Strategies and adaptations for adjusting to changes in sources of revenues at selected community colleges

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Strategies and adaptations for adjusting to changes in sources of revenues at selected community colleges
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Table of Contents
    Title Page
        Page i
        Page ii
    Dedication
        Page iii
    Acknowledgement
        Page iv
    Table of Contents
        Page v
        Page vi
    Abstract
        Page vii
        Page viii
    Chapter 1. Introduction
        Page 1
        Page 2
        Page 3
        Page 4
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    Chapter 2. Review of related literature
        Page 17
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    Chapter 3. Methodology
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    Chapter 4. Results
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    Chapter 5. Summary, conclusions, implications, guidelines, and recommendations for further study
        Page 118
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    References
        Page 134
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    Appendix A. Member institutions in the league for innovation in the community college
        Page 143
        Page 144
    Appendix B. Community college survey of effective strategies
        Page 145
        Page 146
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    Appendix C. Community college interview guide used with interviewees
        Page 148
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    Appendix D. Field interview guide used at field studies
        Page 152
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    Biographical sketch
        Page 155
        Page 156
        Page 157
Full Text












STRATEGIES AND ADAPTATIONS FOR ADJUSTING TO
CHANGES IN SOURCES OF REVENUES AT
SELECTED COMMUNITY COLLEGES









By

NANCY J. VADER


A DISSERTATION IS PRESENTED TO THE GRADUATE SCHOOL
OF THE UNIVERSITY OF FLORIDA IN
PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE DEGREE OF DOCTOR OF PHILOSOPHY

UNIVERSITY OF FLORIDA


1985

































Copyright 1985

by
Nancy J. Vader



































To my mother and father,
Donald and Jennie Vader.













ACKNOWLEDGEMENTS

I am greatly indebted to the many persons who have assisted me with

this study. First of all, I would like to acknowledge my chairman, Dr.

James L. Wattenbarger, and my committee members, Dr. Harold Riker and

Dr. C. Arthur Sandeen, for their patience, assistance, and recom-

mendations. Their helpful expertise and encouragement made this study

enjoyable as well as extremely worthwhile.

This study would not have been possible without the support and

participation from the institutions in the League for Innovation in the

Community College. In particular, I would like to thank Terry O'Banion,

Tal Mullis, and Brenda Beckman for their help, enthusiasm, and friendship.

A very sincere thank you is extended to Donald J. Carlyon, President of

Delta College, for his continued support and especially for his example

of commitment to the community college mission.

My family and friends have also provided me with a very special

source of support throughout the dissertation stages. My friends and

colleagues--Shirley Hekemian, Lesley Hogan, Lettie Molter, Gene Packwood,

David Smith, and Portia Taylor--have provided me with continual encour-

agement. I would especially like to thank two friends--Nancy Laughner

and Maryann Schiller--who have always been there when I needed them.

Most of all, I thank John McCormick for giving me the inspiration to

finish.












TABLE OF CONTENTS


Page

ACKNOWLEDGEMENTS . . . ... . . . . . . . . iv

ABSTRACT . . . . . . . . . . . . . vii

CHAPTER

I. INTRODUCTION . . . . . . . . . . . 1

Background and Rationale . . . . . . . 1
The Problem . . . . . . . . . . . 7
Definition of Terms . . . . . . . . .. 10
Justification for the Study ... ..... ..... 13
Procedures . . . . . . . . . . . 14
Organization of the Remainder of the Study . .. 16

II. REVIEW OF RELATED LITERATURES . . . . . . . 17

Open Systems Theory . . . . .. . . . .. 17
Changes in Sources of Revenue . . . . . . 24
Reactions to Changes in Revenues . . . . . 32
Summary . . . . . . . . . . . . 42

III. METHODOLOGY . . . . . . . . . . . 47

Research Population . . . . . . . . . 48
Sample Selection . . . . . . . . . 48
Instrument Development . . . . . . . .. 53
Data Collection . . . . . . .. . . . 55
Analysis of the Data . . . .. . . . . .. 58

IV. RESULTS . ..... . . .. . . . . . 62

Results of the Survey . . .. . . . . . 62
Field Studies and Interviews . . . . . . 74
Santa Fe Community College . . . . . . . 75
Miami-Dade Community Colege . . .. .. ............. 87
Delta College . . . . . . . . . . 96
Overall Interview and Field Study Results . . .. 106
Discussion of the Results . . .. . . . 110









Page


V. SUMMARY, CONCLUSIONS, IMPLICATIONS, GUIDELINES, AND
RECOMMENDATIONS FOR FURTHER STUDY . . . . . . 118

Summary . . . . . . . . . . . . 118
Conclusions . . . . . . . . . . . 122
Implications . . . . . . . . . . 126
Strategies . . . . . . . . . . . 129
Recommendation for Further Study . . . . . 132

REFERENCES . . . . . . . . . . . . . . 134

APPENDIX

A MEMBER INSTITUTIONS IN THE LEAGUE FOR INNOVATION IN THE
COMMUNITY COLLEGE . .. .. . . . . ... 143

B COMMUNITY COLLEGE SURVEY OF EFFECTIVE STRATEGIES . . 145

C COMMUNITY COLLEGE INTERVIEW GUIDE USED WITH INTERVIEWEES 148

D FIELD INTERVIEW GUIDE USED AT FIELD STUDIES . . . 152

BIOGRAPHICAL SKETCH . . . . . . . ...... 155












Abstract of Dissertation Presented to the Graduate School
of the University of Florida in Partial Fulfillment of the Requirements
for the Degree of Doctor of Philosophy


STRATEGIES AND ADAPTATIONS FOR ADJUSTING TO
CHANGES IN SOURCES OF REVENUES AT
SELECTED COMMUNITY COLLEGES

by

Nancy J. Vader

August, 1985


Chairman: Dr. James L. Wattenbarger
Major Department: Educational Leadership


The purpose of this study was to examine the nature and extent of

changes in sources of revenues at community colleges and to identify

the strategies and adaptations implemented by selected community

colleges in order to minimize the problems related to the revenue

changes. The population for the study consisted of the 18 community

college districts that are members of the League for Innovation in the

Community College. Thirty-three personal interviews were conducted at

three community colleges that were selected from the population for in-

depth field study. In addition to the field studies, a survey was

administered to the chief executive officers at all 18 of the community

colleges. The survey responses, based on a 100% return rate, supported

the actual practices as discovered through the field studies.










The data obtained from the survey and field studies were also used

to either confirm or not confirm two postulates and eight propositions

generated from a review of the related literature; nine of the ten

postulates and propositions were confirmed.

The study confirmed a common assumption regarding the nature of

changes in sources of revenues at community colleges: A lesser propor-

tion of total revenues is coming from state funding sources and a

greater proportion of revenues is being made up of tuition and fees.

The study did not confirm that the approaches community colleges are

utilizing to adjust to the revenue changes are uniform in substance or

effectiveness, but rather that the strategies utilized and subsequent

perceptions and degrees of effectiveness appear to be influenced by

several factors. Some of the influencial factors included the leadership

style of the chief executive officer, the institutional climate, and

the degree of flexibility in raising revenues from other sources.

Further, the study demonstrated that there is no one best way or set of

generalizable guidelines to adjust to problems related to revenue

changes, but rather that a variety of different responses and strategies

may be most suitable for different institutions.

In addition to the conclusions of the study, a set of strategies

were developed based on the results of the study which may prove useful

to community colleges encountering problems similar to the problems

related to revenue changes encountered by the community colleges

involved in the study.


viii














CHAPTER I
INTRODUCTION


Background and Rationale


Beginning in the 1970s, the majority of community colleges, as

well as other higher educational systems, began experiencing a gradual

erosion of their financial position. Major problems of the 1970s and

1980s have been caused by inflation and the accompanying increases in

costs. One of the major problems facing higher education during the

1980s will be reacting to changes in sources of revenues. Community

colleges in particular will be faced with major decisions regarding

adjustments to revenue changes which affect budgeting, programming, and

enrollment policies. In addition, these changes in priority emphases

will reflect changes in institutional mission and goals. Connolly

(1981) characterized the scenario as "a mild form of institutional

middle age setting in," and further asserted:

No longer is there talk of "a new community college
opening every week" or proud boasts of ever-increasing
enrollments. Declining enrollments have meant declining
income for some institutions, and stable enrollments
have produced financial atrophy elsewhere. (p. 35)

Clearly, research aimed at identifying institutional strategies that

have been utilized at community colleges in order to minimize the

problems attributed to changes in sources of revenues is timely as well

as necessary.

The history of community college finance illustrates the dramatic

shift in sources of revenue from primarily local support to increasing

1






2

percentages of state support. In 1929, state support to community

colleges provided only 3 percent of current operating funds, while

local support provided 46 percent (Wattenbarger & Bibby, 1981). By

1969 these distributions had shifted to 51 percent for state support

and 21 percent for local support. A 1983 study (Wattenbarger & Heck,

1983) found that in 1982 state support had risen to 65 percent and

local support had dwindled to 10.9 percent of current operating funds

for community colleges.

In general, however, state appropriations to community colleges

have increased in absolute dollars in most states each year (Martorana,

Wattenbarger, & Smutz, 1978). Despite this fact, the trend has been

for the average percentage growth rate in appropriations to decrease

over the same period. According to Martorana et al. (1978), the

following changes have occurred in community college appropriations:

The average percentage increase was 20.1 in 1974-75,
21.9 in 1975-76, and only 12.1 in 1977.78. This
decrease in the average percentage growth rate may not
only mean that community college systems are not
expanding but also that they may be hard pressed to
maintain current services since increased costs caused
by inflation and utilities costs are large in all
instances. (p. 8)

In addition, a 1983 report (Magarrell) found that while state spending

in fiscal year 1983 rose approximately 6 percent nationwide, it was

the smallest one-year increase in state funds for colleges and univer-

sities in more than 20 years.

The situation created by the changes and decreases in resources can

be attributed to primarily two factors, according to Wattenbarger (1978).

The factors include the following:

First, a reduced or static enrollment, which provides
less money to the college; second, a reduced real
income, resulting from inflation, increased costs of







operation, and/or increased costs of basic items such
as utilities, maintenance, and interest charges. (p. 61)

Even in instances where some institutions have not experienced decreases

in amounts of dollars appropriated, a decline in the real income of the

institution has occurred.

Support for equality of educational opportunity via the comprehen-

sive community college open-door philosophy has been strongly documented

by historical evidence and by noted community college authorities (Bogue,

1950; Gleazer, 1980; Koos, 1970). Ferrin (1971) cited the use of inno-

vative and nontraditional methods by community colleges to overcome

traditional barriers to higher education and to strengthen the open-

door philosophy:

The financial barrier was reduced by charging little or
no tuition, the academic barrier was reduced by open
door admissions policies, and the geographic barrier
was reduced by locating colleges in close proximity to
populated areas. (p. 31)

The original philosophy and commitment of the community college have

been threatened due to the impact of changes in revenues. Gleazer's

contention that community colleges have attempted to be "all things to

all people" (1980, p. 7) is being questioned in an era of changes in

funding and increases in demands for accountability. Cosand (1983)

questioned whether or not the community college will even continue to

function as a "people's college" (p. 24) and maintain a comprehensive

mission:

The colleges were given the autonomy to provide a
diverse educational program of quality for the youth
and adults of the community to be served. This provided
an educational opportunity at minimal or no cost for
all the people who were eligible to enroll regardless
of their age, race, affluence, sex, or educational
background. The community college was indeed a "people's
college." Will this philosophy and service continue?
(p. 24)






4

In light of the impact of changes in revenues at community colleges,

administrators must examine the relationship between institutional

aspirations and available resources to carry out institutional goals.

Carefully considered and skillfully planned responses to revenue

changes must attempt to uphold the institutional mission while becoming

a part of the overall planning process of the institution. Kenneth

Boulding (1975) has warned that unless educational administrators

develop and utilize the skills necessary to address the challenge of

changing revenues, they may find themselves in situations they are

unprepared to meet. Boulding made the following observation:

Present educational administrators have grown in a
period of rapid growth and have been selected presumably
because they are well adjusted to growth and capable of
dealing with it. Perhaps the most serious immediate
problem facing education is that many skills that were
highly desirable during the last thirty years may no
longer be needed in the next thirty years. (p. 5)

A study of financial statistics for community colleges was under-

taken in 1983 by the National Association of College and University

Business Officers (NACUBO) to ascertain what actually has happened to

sources of fund revenues over the past five years. A review of the

details of the report indicated that although the dollars from state

appropriations have increased during the past four years, the percentage

of these revenues has declined, and the decline represents the lost of

substantial funds (Jenkins, 1984). Further examination of the NACUBO

report shows that some colleges have been successful in expanding their

revenue bases as a response to decreasing percentages of state funds

and have made substantial increases in the variety of categories and

amounts of funds from other sources. Therefore, the purpose of this

study (i. e., to examine how some community colleges responded to the







problems created by revenue changes) proves invaluable by identifying

potentially effective strategies useful to similar institutions.

The need for a financial study of this nature is also evident in a

review of relevant literature. According to a 1982 doctoral survey

(Yopp, 1982), community college presidents identified the most trouble-

some issues of concern as money, finances, and declining resources, and

additionally expected the effects of inflation and resource development/

grants/other external funding to consume a greater percentage of their

resources during the 1980s. Further justification stems from the need

to link concepts of organizational theory regarding managerial effec-

tiveness to identification and development of effective administrative

strategies for managing changes in revenues in the community college

(Cameron, 1978; Goodman & Pennings, 1977; Quinn & Cameron, 1983;

Whetten, 1980). Martorana and Kuhns (1975) depicted the community

college as an open system capable of surviving through adaptation based

on feedback from the external environment. Studies in the organiza-

tional systems literature (Griffiths, 1964; Quinn & Cameron, 1983) have

found that open, living systems strive to maintain a steady state in

which all counteracting influences are balanced. The theoretical basis

of this study will focus on the tendency of community colleges, viewed

as open, living systems, to use environmental feedback to strive

towards maintaining the mission of the comprehensive community college

while responding to changes in sources of revenues.

The historical development of community colleges provides an addi-

tional justification for a study in this area. Since their development

in the early 1900s, community colleges have been viewed as innovative

leaders in democratizing educational opportunity and providing equal







access to education. Given this democratizing mission (Koos, 1925) it

may be appropriate to assume that community colleges will continue to

provide effective leadership when faced with significant changes in

revenues. There is a continued need for a study which represents a

potential contribution to the field of educational administration

through the development of guidelines for strategies that will prove

useful to community college administrators when faced with revenue

changes.

