Title: Extension of the concept of horizontal fiscal equity to community college per-student revenues
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Title: Extension of the concept of horizontal fiscal equity to community college per-student revenues
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Copyright Date: 1992
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EXTENSION OF THE CONCEPT OF HORIZONTAL FISCAL EQUITY
TO COMMUNITY COLLEGE PER-STUDENT REVENUES


















By

GEORGE WESLEY HARRELL


A DISSERTATION 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

1992
UNIVERSITY OF FLGRA .l''.rES





































FOR

ANDREA












ACKNOWLEDGMENTS

I would like to thank Dean Madelyn Lockhart for her

support that ultimately led to this Ph.D. I would like to

thank distinguished service professor and chairman of my

doctoral committee, Dr. James L. Wattenbarger, who tweaked

my interest in higher education administration, was

supportive of my efforts, and was very generous with his

time throughout this process. I would like to thank Dr.

David S. Honeyman, cochair of my committee and mentor in the

area of education finance, for his support. I would like to

thank Dr. R. Craig Wood, department chairman and committee

member, for his support and zeal for precision; I hope it

was contagious. I would like to thank Dr. John H. James for

serving on my committee and for bringing humanity in

business back into focus during the MBA program. I would

like to thank Leila Cantara, Cathy Carroll, Christina Aslan,

Phyl Schmidt, Helen Martin, and Linda Cowart for always

having the right piece of paper at the right time, patience

with me, solutions for all my problems, and just the right

word at the right time.

The support and encouragement of my wife, Andrea,

daughter, Jennifer, and son, Wesley made this possible and

worth the effort. And finally, I would like to thank my

mother and father for their support of my educational goals.


iii
















TABLE OF CONTENTS


page


ACKNOWLEDGMENTS . . . . . . . .

ABSTRACT . . . . . . . . .

CHAPTERS


ONE


BACKGROUND OF THE STUDY . . .


Introduction . . . . . . .
Statement of the Problem . . . .
Purpose of the Study . . . . .
Overview of the Methodology . . . .
Limitations and Delimitations of
the Study . . . . . . . .
Definition of Terms . . . . . .
Significance of the Study . . . .
Overview of the Study . . . . .
Organization of the Study . . . .

TWO REVIEW OF RELATED LITERATURE. . . .

Introduction . . . . . . .
Equity . . . . . . . . .
Measurement of Equity . . . . .
Community College Funding Methodologies .
Formula Budgeting . . . . . .
Sources of Revenue . . . . . .
Florida Funding Methodology . . . .
Summary . . . . . . . . .

THREE RESEARCH METHODOLOGY . . . . .

Introduction . . . . . . .
Population of the Study . . . .
Methodology: Horizontal Fiscal Equity
Measurement . . . . . . .
Range . . . . . . . .
Restricted Range . . . . .
Federal Range Ratio . . . . .
Coefficient of Variation . . .
McLoone Index . . . . . .
Gini Coefficient . . . . .


iii

vii


.... 1









Lorenz Curve . . . . . . .
Methodology: Equity Trend. . . . . .
Research Design: Total Revenue Equity Trend.
Research Design: Revenue Source Equity
Trend . . . . . . . . .
Summary . . . . . . . . .

FOUR ANALYSIS OF DATA . . . . . .


Introduction . . .
Total Revenue Equity . .
Gini Coefficient . .
Coefficient of Variation
McLoone Index . . .
Federal Range Ratio . .
Restricted Range . .
Range . . . . .
Lorenz Curve . . .
Total Revenue Equity Summary
Revenue Sources Equity Trend
Gini Coefficient . .
Coefficient of Variation
McLoone Index . . .
Federal Range Ratio . .


Revenue Sources Equity Trend Summary . .
Revenue Sources Relative Horizontal Equity
Gini Coefficient . . . . .
Coefficient of Variation. . . . .
McLoone Index . . . . . . .
Federal Range Ratio . . .. . .
Revenue Sources Relative Equity Trend Summary
Summary . . . . . . . . .

