Because local government has the power to collect taxes. If it chooses to selectively hand them out only to favored political institutions, then in practice thi

Because local government has the power to collect taxes. If it chooses to selectively hand them out only to favored political institutions, then in practice this means many students won't be able to afford to attend their favored schools, and some schools will be financially non-viable. It may be the case that such schools will still exist in this environment (with a smaller student body), but that doesn't make the issue less problematic.