Date Awarded


Document Type


Degree Name

Doctor of Education (Ed.D.)




The purpose of this study was to determine whether a change in the student-faculty ratio used in Virginia's budgetary formula for its public institutions had any impact on (1) the level of instructional costs per student unit as well as any predictors that explained its variance, (2) the level of institutional complexity, and (3) the level of financial stability. It was designed to determine if two educational sectors differed in their responses to revenue distress conditions.;HEGIS financial and salary data were compiled for all public institutions in the Commonwealth of Virginia. They were analyzed together as well as by two sectors: (1) senior-level institutions and (2) community colleges. Pooled time-series cross-sectional multiple regression analysis was used to examine dependent variables' changes after the budgetary adjustments. Stepwise multiple regression was chosen to identify significant predictors of per unit costs. Institutional financial stability levels by year were assessed from a composite score based upon a series of financial and nonfinancial indicators.;No significant difference in per unit costs was found after the budgetary adjustment. The significant predictors of this dependent variable for all institutions were: (1) the instructional expenditure proportion, (2) the staffing ratio, (3) the level of institutional complexity, (4) the amount of educational and general revenues, (5) the number of programs, (6) the interaction of time and sector, and (7) the interaction of time and complexity. In addition, four predictors interacted with time in the senior-level institutions sector. These institutions did not immediately reduce their complexity levels but most were able to preserve their stability despite the type of response to revenue distress.;It was concluded that institutions could not immediately reduce their per unit costs after a budget formula adjustment. Fixed costs and institutional inertia delayed effective responses. Much of the decrease in per unit costs was achieved through salary distress rather than a reallocation of resources among programs which could lead to impaired educational quality.;Further study is needed to evaluate the long-range effect on institutional financial stability and on the achievement of valued objectives from institutions' responses to revenue distress before developing other policy changes.



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