FIVE OBSERVATIONS AND CONCLUSIONS . . . .
Introduction . . . . . . . .
Total Revenue Equity Trend . . . . .
Revenue Sources Equity Trend . . . .
Conclusions and Implications of the Study .
Recommendations . . . . . . . .
Recommendations for Further Study . . .

APPENDICES

A RAW DATA . . . . . . . . .

B COMMUNITY COLLEGES USED IN THE STUDY . .

C COMMUNITY COLLEGE PROGRAM FUND . . . .

D EXPENSE/REVENUE RELATIONSHIP. . . . .



















109

134

137

141


62
63
63
65
66
68
69
71
72
75
77
78
80
82
85
87
89
90
90
91
92
94
95

96
96
97
100
104
106
107









REFERENCES . . . . . . . . ... ... 150

BIOGRAPHICAL SKETCH . . . . . . . . .. .158















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

EXTENSION OF THE CONCEPT OF HORIZONTAL FISCAL EQUITY
TO COMMUNITY COLLEGE PER-STUDENT REVENUES

By

George Wesley Harrell

May, 1992

Chairman: James L. Wattenbarger
Cochairman: David S. Honeyman
Major Department: Educational Leadership


The purpose of this study was to extend the discussion

of horizontal fiscal equity as it relates to public K-12

education to the multiple institution public community

college system. The research dealt with examining and

analyzing the trend of horizontal equity based on per-

student revenues and per-student revenue by source. This

study was focused on the extension of the concept of per-

student horizontal fiscal equity to the general current fund

budget category revenues of the 28 institution community

college system of the State of Florida.

Horizontal equity, in the context of education finance,

is the "equal treatment of equals." Equity was recognized

as one of the goals of community college funding. The

horizontal fiscal equity measurement methodologies used for


vii









public K-12 education were utilized in this study. The six

measures used were the range, restricted range, federal

range ratio, coefficient of variation, McLoone index, and

Gini coefficient. The analysis of horizontal fiscal equity

was extended to the major revenue sources, the Community

College Program Fund (CCPF), student fees, and all other

sources (representing approximately 65%, 25%, and 10% of

revenues respectively). Time series linear regression

analyses were used to examine the temporal trend in equity

over the 10-year period utilized in this study, fiscal years

1980-81 through 1989-90.

Total per-student revenues were found to have an

increasing equity trend based on three equity measures, the

Gini coefficient, coefficient of variation, and McLoone

index, an inconclusive trend based on the federal range

ratio, and a decreasing equity trend based on the range and

restricted range. The CCPF was found to be the most

equitable revenue source, followed by student fees, and the

revenue source, other, based on the Gini coefficient,

coefficient of variation, and federal range ratio, and the

McLoone index indicated that student fees and the other

revenue source were in the reverse order. The State of

Florida community college per-student revenues were found to

have a 10-year trend toward increased horizontal fiscal

equity except for range related equity.


viii
















CHAPTER ONE

BACKGROUND OF THE STUDY

Introduction

The importance of community colleges to the higher

education process and system was summarized by Taylor (1985)

as follows:

the state role in the funding of community
colleges is of direct importance to nearly five
million students (40% of all postsecondary
students), a quarter million teachers, much of
corporate America, and nearly every American
taxpayer. It is an educational topic that spills
into the tangential areas of social access and
mobility, the national economy, American
technology, and even "a nation at risk." (p. 43)

Brookings Institute President Bruce K. Maclaury (1981) wrote

that the "two-year colleges" were "a significant and vital

part of the nation's diverse system of higher education"

(p. vii).

