An efficiency-based decision making model for higher education funding in Mexico

Funding Higher Education Institutes in Mexico has been a topic of endless discussion. Both the universities and the federal government feel the current funding distribution process is not appropriate. The current funding mechanism consists of annual budgets given unconditionally to the universities; the allocation is not associated with inputs to the Higher Education system, nor to the outputs, but is simply related to the previous budget plus an additional fund. This system clearly does not provide incentive for outstanding performance, just as it does not punish poor performance. This dissertation presents a methodology to develop an efficiency-based decision-making model that will provide with a more accountable funding distribution process for the 34 Mexican Public State Universities.; The study method was developed using the data envelopment analysis (DEA) decision theory framework. Twenty-four alternative cases were developed using different variables, with six of the alternative cases producing a reasonable discrimination in the identification of top-performing universities. The model describes the performance efficiencies of the universities based on inputs and outputs to the educational system and proposes future funding based on those measurements.; According to the model developed for this study, the universities of Puebla, Guadalajara, Tabasco, Quintana Roo, Chihuahua, Veracruz, and Nuevo Leon achieved efficiency of 100% during the 1996--1997 academic year. A funding assignment was proposed based on the efficiency achieved by each university, and a comparison was performed against the actual funding given. Analysis of the overall efficiency and the funding difference revealed no correlation leading to a conclusion that for Higher Education in Mexico, no link existed between efficiency and funding. However, this study shows that it is possible to establish a performance-efficiency based funding approach that shifts the budget process from one of accumulated entitlements to one of justified allocation based on performance.