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Nearly everyone now seems to agree that more accountability is needed regarding how colleges and universities perform. But it is not at all clear what it means to have institutions be more accountable to their funders, their students, and the public at large. Typically, efforts to provide more accountability are linked to having institutions provide more information and make their processes more transparent to their various stakeholders. Less frequently, the funding that institutions receive is linked to the results of what they do.
The various ways in which public institutions can reasonably be held accountable, though, rely to a large extent on the relationship they have with the state, particularly with respect to the kinds and degree of autonomy they have been granted. Those relationships range from a high degree of government control to market-like freedoms.
High Regulatory Control. The most regulatory form of a state-institutional relationship is one in which the government is firmly in control of how public funds are allocated, spent, and raised, as well as how most or all institutional decisions are made. Heavily regulated approaches may include features such as strictly monitored line-item budgets, governmental setting of tuition rates and retaining of the revenues collected, as well as governmental determination of which students will receive financial aid. Many countries in Europe have historically followed this model.
Highly regulatory approaches also typically entail a significant reliance on state support and low or nonexistent tuition, with few public funds devoted to student aid or loan programs. In these kinds of systems, there is little accountability beyond a governmental insistence on compliance with rules and regulations, since institutional officials have little autonomy and hence cannot reasonably be held responsible for results.
Mixed Model. In most countries, public systems of higher education begin in the regulatory control mode. But as governments realize they cannot or should not control all aspects of institutional operations, they tend to move to the next stop on the regulatory-market continuum, one in which institutions are given more autonomy in how they raise and spend funds. This model, under which public institutions in most American states now operate, is based on the belief that giving institutions autonomy will achieve better results than having the government tell them what to do or reining them in within strict ranges.
A primary feature of this model is that institutions typically receive block grants from the government, often through funding formulas, rather than line-item budgets, and they have discretion in how they spend the funds. In addition, institutional officials typically have greater authority to set tuition fees, retain those fees, and decide how to spend them. In exchange, institutional officials may be expected to raise a considerable portion of their revenues independently from commercial ventures or other private sources. Also, under this approach, student aid tends to receive a higher share of public funding than under regulatory control systems, and institutional officials have at least some discretion in deciding which students receive financial aid or discounts.
Arthur M. Hauptman has been an independent public policy consultant since 1981. He is an internationally recognized expert in higher-education finance and has written and spoken extensively on issues of student financial aid, college costs, tuition fees, and resource allocation.
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