Evolving Expectations of Management Education

Decline in Public Funding


Privatization of funding, shrinking proportion of funding for public higher education coming from government.

While funding models of higher education vary widely internationally, the overarching trend shows that government support is shrinking. According to the Economist,

    That’s partly because rising demand has increased the burden that higher education places on government budgets. So has “Baumol’s disease”, which increases the relative cost of labour-intensive industries, such as health and education, as technological change lifts the productivity of capital. Ageing populations are pushing up health bills, so education—another huge chunk of government spending—loses out; and since the social benefits of primary and secondary education are clearer than those of tertiary education, universities tend to suffer the most.

The trend has been most pronounced in the United States, where “public colleges now get more money from their students than from all state sources” according to an NPR report. From fiscal years 2003–12, "state funding decreased by 12 percent overall while median tuition rose 55 percent across all public colleges." Over that period, funds from state sources fell from 32 percent of total revenue down to 23 percent.

The privatization of funding has fundamentally changed expectations for higher education. It is less likely to be thought of as a public good—or as having significant positive externalities—as individuals and their families pay increasing portions. And providers of education are becoming more accountable to individuals and organizations they serve rather than to broader society.

Students are acting more like consumers. Undergraduates are selecting more practical, job-focused majors—and doing it sooner. Prospective students expect management education to lead to better job and career prospects at lower cost, encapsulated by increasing “ROI.” Contributing to this trend, large companies are aligning their learning programs more and more to the needs of individual employees, enabling a broader range of formal and informal choices and assisting with personal development plans. As major consumers of management education themselves, businesses are expecting greater return on their education and development expenditures, especially through stronger alignment with their strategic objectives.

The privatization of funding is also impacting expectations about research and knowledge creation, which support management education. Various providers of management education have different missions and models, and some include knowledge creation while others do not. As consumers of management education, individuals and companies are questioning the value of subsidizing research through higher tuition prices and seeking evidence of impact on the education service and business objectives.

Related Resources

Georgette Phillips
Seeking Non-Tuition Revenue Sources

Georgette Phillips, dean of the Lehigh University College of Business and Economics, discusses take-aways from the 2015 AACSB Deans Conference session on business school revenue models.

Technologically Enhanced Education at Public Flagship Universities—Opportunities and Challenges
Ithaka S+R visited ten institutions from the Public Flagships Network (PFN) between late October 2013 and March 2014 to interview academic administrators, directors of online learning, chief financial officers, career services staff, and department chairs in order to understand their perspectives on budgets and business models, student consumption of higher education, and technology-enhanced education.

Grade Level: Tracking Online Education in the United States
Using survey responses from more than 2,800 colleges and universities, this study is aimed at answering fundamental questions about the nature and extent of online education.

Student Tuition Now Outweighs State Funding At Public Colleges
An article from NPR which shares that America's public colleges now get more money from their students than from all state sources.

Wanted: English Majors (at College Park and Elsewhere)
An article in The Washington Post points to several examples of the humanities having difficulty competing for students who are increasingly focused on preparing for careers.

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