In summary, the tension experienced by community colleges between

mission and available resources has been summarized by Richardson and

Leslie (1980) in The Impossible Dream? Financing Community Colleges

Evolving Mission? The legitimacy and potential of the community

college mission in light of changes in resources were discussed in this

monograph:

The community college concept has encompassed a dream
of educational equality for all. Preventing a noble
dream from becoming an impossible dream in the environ-
ment of the eighties will require the best efforts of
policy makers and educators working together to reduce
the widening gap between missions and resources.
(p. 45)

The lack of a clear understanding regarding the impact of responses to

changes in revenues on institutional commitment to mission, planning,

and innovation has left a gap in community college development. This

research will attempt to fill in that gap through the examination of

institutional adaptations to changes in sources of revenue at selected

community colleges.

This study analyzed the nature of changes in revenues and the

impact of institutional adaptations by community colleges to the

changes in revenues. General and individual financial statistics of








selected community colleges were analyzed, as well as data regarding

perceptions of the effectiveness of certain institutional strategies.

An in-depth investigation of specific institutional adaptations and

strategies to changes in revenues at three selected community colleges

formed both the focus of the research and the foundation for the

development of guidelines for adjusting to revenue changes at community

colleges.


The Problem

Statement of the Problem

The problem of this study was to determine which strategies and

adaptations have been utilized at selected community colleges in order

to minimize the problems attributed to changes imposed by the external

environment (i.e., changes in sources of revenues).

Specifically, answers were sought to the following research

questions:

1. What environmental changes (i.e., changes in sources of revenue)

have occurred at the selected community colleges for the period from

1979-80 through 1983-84?

2. What are the institutional adaptations to the changes at the

selected community colleges?

3. Based on a review of relevant literature and the perceptions of

community college presidents, what are the institutional strategies for

adaptation that are considered effective during periods of changes in

sources of revenues at community colleges?

4. What are the implications derived from the data for future efforts

by institutions experiencing similar changes?







Delimitations and Limitations

This study was confined to the 18 community colleges that are

members of the League for Innovation in the Community College (see

Appendix A). Three community colleges were selected from the identified

population for in-depth field study based primarily on the greatest

degree of change in current operating revenue from 1979 through 1982.

Additional criteria for the selection of the three colleges for field

study included willingness to participate, size of the college, size

of the service area, geographic location, and comprehensiveness of

mission. An attempt was made to select the three colleges that exhibited

most of the selection criteria. The financial data were confined to

the financial data collected by the National Association of College and

University Business Officers (NACUBO). The field study data collected

included the NACUBO data as well as state and institutional reports

from the selected community colleges.

A survey instrument was developed by the researcher based on the

literature review. The purpose of the survey was to assess the percep-

tions of the chief executive officers of the League community colleges

regarding the effectiveness of specific strategies a community college

might implement when experiencing changes in sources of revenues (see

Appendix B). The in-depth institutional field studies were subject to

the limitations of case study methodolgy and interviewing using a

researcher-developed interview guide (see Appendix C). Limitations

included the nature of the type of information desired, the specified

concepts involved in the study, the method of interviewing, and the

characteristics of the interviewer (Gorden, 1969, p. 87).








Analysis of the comparative financial data was confined to the use

of descriptive statistics for the purpose of identifying the community

colleges with the greatest changes in revenues. The survey data were

analyzed using rank orders, frequency distributions, and measures of

central tendency displayed in tabular form and accompanied by a narrative

summary. The analysis of the field study data was confined to verifi-

cation, inspection, and matrix and narrative summaries.

The descriptive, ex post facto nature of the study constituted a

strong research approach, even though effects were not manipulated as

in true experimental methods (Selgas, 1976). The design limited the

extent of cause-and-effect statements regarding institutional strategies

and changes in revenues, and also limited the external validity of the

study. Despite these inherent limitations, the findings of this inves-

tigation have significance to community colleges similar to the selected

community colleges in the study in clientele, purpose, structure, and

services offered. This congruence enables community colleges of a

similar nature to take necessary corrective action based on the guide-

lines that were developed as an outcome of the study.

Assumptions

The following assumptions are present in this study:

1. The procedures achieved the purposes of the study.

2. The instruments used yielded valid and reliable data.

3. Community colleges made adaptations and developed strategies to

counteract the effects of changes in revenues.

4. The review of the literature and institutional perceptions by the

chief executive officers at selected community colleges provided a







realistic basis for determining the institutional adaptations to

changes in revenues perceived as most effective.


Definitions of Terms

Changes in Revenues

Changes in revenues were operationally defined as an increase or

decrease of at least one standard deviation or more from the mean in

one or more categories of revenues for the years 1979-80 through 1982-
83 (based on the NACUBO reports for the individual institutions who

were members of the League for Innovation).

Comprehensive Community College (Public)

A comprehensive community college is an institution supported by

public funds and governed by a publicly appointed board which offers

courses and programs limited to the first two years of postsecondary

education. Medsker and Tillery (1971) defined the comprehensive

community college as

encompassing the six main functions of preparation for
advanced study, career education, guidance, develop-
mental education, general education, and community
service. The comprehensive community college is
expected to provide a "program for all" with the
fundamental purpose of equalizing education opportunity.
(p. 53)

Dynamic Equilibrium

Dynamic equilibrium is defined as a condition in which all counter-

acting influences are cancelled, resulting in a balanced, stable

system.

Effectiveness

Effectiveness is an inherently subjective perception, generally

relative to the goals of an institution, regarding how well an institu-

tion maintains its missions and achieves its goals. The major criteria






11
for effectiveness for the purposes of this study are based on a combina-

tion of perceptual data, objective data, and normative definitions from

the literature.

Feedback

Feedback is "the input from the environment to the system telling

it how it is doing as a result of its output to the environment"

(Lonsdale, 1964, p. 175).

Full-Time Equivalent (FTE) Enrollment

FTE enrollment is the number of students enrolled at a community

college consisting of full-time equivalent of all credit hours taken by

full-time, part-time, and non-credit students (NACUBO, 1984, p. 13).

Guidelines

Guidelines are considerations or steps to be followed when develop-

ing institutional responses to changes in revenues.

Institutional Adaptations and Strategies

Institutional adaptations and strategies are operationally defined

as the responses to changing revenues identified in the major studies

found in the review of relevant literature. Probable strategies to

be included are reexamination of institutional mission and goals,

increased productivity, identification of new sources of revenues, and

changes in faculty and staff compositions (Alfred, 1978; Deutsch, 1983;

Wattenbarger, 1978; Whetten, 1981).

League for Innovation in the Community College

The League for Innovation in the Community College is an institu-

tional membership organization comprised of 18 community colleges in the

United States. Membership is by invitation only. Represented in the

League membership are multi-campus districts, single-campus districts,







urban districts, and rural districts of varying sizes. The member

community colleges are noted for innovation among community colleges in

the United States.

Mission

The mission of a higher educational institution is, according to

Caruther and Lott (1981), a statement or report of "what the institution

has been (its heritage), what it shall become (its destiny), and what it

does not believe itself to be" (p. 25). The mission of an institution

is usually a broad statement of the fundamental purpose, philosophy,

clientele served, and services of the college or university.

Revenues

Revenues are operationally defined as the total current fund

balances of an institution, excluding auxiliaries. Current fund

revenues include tuition and fees; appropriations (federal, state,

and local); gifts, grants, and contracts (federal, state, local, and

private); and other sources (NACUBO, 1981). Further, definition of

current fund revenues used by the National Center for Educational

Statistics (1982) is as follows:

Current fund revenues include all unrestricted gifts
and other unrestricted revenues earned during the
fiscal year and restricted current funds to the extent
that such funds were expended for current operating
purposes. (Form 2300-4, p. 5)

State and Local Appropriations

State and local appropriations are government collected revenues

received from or made available to the institution through acts of a

legislative body, except grants or contracts, for the purposes of

meeting current operating expenses. Sources of state and local appro-

priations are state and local revenues.







System

A system is "a set of elements standing in interaction" (von

Bertalanffy, 1956, p. 3). Operationally, the community college is the

system for the purpose of this study.


Justification for the Study

Justification for the study stems from the need to provide a link

between the theory regarding community colleges as open systems capable

of adapting to changes in the environment and the effectiveness of

specific strategies employed by selected community colleges to changes

in sources of revenues. A study of how selected community colleges

maintain dynamic equilibrium by adapting to feedback from the environ-

ment will no doubt prove useful to many other community colleges that

are attempting to uphold the community college mission while responding

to changes in revenues.

Several community college authorities have suggested that the

qualities of the community college that denote its individuality (i.e.,

flexibility, innovativeness, and responsiveness to the community),

further justify a study of how community colleges have responded when

faced with changes in revenues (Carnegie Foundation, 1975; Gleazer,

1980; Vaughn, 1983). The Carnegie Foundation for the Advancement of

Teaching (1975) viewed the strength of the mission of the community

college as a valuable asset in developing the flexibility and overall

strategy to respond effectively to revenue changes. The recommendation

presented by the Foundation in More Than Survival (1975) stated that

community colleges should do more of what they are now
doing. They draw their strength, direction, and
identify from the local community they serve. Their








strength is their role as a community resource and this
can be enlarged by developing new programs to meet
urgent needs, such as training programs for police,
small business, etc. (p. 136)

A final justification for this study is that the study fits into

current research efforts and needs identified by NACUBO and the National

Center for Higher Education Management Systems and has received support

from member institutions in the League for Innovation. In addition,

institutions currently experiencing revenue changes (such as Coast

Community College in California and Lane Community College in Orgeon)

have indicated eagerness to learn and benefit from the experiences of

other colleges that have adapted to changing revenue conditions (such

as Delta College in Michigan and Miami-Dade Community College in

Florida). A valuable outcome of this study was the development of

guidelines designed to provide practitioners in the field with a

framework adapting to changes in revenues.


Procedures

Design of the Study

The study, descriptive and ex post facto in nature, incorporated

the research approach of triangulation (Denzin, 1978; Patton, 1980).

Triangulation, or the combination of methodologies in the study of the

same phenomena or programs, incorporates the use of both quantitative

and qualitative data and methodologies. Denzin (1978) explained the

logic of triangulation as being based on the premise that

no single method ever adequately solves the problem of
rival causal factors. . Because each method reveals
different aspects of empirical reality, multiple methods
of observations must be employed. This is termed tri-
angulation. I now offer a final methodological rule
the principle that multiple methods should be used in
every investigation. (p. 28)







The study determined the nature and impact of changes in revenues

at selected community colleges and examined the institutional adapta-

tions and strategies employed by the institutions in order to minimize

the problems attributed to the changes. The investigation included the

following major procedures:

1. A review of relevant literature, including the identification of

institutional adaptations and strategies for dealing with changes in

revenues perceived as most effective.

2. The development of a survey instrument used to assess perceptions

regarding the effectiveness of specific institutional adaptations to

changes in revenues at the selected community colleges, including pilot

tests and subsequent revisions.

3. The administration of the survey to the chief executive officers at

all 18 of the community colleges in the League for Innovation.

4. The securing of permission for the release of the individual

institutional NACUBO financial data from the participating League

colleges.

5. The collection and analysis of the comparative and individual

financial data from NACUBO. The analysis of the financial data provided

part of the information needed to identify the three community colleges

for further in-depth study.

6. The selection of three community colleges for the in-depth field

studies. Criteria for the selection of the colleges included the

degree of changes in sources of revenues, the size of the college, the

size of the service area, the comprehensiveness of mission, the geo-

graphic location, and the willingness of the college to participate.

7. The requests to the three community colleges selected for








participation in the study and subsequent requests for specific

institutional documents from the college, such as the college catalog,

self-study reports, institutional publications, and budget reports.

8. The development of an interview instrument for the field studies,

two pilot field tests at two community colleges, and subsequent revi-

sions of the interview instrument.

9. The in-depth field studies conducted during on-site visitations to

the three selected community colleges.

10. The analysis and presentation of the data, including the development

of specific guidelines for institutional adaptations and strategies for

adjusting to changes in revenues at community colleges.

The effect of triangulation, i.e. the use of data from several

sources (Patton, 1980), strengthened the external validity of the study

as well as the guidelines and implications presented for further

research. The findings of the investigation therefore have significance

to many community colleges similar in clientele, purpose, and structure

to the community colleges involved in this study.


Organization of the Remainder of the Study

The study consists of five chapters. Chapter II provides a

review of related literature. Chapter III presents the methodology

and specific procedures used for the study. Chapter IV presents the

results of the survey and field studies. Chapter V provides the

summary and conclusions of the study and presents the guidelines

developed from the analysis of the data.













CHAPTER II
REVIEW OF RELATED LITERATURE


The review of related literature for this study is divided into

two sections. The first section examines the theoretical literature on

open systems in relationship to the problem of the study, that is, the

examination of strategies and adaptations utilized at selected community

colleges in order to minimize the problems attributed to changes in

sources of revenues. The second section examines the nature of and

responses to changes in sources of revenues at community colleges; the

second section is confined to relevant literature and studies published

from 1974 through 1984. The summary of this chapter includes the

theoretical propositions developed from the dominant themes found in

the literature review.


Open Systems Theory

Overview

One of the most prominent developments that has emerged in organiza-

tional theory since the early 1960s is the growing view of organizations

as open systems (Hall, 1977; Kast & Rosenzweig, 1974; Katz & Kahn, 1966).

Open systems theory grew out of the application of general systems theory

to organizational theory. General systems theory, the larger view of

"the dynamic interrelationship of several parts of a larger whole as it

interacts with its environment" (Beer, 1980, p. 76), originated from

the seminal works of Boulding (1956), Miller (1978), and von Bertalanffy

(1956). Miller (1978) defined general systems theory as

17








a set of related definitions, assumptions, and propositions
which deal with reality as an integrated hierarchy of
organizations of matter and energy. (p. 9)

In general, several conceptualizations and classifications of

systems have been used in literature regarding the systems theory of

organizations. They are as follows:

1. Organizations as rational systems (Barnard, 1938; Etzioni, 1964;

Simon, 1950; Taylor, 1911; Taylor, 1947; Weber, 1964); and

2. Organizations as open systems (Boulding, 1956; von Bertalanaffy,

1956; Katz & Kahn, 1966; Miller, 1978; Kast & Rosenzweig, 1979).

