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ERIC Number: ED178004
Record Type: RIE
Publication Date: 1979
Reference Count: 0
Formula Budgeting and the Financing of Public Higher Education: Panacea or Nemesis for the 1980s? The AIR Professional File No. 3, Fall 1979.
Gross, Francis M.
Formula budgeting in the financing of public higher education is examined. Budget formulas are defined as a means of applying predetermined average cost rates to quantifiable institutional program measures in order to calculate the dollar resource requirements for a future year. Seven characteristics of budget formulas are described: (1) their complexity; (2) their use of base factors; (3) their use of several computational methods; (4) their zero-base approach; (5) their lack of differentiation among institutions; (6) their linear relationships between base factors and resource requirements; and (7) the prevalence of formula budgeting versus formula funding. Its use throughout the United States is reviewed and it is noted that formula budgeting is the most prevalent approach in the South. Problems of formula budgeting are also reviewed, especially as they pertain to the current period of declining enrollments and the use of enrollment-based formulas. It is suggested that continued reliance on budget formulas as they now exist will create problems during the no-growth or declining periods ahead. It is recommended that budget formulas be modified to limit revenue deductions, that the use of historical average costs be eliminated as formula factors, that appropriate enrollment ranges be established for each institution, and that states consider non-formula budget approaches. (SF)
Descriptors: Budgeting, Declining Enrollment, Educational Economics, Educational Finance, Enrollment Rate, Expenditures, Feasibility Studies, Financial Support, Funding Formulas, Futures (of Society), Higher Education, Operating Expenses, Program Budgeting, Public Education, Resource Allocation, Retrenchment, State Aid, State Colleges, State Programs
Association for Institutional Research, 314 Stone Building, Florida State University, Tallahassee, FL 32306
Publication Type: Reports - Evaluative
Education Level: N/A
Authoring Institution: Association for Institutional Research.
Note: Some small print