Toward a Clearer Understanding of Privatization

The trend toward privatization in higher education is clearly accelerating, as evidenced in both the scholarly and popular presses. It remains unclear whether governments cannot, or choose not to, provide sufficient resources to public postsecondary education, but intelligence points to a myriad of possible points of contention. For instance, the subprime mortgage crisis, downturns on Wall Street, declining state tax bases, and other recently emerging trends suggest little relief is in sight. Furthermore, higher education and the states most likely won't be relieved by other long-term fiscal pressures. K-12 education and Medicare are frequently factors behind funding shortages. State policy continues to encourage competition not only with private institutions but also with other public institutions on a mounting set of issues. For example, Ohio created a program in which its public institutions compete for a $150 million pot of research funding (Richards, 2007). Institutions continue to compete for students and their mi tion dollars, particularly those students who have the means to pay or to use their state-based merit dollars. The competition for students will be especially acute in states, such as Colorado, that have adopted a voucher-style funding structure. Tuition and vouchers, not state block grants, have become an increasingly important source of revenue for some public research universities. States too are recognizing the funding problem and realize that if they cannot provide the resources for their institutions, they should allow them the autonomy and flexibility to set and keep their tuition and to compete for students, investments, and faculty with little state intervention.