The view of an organization as a rational system tends to conceptualize

the organization as a "closed system, separate from its environment and

comprised of stable and easily identified participants" (Scott, 1981,

p. 22). In contrast, the view of an organization by the open systems

theorists is that of

a coalition of shifting interest groups that develops
goals by negotiation; the structure of the coalition,
its activities and its outcomes are strongly influenced
by environmental factors. (Scott, 1981, p. 23)

Kimbrough and Nunnery (1983), in their discussion of systems

theory, contended that a system may be viewed as either open or closed.

They define a closed system as "one with rigid, impermeable boundaries;

as such, there are neither inputs nor outputs--no exchange of matter

and energy with the environment" (p. 298). In contrast, they stated

that "open systems have relatively permeable boundaries. As such, they

receive inputs and receive outputs; energy and matter exchange occurs

between the system and the environment" (p. 298). Most of the current

proponents of the open systems view of organizations stress the








importance of the exchange and interdependence of the system with its

environment (Katz, Kahn & Adams, 1980; Kast & Rosenzweig, 1979; Scott,

1981).

Summarizing the trend in the literature toward open systems theory,

Hoy (1982) stated that "open systems models of organizations began to

supplant closed-systems ones in the 1960s, and, by the late 1970s, the

transition was virtually complete" (p. 7). This transition appearingly

produced a consensus that modern organizations, including educational

ones, are open systems; any analysis of modern-day organizations without

reference to the dynamics of the environment is simply insufficient

(Bidwell, 1979).

Organizations as Open Systems

The view of organizations as open systems that interact constantly

with a dynamic, changing environment is most timely and applicable to

the study of changes in sources of revenues at community colleges. For

instance, Martorana and Kuhns (1975) depicted the community college as

a system that was capable of adaptation based on feedback from the

external environment in order to maintain survival. Therefore, com-

munity colleges, when confronted with a change in sources of revenues,

may respond in manner not only to survive but also to carry out insti-

tutional goals and maintain mission.

Prior to a thorough understanding of the relationship between an

open system and its environment, the characteristics of open systems

known as feedback, dynamic equilibrium, and equifinality need to be

considered. For example, the concepts of feedback and dynamic equilib-

rium are critical to understanding how an organization uses information

and changes from the environment to continually adjust and modify its








subsequent functioning in order to perform effectively and ultimately

survive. Applied to a community college, feedback could be in the form

of decreased state appropriations which in turn may cause the institution

to look to other sources of revenue, such as increasing tuition.

Feedback, which can be either positive or negative, is information

from the internal or external environment regarding the outputs of the

organization. The feedback to the organization is a critical means of

organizational control, particularly if it is of a negative nature.

Negative feedback "indicates that the system is deviating from a

prescribed course and should readjust to a new steady state" (Kast &

Rosenzweig, 1974, p. 7). Whetten (1981) claimed that feedback is infor-

mation which enables the system to adjust in order to "maintain a state

of compatibility between internal operations and environmental con-

ditions, including social norms, regulations, and client needs" (p. 81).

Dynamic equilibrium, the preferred modus operendi for an organi-

zation, is a dynamic state of continuous adaptation to changes in the

environment and internal forces in order to preserve the character of

the system (Kast & Rosenzweig, 1974; Katz & Kahn, 1978). Dynamic

equilibrium involves a continuous flow of material, energy, and infor-

mation which the system utilized to stay on target and continue to

proceed toward its goals.

The concept of equifinality is that final results may be achieved

with different inputs and similar inputs may result in different

conditions. Stated more parsimoniously, the concept of equifinality

suggests that there is no one best way to reach a goal, but rather that

varying inputs, paths, condition, and activities in an organization can

achieve given goals and results. The concept of equifinality opens up






21

a wide range of alternatives for meeting organizational goals (Kimbrough

& Nunnery, 1983). Kast and Rosenzweig (1974) suggested the following

operational application of equifinality to organizations:

The equifinality of social systems has major importance
for the management of complex organizations. The
closed-system cause-and-effect relationship from the
physical sciences would suggest that there is "one best
way" to achieve a given objective. The concept of
equifinality suggests that the manager can utilize a
varying bundle of inputs into the organization, can
transform these in a variety of ways, and can achieve
satisfactory output. Extending this view further
suggests that the management function is not necessarily
one of seeking a rigid optimal solution but rather one
of having available a variety of satisfactory alterna-
tives. (p. 9)

Another tenet of systems theory is that to some degree all organi-

zations depend on the types of relations they develop with the larger

environment for their own survival. No organization is self-sufficient;

"each organization exists in a specific physical, technological, cul-

tural, and social environment to which it must adapt" (Scott, 1981,

p. 17). Wattenbarger, Haynes, and Smith (1982) stated that "according

to systems theory, the external organizations provide the medium in

which an organizational system operates" (p. 4); they described the

external environment as consisting of such things as the available

clientele and working supplies, staff, level of knowledge, other

educational institutions, and the level of support of public opinion

for the organization.

Katz, Kahn and Adams (1980) viewed changes in the organization as

the result of environmental modifications, conditions, and forces.

They claimed that without environmental changes that interfere with the

maintenance and production inputs an organization will not change. The

environment, or world outside the organization, is the driving force







behind organizational changes. In an operational sense, a greater

degree of complexity, instability, and future potential for change in

the environment will lead to an increase in the differentiation,

innovation, and ability of an organization to respond quickly to

environmental changes (Wattenbarger et al., 1982).

A 1982 study of changes affecting community colleges illustrated

how environmental forces can become a threat to the community college

mission and to the open door philosophy (Henderson, 1982). The environ-

mental feedback to the community college identified by Henderson and

others included legislative actions such as reduced funding, changes in

governance/structure, increased demands for accountability and quality,

and limitations on enrollments (Alfred, 1979; Burnsted, 1980; Martorana

& Nespoli, 1978; Marty, 1978). The studies concluded that the environ-

ment in which the community college functions must be known in order to

render responses which facilitate survival and maintain institutional

mission.

Organizational Effectiveness in Higher Education

Cameron (1978) was among the first researchers to address the

actual measurement and prediction of organizational effectiveness in

higher education. In his 1978 doctoral study he demonstrated a need

for considering specific domains and expanding predictive models of

organizational effectiveness. Also, he proposed a more inclusive

definition of organizational effectiveness than relying solely on

organizational goal accomplishment. In subsequent research, Cameron

(1981) identified four domains of organizational effectiveness (i.e.,

academic, morale, external adaptation, and extracurricula domains) as

well as identified characteristics of institutions which were predictive





23

of organizational effectiveness. Implications of the research findings

include the possibility that different models of effectiveness may be

relevant to different types of organizations; and, when viewed as a multi-

domain construct, levels of organizational effectiveness in different

domains may vary significantly within the same organization (pp. 42-

45).

Several models of organizational effectiveness have emerged from

related studies. The majority of the studies concluded that organiza-

tional effectiveness is inherently subjective and the best criteria for

its definition and assessment are relative to the situation and contingent

upon several factors (Cameron & Whetten, 1983; Drucker, 1980; Zammuto,

1982). Zammutto succinctly described the open systems approach to

organizational effectiveness, that is, emphasizing flexibility and

growth in his summary of the changing nature of organizational effec-

tiveness. He stated:

Organizational effectiveness is not a known or constant
quality. . Performance that is effective today is
equally likely to be ineffective tomorrow as preferences
and contraints change. The goal of the effective organ-
ization is, continually, to become effective rather
than be effective. The journey is, in this case, more
important than the destination. (p. 161)

Although there appears to be a void in the literature in relation

to organizational effectiveness in higher education, two additional

studies seem to have relevance to education in general. Gilmartin

(1984), in his longitudinal attempt to compute indicators of institu-

tional viability, developed statistics on nearly all colleges and

universities in the United States. He used objective measures to

identify colleges and universities in distress of some sort, such as

closure, extreme enrollment decline and extreme decline in current fund

revenues and balances. Although the kinds of colleges which frequently








tend to be less viable were identified, his study did not include any

examination of how colleges adapted to distress and what actions were

effective at the colleges that improved in viability.

In contrast to Gilmartin's quantitative study (1984), Chaffee

(1982) incorporated a case study approach to assess recovery from

financial and enrollment decline in small, private, liberal arts

institutions. Chaffee identified several characteristics that were

crucial to the institution's ability to weather the decline and recover

successfully. The characteristics included the leadership ability of

the chief executive officer, a clear and strong sense of organizational

identity and mission, and close attention to constituencies of the

college. In addition, Chaffee attributed the success of the institution

to raise revenues from outside sources to the degree that the institu-

tion possessed the characteristics cited.

In summary, the review of the literature on open systems theory

demonstrated a lack of research on how community colleges have adapted

to environmental changes. Commenting on higher education in general,

Whetten (1981) proposed that educational organizations can enhance

their adaptive potential by utilizing the pressure of environmental

change (i.e., scarcity), to spur innovation and improve organizational

effectiveness. The next section of this chapter will review the

specific studies regarding changes in sources of revenue and subsequent

responses by institutions of higher education.


Changes in Sources of Revenue

Higher Education Overview

During the 1960s, unprecedented growth in both enrollments and

sources of revenue in organizations of higher education generated








considerable preoccupation with growth. The experience of tremendous

growth encouraged the development of a growth psychology, growth-

dependent structures, and growth-contingent funding, particularly in

community colleges. Unfortunately, according to Dresch (1977), this

preoccupation with growth "relieved the education establishment of the

need to devise adaptive mechanisms that did not rely on growth for

their effectiveness" (p. 29).

According to the Carnegie Foundation studies (1975), higher education

has gone through various phases of development and will be experiencing

a period of slow or no growth from 1985 through the year 2000. The

growth phases of higher education development as presented in the

Carnegie Foundation report More Than Survival (1975) are

1636-1870 Slow growth
1870-1880 Fast acceleration of growth
1880-1960 Rapid growth
1960-1970 Fast acceleration of growth
1970-1985 Fast deceleration of growth
1985-2000 Slow growth or not growth (p. 87)

These forecasts of decline in the growth rate of institutions of

higher education have come to fruition in the late 1970s and early

1980s, particularly in four-year college and university enrollments.

Since universities and four-year colleges enroll the majority of the

traditional college-age population group (i.e., 18 through 24 year

olds), the decline in this population group has been reflected in

decreasing numbers at these institutions. Until 1983, community

colleges did not experience the same degree of enrollment decline, with

the exception of a slight enrollment drop in 1978.

In addition to the enrollment decline, community colleges faced

increased competition for students from four-year institutions and







rising costs of educating a diversity of students. In spite of these

trends, Breneman (1983) suggested that public community colleges are

probably most favorable positioned in relation to other sectors of

higher education due to their "relatively low prices, their ability to

serve the adult part-time population, and their flexibility of shifting

program offerings rapidly in response to changing demands" (p. 18).

Although considerable attention has focused on fluctuations in

higher education enrollments, many higher education critics see the

most serious problem as inflation, not enrollment (Alfred, 1982; Astin,

1977; Frances, 1983; Johnson, 1983; Mortimer & Tierney, 1979). In a

review of the past 10 years, Frances (1983) contended that although

inflation is down markedly in the economy as a whole, in higher education

it is hardly down at all (p. 4). Frances cited two major problems

resulting from continued inflation in higher education: one is the

comparatively lower purchasing power of faculty than of workers in

general due to salary increases that were lower than inflation rates;

the other is that increased productivity in higher education has resulted

in educating significantly more students with significantly fewer real

dollars for instruction. Further complicating the problem of inflation

in higher education, according to Frances, is the following trend:

Institutions have faced serious shortfalls in state and
local funding, in most cases because enrollment grew
faster than the real value of funding per student. But
the problem was inflation, not unwillingness of legislatures
to finance higher education. (p. 5)

Purga's 1979 study of the effects of enrollment decline in Florida's

community colleges supported Frances' contentions regarding inflation.

Purga found that during times of inflation, institutions that had not







experienced actual decline may have experienced an effective resource

decline due to the inherent fiscal constraints of inflation.

Inflation has had a direct bearing on sources of revenue to higher

education, resulting in the inability of tax revenues to keep pace with

state and local spending (Alfred, 1982). Specifically, inflation has

had an impact on the three principal sources of community college

revenue, that is, property tax, state appropriations, and tuition and

fees (Lombardi, 1979). Lombardi, in his 1979 study of community

college finance, indicated that the potential for increasing revenue

from traditional sources is bleak, based on numerous failures to

increase local tax levies. The 1978 passage of Proposition 13, a

property tax limitation measure in California, resulted in a dramatic

shift in the primary sources of revenue from the local level to the

state level (Good, 1983). In addition to the shift in sources of

revenue prompted by Proposition 13, the 1984 California legislature

approved the authorization of tuition in the traditionally tuition-free

community colleges in exchange for increased community college support.

In many states, inflation combined with the political and economic

environment has dictated educational policy decisions (Astin, 1977;

Burnsted, 1980; Henderson, 1982). Financial strains on community col-

leges have been created by the increased costs involved in expanding

greater access to a diversity of students with varying levels of ability.

At the same, community colleges have become victims of economic policy

trends to cut operating costs and streamline higher education (Astin,

1977).

Henderson (1982), in his study of Florida's community colleges,

found that the economy has influenced the state legislature to make







decisions and set spending priorities which affected the open door

philosophy of the community colleges. (p. 104). The traditional open

door philosophy embraced by community colleges since the 1960s has begun

to close at some institutions (Watkins, 1982). This is primarily due

to fiscal constraints imposed by legislative cuts in funding, programs

and student aid (Knoell, 1983; Richardson & Leslie, 1980; Vaughn, 1983).

Vaughn (1983), concurring with the major critics, stated that "perhaps
more than any other factor, funding influences the shape of mission"

(p. 14).

