of its budget on higher ed, but having a low budget to begin with. That's like looking at low income people paying a higher % of their income on housing and being surprised that they live in smaller, run down apartments while the more affluent spend a smaller % but live well. Similarly, the correlation of SAT scores and spending is ridiculous -- if you have kids ready to take the SATs then it is very likely you don't have to spend as much on education. For instance, if you have a large special ed population or a large immigrant population, then you might have demands for educational services that are totally unrelated to helping kids do well on their SATS.
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