Public Universities: The Supply Side of Building a Skilled Workforce

Abstract

Over the past few decades, public universities have faced significant declines in state funding per student. We investigate whether these declines affected the educational and research outcomes of these schools. We present evidence that declining funding induced public universities to shift toward tuition as their primary source of revenue. Selective research universities enrolled more out-of-state and international students who pay full fare and increased in-state tuitions, moderating impacts on expenditures. Public universities outside the research sector had fewer options to replace stagnating state appropriations, requiring diminished expenditures and increased in-state tuitions. The evidence we present suggests that the cuts negatively affected degree attainment at the undergraduate and graduate levels. While the evidence on research is mixed, there are indications that the impact of spending declines on research outcomes may become evident over a longer time period