In addition, Richardson (1982) cited a shift in the priorities of

public policy from access toward achievement. He maintained that

community colleges are "victims of their own success," stating that the

"explosion of clienteles, services, enrollments, and delivery systems

has not been matched by corresponding commitments of additional dollars

from state, local, or federal sources" (pp. 147-8). Cohen (1983),

elaborating on the effects of the cutbacks in funding and resources,

noted:

More recently the era of declining resources has forced
a redefinition of institutional purpose. The question
now is not how to add but how to drop programs, how to
eliminate curriculums and services. The question is no
longer a new program versus no program; it is which
program to keep, which one to drop. (p. 183)

Clearly, the environment of the 1980s for community colleges is a

dramatically different scenario than that of the growth decade of the

1960s, when resources seemed unlimited and community colleges were

opening at the rate of one per week. Talk of retrenchment and how to

do more with less has replaced grandeur talk of endless growth. In

1983 B. Lamar Johnson, the first executive director for the League for

Innovation in the Community College, stated that "community colleges--






29
and indeed all of higher education--are faced with a financial crisis"

(p. 35). Paul Elsner (1981), Chancellor of Arizona's Maricopa Community

Colleges, claimed that a "tax conscious public and budget conscious

legislators have brought us into a time of retrenchment" (p. 5). Many

leading critics appear to agree with Deustch (1983), who summarized

that "retrenchment is the single most important issue facing higher

education through the year 2000" (p. 41)

Richardson (1982) cited the changed external environment in which
community colleges function as one characterized by a period of scarcity.

He stated the following:

Accustomed to growth, we have attempted to forestall
the inevitable stabilization or even decline of enroll-
ments by seeking new clientele. Many of the new
clientele have problems which make them more expensive
to serve. Public policy makers have not been as
enthusiastic about our pursuit of new clientele as we
have been. Consistently they have refused to provide
us with the additional funds that we have required.
(p. 150).

Studies consistent with the focus of revenue changes at community

colleges have mushroomed since the passage of the tax-limiting

"Proposition 13" in California in 1978. Proposition 13 limited property

taxes, the primary source of community college funding in California,

by almost 60 percent (Jackson, 1981, pp. 152-3; Lombardi, 1979).

Lombardi (1979) reported that community colleges lost 465 million

dollars in property tax receipts due to the passage of Proposition 13.

Despite the buffer provided by some state surpluses, the "Post-Proposi-

tion 13" budget for the California community colleges was 86 percent of

the "Pre-Proposition 13" budget (p. 8). In a related study on tax

limitation issues by Lombardi (1979), the impact of Proposition 13 was

reflected by the failure of 20 local tax levy increases in Illinois.






30

In general, it appeared that by the end of the 1970s the potential for

increasing revenues from the traditional sources was gloomy for community

colleges.

McGuire (1978), in his study of public community college funding in

the United States, surveyed state community college directors to assess

state community college financial conditions. Of the 39 states respond-

ing, state directors in 21 states reported that community college

funding had reached a "stabilized" condition with no appreciable

increase or decrease in financial resources in three years. Of the

remaining 18 states, seven reported a decrease in funding and eleven

reported an increase. McGuire pointed out that even stable funding

constitutes a real cut in an inflationary period, especially if enroll-

ments are increasing as they have been at community colleges.

Further validation of changes in revenue sources is found in a 1982

doctoral study (Sedate, 1982). Sedate examined the current operating

revenue and expenditure patterns of 14 selected community colleges in

Texas. As a group, the Texas community colleges obtained funds to

match enrollment changes and inflation, yet in doing so relied more

upon state funds and less from local sources, especially student

tuition and fees. Several studies conducted by the Institute of Higher

Education at the University of Florida (Wattenbarger & Bibby, 1981;

Wattenbarger & Heck, 1983; Wattenbarger & Starnes, 1976) have also

validated the changes in sources of revenues at community colleges on a

state by state basis as well as incorporating a longitudinal national

comparison. Richardson and Leslie provided a summary of the scenario

of the 1970s in their 1980 monograph on community college funding:

From 1972 to the present, there has been gradual
erosion of the financial position of community colleges,







with no concomitant adjustment of institutional aspira-
tion. The result has been a period of educational
inflation during which programs and services have been
provided to greater numbers of students while the
constant dollars available have often remained essen-
tially stable or, in some instances, declined.
Community colleges have been among the hardest hit in
terms of the adequacy of state appropriations. Those
funded in part by local property taxes have encountered
taxpayer resistance as the decline in the share of the
costs paid by states had to be offset by increased
local dollars. (pp. 43-44)

The latest and perhaps most extensive study regarding trends in

what is happening to sources of revenue at community colleges was

conducted by NACUBO over the period 1976 through 1984. NACUBO surveyed

the business officers in 120 two-year public community colleges in 21

states chosen at random, representative of the total population of

community colleges. The following revenue trends were identified

(Jenkins, 1984):

1. Actual dollars appropriated by state and local governments have

continued to increase substantially.

2. The other source of increase in revenue was in tuition and fees.

3. There was a small decrease in federal grants and contracts.

4. Two other sources which showed increases were endowment income and

private gifts, grants, and contracts.

5. The remaining total of other revenues did not reflect substantial

change. (p. 25)

Although the NACUBO findings identified an actual dollar increase,

the actual percentage of state funds had decreased and was made up by

the substantial increases in tuition and fees and increased local

government funds. In summary, the trends apparent in revenue source

changes at community colleges from the studies reviewed include the

following:








1. Tuition is becoming increasingly important in financing community

colleges, comprising more than 10 percent of most operating budgets

Jenkins, 1984; Richardson & Leslie, 1980; Wattenbarger & Bibby, 1981;

Wattenbarger & Stepp, 1978).

2. Local funds contributing to community college revenues are decreasing

in general as a percent of the total operating budgets of community

colleges (Lombardi, 1979; Richardson & Leslie, 1980; Wattenbarger &

Heck, 1983).

3. State funds, while continuing to increase in dollar amounts, have

decreased as a percent of the total operating budget (Jenkins, 1984).

4. Some community colleges have been successful in expanding their

revenue base through substantial increases in increased sources of

revenue generated through efforts in development and fundraising

activities (Jenkins, 1984; Watkins, 1984b).


Reactions to Changes in Revenues

Four-Year Colleges and Universities

Four year colleges and universities were the first to react to

revenue decline perpetuated by demographic pressures and expenditure

pressures that grew faster than institutional revenues (Breneman, 1983;

Carnegie Foundation, 1975; Mortimer & Tierney, 1979). In many cases of

institutional decline in higher education, management was ill-prepared

to cope with retrenchment. Chaffee (1982), in her study of strategies

used in small private liberal arts colleges, found that in many cases

prior growth of enrollments and institutional revenues were the chief

cause of decline because the growth was planned, financed and managed

poorly, thus undermining productivity. Whetten (1981) supported

Chaffee's finding, contending that due to previous periods of rapid







growth, institutions have not developed the skills nor the mentality

necessary to deal with scarcity. Whetten further proposed that insti-

tutions tend to respond conservatively to decline and do more of what

they are already doing. He attributed this tendency to the conservative

structure of higher education institutions which creates a bias against

changes and innovation, thus perpetuating the status quo (pp. 83-89).

Specifically, studies of reactions to declines in revenue sources

in higher education have concentrated on ways to reduce expenditures

and reallocate resources (Carnegie Foundation, 1975; Heydinger, 1983;

Hyatt, Shulman, & Santiago, 1984; Mayhew, 1980; Mortimer & Tierney,

1979). The Center for the Study of Higher Education at The Pennsylvania

State University (Mortimer & Tierney, 1979) documented the experiences

of three institutions experiencing reductions in revenues: University

of Michigan, University of Pennsylvania and the Pennsylvania State

College System. The two primary strategies employed were changing the

student-faculty ratios and internal reallocations of resources based on

program review. The internal review of programs resulted in faculty re-

ductions and dismissals as a result of specific program discontinuences.

Pfleiger (1980), in his study of the effects of revenue on the

administrative structures in small independent colleges, found that

attempts at increasing revenues were implemented rather than cutbacks

in administrative staff. The presidents surveyed in the study indicated

that the most prevalent techniques for increasing revenues were increas-

ing tuition and fees and developing programs to attract nontraditional,

part-time students. In a similar study focusing primarily on adminis-

trative staff reductions (Abrahamowitz & Rosenfeld, 1978), the most







frequently cited methods for retrenchment were early retirement,

nonreplacement of faculty and staff, and termination of part-time staff.

Chaffee's (1982) study of the effects and responses to enrollment

and revenue decline in small independent four-year schools incorporated

a case study approach. The results of the study of fourteen schools

formed the basis of Chaffee's generalizations regarding the management

of decline. In the institutions that had arrested the decline in

revenue and achieved financial stability and improvement, the following

characteristics were evident, as summarized by Lawrence (1984):

1. The presidents had an obvious ability to explain
the merits of the institution to the public.
2. The presidents were backed by assertive admissions
officers who understood the missions of the college.
3. Marginal rather than major changes were made in
programs.
4. Capital fund campaigns were started and alumni
development efforts were organized.
5. Close attention was paid to market factors and
constituencies who supplied critical resources.
6. Environmental opportunities were seized (i.e.,
via the use of trustees, professionalization of the
management team, public support, and development
efforts).
7. A strong and clear sense of organizational identity
was established and maintained.
8. Major decisions were made on the basis of the
institution's identity and the subsequent budgeting,
programmatic and enrollment policies reflected insti-
tutional mission and goals. (paraphrased, p. 23)

Another significant discovery in Chaffee's study was that in every case

of successful recovery from decline, the schools had replaced the old

administrators (i.e., those who had managed the college during growth

and expansion) with a new management team. Cameron and Whetten (1983)

described the reason for this phenomenon documented by Chaffee:

A new state of organizational development made old
ways of administering ineffective. Administrative
style must change, therefore, or else new administrators








who can manage the demands of a new state of development
must be installed when major institutional transitions
occur. (p. 295)

In two related studies by Cameron (1982; 1983), the orientations of

administrators and their responses to enrollment changes in universities

were examined. Both studies revealed a significant difference in the

strategic emphasis of the administrators in universities declining in

enrollments from administrators with growing or stable enrollments.

The administrators experiencing decline tended to be conservative and

internally focused in their orientation, emphasizing finances, budget-

ing, and fundraising. The administrators with growing enrollments were

characterized by an external orientation, advocating innovative proac-

tive responses and emphasizing public relations, service, and interaction

with external constituencies. Cameron's studies supported the findings

of Chaffee and Whetten, noting that administrators in declining organi-

zations tend to respond with conservatism, and may actually be perpet-

uating the decline by their anachronistic style.
*
The most recent study of strategies to changes in resources at

public colleges and universities examined four universities and one

community college district in three states hit hard by state revenue

shortfalls (Hyatt et al., 1984). The study incorporated a case study

approach to determine the effects of revenue reductions and the specific

institutional responses to the fiscal stress. Hyatt reported that what

actually had occurred at the institutions was reallocation, or, a long-

term approach defined as "a process which distributes resources according

to a plan" (p. 15). The specific factors involved in developing what

was considered to be an effective reallocation process at the institu-

tions were as follows:







1. Faculty and constituent involvement in the reallocation process;

2. Assessment of institutional role and mission;

3. The quality of academic and support programs; and,

4. Assessment of the long-term versus short-term costs and benefits

associated with reallocation.

It should be noted that all of the institutions included in the Hyatt

study viewed retrenchment and reallocation as a generally positive

experience. Some institutions found that the process "improved faculty

and staff understanding of the institution's role and mission and has

helped in setting institutional priorities" (p. 11). In concluding,

Hyatt et al. noted that the process of reallocation had prompted an in-

depth discussion of the long- and short-term implications associated

with the process (pp. 11-12). Also, in order to meet the challenges

facing institutions of higher education in the years ahead, Hyatt et

al. concluded that "reallocation must be made an integral part of

institutional management" (p. 12).

Community Colleges

Community colleges, despite relatively stable enrollments until

1983 (Watkins, 1984a), are facing similar stabilized and changed revenue

conditions as found in four-year institutions. Increased competition

for state dollars (Wattenbarger & Starnes, 1976) as well as for students

(Breneman, 1983) has placed community colleges in an uncomfortable

position. In many instances, community colleges have responded to

worsened revenue conditions amidst demands for increased services and

growing demands for accountability (Alfred, 1978; Henderson, 1982;

Richardson, 1982). Henderson (1978) cited that the most urgently

needed high-cost and innovative programs are generally the first to be







cut at community colleges in times of declining resources (p. 30).

Further, Henderson described the strategies employed to adjust to

declining revenues at community colleges as "a retreat to traditionalism"

(p. 29) precisely when there are renewed demands for new approaches to

serve new clientele.

Studies on strategies used by community colleges to adapt to

changes in revenue began to appear shortly after the passage of Proposi-

tion 13 in California and concurrent tax limitation measures in other

states (Jackson, 1981; Lombardi, 1979; McGuire, 1978). In McGuire's

1978 study of funding conditions in community colleges as reported by

the state directors in 39 states, the most frequently mentioned responses

to decreased and stabilized funding were reported as increasing part-

time faculty, reducing non-instruction expenses, and increasing student/

teacher ratios (p. 19). Wattenbarger (1978) expanded on responses to

reduced resources at community colleges, maintaining that reexamination

of the institutional mission was essential, as well as an institutional

planning process. Proposing an action-oriented approach to reduced

resources, Wattenbarger suggested several responses for administrators

to implement, including

1. Reducing the teaching and administrative staff;

2. Increasing faculty productivity by raising faculty/student ratios;

3. Reducing full-time faculty;

4. Curtailing/consolidating programs;

5. Identifying new sources of funds; and

6. Increasing efficiency and effectiveness through the reorganization

of the management structure.






38
Alfred (1978) reaffirmed Wattenbarger's approach and also recommended

the organization of an aggressive public relations program, increasing

lobbying efforts, using outcome measures to build an effective resource

base, and implementation of a flexible short- and long-term planning

process carried out by the central administration (p. ix, 87).

The responses to revenue decline by 70 community college districts

in California in 1978 were studied by Lombardi (1979). The most

frequent strategies implemented by the community colleges identified by

Lombardi were as follows:

1. Determined program priorities among current programs and made

subsequent program cuts. (The highest priority programs were occupa-

tional and transfer; the lowest priority programs were community

service and non-credit adult education.)

2. Suspended cost-of-living increases.

3. Instituted hiring freezes and cut current fringe benefits.

4. Dropped overload assignments of tenured faculty.

5. Cut the length of administrative contracts.

6. Eliminated and combined courses and programs based on a "zero-

based type of scrutiny" to determine need.

7. Imposed fees such as health and facilities fees.

8. Stopped capital outlay projects.

Breneman and Nelson (1981), in their analysis of community college

financing in the 1980s, suggested three possible approaches for community

colleges. The alternatives they suggested are as follows:

1. Maintain the commitment to the comprehensive mission, giving

academic, occupational, and community service components equal priority.






