The Colorado College Opportunity Fund: Subsidizing Students rather than Universities

Abstract

Large-scale changes in the way public institutions are funded are relatively rare events that deserve close attention. In 2005, Colorado transformed its operating appropriations for undergraduate postsecondary education into vouchers that state residents can use to attend public and some private institutions. Subsequent evaluations have been critical, while failing to specify just what measurable changes in the behavior of postsecondary institutions were expected. The economic theory of nonprofit firms implies that colleges and universities will respond in various ways depending on their mission and the preferences of their academic principals. This may include reducing undergraduate enrollments. Preliminary empirical analysis suggests that differences in the ratio of direct government support to tuition and fee revenue may affect university behavior, but results for individual institutions in Colorado have not yet been determined.

Keywords: Higher education, state appropriations, vouchers