In 1980, the Ohio Board of Regents (OBR) proposed several alternative funding formulas for the state's public-assisted institutions in anticipation of enrollment declines. Two alternatives, involving subsidy ceilings and free competition for students, were dismissed in favor of a third alternative involving a system of voluntary restraints in which Ohio public institutions would plan to maintain or decrease their enrollments in an orderly manner under several mandated restrictions. This alternative also included a modification of the existing enrollment-driven subsidy model that would permit money earned by growing institutions to be transferred to those in decline. As part of the review of these alternatives, enrollment and subsidy data were analyzed, revealing that: (1) there was a strong correlation between enrollment growth and the cost of education as measured by total institutional expenditures per full-time equivalent student (FTE); (2) growing institutions were on the whole operating at a lower instructional subsidy per FTE than declining institutions; and (3) there was already diversity in educational subsidies per FTE within the system with apportionments per FTE for universities ranging from $1,710 to $4,211, for community colleges from $1,819 to $2,641, and for technical colleges from $1,772 to $3,976. While it is difficult for the OBR to allow declining institutions to experience destructive financial problems, an argument for allowing the free market approach to prevail, at least in a modified form, could be made on the basis that growing institutions need more money while declining ones need less; and that if an institution's revenue fluctuates with enrollment, it will likely work to operate in a manner similar to profit-making corporations and be more responsive to student needs and more efficient and accountable in terms of staffing. An enrollment-driven state support system which includes a relief loan fund for institutions which face financial exigency is recommended. (RO)