39

2. Drop the community service component and emphasize the traditional

collegiate function.

3. Emphasize the community service orientation and become community

based learning centers.

Three recent doctoral studies (Charnley & Hungar, 1982; Mehnert,

1982; Yopp, 1982) provided research on revenue changes in community

colleges. Yopp (1982), in a national survey of 827 community and

junior college presidents, found that the most troublesome issue

identified by the presidents centered around finances. The presidents

reported that they expected to generate funds or reduce expenditures at

their institutions by increasing tuition, productivity, funding from

the state, and through the increased use of parttime instructors and

energy conservation practices.

In Mehnert's (1982) study of strategies for community college

retrenchment a historical analysis was used to create a weighted order

of survival strategies. In descendent order, the strategies include

balancing the budget by research, resource analysis, and cost effective-

ness; planning/self-study; maintaining a unique mission; improving

spirit and morale; lowering personnel costs; improving public attitudes;

offering pertinent, quality programs; and collaborating with other

institutions.

In a related doctoral study, Charnley and Hungar (1982) examined

the planning process for resource allocation at Seattle Central Community

College. They developed a planning model to meet the particular

context and environmental conditions for the allocation of declining

resources at the college. In doing so, they identified the key factors

to effective planning and resource allocation as committed, dynamic







executive-leadership and systematic involvement or organizational

members in the planning process.

In addition to the previously cited studies, the literature search

revealed agreement regarding the criteria for effective strategies to

changes in revenues in higher education. Levine (1979), discussing

cutback management in the arena of public management, stressed the

value of involving the affected units or parties in the cutback process

and the disservice of implementing across-the-board cuts:

Sharing the pain of cuts by allocating them across-
the-board to all units may minimize pain, help to
maintain morale, and build a good team spirit in the
organization, but it is not responsible management.
Not every unit in an organization or every agency in a
government contributes equally to the goals, purposes,
and basic functions of that organization or government.
(p. 102)

An additional problem cited by Levine (1979) was that in general "inef-

ficient organizations are less penalized when cuts are taken across-

the-board than are efficient organizations" (pp. 181-2). According to

Levine, this was primarily due to the lack of rewards for conserving

resources in public management.

An example of staff involvement in the priority-setting process and

avoidance of any across-the-board cuts is the institution-wide planning

process implemented by the University of Minnesota (Heydinger, 1983).

The University, caught in a 12% cut in their operational budget in the

1981-83 biennium, responded by using their existing institution-wide

planning process to arrive at a set of specific program priorities for

the system. The process leading up to the final budget decisions

involved faculty and staff, avoided any across-the-board cuts, and

ultimately integrated the academic governance procedures of each

college throughout the entire process.








The State University of New York (SUNY), which has over 60

campuses including community colleges, responded in a similar nature

when faced with a major state budget reduction in 1976 (Shirley, 1982).

One of the four major university centers in the system, SUNY-Albany,

responded to the cutback directives within a long-range planning

perspective. The institution formed a faculty-dominated taskforce

which implemented program review to determine program cuts. The

taskforce rejected across-the-board cuts and focused on program areas

where they had "over-expanded" in the 1960s. The final outcome was the

termination of 18 of the institution's 129 programs. Of the 110

faculty affected by the cuts, 70 faculty were reallocated to high

priority program areas and 38 faculty positions were surrendered to the

State of New York (p. 24). An obvious benefit of the SUNY-Albany

process appeared to be that the short-range budget cuts were perceived

to be consistent with the long-range plan for the campus and significant

involvement by departments was incorporated into the reallocation

process.

Campbell (1982), in his study of 37 campuses responding the finan-

cial difficulty, found common responses which concur with the previous

studies. He cited deferred maintenance, restricted travel, increased

recruitment, upgraded public image, and cutbacks in non-instructional

areas as the most common approaches. Campbell characterized the "most

successful" institutions surveyed:

1. They knew they needed to employ a more effective
use of resources.
2. They had to promote a long-range perspective in
their planning activities.
3. They needed to identify priority programs, and
cut or trim other.








4. They recognized the need to attract and retain
capable managers.
5. They knew they had to improve their fundraising
activities.
6. They needed greater trustee involvement and
more structured faculty and staff participation.
(pp. 15-16)

Overall, the studies regarding how community colleges and other

institutions of higher education have adjusted to changes in revenue

appear to have several themes in common, including the following:

1. The need to incorporate the existing planning process into the

decision-making process regarding the reallocation of resources was

stressed (Heydinger, 1983; Shirley, 1982; Wattenbarger, 1978).

2. Retreating to traditional responses such as deferred maintenance

and across-the-board cuts was viewed as a short-term solution (Henderson,

1978; Levine, 1979; Lombardi, 1979).

3. The most strategic and innovative measures promoted a long-range

approach (Breneman, 1983; Hyatt et al., 1984; Whetten, 1981). These

themes contribute to the development of the theoretical propositions

regarding adjustments to changes in revenues presented in the summary

section of this chapter.


Summary

Development of the Postulates and Propositions

Several recurring themes were present in the studies reviewed, which

led to the development of the following postulated and propositions.

The postulates are suggested and used as the premises related to

reaching conclusions regarding strategies utilized to adjust to changes

in sources of revenues at community colleges. The propositions, which

are suggested to support the postulates, were analyzed in conjunction






43

with the data presented in Chapter IV as to whether they are supported

(confirmed) or not supported (rejected). Further, the degree of con-

firmation or rejection of the postulates and propositions led to the

development of strategies for responding to the problems related to

changes in revenues at community colleges, which will be presented in

Chapter V. The propositions are as follows:

Postulate I

Where there were changes in sources of revenues at community

colleges, they were usually a result of changes in state funding or

fiscal restraints imposed by the state legislature. The results of the

changes, although dollars had actually increased, was that the propor-

tion of dollars from state sources had decreased.

Proposition I-A

Institutions attempted to increase revenues by raising tuition,

increasing fundraising and development efforts, and by making some

activities self-supporting.

Proposition I-B

Institutions attempted to decrease expenditures by implementing

across-the-board cuts, deferring maintenance, and increasing the use of

part-time faculty.

Proposition I-C

Institutions attempted to become more efficient by raising student-

faculty ratios and instituting hiring freezes/nonreplacement of faculty

and staff.

Proposition I-D

Institutions protected the instructional program area by making

little or no changes in it; when changes were made, they were made








according to plan, such as using program review, priorities, planning

data, and incorporating the changes into the long-range goals and plans

of the institution.

Postulate II

The effectiveness of the strategies implemented as a result of

changes in revenues is a function of the characteristics of the community

college and its environment.

Proposition II-A

Assertive leadership of the chief executive officer was crucial to

instilling a clear and strong sense of institutional mission during

periods of changes in sources of revenues.

Proposition II-B

Close attention to constituencies and to the process of faculty and

staff involvement in the priority and decision-setting processes was

crucial to the acceptance of the plans, as well as to the maintenance

of the morale and innovation within the institution.

Proposition II-C

The skills and mindset to deal with changes in revenues were often

lacking due to prior periods of growth; therefore, institutions tended

to respond conservatively, avoid program risk-taking or hard personnel

decisions.

Proposition II-D

Strategies were often limited in scope and application due to the

lack of control of external variables present in the environment (i.e.,

state-set tuition levels, state and local economy, and legislative

policy).








It appears clear from the literature reviewed that the changing

environment permeating higher education has produced new trends in the

sources and amounts of revenue for community colleges. Funds from the

traditional state and local revenue sources to community colleges began

to decline in the 1970s due to inflation and shifts in legislative

priorities (Henderson, 1982). The effects of these changes have

included the development of responses and strategies by community

colleges to adjust to the changes in revenues, often at the expense of

the institutional mission. The funding experience of the 1960s and

1970s created a growth orientation which has dominated the management

of community colleges. This growth orientation became dysfunctional in

the late 1970s, contributing to the lack of data-based recommendations

and strategies regarding the management of an organization experiencing

revenue decline conditions caused by inflation and rising costs.

Whetten (1980) contended that even systems theory, which emphasizes the

need for an institution to adjust to environmental changes, suggests

"that an organization must grow in order to maintain a steady state

relationship with its environment" (p. 579).

In the review of related studies, it was found that changes in

revenues, particularly if they were of a negative nature, were the pri-

mary stimulus for changes in the organization. The changes in the

organizations were usually related to the strategies implemented as a

result of the revenue changes. For instance, when institutions imple-

mented across-the-board cuts there were sometimes changes in the

institutional budgeting processes. Also, at some institutions a review

of institutional missions and goals followed the implementation of

certain strategies, such as cutting back in non-instructional or





46

student service areas. The most prominent themes found in the literature

identified through the development of the postulates and propositions

will guide the analysis of the data in Chapter IV and the development

of the strategies recommended for community colleges experiencing

revenue changes presented in Chapter V.














CHAPTER III
METHODOLOGY


This chapter provides a description of the specific methodology

employed for addressing the research problem, that is, determining which

strategies and adaptations have been utilized in order to minimize the

problems attributed to changes in revenues at community colleges. The

procedures developed and utilized in collecting data for this study are

described and summarized in this chapter. In addition, the logical

relationship between the problem statement and the methodology utilized

for this study is demonstrated through utilization of the research

technique of triangulation, that is, the use of a variety of sources of

data and multiple methods to study the research problem (Denzin, 1978).

The research methodolgy of this study consisted of the following

elements: (a) identification of the research population, (b) selection

of the sample for field study, (c) development of an instrument, (d) col-

lection of data, and (e) analysis of the data. This investigation

began with informal interviews with two administrators at two community

colleges in January, 1984. Both of the community colleges are members

of the League for Innovation in the Community College. One of the

administrators interviewed was a community college president. Each

administrator was asked to describe the degree of change in sources of

institutional revenues for the period 1979 through 1983 at their

institution. If changes had occurred, each administrator was asked to

describe what, if any, problems had been created at the institution







because of the revenue changes. In addition, each administrator was

asked what responses the institution had employed to counteract the

problems and if they perceived the responses to be effective (i.e., to

maintain the mission of the college). The results of the informal

interviews reflected a consensus among the perceptions of these community

college administrators that changes in sources of revenues were creating

problems at community colleges. The findings also revealed differing

perceptions regarding the effectiveness of specific responses to deal

with the situation created by the revenue changes. The findings of the

informal interviews reinforced the need for the study and provided a basis

for the formulation of the survey instrument developed by the researcher.


Research Population

The research population for this study consisted of the 18 community

college districts that are member institutions of the League for Innova-

tion in the Community College (see Appendix A). The League, an educa-

tional consortium noted for national leadership and development in the

community college field, functions specifically to stimulate experimen-

tation and innovation in community colleges. The 18 League member

districts are comprised of 54 public community colleges, represent 13

states, enroll over 850,000 students, and have a combined faculty and

staff of 25,000. Membership in the League is by invitation only; the

current board policy is to limit membership to no more than 18 community

college districts.


Sample Selection

The selection of the sample for this investigation consisted of two

phases. The first phase was the distribution of the researcher-developed






49
survey instrument to the chief executive officers of the entire popula-

tion, that is, at all 18 of the community college districts in the

League for Innovation. The rationale for using this strategy was to

increase the likelihood that the survey data collected were represent-

ative of the entire population of interest. Also, distributing the

survey to the entire population increased the degree of external

validity, or, generalizability, of the study.

The second phase of the sample selection employed a combination of

quantitative and purposeful sample selection techniques in the selection

of three community colleges for in-depth field study. The purpose of

the field studies (i.e., to study in-depth the situation, environment,

and perceptions regarding the effectiveness of the actual responses

employed to adapt to changes in sources of revenues at community

colleges) increased the need for a sample of varied and extreme cases.

In order to identify varied and extreme cases for field study,

data from a national study of community college finance conducted by

the National Association of College and University Business Officers

(NACUBO, 1984) were used. Thirteen League community colleges were

identified as participants in the study for the baseline period of

interest (i.e., 1979 through 1983). The 13 League community colleges

were contacted by the researcher requesting permission for the release

of their individual institutional financial statistics as reported to

NACUBO for the study. Of the total 13 League colleges contacted, all

13, or, 100%, granted permission for the data release by NACUBO to the

researcher. The data were released from NACUBO to the researcher in

June, 1984. The data from NACUBO were limited to financial statistics







for only 10 of the 13 League colleges identified for the period from

1980 through 1983 because of a change in the data processing program

used by NACUBO in 1980 which restricted access to the data.

Descriptive statistics were used in the analysis of the NACUBO data

in order to identify the community colleges with the greatest degree of

change in current operating revenues from 1980 through 1983. The finan-

cial data were interpreted using frequency distributions and measures

of central tendency. The purposes of utilizing frequency distributions

were to identify patterns in the distribution of scores and to identify

the most frequently occurring class of scores (Huck, Cormier, & Bounds,

1974). The identification of the means and standard deviations for the

selected community colleges for the years 1980 through 1983 identified

the institutions with the greatest degree of change in current revenue

categories (i.e., those which deviated more than one standard deviation

from the mean). It should be noted that no attempt was made to rank or

analyze interinstitutional revenue mixes, as comparisons are limited in

use and difficult to make due to the wide range of financing schemes in

different states and localities. Further, the lack of control that

administrators have over the setting of tuition and appropriation

levels makes medians and quartile comparisons of dubious statistical

value. The composite means and standard deviations are presented in

Table 3-1.

In addition to the NACUBO financial data, additional criteria were

employed for the selection of the three community colleges for field

study. The additional criteria included the following:

1. Willingness to participate.

2. The size of the institution, that is, at least one community









Table 3-1
Changes in Current Operating Revenues
1980-81 through 1982-83


Sources of Revenues


Institution

A

B

C

D

E

F

G

H

I

J


Credit Tuition
and Fees

2.8

1.9

-.1

-2.6

3.7

1.0

-3.8

2.6

3.7

.9


State Local
Appropriations Appropriations

-4.1 -2.2

-2.1 n/a

.6 n/a

-4.1 -.9

-4.5 3.7

-4.6 -2.2

5.3 -4.7

-9.7 .5

-1.4 -2.1

-5.0 -1.0


Gifts, Grants & Contracts
Federal State & Local

5.7 -1.2

1.1 .6

4.3 .3

3.1 1.8

1.2 0

5.0 .7

.7 -.7

5.4 3.7

-2.2 2.3

3.2 1.7


Other

-.9

.2

-2.1

-1.1

-4.2

.9

2.6

-1.4

-.9

.1


Total SD from
the mn Tn all
six categories

1

2

3

0

4

3

4

3.5

2

2


Mean of
the category 2.31

Standard deviation 1.23


n=10


4.14

2.4


1.73

1.48


3.2

2.1


1 .92

.95


1.48

1.13


2.45





52

college generating less than a total credit and noncredit enrollment of

8,000 full-time equivalent (FTE) units and at least one community college

generating more than a total credit and noncredit enrollment of 12,000

full-time equivalent (FTE) units.

