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Title page for ETD etd-07022014-175445

Type of Document Dissertation
Author Shepherd, Justin Cole
Author's Email Address justin.c.shepherd@vanderbilt.edu
URN etd-07022014-175445
Title Linking University Expenses to Performance Outcomes: A Look at Departments, Colleges, and Institutions
Degree PhD
Department Leadership and Policy Studies
Advisory Committee
Advisor Name Title
William R. Doyle Committee Chair
Alisa Hicklin-Fryar Committee Member
Christopher P. Loss Committee Member
Michael K. McLendon Committee Member
Stella M. Flores Committee Member
  • performance funding
  • data envelopment analysis
  • stochastic frontier analysis
  • finance
  • higher education
Date of Defense 2014-05-14
Availability unrestricted
Falling state appropriations, rising tuition, and increasing student loan burdens have introduced new challenges for public higher education and raised questions of affordability, accessibility, and accountability. Policymakers have responded by introducing reforms such as performance funding and deregulation to measure efficiency and improve institutional performance. These reforms rely on competition and markets, treating higher education like a business and using a production function based framework to turn financial and student inputs into institutional outputs. This dissertation modifies and applies such a business model to higher education to evaluate the relationships between inputs and expenses, expenses and outputs, and the institutional efficiency in the production of key policy indicators. Using panel data from the Integrated Postsecondary Education Data System, University of Texas System, and Texas Higher Education Coordinating Board, I am able to examine these relationships at the institutional, school, and departmental levels using multivariate regressions, fixed effects, stochastic frontier analysis, and data envelopment analysis. These methods, and the various levels of analysis, are rarely seen in higher education research and they offer a comprehensive view of the higher education production function. The results reveal strong relationships between revenues and expenses, indicating a close alignment between the source of funding and how it is used. Expenditures, however, are not strongly related to outputs. This shows a lack of variation in institutional performance and suggests an optimal input-output mix rather than a linear relationship. Finally, in looking at institutional efficiencies in comparison to this optimal point, most institutions are relatively efficient when compared to their peers after controlling for their Carnegie classification and proxies for the quality of their inputs. While state reforms are built upon the premise of doing more with less, these findings challenge this assumption and show that students themselves are the drivers of performance in higher education and that most institutions are actually performing quite well. Indeed, cuts to higher education as a result of the Great Recession and state reform are pulling institutions away from this optimal point and hurting institutional educational processes.
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