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Efficiency-Based Funding for Public Four-Year Colleges and Universities

Author

Listed:
  • Thomas R. Sexton

    (State University of New York-Stony Brook)

  • Christie L. Comunale

    (Long Island University)

  • Stephen C. Gara

    (Drake University)

Abstract

We propose an efficiency-based mechanism for state funding of public colleges and universities using data envelopment analysis. We describe the philosophy and the mathematics that underlie the approach and apply\break the proposed model to data from 362 U.S. public four-year colleges and universities. The model provides incentives to institution administrators to eliminate wasteful spending and increase positive outcomes while maintaining educational quality and research productivity. The institutions in our study spent $96.74 billion, and states would reimburse $88.02 billion. Thus efficiency-based funding would reduce state government expenditures on these institutions by $8.72 billion, or approximately 9.0 percent. Efficiency-based funding is politically viable, as demonstrated by North Carolina’s successful use of this approach in pupil transportation operations since 1994. The model will be of interest to state legislators, state education officials, and others who are concerned with funding formulas for institutions of higher education. © 2012 Association for Education Finance and Policy

Suggested Citation

  • Thomas R. Sexton & Christie L. Comunale & Stephen C. Gara, 2012. "Efficiency-Based Funding for Public Four-Year Colleges and Universities," Education Finance and Policy, MIT Press, vol. 7(3), pages 331-359, July.
    • Handle: RePEc:tpr:edfpol:v:7:y:2012:i:3:p:331-359
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    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/EDFP_a_00070
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    Citations

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    Cited by:

    1. Kristof De Witte & Laura López-Torres, 2017. "Efficiency in education: a review of literature and a way forward," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(4), pages 339-363, April.
    2. Kunsch, Pierre L. & Ishizaka, Alessio, 2018. "Multiple-criteria performance ranking based on profile distributions: An application to university research evaluations," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 154(C), pages 48-64.
    3. Alexander Arévalo S & Víctor Giménez G & Diego Prior J, 2022. "Análisis de eficiencia en educación: una aplicación del método StoNED," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, vol. 92(2), pages 45-91, October.

    More about this item

    Keywords

    higher education; college; universities; state funding;
    All these keywords.

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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