There was continuing concern expressed in the

literature for the financial crisis facing community

colleges. The problem was not new; Lombardi (1971),

concerned with adequacy of funding for community colleges,

wrote The Financial Crisis in the Community College, and

Kintzer (1980), concerned with the impact of Proposition 13

on community colleges, wrote Proposition 13: Implications

for Community Colleges. Martorana and Wattenbarger (1978)

1










indicated that community colleges have "experienced

increasing financial uncertainty" due to the "pressures on

public support to postsecondary education" (p. 386), and

Lombardi (1979) indicated that the "lean years" were facing

the community colleges in the "post-proposition 13 era"

(n.p.).

The community college funding problem was not isolated

or limited to Florida; the problem was national in scope.

It was reported by El-Khawas, Carter, and Ottinger (1988)

that nationally the current-fund expenditures per full-time

equivalent student (FTE) for 2-year public institutions had

increased only "4.8%," in constant dollars, in the period

1970-71 to 1984-85 (p. 34).

Gold (1990) indicated that higher education is the

"second largest component of state budgets" and as "such a

major component of state spending," the "general state

fiscal conditions are the most important determinant of

state support" (p. 21). The economic downturn of the

economy in the United States had further impaired the

ability of many states to finance postsecondary education.

State legislatures had sought to determine the optimal

funding method, but no generally accepted "best" method

could be found in the literature. Criteria for judging

methods had been proposed by several researchers including

Martorana and Wattenbarger (1978) and Garms (1977).











State funding had been categorized into six

subcategories of the three funding methodologies for public

community colleges (Wattenbarger & Starnes, 1986). In the

period 1988 to 1990 "eight states reported that they have

changed to a formula-based allocation scheme" (Honeyman,

Williamson, & Wattenbarger, 1991, p. 5). Formula budgeting

is the "prevalent approach to allocating state resources to

colleges and universities" (Ahumada, 1990, p. 467). McKeown

(1986) indicated that a majority of states used funding

formulas for higher education resource allocation. A state

system using a form of formula budgeting, as defined in this

study, was selected for this research. The rationale for

using a formula budgeting state was because of the broad

applicability of the results, since most states have used or

will use a form of formula budgeting for allocating

community college funding to each institution within the

respective state system. As reported by Honeyman et al.

(1991) and McKeown (1986), the current trend in funding

community colleges has been toward formula funding. The

question of equity, as defined as "equal treatment of equals

under equal circumstances," has been raised relative to the

results of the formula budgeting processes in effect in many

state postsecondary education systems (McKeown, 1986, p.

63). The "equal treatment of equals" was called "horizontal

equity" by Berne and Stiefel (1984, p. 13), Jones (1985, p.

56), Jordan and McKeown (1980, p. 102), and Wood, Jones, and










Riley (1984, p. 4). McKeown (1986) stated that the purpose

of using formulas was to accomplish the "equitable

distribution of available state funds" (p. 65).

Wattenbarger and Mercer (1988) and Jones and Brinkman (1990)

indicated that equity is one of the principles sought by

states in developing procedures for funding community

colleges.

The inequality of funding has been recognized by

others. Kerr (1980) indicated the need to raise

"significantly the comparative level of financing of the

least well financed institutions" (p. xii). The equity

question has many facets in higher education. Woodbury

(1983) was a proponent of the cost-effectiveness approach to

allocating between sectors of higher education. Educational

equity has been listed by Wattenbarger (1991) as one of the

three goals of higher education and further noted that

community colleges have been attentive to the goal.

Breneman and Nelson (1981) in discussing community

college financing stated that "equitable distribution of

educational opportunities" was better served by student

equity than by taxpayer equity (p. 122), and further

reported that states should "reduce the disparity in local

resources available per (community college) student" (p.

125). Garms (1977) listed interdistrict equity as one of

the criteria for community college funding methodologies.

Nelson (1982) in the chapter titled Equity and Higher









5

Education Finance: The Case of Community Colleges said that

community colleges are the "sector of higher education with

the closest kinship to elementary-secondary schooling" (p.

215). "Revenues per student" and "interdistrict equity at

the community college level" were stated to be "quite

similar" to the "school finance reform movement" as it

related to "educational opportunity" (Breneman & Nelson,

1981, p. 121).

