A new model for financing public colleges and universities

Abstract

Purpose-The purpose of this paper is to suggest public service corporations as a new means of helping to finance comprehensive public colleges and universities based on a well-documented assumption that the current shared responsibility for financing public colleges is broken. Design/methodology/approach-The paper focuses on financing comprehensive public colleges and universities, and explicitly does not focus on research, community, or proprietary institutions. The paper draws heavily from national data and literature on college finance and productivity, and uses New Jersey's state colleges and universities as primary examples. Findings-The paper asserts that a new funding rationale for public colleges is imperative or these institutions will fail the principal mission of broad access for middle-income students. Citing examples from New Jersey and other states, and drawing on work of other policy analysts, the paper proposes creation of new public service corporations not only as a means of generating new revenue to replace diminished state investment, but also as a means of enhancing transparency, accountability and public trust. The paper discusses explicit purposes and measurable benefits of the public service corporation. Originality/value-The paper is written by two higher education policy practitioners with a combined 40 years executive experience in higher education law and policy at the state and national levels. They have been a leading voice for policy innovation in New Jersey. The paper has significant value for college presidents, trustees, governors, legislators, and policy analysts.

Insights and Implications for State Policy-Makers

“…Such experiments in autonomy can succeed. For example, New Jersey granted its state colleges and universities the autonomy to set tuition and fees and to conduct academic and business affairs with significantly less state involvement under statutory changes in 1986 and 1994 (Greer 1998; Greer and Klein 2010). Since then, New Jersey’s state colleges and universities have become among the nation’s most productive public institutions of higher education, ranking first in the United States in the number of bachelor degrees produced relative to the state’s total funding per FTE; third in six-year graduation rates relative to total funding per FTE; and the third overall “most productive” set of public baccalaureate and master’s institutions in the country (Kelly and Jones 2007).…”