Persistent Cost Efficiency at Public Community Colleges in the US: A Stochastic Frontier Analysis

Abstract

This study utilizes an extensive panel data set spanning 15 years (2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016)(2017)(2018) and 752 public community colleges to investigate operating costs and persistent cost efficiency at public community colleges in the United States. We employ a generalized true random effects (GTRE) regression model that takes into account spatial correlation of costs among community colleges, to estimate cost efficiency via stochastic frontier analysis (SFA). The results reveal a positive relationship between operating costs and associate degrees and certificates as well both human (part-and full-time faculty) and financial resources (local, state and federal funding and tuition revenue), controlling for other variables. Furthermore, with an average persistent (long-term) efficiency of 87%, few institutions are relatively cost inefficient. Moving forward, campus leaders and policy makers alike may consider yearly data and efficiency calculations to develop strategic plans and funding alternatives. With 40 percent of first-time students transferring at least once within six years and over half of those students transfer from a community college, future research may study cost efficiency of community colleges while accounting for student transfers as an output.

Efficiency in Indonesian Higher Education: Different Governance Leads to Different Performance

“…The model used in this study was the SFA translog multiproduct cost frontier, suggested by Agasisti (2016) and Kumbhakar & Knox (2000). The translog function has a higher degree of flexibility and is often used to analyze efficiency in public higher education establishments (see Fahmy-Abdullah et al, 2021;Ferro & D'elia, 2020;Giraleas, 2021;Gralka, 2018a;Titus et al, 2021;Vamosiu et al, 2018). In 2021, based on data from the Ministry of Education, Culture, Research, and Technology, there were 68 public higher education establishments in Indonesia.…”

“…The input data were obtained from the performance reports of the public higher education providers in 2021. The use of total expenditure in the cost frontier has been applied by many researchers to model SFA (Agasisti & Gralka, 2019;D'elia & Ferro, 2021;Fu et al, 2019;Titus et al, 2021;Vamosiu et al, 2018).…”

“…Bolli et al (2016) for example, used the number of students as an output, while other researchers, such as Kulshreshtha & Nayak (2015), used that indicator as an input. The amount of research funding was used as an output by Titus et al (2021), but used as an input by Bertoletti & Johnes (2021). The absence of rules in this regard has increased researchers' subjectivity in choosing inputs and outputs (Agasisti & Gralka, 2019).…”

Do Financial Investment, Disciplinary Differences, and Level of Development Impact on the Efficiency of Resource Allocation in Higher Education: Evidence from China

“…First, the stochastic frontier model (SFA) and the Solow residual method (SRA) are used as parametric analysis methods to derive efficiency results primarily through modeling and variable assumptions [44]. For example, Titus et al [45] calculated the resource allocation of 752 community colleges in the US with the help of the SFA model and found a high level of overall efficiency. Song Zhiyan et al [46] used the SFA model to calculate the input-output efficiency of general universities in China and concluded that the overall efficiency profile was good, but there were internal gaps and input redundancy.…”

An Interstate Analysis of the Efficiency of Secondary Education in India: A Stochastic Frontier Approach

“…Despite the relatively small size of average institutions, they found that economies of scale are largely exhausted. Titus, Vamosiu, Buenaflor and Lukszo (2021) used an extensive panel data set spanning 15 years (2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016)(2017)(2018) and 752 public community colleges to investigate operating costs and persistent cost efficiency at public community colleges in the United States and revealed a positive relationship between operating costs and associate degrees and certificates as well both human (part and full-time faculty) and financial resources (local, state and federal funding and tuition revenue), controlling for other variables. They observed an average persistent (long-term) efficiency of 87% while few institutions were relatively cost inefficient.…”