Analysis of Funding Performance of Public Universities

The purpose of this research was to analyze funding performance of the Iranian public universities form both expenditure and income perspectives. An empirical research approach was used. The author developed a new behavioral model entitled “budget stochastic frontier”. Furthermore”, “Output – based Budgeting” approach was used. The date analysis from 52 public universities during 2006-2008 revealed that the variables used in the research did not play a significant role in the allocation of funds. The author concluded that “output-based budgeting” approach is not used comprehensively in Iran. Moreover, the use of this approach is not efficient. However the government guarantee of buying the outputs of universities is an efficient strategy for compensating the expenditures of universities.