On the technical and allocative efficiency of research - intensive higher education institutions

In 1980, estimated federal support for higher education in the US totaled approximately $55-billion. By 1999 that figure had swelled to just over $88-billion even though federal onbudget support for postsecondary education actually fell during this time from $22.2-billion to $18.2-billion. What largely stimulated the growth were policy shifts on two different fronts: a significant commitment by the federal government for tuition support and, to a lesser extent, institutional support vis-à-vis research. Indirect support in the form of student aid rose in real terms by $23.1 billion while appropriations for academic research grew by $7.6 billion. In the face of increasing federal support for higher education, public concerns that colleges and universities cared little about containing costs and increasing productivity continued to grow. Institutions were raising tuition while students and their families were shouldering greater portions of financing a collegiate education. At the same time universities embarked on billion dollar capital campaigns and lobbied state governments for greater annual appropriations in the name of maintaining existing levels of quality. In 1997 when the National Commission on the Cost of Higher Education (NCCHE) released the tentative results of their study into the nature of college costs, much to the dismay of lawmakers and the general public, the panel concluded that for the most part American higher education was actually a bargain. As one panel member noted, “there is a lot wrong with higher education...but the one thing colleges can’t be accused of is gouging the public” (Anderson cited in Burd, 1997). For the most part, public concerns with higher education costs and productivity seem to have been sparked by three converging forces: demand-side cost escalation, a depressed economy, and a shift in the burden of financing a college education toward students and their families. When the public, and eventually legislators, began seriously looking at why it cost so