3. The size of the service area, that is, at least one community

college from a total service area population greater than 250,000 but

less than 500,000 and at least one community college from a total

service area population in excess of 500,000.

4. The geographic location of the institution, that is, at least one

community college from the southern/western region of the United States

and at least one community college from the northeastern/midwest region

of the United States.

5. The comprehensiveness of the mission of the institution, that is,

the scope of the community college mission should encompass the six

functions of transfer preparation, occupational education, developmental

or compensatory education, general education, guidance, and community

service (including adult/continuing education).

The selection procedures combined quantitative data analysis and

purposeful sample selection techniques, using criteria, judgement, and

strategy on the part of the researcher. The three community colleges

selected for in-depth field study met the majority of the selection cri-

teria as well as provided a diversity of institutional characteristics.

Although the problem of small sample size is present in the method

employed, the maximization of variation in case selection increased the

likelihood of greater representativeness and generalizability to other

community colleges. Patton (1980) stated: "While studying one or a

few critical cases does not technically permit broad generalizations to






53

all possible cases, logical generalizations can often be made from the

weight of evidence produced in studying a single, critical case"

(p. 130). Further, increasing the diversity in the sample, although

the sample size remains small, affords the researcher more confidence

in patterns that emerge as common among cases as well as characteristics

that emerge as unique to the different settings (Patton, 1980, p. 102).


Instrument Development

Data for this study were collected by means of two separate re-

searcher-developed instruments. The first instrument was a survey

questionnaire (See Appendix B) developed to assess the perceptions of

the chief executive officers of the 18 League community college districts

as to the effectiveness of specific strategies for adapting to changes

in revenues. A secondary purpose of the survey instrument was to

validate the findings in the literature review and establish standards

against which the theoretical propositions were evaluated in the

analysis of the data. The second instrument developed was an interview

guide (see Appendix C) used to facilitate the data collection of the

perceptions of institutional personnel at the three community colleges

selected for field study.

The survey questionnaire was developed based on the institutional

adaptations to revenue changes found in the review of the literature

and from information obtained from the informal interviews conducted

with administrators at two League community colleges experiencing

changes in sources of revenues. The informal interviews facilitated

the task of developing good objective questions through the adminis-

tration of open-ended forms of the survey questions to a small sample







of subjects representative of the population of interest (Issac &

Michael, 1975).

The survey questionnaire was pilot-tested during a field visit to

two community colleges representative in size, comprehensiveness, and

mission to those community colleges involved in the study. In addition,

several community college personnel reviewed the instrument for clarity

and content validity. Upon subsequent revision of the instrument,

the final draft incorporated a Likert-type ordinal rating scale to

assess the perceptions of the chief executive officers at the 18

League community college districts as to the effectiveness of specific

institutional adaptations and strategies an institution may employ to

deal with revenue changes. The five-point rating scale included a

range from one, signifying not at all effective, to five, signifying

extremely effective. Each interval between the five points on the

scale was assumed to be equal (Tuckman, 1978).

The second instrument developed by the researcher was an interview

guide for the interviews conducted at the three League community col-

leges selected for field study. The questions included in the interview

guide were designed to facilitate answers to the following questions:

1. Based on the revenue changes that have occurred at the institu-

tion, have related changes or problems occurred?

2. Have specific strategies and adaptations been implemented to

counteract the impacts and effects created by the changes in revenues?

If so, what were the strategies and how effective were they perceived

to be?







3. What effect, if any, have the changes in revenues had on the

institution, and how effectively has the institution responded in terms

of maintaining the institutional mission?

4. What are some of the strengths of the institution as well as re-

strictions that have influenced the course of events at the institution?

The interview instrument was pilot-tested over a three day period

consisting of 10 interviews at two community colleges similar in size,

scope, and mission to the League colleges involved in the study. Subse-

quent revisions of the interview instrument incorporated the suggestions

and eliminated the deficiencies revealed in the pilot tests.


Data Collection

The data for this investigation were collected in two phases.

First, the survey instruments were distributed to each of the chief

executive officers of the 18 member districts in the League for Inno-

vation. The distribution of the surveys occurred through a mail-out on

June 6, 1984. A cover letter describing the primary focus of the study

and assuring anonymity was included with the survey. Replies from 14

of the 18 chief executive officers were received by the designated dead-

line of June 15, 1984. Follow-up letters and telephone calls were used

to contact nonresponding subjects after the established return deadline

has passed. The follow-up attempts resulted in securing the remaining

four surveys from the chief executive officers by August 3, 1984.

The total number of responses to the survey instrument was 18 of 18,

or, a 100% return rate. This high rate of return influences both the

external and internal validity of the results, and establishes a






56

greater possibility for generalization among the perceptions regarding

the effectiveness of specific responses to changes in sources of revenues.

Prior to the second phase of the data collection (i.e., field stud-

ies), the chief executive officers of the three institutions selected

for field study were contacted and asked for their consent and coopera-

tion in conducting a study on changes in revenues and their institutional

adaptations to revenue changes. Included in the letter requesting co-

operation was a brief description of the purpose and anticipated outcome

of the study. In addition, concurrent cooperation was received from

the Executive Director of the League for Innovation and from the appro-

priate staff associate at NACUBO.

The second phase of the data collection for this study was conducted

by the researcher during individual site visitations to the three

community colleges selected for in-depth field study. A field study

guide developed by the researcher was used to prepare for the site

visitation and to guide the actual data collection in the field (see

Appendix D). The site visitations lasted from four to five days at

each institution. The majority of meetings and interviews were pre-

scheduled in conjunction with the designated League representative at

the institution. Additional meetings and interviews were scheduled on-

site according to the availability of specific institutional personnel.

Personal interviews were conducted with 11 respondents at each of

the three institutions by the researcher. Interviewee respondents at

each community college included the president, chancellor or chief

executive officer, if available; a provost or executive vice-president;

the chief institutional budget officer; the chief student personnel

services officer; the foundation director; two deans or directors of







instructional programs most directly affected by revenue changes; the

staff development director or dean; the chief institutional planning

officer; and three selected faculty and staff from departments most

directly affected by revenue changes.

Consequently, interviews were accomplished with a total of 33

participants; each interview lasted approximately one hour. Each

interviewee responded to questions posed by the researcher based on the

interview guide (See Appendix C). Responses were recorded by the

researcher in written form; further clarification of responses was

requested when deemed necessary by the researcher. The interviewees

supplemented their verbal responses with documents in many cases, such

as departmental reports, budget memos, and written policies. The

reliability of the interview responses was checked by cross-checking

the intra-institutional responses to certain items as well as cross-

checking the responses with the available documentation. Inter-insti-

tutional reliability was checked by the researcher by comparing the

responses of the same items on the interview guide between institutions.

External validity was increased by the design of the persons selected

to be interviewed, that is, persons in the same or comparable positions

at each institution.

After the interviews and field visitations were completed, the data

were summarized and executive summaries of the data prepared by the

researcher were sent to the League representatives of the involved

institutions for their reaction and feedback. The feedback received

from the League representatives was included in the final analysis of

the field study data in Chapter IV.








Analysis of the Data

Data analysis is the process of bringing order to the data by

organizing the data into patterns, categories, and basic descriptive

units (Patton, 1980). Several approaches to data analysis as well as

to data collection were used in this study. This combination of method-

ologies in the study of the same phenomena is known as triangulation

(Denzin, 1978; Patton, 1980). Triangulation allows the researcher

greater flexibility in the data collection process, such as collecting

data through both qualitative and quantitative methods. Besides the

obvious advantage of the comparability of the data collected, two

additional advantages of this technique that contribute to the verifi-

cation and validation of data analysis are, according to Patton (1980)

(a) checking out the consistency of findings generated by different

data collection methods and (b) checking out the consistency of dif-

ferent sources within the same method.

The analysis of the survey data for this study incorporated the

quantitative techiques of descriptive statistics to identify the insti-

tutional strategies perceived as most effective by the chief executive

officers of the League institutions during periods of changes in

revenues at community colleges. The responses from each individual

survey were keypunched on data processing cards and run on an IBM 360

mainframe computer during August, 1984. The resulting output displayed

the composite data in an item analysis format for each individual

question on the survey. The item analysis included the arithmetic mean

and standard deviation for each survey item; the means and standard

deviations were displayed for both yes and no responses.







The data were interpreted and presented using frequency distribu-

tions, means, standard deviations, and rank order computations. The

data were displayed in tabular format and accompanied by a narrative

summary. The complete results of the survey data analysis are presented

in Chapter IV.

The rank summary of responses was used to establish the criteria

for categories regarding the perceived effectiveness of the survey

responses. The criteria for data inclusion were developed by the

researcher in order to place composite responses in categories of

effectiveness. The standards used to develop the criterion were based

on achieving majority or greater of the number of respondents to each

item on the survey; the decision rules established for the standards

for the means were based on the rating scale identified in the survey

instructions. The decision rules establishing the criteria for data

inclusion were as follows:

1. For inclusion in the category of most effective, the number of

responses must total eight or more and the mean must be equal to or

greater than 3.70.

2. For inclusion in categories of average in effectiveness, the number

of responses must total eight or more and the mean must be between 3.20

and 3.69.

3. For inclusion in the category of least effective, the number of

responses must total eight or more and the mean must be equal to or

less than 3.19.

The results of the survey data analysis were used to check the va-

lidity of the theoretical propositions and to faciliate the development

of guidelines for community colleges when responding to problems related







to changes in revenues. The results of the survey data analysis are

presented in Chapter IV.

The nature of the field study data collected during the in-depth

interviews and document inspection lent itself to analysis in several

ways. The analysis of qualitative data of this nature typically

follows no formal or universal rules. The lack of limitations aligns

well with the nature of the inductive method of qualitative discovery.

For example, Guba (1978) described the "discovery oriented approach" as

minimizing the manipulation of the study setting by the researcher.

Further, Guba (1978) described this approach as lacking prior restraints

on what the outcomes of the research will be, as opposed to the re-

straints present when pure scientific inquiry is conducted.

Prior to the field study data analysis a decision rule was estab-

lished by the researcher as a guide for the inclusion of data from the

interviews. The decision rule was: If 40% or more of the interviewees

gave the same response to an item, the item was included in the overall

summary matrix analysis presented in Chapter IV. This inclusion rule

increased the external validity of the study by allowing only those

responses that nearly met a majority of the responses received from

the interviewees. The internal validity and reliability of the data

were cross-checked through the comparison of interviewee responses.

The data from each individual field study were analyzed and presented

for each institution in a case study format. In addition, the overall

data from all three institutions were presented in tabular and matrix

formats accompanied by a descriptive narrative.

The purposes of classifying the institutional data in case study

format were to identify patterns and themes within a particular setting






61

and across cases. The analysis organized the data by specific cases of

each institution, thus permitting in-depth study of each case. Included

in the case study data for each institution were the interview data,

the documentary data, the observational data, and general impressions

and statements of the researcher and others regarding the case. The

case study analysis incorporated an inductive approach, allowing rela-

tionships between variables to emerge from the analysis process itself.

The complete case studies, matrices, and descriptive narratives are

presented in Chapter IV.














CHAPTER IV
RESULTS


This study attempted to determine the nature of changes in sources

of revenues at community colleges, the strategies and adaptations that

have been utilized at selected community colleges in order to minimize

the problems associated with the changes, and which strategies were

perceived as effective by the chief executive officers of the selected

community colleges. The results of the study were determined by as-

sessing the perceptions of the chief executive officers of the League

institutions regarding the effectiveness of specific strategies, by

interviewing institutional personnel at three selected community col-

leges, and by conducting in-depth field studies at the three selected

institutions. First, the results of the survey are presented. Second,

the results of the in-depth field studies and personal interviews are

presented. Finally, the theoretical propositions developed and presented

in Chapter II are either confirmed or rejected based on the results.


Results of the Survey

The purpose of the survey was to measure the perceptions of the chief

executive officers of the League institutions as to the effectiveness

of specific strategies a community college might implement when experi-

encing a decline in sources of revenues. For the purpose of the

survey, effectiveness was defined in terms of how well the strategies

contributed to maintaining the overall goals of the institution. The

rating scale for the survey was as follows:

62







1 not at all effective
2 below average in effectiveness
3 about average in effectiveness
4 above average in effectiveness
5 extremely effective

The results of the chief executive officers' perceptions are based

on the entire population of interest, that is, all 18 of the League

chief executive officers. The total number of responses to the survey

instrument was 18 of 18, or, 100% of the population. All surveys

returned were usable; therefore the results are based on a 100% effective

return rate. The results of the survey are presented in tabular format

accompanied by a narrative explanation.

Effectiveness Ratings of Strategies

Strategies perceived as most effective. Listed in Table 4-1 in

rank order are the strategies perceived as most effective by the chief

executive officers. The statistics are based on those who ranked the

strategy after indicating that they had used the strategy in the last

three to four years. Since the respondents indicating no (they had not

used the strategy) did not rank the strategy, only those respondents

indicating yes (they had used the strategy) are included in the analysis.

Only strategies used by eight or more of the respondents are included

in the table; the mean of the strategies included are all 3.70 or above.

Although strategies used by less than eight of the respondents were not

included in the table, it should be noted that three of the strategies

listed in the survey had a mean rating of 4.25 and above, although they

were used by only three to four of the respondents. The strategies

include review/change enrollment-driven funding formula, mean = 4.25;

sell or rent unused or underutilized facilities, mean = 4.33; and

contract for services such as bookstore or daycare, mean = 4.67.





64

The strategies ranked as most effective which were used by the greatest

percentage of the respondents were initiate retirement options, used

by 89% and increase cooperative relations and linkages with business

and industry, also used by 89% of the respondents. The percentages

reflecting those respondents who have tried the strategies within the

past three to four years are also presented in Table 4-1.