The utilization of the equity measuring techniques,

prevalent in evaluating K-12 public education per-pupil

horizontal fiscal equity, for examining and analyzing

community college per-student horizontal fiscal equity was

based on the similarities of the systems and the need to

measure the distribution disparity of per-student revenues

and revenue sources. The purpose of evaluating the

horizontal equity was a response to the equity goals for

funding community colleges (Breneman & Nelson, 1981; Jones &

Brinkman, 1990; Kerr, 1980; McKeown, 1986; Nelson, 1982;

Wattenbarger & Mercer, 1988).

Statement of the Problem

Per-student fiscal equity has generally been accepted

as one of the goals for funding community colleges (Breneman

& Nelson, 1981; Jones & Brinkman, 1990; Kerr, 1980; McKeown,

1986; Nelson, 1982; Wattenbarger & Mercer, 1988). In a

state system of community colleges where the commonality of

institution mission and funding was the state goal, the










ability to measure, contrast, trend, and compare the per-

student allocation of funds or student funding equity was

required by legislative bodies and the public.

The preponderance of the research on per-student fiscal

equity has dealt with public K-12 school systems and has

been fueled by the "fierce litigation" associated with equal

opportunity and district wealth redistribution (Camp,

Thompson, & Crain, 1990, p. 289). The litigation basis was

also supported by Vacca (1975).

The problem was that achievement of horizontal equity

in community college per-student funding required the

ability to measure and evaluate the effect of legislative

funding action on community college systems using

recognizable techniques. Gurwitz (1982) said that "to

determine whether expenditures have or will become more

equal and by how much, we need measures of equity" (p. 179).

Equity may be measured using several different indexes but

the basic concept is to compare distributions. Gurwitz

(1982) further indicated the need to have a recognizable

method of evaluating "movement in the direction of equality"

and not to "strive for perfect expenditure equality" (p.

179).

The problem found was that for multiple institution

public community college systems, there had not been any

studies reported that had evaluated horizontal fiscal equity

utilizing recognized methods of evaluating equity, examining









7

equity measures for applicability, or analyzing the temporal

trend of horizontal equity for a community college system

over a multiple year period. A study was needed to extend

the discussion of horizontal fiscal equity to the multiple

institution public community college system. A study was

needed to analyze and examine whether the Florida Community

College system had been meeting the reasonable standard of

horizontal equity and to evaluate the horizontal equity

trend of the community college system over a multiple year

period. The study needed to accomplish the analysis through

the application of the recognized per-pupil horizontal

fiscal equity measurement techniques.

Purpose of the Study

The purpose of this study was to extend the discussion

of horizontal fiscal equity as it relates to public K-12

education to the multiple institution public community

college system by analyzing selected horizontal equity

measures and examining the temporal trend of the horizontal

equity over a 10-year period. This study was focused on

per-student total revenues that resulted from the

distribution of the major current general fund revenue

sources (state foundation funding formula, student fees, and

other revenue) in the multiple institution public community

college system of the State of Florida. To investigate this

issue, research questions were developed as follows:










1. Was there a trend in per-student horizontal fiscal

equity, based on per-student total revenues, for the state's

public community college system for the fiscal year periods

1980-81 through 1989-90 based on the K-12 public education

per-pupil fiscal equity measurement criteria for horizontal

equity?

2. Was there a trend in per-student horizontal fiscal

equity for the three major components of revenues (i.e., the

foundation funding provided by the state; student fees; and

other sources) for the 10 fiscal year period based on the K-

12 public education horizontal fiscal equity measurement

criteria; in addition, what was the contribution of the

three major components of revenue to the total per-student

horizontal fiscal equity?

Overview of the Methodology

This study was focused on the extension of the concept

of horizontal fiscal equity through the application of K-12

horizontal equity measurement methods to the multiple

institution public community college system per-student

horizontal fiscal equity. This study included the

application of the recognized horizontal fiscal equity

evaluation criteria, used in evaluating K-12 horizontal

fiscal equity, for the purpose of examining and analyzing

community college per-student revenue and revenue source

horizontal fiscal equity trends over a 10-year period.










