Funding and Focus: Resource Dependence in Public Higher Education

Utilizing resource dependence theory, this study investigates the relationship between institutional reliance on net tuition dollars as a source of revenue and institutional expenditures for education and related activities at public, four-year institutions of higher education in the United States. Drawing on an 11-year panel of university-level data and utilizing an instrumental variables approach which acknowledges the potential endogeneity of institutional revenue structure, I find that institutional expenditures are quite responsive to changes in revenue patterns. This is a finding that is discussed within the context of the longstanding trend of decreased state support for public higher education, as well as the increasing popularity of market-oriented approaches to the management of public higher education systems observed in the United States and abroad.