Cost Efficiency in Public Higher Education.

This study used the frontier cost function framework to examine cost efficiency in public higher education. The frontier cost function estimates the minimum predicted cost for producing a given amount of output. Data from the annual Almanac issues of the "Chronicle of Higher Education" were used to calculate state level enrollments at two-year and four-year public institutions, total educational and general expenditures, research expenditures, state appropriations for higher education, and average tuition rates for the 1989-90 through 1992-93 academic years. It was found that, overall, inefficiency does exist in public higher education, in that states have costs that are about 20 percent above the estiniated frontier. It also found that states with higher two-year school enrollments had higher efficiency rankings than states with lower two-year enrollments, and that larger university systems tended to be more efficient than smaller systems. A significant relationship was also found between the share of total educational expenditures provided by state appropriations and the degree of efficiency, in that states with the smallest and largest shares were more efficient than states in the middle group. (Contains 31 references.) (MDM) ******************************************************************************** * Reproductions supplied by EDRS are the best that can be made * * from the original document. * ******************************************************************************** Cost Efficiency in Public Higher Education

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