The research methodology employed in this study was

nonexperimental. This study utilized population data.

These raw data for the population utilized in this study are

listed in Appendix A. The 28 institutions that comprised

the State of Florida Department of Education Division of

Community Colleges used in this study are listed in Appendix

B (Florida Statutes 240.3031, 1991; State of Florida Bureau

of Information Systems, 1991). The number of community

colleges in the system has remained constant at 28 since

1972 when the "master plan had been implemented" (State of

Florida Bureau of Information Systems, 1991, p. 1). This

study utilized the ten fiscal year periods from 1980-81 to

1989-90. Fiscal year 1989-90 was the most recent year for

which data were available.

In order to investigate research question number one,

the per-student total revenue fiscal equity was analyzed and

examined using the K-12 public education per-pupil revenue

disparity criteria for horizontal equity, as described by

Wood et al. (1984), the range, and restricted range (Berne

and Stiefel, 1984; Gurwitz, 1982). The FTE data and the

revenue data for each institution were used to calculate the

per-student revenues for each institution for each of the 10

years of this study.

The per-student revenues for each institution of the

state for each year were used to calculate the range,

restricted range, coefficient of variation, McLoone index,










federal range ratio, and Gini index. The Lorenz curve was

plotted to depict the Gini index. The value for each

indicator was calculated for each year of this study. The

six selected indicators were examined and analyzed.

Linear regression of the time series for each measure

was used to examine and analyze the linear relationship of

each indicator over the 10-year period of this study. The

algebraic sign of the slope was used to evaluate the trend

of the equity measure over the 10-year period.

In order to investigate research question number two,

the major revenue components were identified. The major

components of total current revenues were the Community

College Program Funding (CCPF), student fees, and other

revenues (State of Florida Bureau of Information Systems,

1991). Other revenues included other state revenues, other

local revenues, and federal revenues (State of Florida

Bureau of Information Systems, 1991). Per-student revenues

by major component for each institution for each year of

this study were calculated. The CCPF methodology (see

Appendix C) and revenue sources used by the State of Florida

Community College Division are described later in this

study. The per-student revenue values for each of the three

major revenue components for each institution of the state

for each year were used to calculate the Wood et al. (1984)

horizontal equity measures (coefficient of variation,

McLoone index, federal range ratio, and Gini index).








11

The Lorenz curve, range, and restricted range were not used

in this part of the analysis. Each value for each indicator

was calculated for each year of this study.

Linear regression of the time series for each measure

was used to examine and analyze the linear relationship of

each indicator over the 10-year period of this study. The

algebraic sign of the slope was used to evaluate the trend

of the equity measure over the 10-year period.

For the second part of question two, time series linear

regression analysis was used to examine the relative equity

of the three revenue components to the resulting per-student

total revenue equity for each of the four equity measurement

indicators during the 10-year period. The relative location

of the time series linear regression line and the slope of

the revenue source time series linear regression lines in

relationship to the total equity time series linear

regression line for each indicator were used for this part

of the analysis.

Limitations and Delimitations of the Study

This study was limited to the equity concept of

horizontal equity. This study was limited to the State of

Florida Community College System; the focus was upon a state

system with a multiple institution public community college

system that had a stated goal of a common academic mission,

common funding objective, and common funding methodology for

all institutions within the community college system.









12

The tests of equity were limited to the six most widely

used and recognized statistical techniques currently

employed to evaluate public K-12 education per-pupil funding

equity. The data were limited to the data for the 10 fiscal

years from 1980-81 to 1989-90 for the 28 institutions that

comprise the public community college system of the State of

Florida.

Annual expenses were limited to the fiscal year

education and general current fund expenditures, annual

revenues were limited to education and general current fund

revenues, and the annualized school year FTE was based on a

40 credit hour per year equivalent student as reported.

