Resourceful Responses

Abstract

A major challenge for contemporary public research universities is the need to affirm to the public and to the political community that the quality of higher education found at these largely autonomous institutions is of such import that it should be sustained by both public and private support. This challenge is made all the more difficult by the growing reluctance expressed by both state and federal policymakers to fund the university's educational mission at anywhere near the level university officials feel is required to sustain that mission. A further complication is the perception within a growing number of politically influential groups that research universities have largely eluded the beneficial effects of market-driven efficiency. Our objective in this article is to examine how research universities are responding to this complex challenge in the connection between revenue generation and budgetary expenditure in a market-driven age. We argue that the response might involve a recognition that American research universities have a long record of institutional adaptation (Graham & Diamond, 1997). We examine funding and expenditure patterns during this decade and conclude that there is support for the argument that universities are adapting to the current climate by incorporating market-like behavior into their business plans. Specifically, we find noteworthy differences in behavior between institutions which experience enrollment declines and those that do not, and we find a strong relationship between increased reliance on particular sources of revenues and expenditures on student services, findings that seem to indicate market-like responses of public research universities to changing conditions. Historical Context American universities are distinguished by their relative autonomy as state institutions. Students of the American state formation draw attention to the strong tradition of locality and a corresponding skepticism of national institutions (Skowronek, 1982; Skocpol, 1995). In such a political culture, state universities have largely escaped the sort of control exercised by European ministries of education; indeed, the control exercised by subnational education departments as well. The great number of American state and private universities engendered fairly early on a competition for students and faculty and the expectation that universities could have a good deal of latitude in that competition. Of course, as we know, universities as autonomous institutions are complicated by their own internal organization as collections of semi-autonomous units. This strong tradition of decentralization within the state university may contribute to the capacity to innovate at the margins without appearing to deviate from traditional conceptions of what a university should be (Tierney, 1998). In the current debate over the public research university, commentators are often too willing to use images from fashionable films, to describe universities metaphorically as great ships speeding along on a predetermined course, ships of such size that even when they see the iceberg of public discontent they are unable to avoid the crash in time. The reality is often that a public research university is more like a flotilla of ships of quite diverse size and function that, when taken as whole, might be more profitably understood as a fleet quite capable of engendering radical shifts in direction at the margin that allow steady adjustment at the center. It can be argued that American public research universities have in large measure prospered by adopting a strategy that embodies a potent, almost paradoxical, combination of continuity and radical change at the same time. This has certainly been the case over the last half of this century. Indeed, public research universities are remarkably evolving blends of public and private initiatives. It is not surprising that these universities that are often regarded as agents of social and economic change, themselves, undergo change. …