Historically black college and university operating cost efficiencies: stochastic cost estimates and comparisons to predominately white institutions

This paper compares operating cost efficiencies of public historically black colleges and universities to those of predominately white institutions in the USA. Panel data spans four academic years, 2005 to 2006 through 2008 to 2009. Cost frontiers are estimated with an inefficiency component that includes institutional specific environmental factors. Results indicate that historically black institutions have some cost advantages over their predominately white counterparts, but on average suffer higher operating inefficiencies. Comparisons are made as to the extent to which student retention, faculty tenure, and state government funding contribute to cost inefficiencies. Inefficiency growth among black universities appears to have outstripped those of white institutions through 2007 to 2008. Yet, in 2008 to 2009 historically black universities made substantial efficiency improvements while predominately white institutions experienced a high inefficiency growth. Given the historically black contributions to educational and economic development, the inquiry and results should be of wide managerial and public policy interest.