Assessing the effects of four budget-balancing strategies in higher education

This paper compares four short- and medium-term strategies available to public higher education to balance budgets in the face of major cutbacks in public funding. These strategies include: capping enrolments, changing the enrolment mix, raising prices and increasing enrolments without raising prices. The paper assesses the likely effects of these four strategies on the performance dimensions of participation, equity, productivity and quality. Some of the key political and economic considerations that do and should inform the decisions of institutional leaders are then considered. We conclude that there are fundamental inadequacies in our understanding of the possible impacts of changing enrolments on marginal costs. This means that higher education system and institutional leaders may not be fully and rationally exploring the range of options available to balance their budgets in the face of recession-driven cutbacks; in particular, they may not adequately consider the possibility of increasing enrolments without increasing fees.