Director: Daniel C. Levy

State Budget Cuts Hurt Private Institutions

PROPHE Summary (by Yingying Xu):

U.S. public and private institutions both suffer from budget cuts as states try to close deficits. Many state officials say they cannot continue direct financial support to private institutions. But private institution officials argue that they can offer unique academic programs while getting only a small fraction of state higher education money, and they serve public purposes as well. Some officials from public institutions say that state support for public and private institutions should be based on the same basic formula, while others see support to privates as wrong or an unaffordable luxury. Different priorities in state financial aidmake the problem even more complicated. Across states there is considerable variation in the types and weight of public funding and in how private sectors have fared this year with their state funding.

For the full story (shown with permission) see the Chronicle of Higher Education, August 1, 2003, "Private Colleges Face Cuts in Public Dollars," by Sara Hebel.
http://chronicle.com/free/v49/i47/47a01901.htm

PROPHE Observation (by Daniel C. Levy):

One of the extraordinary features of U.S. private higher education has long been how much it combines private and public funds. In other countries, public higher education has generally been publicly funded while private higher education, usually much more recent, has been mostly privately funded. The U.S. example shows how public funding of privates can help the privates with their revenue, save public money (compared to more enrollments in public institutions), and promote choice, but it also shows how this funding can compete with funding to public higher education, meaning sensitive conflicts between the two sectors. Moreover, such practice puts a part of the private sector's income at the discretion of public authorities. Then matters may depend on political lobbying. The U.S. is a laboratory of state experiments about whether governments fund private higher education, how, and how much.