An Examination of the Influence of Decreases in State Appropriations on Online Enrollment at Public Universities

Abstract

State support for public higher education has been a primary concern for decades. Online education has been identified previously as an alternative revenue source that can offer financial relief to colleges and universities. This study uses IPEDS data and a fixed effects regression approach to examine whether public universities increase their reliance on online education in response to decreases in state appropriations. Consistent with resource dependence theory, we found a negative relationship between state appropriations and online enrollment at public 4-year institutions. Our findings indicate that public universities, particularly public doctoral institutions, appear to be responding to declines in state appropriations by engaging in revenue diversification and increasing their commitment to online education.

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Notes

  1. 1.

    Economies of scale are defined as cost advantages obtained after increases in size or “scale” allow for fixed costs to be spread out over more units of output (Morris 2008).

  2. 2.

    Due in part to decreasing public support, net tuition revenue as a percent of total revenue in public higher education has increased from 23% in 2003–04 to 28% in 2011–12 (Jaquette and Curs 2015).

  3. 3.

    In 1995, only 9% of American adults accessed the internet. By 2010, roughly 77% of all Americans had internet access in their homes (Moore and Kearsley 2012).

  4. 4.

    The extent to which enrollment increases in online courses affect the quality of teaching and learning remains unclear. See Lack’s (2013) extensive review of empirical studies on the quality of online education.

  5. 5.

    Although “online” education and “distance” education are often used interchangeably, we solely use “online” education for two reasons: 1. Clarity. 2. The overwhelming majority of distance learners use the internet in lieu of other technologies (Ortagus 2017).

  6. 6.

    For example, State University of New York (SUNY) chancellor, Nancy Zimpher, announced that SUNY would increase its enrollment from 465,000 to 565,000 students and would be doing so exclusively through increasing their commitment to online programs (Bakeman 2014).

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Correspondence to Justin C. Ortagus.

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Ortagus, J.C., Yang, L. An Examination of the Influence of Decreases in State Appropriations on Online Enrollment at Public Universities. Res High Educ 59, 847–865 (2018). https://doi.org/10.1007/s11162-017-9490-y

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Keywords

  • Online education
  • State appropriations
  • Resource dependence theory
  • Public universities