Optimizing University Managed Resources for South Dakota: A Simulation Approach

A simulation analysis demonstrates the use of tuition as a policy tool to achieve financial independence among the six South Dakota public universities under University Managed Resources (UMR). The simulation analysis maintains an overall environment of funding stability and is guided by horizontal equity, a concept from the economics of public finance that all entities of the same or similar situation are treated similarly. Financial independence is defined as an annual budgeting process with no reallocation of financial resources among or between the six universities. For each of the three indicators of horizontal equity simulated, achieving financial independence also realized a convergence of base funding per state-support-tuition student full-time-equivalents (FTE) among the six universities.