State Capital Expenditures for Higher Education: "Where the real politics happens"

Little empirical attention has been paid to state capital expenditures for higher education. While some anecdotal evidence exists that the process of appropriating capital dollars to higher education institutions is a particularly political process, no study has systematically examined the determinants of higher education state capital spending. This study counters this scholarly oversight by employing a longitudinal analysis of the factors associated with state capital expenditures for higher education. Panel data is used including political, higher education sector, and economic and demographic variables from 1988–2004 on all 50 states. Our fixed effects analysis reveals that the process is indeed political. Numerous political factors were significantly associated with capital expenditures for higher education, including political culture, electoral competition, budgetary powers of the governor, higher education governance structures, interest groups, legislative professionalism, and voter turnout. Although some higher education sector factors, such as private giving and tuition rates, proved to have a significant influence on state capital expenditures for higher education, the results provide substantial evidence that politics matters in the appropriation of these capital dollars. These findings suggest that more research is needed to understand how the determinants of state capital spending differ from other state expenditures on higher education.