Director: Daniel C. Levy

A Growing Trend of US Public Universities Turning into Private-Sector Funding

PROPHE Summary (by Hirosuke Honda):

Arizona universities, like other public universities, have faced a great challenge in declining state appropriation. They recently have emulated a trend in privatization, led by the University of Michigan where state dependence on finance had been reduced from 70% in 1965 to 10% in 2003 while there is rising tuition and aggressive strategic planning for private finance. Alumni giving and other private donations have a central place, and Arizona universities are diversifying their revenue streams in that respect.

For the full story, see The Business Journal of Phoenix, November 27, 2005, "State universities turn to private-sector funding" by Chris Casacchia.

PROPHE Observation (by Daniel C. Levy):

In its extent, the privatization of public university income stands out in the U.S. and a few other countries (such as Chile). Even in the U.S., however, a fall in the proportion of guaranteed state funds to total funds need not mean a fall in state contributions in absolute terms. Much state-and federal-money comes through student loans, research funds, and public outsourcing and contracting. Moreover, trends in other countries, though not on a par with those in the U.S., can stand out for marking a large shift from nearly full dependence on government subsidies. Many public institutions, even while maintaining that their mission is public, now mix public and private finance. In those countries in which some private universities have gained access to some public money, the private-public distinction in financing shrinks, though it usually remains formidable.