Do state appropriations influence cost efficiency in public higher education?

The note has two primary purposes. The first is to extend the literature examining costs in higher education to a frontier cost function framework. The second goal is to determine whether the source of funds in public higher education influences the degree of efficiency Results show that larger university systems are more efficient than smaller university systems. Also, the source of funds is important as states with the lowest and highest share of total expenditures provided by state appropriations are less efficient than states in the middle of the expenditure distribution.