Members of Montana State University’s President’s Advisory Council have been assigned a challenging problem. Here it is: In 1984, state appropriations covered 76 percent of MSU’s revenue while tuition and fees accounted for 18 percent. In 2001, those numbers were nearly equal. Clearly, this creates a hardship for some. How can we maintain student access and improve quality while state funding decreases? Here are my recommendations.

First, let’s order our ethical priorities. In tough times our limited tax dollars should go to people who most need help, e.g., the elderly and children without health care.

Second, recognize our situation is part of a major, nationwide trend toward reduced state support of public universities. The University of Virginia is moving toward no state funding. Some state schools are charging tuitions equal to elite private schools. For example, tuition at Miami University in Ohio, which calls itself a “public ivy,” is $16,300. MSU’s is one-fourth of that.

State higher education was traditionally justified as a public good with costs paid by taxpayers. However, this implied that taxpayers whose children did not go on to college subsidized those who did. But people intuitively understand it’s unfair to tax those with modest incomes to subsidize those who will be quite well off.

The positive empirical relationship between education and income is well known. Over a lifetime a BA or BS degree generates about a million dollars more than a high school diploma while a professional degree yields $3.2 million more than high school. The Wall Street Journal notes that “students should pay more for their education because it will vastly improve their earning power.”

Third, the average Montana high school graduate consistently performs far above the national average on the SAT. There is no question these kids have the intellectual ability to succeed. However, Montana ranks 45th in U.S. income, and state funding is less than half that of our peers, which is about $8,500 per student. Since state funding is unlikely to increase significantly, we should help our students overcome personal economic barriers.

Private funding could be a major source of aid. MSU has produced many highly successful alums. Several have contributed millions to scholarship funds. Further, they understand the importance of education to a resilient society. And there are additional sources of funding, many local. For example, Bozeman has about 35 environmental organizations. They could fund scholarships in, say, environmental or earth sciences. This year FREE donated $10,000 to scholarships for worthy Montana kids. A smaller grant helps support Professor David Sands’ program to bring exceptional high school biology students to MSU for a summer course in biotechnology. Larger organizations could be more generous.

Fourth, administrators should focus on MSU’s strengths. Three stand out: national stature, e.g., biofilms and computer science; great bargains for quality, e.g., engineering and accounting; and our amenity-rich location. Where else can students hit knee-deep powder, match a hatch, and still make their classes? This combination is a powerful lure to talented out-of-state students who pay a tuition premium, which helps keep costs down for Montana kids.

MSU has great potential in other areas. Entrepreneurial talent is needed to find and develop it. For example, the Wallace Stegner Chair could be a catalyst for innovative ideas on the future of the West.

One of the requisites for a successful organization is high morale. In the three-plus decades I’ve worked with MSU, I’ve never seen morale higher. The results are clear.

Our research budget has grown from $17 million in 1990 to $66 million last year. It is expected to reach a record $83 million this year. We are within sight of the $100 million benchmark for major university standing. This research provides MSU’s undergraduate and master’s students extraordinary educational opportunities. Here undergraduates can participate in projects available only to Ph.D. and post-doc students at big universities.

Finally, MSU can’t and shouldn’t try to replicate a Big 10 or Pac 10 school. We must focus on our productive niches and capitalize on our premier location and excellent faculty. Both MSU and the President’s Advisory Council have sound reasons to be optimistic despite declining state funding. MSU’s future could be bright indeed, especially if the administration develops new niches and provides decisive leadership.