Financing Higher Education Institutions in the 21st Century

[Excerpt] My remarks today relate to the “Financing of American Higher Education Institutions in the 21st Century”. Although the discussion has some implications for the ability of students and their families to finance college educations, my focus is on institutions of higher education, not on students. I will begin by discussing the growing resource imbalance that is emerging between public and private institutions and then the growing inequality of resources across institutions that is occurring within each of the public and private sectors. As I do this, I will illustrate the implications of some of these changes for the patterns of faculty compensation and faculty turnover that we observe across academic institutions. I will then turn to a discussion of the growing importance of scientific research to universities and the growing costs that universities are incurring for this research. The enormous costs of scientific research are increasingly being born by the institutions themselves and institutions need to understand who actually bears the burden of these costs. Institutions increasingly are hoping that they will generate revenue to support their research enterprise through the commercialization of their faculty members’ research findings, but I shall show that currently very few institutions are generating substantial funding from their commercialization activities. Finally, if time permits, I will conclude with some speculations about the directions in which our American higher education system will evolve over the next few decades and what some of the major financial issues facing academic institutions will prove to be. Much of my discussion draws on research that I have been conducting jointly with a wonderful group of undergraduate and graduate students associated with the Cornell Higher Education Research Institute and my great debt to them for help in preparing these remarks will be obvious to you.