Revenue diversification in public higher education: Comparing the University and Polytechnic sectors.

Abstract

Financial stringency has been an increasing concern to public higher education in Europe, as this sector has become one of the potential areas for cuts in public expenditure, especially in the aftermath of the financial crisis of 2008. Public Higher Education Institutions have therefore been under increasing pressure to diversify their funding sources. This study compares the ability of public universities and polytechnics to accumulate non-public revenues by using a panel of 30 Portuguese higher education institutions for the period 2003-2009. Specific institutional characteristics are investigated, including the relative size in undergraduate and postgraduate programmes, the qualification of the academic staff and the regional environment where institutions are located. Our results suggest that the level of qualification of the academic staff is one of the most important determinants of institutions’ ability to gather non-governmental funding from tuition fees and other sources.