Higher education multi-product cost functions are estimated for the public and private sectors disaggregated by research, comprehensive, baccalaureate, and associate level institutions. The output mix incorporates professional school teaching output, in addition to undergraduate and graduate teaching and research outputs. Scale and scope economies are examined by sector and institutional level, also accounting for regional differences. Ray economies are found throughout the private sector, but confined to lower level public institutions. Research economies are widespread throughout all sector levels. Economies of scope prevail among private institutions across levels, but only among comprehensive and baccalaureate public colleges.

For decades, state funding of public historically black colleges and universities (HBCU) has been shown to be de facto discriminatory relative to the funding of their predominately white counterparts. Although the dual system has been legally dismantled, the disparate funding has remained in place in a number of ways. For example, recent research shows that in 1995 approximately 17% of the fewer state funding dollars allocated to historically black institutions (HBI) relative to predominately white institutions (PWI) could be attributed to fiscal discrimination. After more than a decade, the present research uses 2006 finance data to provide tests as to the extent of progress in moving HBI toward greater funding equality.

Cost, Scale economies, Scope economies, Higher education, I00,

This paper provides stochastic frontier cost and (in)efficiency estimates for private for-profit colleges with comparisons to public and private non-private colleges. The focus is on the two-year U.S. higher education sector where there exists the largest and fastest growing entry of for-profit colleges. Unbalanced panel data is employed for four academic years, [2005][2006][2007][2008][2009]. Translog cost frontiers are estimated with an inefficiency component that depends upon environmental factors defined by college specific characteristics. More experienced public and private non-profit colleges are found to be more cost efficient relative to the newer entrants. In addition, the newer for-profits exhibit greater efficiency variability but also show some evidence of efficiency gains over the academic years. There is some cursory evidence that for-profit entry is positively correlated, albeit weakly, with greater public college sector inefficiency.

Financial reforms in U.S. public higher education are well underway and are progressively replacing university enrollment based funding formulas with performance based models driven, in part, by graduation rates. Doing so, however, fails to account for the internal resource constraints and managerial efficiencies associated with production. Moreover, graduation rates are affected by external factors beyond the control of university decision-makers. This paper addresses these issues and uses a four-stage data envelopment analysis (DEA) model to evaluate university graduation rate performance. The four-stage DEA efficiencies correct for both environmental and statistical noise effects on university operations. Efficiency estimates control for the friendliness of the higher education operating environments as measured by differences in public financial support and educational quality. The results indicate that while universities are favorably efficient according to single stage estimates, additional efficiency gains of about three percentage points arise after accounting for good and bad fortune and external environmental effects. The number of efficient universities is found to more than double, thereby indicating significant shifts in the efficiency rankings of universities. Yet, better quality data is needed and should be forthcoming as universities and states gain greater experience with the implementation of performance based funding and ties to student success.