Financing Private Universities

Trends and Issues

Abstract

　 The aim of this paper is to clarify the changes in the financial situation of Japanese private universities since 1995, from the perspective of a macro-level and a micro-level analysis.　 What emerges clearly from the analysis of aggregate financial data is that in addition to a worsening of the current budget (the ratio of current expenditure to current income), the ratio of the reserve fund in terms of the stock that must be maintained in order to ensure stable management, also shows a downward trend. Furthermore, there is a widening gap among universities in accordance with their scale and location. On the basis of an analysis of the financial database of individual universities, which covers 91% of the total, I classify 4 types in terms of the aspect of the change from 2007 to 2010. 63% are in excellent condition, 8% show a favorable swing, 12% are detereorating, and 17% are in a state of stagnation. The relationship between differences in the financial condition and differences in management actions is also analyzed. The “stagnation group” shows a decrease in expenditure, but this is exceeded by the reduced income from tuition fees. A number of universities in this group have started to reduce their student quota.　 In order to tackle future issues, two research perspectives are needed. One should focus on how to verify the effects of management reforms and the internal efficiency of private universities. The other should focus on how to clarify the social role of private universities and on a discussion of ‘who should pay’ based on clarification of ‘who benefits’.