Strategies perceived as average in effectiveness. The strategies

perceived as average in effectiveness, falling within the mean ratings

from 3.20 to 3.69, are presented in Table 4-2. Nineteen strategies, or

49% of the total strategies listed in the survey, fell within the

average in effectiveness range. There appears to be strong consensus

in regard to the ratings in this category. The low standard deviations

in this rating category reflect a greater consensus regarding the

effectiveness of the strategies in this category as compared to the

category of most effective. It should also be noted that a signif-

icant number of the strategies listed in this category refer to faculty

and staff usage.

Strategies perceived as least effective. As can be seen from Table

4-3, seven strategies were perceived as least effective by the chief

executive officers; least effective strategies were defined with a mean

rating of 3.19 or below. Although only four of these strategies were

used by more than half of the respondents, all of the strategies

perceived as least effective related to deferral and reductions of

expenditures and across-the-board cuts.

Effectiveness rankings of the most frequently used strategies.

Table 4-4 presents a ranking of the strategies and their perceived

effectiveness according to the total percent of the respondents










Table 4-1

Strategies Perceived as Most Effective


Strategy Mean Standard N (yes Percent
Deviation responses) of total


Attempt raising the local millage
level/taxes 4.13 1.05 8 44%

Initiate retirement options 4.00 1.00 16 89

Raise student/faculty teaching
ratio 3.91 .90 11 61

Increase cooperative relations
and linkages with business
and industry 3.88 .70 16 89

Attempt to make some activities
self-supporting 3.87 .90 11 61

Increase student recruitment
efforts 3.85 .77 13 72

Increase the use of part-time
faculty 3.85 .66 13 72

Increase fundraising and
development efforts 3.75 1.03 10 56

Renew and redefine institutional
mission and goals 3.73 .96 12 67

Institute a hiring freeze 3.70 1.1 11 61








Table 4-2

Strategies Perceived as Average in Effectiveness


Strategy Mean Standard N (yes Percent
Deviation responses) of total

Reassign faculty and staff 3.69 .82 13 72%

Limit non-FTE-producing programs
and services 3.67 .94 10 56

Charge user fees for services 3.63 .70 9 50

Increase public relation efforts 3.62 .84 13 72

Retrain faculty and staff 3.55 .78 11 61

Reduce non-instructional staff 3.54 .84 13 72

Share staff among campuses
or departments 3.54 .84 14 78

Attempt to reduce student
attrition 3.53 .85 17 94
Increase the recruitment of new
student populations 3.50 .73 14 78

Increase lobbying efforts 3.50 1.06 16 89

Raise tuition/student fees 3.50 1.12 15 83

Increase institutional long-term
planning efforts 3.46 .71 15 83

Target reductions through an
institution-wide program
review process 3.45 .78 12 67

Implement cost-analysis studies 3.38 .70 17 94

Involve faculty and staff in
the reallocation process 3.38 .93 16 89

Reduce the number of course
sections 3.35 .88 12 67

Encourage staff and faculty
development programs 3.35 .76 17 94










Table 4-3

Strategies Perceived as Least Effective


Strategy Mean Standard N (yes Percent
Deviation responses) of total


Institute across-the-board-cuts 3.00 .71 8 44%

Reduce travel expenditures 2.82 .94 12 67

Defer equipment purchases 2.58 .92 16 89

Defer major maintenance
expenditures 2.27 1.14 11 61

Use up excess revenues/
fund balance 2.11 .74 9 50









Table 4-4

Effectiveness Rankings of the Most Frequently Used Strategies




Rank Strategy Percent of Effectiveness
Order total Rating (mean)


1 Reduce student attrition 94% 3.53

2 Cost-analysis studies 94 3.38

3 Faculty/staff development 94 3.35

4 Retirement options 89 4.00

5 Business/industry cooperation 89 3.88

6 Increase lobbying 89 3.50

7 Involve faculty/staff 89 3.38

8 Defer equipment purchases 89 2.28

9 Raise tuition/fees 83 3.50

10 Increase planning 83 3.46

11 Share staff 78 3.54

12 Increase student recruitment* 72 3.85

Increase part-time faculty* 72 3.85

13 Reassign faculty/staff 72 3.69

14 Increase public relations 72 3.62

15 Reduce non-institutional staff 72 3.54


*indicates tie rankings








that indicated they had tried the strategy. For the most part, the

strategies most frequently used fell within the personnel and enrollment

areas, as well as appear to be process-oriented. It is interesting to

note that of the 16 strategies which 72% or more of the respondents

tried, only one fell below 3.35 in effectiveness rating (defer equipment

purchases = 2.82).

Effectiveness rating by type of strategy. A related illustration

of the effectiveness of specific strategies is presented in Table 4-5.

The strategies are grouped according to type of strategy (personnel,

revenues, expenditures, enrollment, and process). Only strategies

tried by 50% or more of the respondents are included in this table; the

total number of strategies illustrated is 28, or 72% of the total.

The types of strategies most frequently tried by the respondents

fell within the process (81%), enrollment (78%) and personnel (71%)

categories. The type of strategy with the highest average effectiveness

rating is the revenue type (mean = 3.78), followed by the personnel

type (mean = 3.72). Both means, 3.78 and 3.72, fall within the most

effective range. It is interesting to note that although the revenue

type of strategies was tried by an average of only 59% of the respond-

ents, it was ranked highest in overall effectiveness at 3.78. The

lowest ranked type of strategy, expenditures, was tried by 66% of the

respondents and was ranked with an average of 2.51, falling in the

least effective category.

Measures of Central Tendency and Frequency Distribution

The grand mean of the perceived effectiveness strategies listed was

3.50, which would fall in the average in effectiveness category. The

mode, or most frequently occurring rating, was also 3.50, which indicated








Table 4-5

Effectiveness Rating by Type of Strategy


Type of Strategy Percent Effectiveness
Tried Rating (mean)

ENROLLMENT
Increase recruitment 72% 3.85
Reduce attrition 94 3.53
Reduce course sections 67 3.35
n=3 m=78% m=3.58

EXPENDITURES
Limit non=FTE activities 56% 3.67
Cost-analysis studies 94 3.38
Across-the-board reductions 44 3.0
Reduce travel expenditures 67 2.82
Defer equipment purchases 89 2.58
Defer maintenance 61 2.27
Use up fund balances 50 2.11
n=7 m=66% m=2.51

PERSONNEL
Retirement options 89% 4.00
Raise teaching ratios 61 3.91
Increase part-time faculty 72 3.85
Hiring freeze 61 3.70
Reassign faculty/staff 72 3.69
Retrain faculty/staff 61 3.55
Reduce non-instructional staff 72 3.54
Share staff 78 3.54
n=8 m=71% m=3.72

PROCESS
Business/industry cooperation 89% 3.88
Review mission/goals 67 3.72
Increase public relations 72 3.62
Increase lobbying 89 3.50
Increase planning 83 3.46
Program review 67 3.45
Involve faculty/staff 89 3.38
Faculty/staff development 94 3.35
n=8 m=81% m=3.55

REVENUES
Raise millage/taxes 44% 4.13
Self-supporting activities 61 3.87
Increase fundraising/development 56 3.75
Charge user fees 50 3.63
Raise tuition/fees 83 3.50
n=5 m=59% m=3.78








consistency in the rating of strategies. The median was 3.54 and the

range of ratings fell within 2.11 to 4.67. The overall mean of the

standard deviations was .87, which by itself is difficult to interpret

but could be an indication of general consensus among the ratings of

the respondents.

The measures of central tendency as well as the ratings presented

in this chapter are based on the respondents which indicated that they

had used the strategy in the last three to four years. The no responses

were not incorporated into the statistical analysis because the respond-

ents indicating that they had not used the startegy did not go on to

rank the strategy based on how effective they believed it would be if

they had tried it. Although this occurrence limited the possibility of

including this variable in the analysis, the overall external validity

of the results may be greater because the ratings were generated only

from those chief executive officers who indicated they had in fact used

the strategy. In other words, the ratings are based on actual practices,

not on speculation as to how effective the strategies may have been if

they were used.

The general distribution of the scores is illustrated in the fre-

quency distribution presented in Table 4-6. Although no parametic

tests were used, the scores are distributed quite evenly, closely

approximating the normal curve. As can be seen from the overall dis-

tribution of scores presented in Table 4-7, there is a tendency for the

scores to cluster near the middle of the distribution. Nearly half, or

48.7% of the overall total scores fell within the 3.99 to 3.50 range.

The 3.49 to 3.0 range encompassed 20.5% of the total scores. The

lower and higher ends of the distribution were evenly matched, with










Table 4-6

General Distribution of Scores


Class Interval Overall Percent Frequency of
Frequency of Area Yes Responses


5.00 4.50 1 2.6% 0

4.49 4.00 5 12.8 2

3.99 3.50 19 48.7 19

3.49 3.00 8 20.5 7

2.99 2.50 3 7.7 2

2.49 2.00 3 7.7 2

n=39 100.0% n=22







Table 4-7

Overall Distribution of Scores


Score Overall Range Percent of
Frequency Total Area


4.67 1 5.00-4.50 2.6%


4.33 1
4.25 1 4.49-4.00 12.8%
4.13 1
4.00 2


3.88 1
3.87 1
3.85 2
3.75 1
3.73 1
3.70 1
3.69 1 3.99-3.50 48.7%
3.67 1
3.63 1
3.62 1
3.55 1
3.54 2
3.53 1
3.50 4


3.45 1
3.43 1
3.38 2 3.49-3.0 20.5%
3.35 2
3.00 2


2.82 1
2.67 1 2.99-2.50 7.7%
2.58 1


2.40 1
2.27 1 2.49-2.00 7.7%
2.11 1


n=39


100.0%






74

six, or 15.4% of the scores falling below 3.0 and six, or 15.4% of the

scores falling above 4.0.


Field Studies and Interviews

This section presents the results of the in-depth field studies and

the interviews conducted at the three selected community colleges. The

purposes of the field studies and interviews were to determine the

nature of changes in revenues at the institutions, to discover the

strategies implemented to minimize the problems attributed to the

revenue changes, and to determine the perceptions of institutional

personnel regarding the strategies implemented to adjust to the changes.

The institutions visited ranged from a medium size single-campus com-

munity college to a large multi-campus college in a major metropolitan

setting. The field studies, conducted during June, July, and August

1984, lasted from four to five days at each institution. A standard

interview protocol guided all interviews and is included in Appendix C;

11 personnel were interviewed at each institution. In addition,

document analysis, field notes and informal observations contributed to

the results. The three case studies, reflecting institutional operations

and perceptions as of August 1984, have been critiqued by institutional

representatives to avoid factual errors.

The results of the three field studies are presented in this

chapter in case study format, including an institutional profile, an

overview of funding, a chronology of changes in revenues and enroll-

ments, and the institutional perceptions. In addition, a summary

section ties together the individual interview results into a composite

synthesis.









Santa Fe Community College

Institutional Profile

Santa Fe Community College was established by the Florida State

Legislature in 1965 as a comprehensive public community college to

serve the counties of Alachua and Bradford in north central Florida.

The open-door policy and concept of total service to the community of

the college is reflected in the college mission statement (Santa Fe

Community College Catalog, 1984):

Santa Fe Community College is a comprehensive community
college with an open-door policy and is firmly committed
to equal access and equal opportunity for all persons.
Placement in the college is on the basis of testing and
counseling. The mission of the college is to offer
opportunities to develop intellectual capacities,
occupational aptitudes and avocational interests so as
to contribute to students' personal growth and to meet
contemporary society's needs for informed, concerned
and responsive citizens. (p. 10)

The college has grown from an institution of 889 full-time equivalent

students with 102 full-time and part-time faculty in 1966 to a total of

5559 academic full-time equivalent students with over 370 full- and

part-time faculty in 1982. The growth in the service district of the

institution has also been significant; the 1980 census for the combined

counties of Alachua and Bradford was 171,371.

Santa Fe Community College is located in one of the richest agri-

cultural centers of the state. The major occupational group in the

city in which the college is located (i.e., Gainesville) is government,

which makes up 43.12% of all employment. The University of Florida,

Shands Teaching Hospital, and a large Veterans Administration Hospital

are located in Gainesville in addition to some light industry. The

tourism industry also contributes to the economy of the area.







Santa Fe Community College operates primarily on a main campus of

125 acres and has a total of 30 buildings. The college operates two

off-campus centers: One is located in Bradford County and the other is

the college's Police Academy at the Gainesville Municipal Airport. The

completion of a building on the main campus for the college's health

related programs enabled the sale of the southwest Gainesville Center

that had previously housed the health programs. The college offers

college transfer programs, occupational programs, community education

programs, and is the designated area vocational education school.

Santa Fe Community College's 1983 enrollment consisted of over 10,000

students in all programs (unduplicated student headcount). The college

prides itself on the fact that it attracts 40 percent of the top 10

percent of its district's graduating seniors. The college employs 228

full-time faculty, 245 career service staff, 39 administrative personnel,

and 17 professional specialists.

The college is governed by an eight member Board of Trustees

appointed by the Governor in four-year staggered terms. State regu-

lations provide a clear differentiation between the policy-making role

of the Board and the management role of the president. The president

of the college, who has held the office since 1971, succeeded the

founding president of the institution, Joseph W. Fordyce. Three

principal administrators report directly to the president, and the six

top-ranking administrators of the college comprise the president's ad-

ministrative council. The College Senate, comprised of all individuals

on annual and continuing contracts, plays a major role in the organi-

zation and governance of the college. Another governing body comprised








of career service employees also contributes to the governance of the

college.

The college has an Endowment Corporation that has been in existence

since 1971. The Santa Fe Community College Community Gallery of Art is

the first community college art gallery approved by the National

Gallery of Art and Smithsonian Institutions for loan of high security

exhibitions. The college Biological Parks Training Program and Zoo is

the only one of its kind in the nation in an educational institution.

The college has established linkages with the business community by

providing training and assessment for local industries. Santa Fe

Community College is accredited by the Southern Association of Colleges

and Schools; most recent accredition was granted in 1982. In addition,

Santa Fe Community College is a charter member of the League for

Innovation in the Community College as well as a charter member of the

Florida Community Junior College Inter-Institutional Research Council,

the research consortium for Florida's community college. The college

ranks 11th in enrollment size of Florida's 28 community colleges and

operates with an annual budget of over 18 million dollars for the 1984-

85 fiscal year.