Intrastate comparisons between years are permissible and are

an integral part of this study. The methodology used in

this study is applicable and exportable to other state

systems that meet the selection criteria; however, direct

interstate comparisons of these results are not within the

scope of this study.

Definition of Terms

The following definitions are for clarification and to

ensure precision in interpreting this study, and as such,

may apply only for the purpose of this study.

Funding methodology refers to the method of allocating

funds to the individual institutions within a multi-

institution public community college system. In the context

of this study funding methodology refers to all rules and









13

regulations set forth that affect the generation of revenues

by the institutions. Funding methodology in this study

includes all legislation and regulation that pertained to

foundation funding, student fees, and other revenues.

General current fund was defined as "the fund used to

account for resources that are available for the general

financial requirements of the college, the only restrictions

being those imposed by law or the budget" (State of Florida

Bureau of Information Systems, 1991, p. 68).

Community College Program Fund (CCPF) is defined as

"those monies allocated by the Legislature [of the State of

Florida] to operate the colleges for the next fiscal year"

(State of Florida Bureau of Information Systems, 1991, p.

67).

Horizontal equity refers to the "equal treatment of

equals" (Jones, 1985, p. 56). More specifically, per-

student funding horizontal equity refers to equitable

expenditures and revenues for equal students independent of

the particular institution attended by the student within

the community college system. The significance of

horizontal equity in the context of this study is the equal

opportunity that is afforded each student.

Formula budgeting refers to a budget allocation

technique that uses, in whole or in part, units of

production (such as full-time equivalent enrollment (FTE))

multiplied by a dollar value per unit of production to









14

obtain the budget allocation for the institutions within the

system. The allocation is not dependent on the institution

at which the production occurs.

Full-time equivalent (FTE) enrollment (annualized)

refers to the measure of effort in credit hours that a full

time student would require or the unit of production

associated with a full time student on an annual basis. For

the Florida Community College Division the FTE value was

defined as "student semester hours divided by 40 for

Advanced and Professional, Postsecondary Vocational

instruction," and "for all other instruction, 900

instructional hours equate to 1 FTE" (State of Florida

Bureau of Information Systems, 1991, p. 68). The

measurement of FTE must have been consistent within each

community college system to allow horizontal equity

measurement on a per-student basis, but may vary between

systems.

Per-student fiscal equity refers to the horizontal

equity of expenditures or revenues for any student attending

any particular institution in a multiple institution public

community college system. Per-student expenditures or

revenues were determined by dividing total fiscal year

education and general current fund expenditures or revenues

by the corresponding period's annual equivalent FTE.










Significance of the Study

The importance of community colleges to the education

system and the goal of equitable distribution of funding to

community colleges has been substantiated in the literature.

However, without specific models and techniques to evaluate

per-student horizontal fiscal equity in multiple institution

public community college systems, state legislators lacked

the basis for making proper decisions to attain or improve

fiscal equity in the community college segment of a state's

higher education system. This analysis would be expected to

yield results that would provide a basis for examining the

horizontal fiscal equity trend resulting from the available

revenues and revenue sources allocated by the states. The

techniques employed in this study could be used to analyze

the effect on per-student horizontal fiscal equity of

pending legislative budget actions that relate to community

college funding.

State legislators would be able, not only to determine,

but also to predict if the funding proposed for community

colleges would alter per-student horizontal equity.

Legislators would be able to evaluate proposed changes in

funding methodology to determine if the changes would result

in a more equitable distribution of funds to the public

community colleges within a state system. The study should

provide the basis for legislative bodies to address equity

in funding community colleges and should provide a method of








16

evaluating the effectiveness of the actions taken to ensure

equity.

Overview of the Study

A comprehensive review of existing literature was

conducted to determine if the research already existed; or

if not, to determine if the techniques and methodologies

that were needed to solve the problem were available. It

was determined during the review of the literature that

similar problem solutions could be found in K-12 horizontal

equity measurement studies that would be applicable as

methodology appropriate to this research.

