Measuring Efficiency in Illinois Public Universities: A DEA–SFA Analysis of State Funding and Student Retention
DOI:
https://doi.org/10.54536/ajebi.v5i3.5743Keywords:
Efficiency, Higher Education, Illinois Public Universities, Retention State Appropriations, TuitionAbstract
The study of the efficiency of higher education institutions has been critical notably for university administrators to understand their institutions’ challenges better and develop strategies to overcome them. This paper utilizes the Stochastic Frontier Analysis technique (SFA) and Data Envelopment Analysis (DEA) to investigate the cost efficiency of nine public universities (on twelve different campuses) in Illinois during the period 2011-2020. Maximum likelihood estimates are used to assess the impact of changing state appropriations, as well as retention and tuition rates, on the efficiency of Illinois public universities. While the key findings of this empirical study suggest that state appropriations have little impact on the efficiency of Illinois public universities, higher retention rates are the most significant factors in determining and enhancing efficiency. In short, Illinois public universities show different levels of efficiency, with some excelling despite limited resources, while others struggle. The results suggest certain reforms including enhancing retention, optimizing financial management, supporting underperforming universities, promoting innovative teaching, and conducting regular efficiency reviews.
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