State universities in Michigan argue that they have been starved for money and that falling real appropriations from the state legislature have jeopardized the quality of higher education. They contend that this has resulted in a loss of competitiveness for Michigan at a time when the state faces economic stagnation caused by globalization's impact on key basic industries. This study makes two key findings: (1) By most measures, on-average revenues per full-time equivalent student at Michigan public universities rose throughout the 2000-2005 period despite real reductions in state appropriations per student while expenditure growth per student was somewhat less; and (2) National econometric evidence indicates that state appropriations for higher education do not have positive effects on economic growth but to the opposite conclusion: higher appropriations are associated with lower economic growth. These findings suggest that the observed shrinkage in state appropriations over the first half of the decade was actually a positive development. The authors question a growth strategy based on expansion of higher education, advocating that results included in the econometric estimation suggest that a better growth strategy for the state would be a reduction in the overall tax burden. (Contains 9 footnotes and 3 tables.)