Revenue Diversification in Public Higher Education: Comparing the University and Polytechnic Sectors

Financial stringency has been an increasing concern in the higher education sector, especially in the aftermath of the financial crisis. As a result, public higher education institutions have been under increasing pressure to diversify their funding sources through tuition fees and other nonpublic revenues. This article reflects on the institutional impact of those changes by analyzing a panel of 30 higher education institutions from the Portuguese public university and polytechnic sectors for the period between 2003 and 2009. The authors explore the relevance of institutional characteristics such as enrollments in undergraduate and postgraduate programs, the qualifications of academic staff, and the regional environment where institutions are located. Results suggest that certain institutional characteristics related to mission differentiation and the path of development of binary systems are important determinants of higher education institutions’ ability to earn income from tuition fees and other nonpublic sources.