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Why Public Universities Cannot Restrain Costs

Why Public Universities Cannot Restrain Costs

(p.41) 3 Why Public Universities Cannot Restrain Costs
Saving Alma Mater
Ernst R. Berndt
University of Chicago Press

The gradual transition from subsidy dependence to tuition dependence for public universities has awakened the forces of supply and demand. Government subsidies have weakened the cost discipline normally imposed by competition, resulting in an increased pressure for colleges to raise tuition. Furthermore, state-mandated tuition controls have been only partly effective at resisting this pressure, and then only by retrenching the institutions and eroding their infrastructure. But a generally rising national demand for higher education has also been a significant factor in exempting public colleges from competitive forces. Campuses allow themselves to deteriorate slowly rather than make the difficult and unpopular choices that will stretch their budgets and boost their productivity. Of course, this is not a strategic or even likely a conscious decision. It is, rather, an expedient choice that preserves campus harmony and respects the insistence of academic constituencies on having a decision-making voice. But as a consequence, each year public universities become a little more depleted. However, campus resistance to change is only part of the explanation. More fundamentally, public colleges have been shielded from the beneficial forces of competition by outside influences, specifically government subsidies, tuition controls, and other regulatory mandates. These external influences act in different ways but ultimately lead to the same result.

Keywords:   public universities, college education, higher education, cost analysis, tuitions, competition

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