Budgeting and resource allocation in universities: a public choice approach

ADMINISTRAÇÃO PÚBLICA

Budgeting and resource allocation in universities: a public choice approach

Marcos Fernandes Gonçalves da Silva

Professor at EAESP/FGV and Visiting Research Fellow (1997-98) at ILAS/ University of London. E-mail: [e-mail]

ABSTRACT

The calls for colleges and universities to improve their productivity are coming thick and fast in Brazil. Many studies are suggesting evaluation systems and external criteria to control the quality of teaching and research in universities. Since universities and colleges are not profit-oriented organizations (considering only the legitimate and serious research and teaching organizations, of course), the traditional microeconomics and administrative variables used to measure efficiency do not have any direct function. An alternative would be to create an "as if" market control system to evaluate performance in universities and colleges. Internal budget and resources allocation mechanism can be used as incentive instruments to improve quality and productivity. It will be the main issue of this article.

Key words: Education quality, university evaluation, budgeting, public resources allocation, incentives.

RESUMO

As demandas exigindo a melhoria da produtividade em faculdades e universidades estão surgindo dramática e rapidamente no Brasil. Muitos estudos têm sugerido sistemas de avaliação e critérios externos para controlar a produção universitária em termos quantitativos e qualitativos. Considerando-se que as universidades e faculdades não são organizações com fins lucrativos (excetuando-se, é claro, as caça-níqueis), as variáveis microeconômicas e administrativas tradicionais usadas para medir a eficiência não possuem nenhuma função direta. Nesse sentido, dever-se-ia criar um sistema de controle "à la" mercado (imitando o mercado) para avaliar a produção em universidades e faculdades. O orçamento e o mecanismo de alocação de recursos contido nele podem ser usados como instrumentos de incentivo para melhorar a qualidade e a produtividade. Esse será o principal tema deste artigo.

Palavras-chave: Qualidade da educação, avaliação de universidades, elaboração de orçamentos, alocação de recursos públicos, incentivos.

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BIBLIOGRAPHY

GENERAL REFERENCES

BUILDING the budget structure of the university: experience of state universities of São Paulo concerning the autonomy of financial management. Universidade de São Paulo, 1995. Discussion paper.

TOWARDS a sustainable resource allocation mechanism. University of Bristol, 1993. Committee of Deans.

WORLD BANK. World Development Report. Oxford : Oxford University Press, 1996.

NOTES

1. This study expands on recent work on the subject in which no consideration is given to public choice assumptions and provides a more incisive and complete analysis applying agency theory to the study of productivity problems facing universities and colleges. The main references in this area: Atkinson, H. and Massy, W. F. (1996), Chevaillier, T. (1993), Cohn, E. and Geske, T. G. (1990), El-Khawas, E. and Massy, W. F. (1996), Lawler, E. and Mohrman, S. (1996), Massy, W. F. (1993), Massy, W. F. (1996a), Massy, W. F. (1996b), Massy, W. F. (1996c), Massy, W. F. (1996d), Massy, W. F. (1996e), Massy, W. F. and Hopkins, D. S. (1996), Schutte, F. (1993), Strauss, J., Curry, J. and Whalen, E. (1996), and Winston, G. (1996).

2. The fundamental elements and conceptions used here are founded in Horn (1996), Kraan (1996), Silva (1996a), and Silva (1996b).

This is the case for Milgrom and Roberts (1992).

3. Massy (1996c, p. 50) argues that "unlike business firms, colleges and universities operate on a nonprofit basis and for altruistic goals". I disagree with this point of view. The productivity hypothesis in economics must be used as an instrumental conception and not as a realistic one. It is also na"ve to presuppose that the agents in non-profit organizations are economically eunuchs. The public choice assumption that the homo economicus assumption has to be extended to politics and public organizations applies equally to such non-profit organizations as colleges and universities.

4. This difficulty explains why evaluations in colleges and universities are so widely criticized, mainly by teachers and researchers.

5. This literature is well developed and has been applied to public administration by Horn (1996) and Kraan (1996).

6. About this concept and for a very simple illustration of contracts and moral hazard, see Silva (1996b).

7. The classification referred to here is that published annually in the "World Economic Report". See, for example, World Bank (1996).

8. In the Getulio Vargas Foundation in São Paulo, for example, the students can receive scholarships and loans, but the allocation depends on performance. This is a well-designed incentive scheme to the students. However, in public universities there is no payment - they are free. In my opinion, this kind of contract with the students is perverse because there is moral hazard.

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Publication Dates

• Publication in this collection
  23 Sept 2011
• Date of issue
  Dec 2000