Do state appropriations influence cost efficiency in public higher education?

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