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Persistent Cost Efficiency at Public Community Colleges in the US: A Stochastic Frontier Analysis

Marvin A. Titus (), Adriana Vamosiu (), Shannon Hayes Buenaflor () and Casey Maliszewski Lukszo ()
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Marvin A. Titus: University of Maryland
Adriana Vamosiu: University of San Diego School of Business
Shannon Hayes Buenaflor: University of Maryland
Casey Maliszewski Lukszo: Northern Virginia Community College

Research in Higher Education, 2021, vol. 62, issue 8, No 3, 1168-1197

Abstract: Abstract This study utilizes an extensive panel data set spanning 15 years (2004–2018) and 752 public community colleges to investigate operating costs and persistent cost efficiency at public community colleges in the United States. We employ a generalized true random effects (GTRE) regression model that takes into account spatial correlation of costs among community colleges, to estimate cost efficiency via stochastic frontier analysis (SFA). The results reveal a positive relationship between operating costs and associate degrees and certificates as well both human (part- and full-time faculty) and financial resources (local, state and federal funding and tuition revenue), controlling for other variables. Furthermore, with an average persistent (long-term) efficiency of 87%, few institutions are relatively cost inefficient. Moving forward, campus leaders and policy makers alike may consider yearly data and efficiency calculations to develop strategic plans and funding alternatives. With 40 percent of first-time students transferring at least once within six years and over half of those students transfer from a community college, future research may study cost efficiency of community colleges while accounting for student transfers as an output.

Keywords: Educational finance; Community colleges; Cost efficiency; Stochastic frontier analysis; Spatial analysis (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s11162-021-09634-y

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