Funding

Florida's 28 community colleges operate under a balance of local

control with state coordination and support; state support has for the

most part been consistent with the steady enrollment growth in the

community colleges. The colleges are funded by the state through an

annual College Program Fund Appropriation (CPFA) on a program cost

basis which differentiates thirty four programs; the program costs

factors have been determined by state level studies. The formula








allows funding at a higher rate for smaller schools and withholds

revenues if a college does not achieve the number of full-time equiva-

lents assigned. Wattenbarger and Heck, in their 1983 study of community

college finance, describe the funding environment for the community

colleges in Florida:

Salary increases, rising energy costs, new facilities,
and inflation form the bases for annual revenue in-
creases. Currently, the state provides 66.5% of the
total operation costs with student fees providing 22.2%
and the federal government providing 6.7%. (p. 15)

Due to a legislative change in the contact hours required in

occupational programs, enrollment trends are emerging that indicate the

leveling off of occupational programs and modest increases in other

programs (Santa Fe Community College Self-Study, 1982, p. IV-16). For

the most part, state appropriations to educational sectors in Florida

have roughly kept pace with inflation, but the community colleges have

fallen behind somewhat because of a higher growth in FTE than the K-12

or state university system sectors. In addition to the restrictions

imposed by state funding, the student matriculation fees for community

colleges are capped by law, thereby limiting the flexibility on the

part of the colleges to raise tuition.

The system of funding community colleges in the state of Florida

imposes several restrictions on certain funds by making them categorical

in nature, such as for special faculty salary increases, staff and pro-

gram development, and for the improvement of academic standards. In

some instances, the lack of funds to support state mandated requirements

and increases in accountability have created major problems for community

colleges. In addition, funding levels are extremely sensitive to short-

falls in state revenue collection as the state sales tax constitutes





79
the major revenue-producing category of the budget. Funds for capital

projects and improvement have historically had strong state commitment,

yet have been diminished by the veto of the governor in recent years.

Chronology of Changes in Revenues and Enrollments

Santa Fe Community College has experienced concurrent downturns in

enrollment and appropriations from the state (see Tables 4-8 and 4-9).

The enrollment decline reflects a general pattern of leveling enrollments

at community colleges on a state-wide basis. Inflation and downturns

in the state's economy were dramatized by cuts in state appropriation

in 1981-82 and again in 1982-83. The 1981-82 cut was 1.2% and the

1982-83 cut was 4.7% of the original appropriations.

In addition to the demonstrated changes in enrollments and sources

of revenues at the institution, several other changes were identified

in the college's Self-Study report (1982). The changes include the

following:

1. There was a decline in the percent of the budget allocated to

instruction;

2. There was a decrease in the number of full-time faculty and an

increase in the number and proportion of part-time faculty (see Table

4-10);

3. There was an increase in the average class size;

4. More financial resources were required for evaluation and follow-up

activities due to legislative emphasis on quality and accountability;

and

5. Expenditures for plant operations were escalating at a greater rate

than other categories of expenditures; this was primarily due to rising

utility rates.










Table 4-8

Changes in Enrollment, 1980-85
Santa Fe Community College


Year FTE
Enrollment


1980-81

1982-83

1984-85


5777

5559

5101 (projected)


Source: Santa Fe Community College Institutional
Self-Study Report (1982)









Table 4-9

Changes in Sources of Revenue
Santa Fe Community College


Revenue Source


Tuition and Fees

State Appropriations

Grants, Gifts and
Contracts

Other


Percent of Total Revenues
1980-81 1981-82 1982-83


21.7%

64.7


11.3

2.1


23.8%

65.1


9.3

1.8


23.5%

62.5


12.5

1.5


Source: NACUBO Comparative Financial Statistics for Public
Community and Junior Colleges (1982; 1983; 1984)










Table 4-10

Proportion of Part-Time Faculty to Full-Time Faculty, 1976-80
Santa Fe Community College



Faculty


Ful 1 -Time

203
199
206
217
213


Part-Time


Percentage of
Part-Time Faculty


130
103
79


39%
24%
28%
24%
21%


Source: Santa Fe Community College Institutional
Self-Study Report (1982)


Year


1980-81
1979-80
1978-79
1977-78
1976-77





83

As the results of the Self-Study indicated the proportion of part-time

to full-time faculty members has increased significantly. Although

there are only 10 fewer full-time faculty members in 1980-81 than in

1976-77, there are 54 more part-time faculty members, or, an increase

of 71%. These figures do not account for the number of overload

credit hours taught by full-time either but nevertheless indicate a

rising degree of dependence upon part-time faculty.

Institutional Perceptions

The field study site visit to Santa Fe Community College, conducted

in August of 1984, included interviews with 11 administrators and

faculty at the Santa Fe Community College campus in Gainesville,

Florida. All of the interviewees concurred with the researchers'

description of changes in revenues at the institution (i.e., a decrease

in the proportion of the general operating budgets from state appro-

priations and an increase in the proportion of the budget comprised of

fees, grants, gifts, and contracts). In addition, nearly all of the

interviewees were concerned with the impact the state cuts imposed in

1981 and 1982 and also expressed concern for the continued decrease in

enrollments.

The most frequently mentioned problem identified by the interviewees

as being associated with changes in revenues was the propensity of the

state legislature to impose mandates on community colleges without

accompanying the mandates with sufficient--or in many instances any--

additional funding. Nine of the 11 respondents indicated this as a

major problem. Nearly half of the respondents also mentioned increased

program and budget scrutiny and the closing of the traditional community

college open door as major problems. The closing of the open door was





84

attributed to increased testing, standards, and requirements imposed by

both the state and the institution.

The most frequently mentioned strategies implemented to adjust to

changes in revenues at the institution are shown in Table 4-11. Of the

strategies mentioned, the consensus of the interviewees was that the

hiring freeze and the reassignment of faculty and staff were the most

effective strategies and increased the overall efficiency of the

institution. The least effective strategy mentioned was the deferral

of maintenance and equipment purchases. Comments included: "We've

lost ground with technological advances" and "In the long run, catching

up on deferred maintenance costs more."

The interviewees identified several criteria they perceived as

guiding the institutional strategies implemented. The most frequently

mentioned response was that "protecting people" (i.e., the faculty and

staff of the institution), was the basic premise behind the decisions

that were made. One interviewee described the criterion as "protecting

people by making the least painful and most humane decisions." The next

most frequently mentioned criterion guiding the strategies developed,

in descendent order, were to protect and maintain the instructional pro-

gram, to meet legislative mandates, to maintain quality, and to maintain

service to students.

There was a significant level of consensus in regards to the degree

of the involvement of the faculty and staff in the development of the

strategies. The majority of respondents stated that the process was a

top down process, while several other respondents identified the chief

executive officer as the major decision-maker and the degree of involve-

ment of faculty and staff as minor. Two of the respondents stated










Table 4-11

The Most Frequently Implemented Strategies to
Adjust to Changes in Revenues at
Santa Fe Community College





Number of
Strategy Respondents



Hiring Freeze/Unfilled Positions 11

Recruit new populations 11

Reassign faculty/staff 9

Across-the-board cuts 7

Increase fundraising/development efforts 7

Increase recruitment 6

Defer maintenance and major equipment purchases 6

Encourage early retirement 4

Improve retention 4

Increase linkages with business and industry 3

Implement user fees 3

Reduce travel expenditures 3

Increase self-supporting activities 3

Lower student/faculty ratio 3


n=ll






86
that they felt there was a considerable amount of involvement and that

people basically understood the rationale behind the decisions that

were made. A dean at the institution described the decisions as

"people-based, combining both the human element and efficiency."

The strengths identified as extremely positive factors in regard to

adjusting to changes in revenues were stated by the majority of respond-

ents as the institution's flexibility in responding to and meeting

needs and also the institutional personnel. Other frequently mentioned

strengths were the management and leadership of the institution, the

President, the environment, the institutional orientation toward

students, and the openness to pursue new things at the institution.

The most frequently mentioned factors perceived as restrictive were

legislative mandates and controls, the economy, the lack of local

funds, and the lack of legislative planning. The majority of the

interviewees reflected the comment voiced by one administrator: "The

constant change in the legislative attitudes and activity make it

almost impossible to plan anymore."

Overall, the personnel interviewed were very positive in their

assessment of the ability of the institution to adjust to changes in

revenues. There was clear consensus that Santa Fe Community College

had dealt with the changes very well, improved and strengthened the

academic program, and in spite of the circumstances, maintained the

mission of the institution. The negative comments reflected a feeling

that morale and creativity at the institution have suffered in the

process. One individual summarized the outcome as "The right decisions

have been made . although without the process of involving people








in making the decisions that affect them as well as affect the course

of the institution."


Miami-Dade Community College

Institutional Profile

Miami-Dade Community College is a large, public-supported multi-

campus community college which serves the populous Metropolitan Dade

County community. The service area population for the college is

1,764,400. Miami, the largest city in the state of Florida, makes up

the bulk of the college's service district. Known largely for its

tourist industry, the Miami area has also emerged as a national and

international center for business, banking, and culture.

Dade County Junior College, as it was called when it began instruc-

tion in 1960, was changed by Board action in 1963 to Miami-Dade Junior

College and finally to Miami-Dade Community College in July, 1973.

Miami-Dade Community College has grown from a single campus which

opened in temporary quarters with 1,400 students to a multi-campus

college which enrolls over 60,000 students (total unduplicated head-

count) at four major campuses and numerous centers throughout the

college's service area. In addition, Miami-Dade Community College

offers college level courses through the Open College, a multi-media

system of television, radio, audio-visual cassette tapes, and independ-

ent study.

Miami-Dade Community College is a comprehensive community college

with goals that advance the open door admissions philosophy. Three-

fifths of the students are enrolled in Associate of Arts transfer

programs and one-fifth are enrolled in occupational and special interest






88
program courses. The diversity of the college's student population is

reflected in the fact that Miami-Dade has the largest number of foreign

student-visa enrollees of any postsecondary institution in the United

States; the majority of students enrolled are Hispanic and less than

half of all Miami-Dade students report English as their native language.

Partially in response to the challenges presented by this diverse

student body, the college initiated a series of systematic and compre-

hensive reforms and innovations involving the entire educational

program since the mid-1970s. Miami-Dade Community College has received

national recognition for leadership in postsecondary educational

reforms, particularly for its General Education model, Standards of

Academic Progess monitoring system, and the Advisement and Graduation

Information System (AGIS).

Miami-Dade Community College employs over 2300 personnel, including

approximately 1100 faculty and approximately 1290 administrative and

support staff. The faculty of the institution are not unionized

although there have been several union votes at the institution. The

Faculty Senate, composed of full-time faculty and staff, is the internal

governing body for the institution. The President's Council of the

college is composed of the president, the chief executive officers of

the college's district administration, the vice presidents of the

college's four campuses, the president of the Faculty Senate, and the

chief representatives of the college's Community Relations, Business

Affairs and Institutional Development components. The current president

has served as president of Miami-Dade since 1980, preceded by Peter

Masiko, the founding president of the institution. The institutional

budget for the 1983-84 year was set at over $80 million dollars.







The Miami-Dade Community College District Board of Trustees is

comprised of five members, each of whom is appointed by the governor

and confirmed by the Florida state senate for a four year term. The

district governing board, vested with the governing authority for the

college, works directly with the college president in all matters

pertaining to the governance and operation of the college.

Miami-Dade is accredited by the Southern Association of Colleges

and Schools; the most recent self-study was of a non-traditional nature

conducted in 1983. Included in the non-traditional self-study was a

college mission reform component which was to be completed in 1984.

Miami-Dade has been a member of the League for Innovation in the

Community College since 1980. In 1983, the Miami-Dade Community

College Foundation, Inc. (established in 1965) was the recipient of the

third largest gift given to college or university and largest given to

any two-year institution in the United States. The gift, approximately

$50 million dollars, was from the estate of the late Colonel Mitchell

Wolfson, Sr., the first chairman of the Miami-Dade Community College

District Board of Trustees.

Funding

Miami-Dade Community College receives the majority of their op-

erating revenues from the state through the Florida College Program

Appropriation (described in detail in the Funding section of the Santa

Fe Community College field study). To the extent that the state

treasury in Florida provides the bulk of the operating budget of each

community college in the state, some financial restrictions are similar

among the community colleges in the state. For instance, the state

sets the upper tuition level limit for the community colleges as well








as sets enrollment projection levels. Colleges are penalized if they

do not fall within their specified corridors for enrollment by having

to pay back state aid.

In comparison to other community colleges in the state, Miami-

Dade's salary schedules are the highest. Part of the reason may be due

to the high cost of living in Dade County as compared to the rest of

the state. Due to the fact that a large number of Miami-Dade's enroll-

ees are in developmental courses, a state-mandated redefinition of the

credit hour base for developmental instruction which underestimated the

workload created an inequity for Miami-Dade (Richter, 1984); the change

resulted in a loss of nearly 50% of the institutions' FTE generation

and subsequent funding.

Chronology of Changes in Revenues and Enrollments

Changes in revenues and enrollments paralled each other at Miami-

Dade Community College: Enrollments began to decline in the 1980s

concurrently with a decline in the proportion of the operating budget

derived from the state, as illustrated in tables 4-12 and 4-13. The

proportion of the budget coming from tuition and fees remained fairly

constant, while the gifts, grants and contracts category increased from

10.5% in 1980-81 to 15.2% in 1982-83. During this period, state

mandated cuts of 1.2% in 1980-81 and 4.7% in 1981-82 were executed

after the budget had been set.

Miami-Dade's enrollments began to decline in the 1980s, and appear

to exhibit a trend in the downward direction. The enrollment decline

came as no surprise, but rather was projected by institutional officials

after the burgeoning enrollment growth experienced in the 1970s.










Table 4-12

Changes in Sources of Revenue
Miami-Dade Community College


Revenue Source Percent of Total Revenues
1980-81 1981-82 1982-83


Tuition and fees 25.9% 26.4% 25.7%

State Appropriation 59.3 60.1 56.9

Grants, Gifts, and Contracts 10.5 10.2 15.2

Other 4.3 3.4 2.2


Source: NACUBO Comparative Financial Statistics for
Public Community and Junior Colleges
(1982; 1983; 1984)










Table 4-13

Changes in Enrollment
Miami-Dade Community College


Full 1-Time

Part-Time

Non-Credit


Total


1980-81

17,622

8,720

3,041

29,383


1981-82

17,137

8,382

3,291

28,810


Source: NACUBO Comparative Financial Statistics for
Public Community and Junior Colleges
(1982; 1983; 1984)


1982-83

16,228

8,666

764

25,658