The researcher obtained data on the funding methodology

employed by the state, total annual revenues and

expenditures by institution, annual revenues by source, and

annual FTE by institution. The research design of this

study was nonexperimental and utilized population data for

the period covered by this study. No similar studies of

horizontal fiscal equity for community colleges were found

in the literature; however, the techniques and horizontal

equity measures utilized in this study were found in the K-

12 literature.

Organization of the Study

This study consists of five chapters and associated

appendices. Chapter Two contains a review of the germane

literature that includes the following topics: equity,

equity measurement, community college funding methodologies,









17

formula funding, sources of community college revenues, and

related topics. The research methodology employed by the

researcher is described in Chapter Three and includes the

data sources and statistical techniques used in this study.

Chapter Four contains the analysis of the data used in this

study, and Chapter Five includes the conclusions,

observations, and recommendations for further study. The

appendices contain the raw data, list of community colleges

used in this study, description of the State of Florida

Community College Program Fund (CCPF), and other related

information.














CHAPTER TWO

REVIEW OF RELATED LITERATURE

Introduction

This chapter contains the results of the literature

search of the topics that were germane to the research. The

research centered on the extension of the discussion of

horizontal fiscal equity to the per-student revenues of a

multiple institution public community college system. The

research dealt with the techniques required to analyze the

relative level and temporal trend of per-student horizontal

fiscal equity that resulted from the actual available

revenues and revenue sources that were allocated to a

multiple institution public community college system.

Specifically, the review of literature focused on

topics relevant to the equitable distribution of revenues

within a multiple institution public community college

system. The 28 institutions of the State of Florida,

Department of Education, Division of Community Colleges were

used in the study. The 28 institutions are defined in

Florida Statutes 240.3031 (1989) and are listed in Appendix

B, Table B-l.

The importance of community colleges to the higher

education process and system has been stated previously











(Taylor, 1985). Taylor (1985) emphasized the scale of the

community college systems and that "40% of all postsecondary

students" make use of community colleges (p. 43). Brookings

Institute President Bruce K. Maclaury (1981) wrote that the

"two-year colleges" were "a significant and vital part of

the nation's diverse system of higher education" (p. vii).

The review of the relevant literature is presented by

topic in this chapter. The main areas of concern included

equity and the application of equity to education, equity

measurement techniques and indices, community college

funding methodologies and trends, and the sources of revenue

for community colleges.

Equity

The concept of equity was not a recent addition to

education finance. Elwood Cubberly, 1902, was attributed

with having been "the first to suggest the concept of fiscal

equalization of educational opportunity" (Wood, Jones, &

Riley, 1984, p. 3). Jordan and McKeown (1980) further

contributed Cubberly with the "concept of fiscal

equalization of educational opportunity" (p. 99).

There were numerous definitions and categorizations of

equity found in the literature. In Webster's New Collegiate

Dictionary (1981) the definition of equity includes the

phrase "freedom from bias or favoritism" (p. 383).

Alexander (1982) indicated that equity encompassed "justice,

equality, humanity, morality, and right" (p. 194).









20

Alexander (1982) also indicated that equitable treatment may

have had as a basis the "natural law of Thomas Aquinas,"

"the utility of Jeremy Bentham," or the "Rawlsian concepts

of freedom and justice" (Alexander, 1982, p. 194).

Equity and equality while synonyms were not

interchangeable terms in education finance. In the context

of education, Coons (1980) stated that there was "no virtue

simply to achieve equality" (p. 134). Burrup, Brimley, and

Garfield (1988) stated that "public education systems are

designed to produce equity (fairness)" but further stated

that "they do not, cannot, and should not aspire to produce

complete equality" (p. 10). Alexander (1982) also indicated

that "equity was more than equality" (p. 195) and

categorized equity as commutative, as in right of ownership,

and distributive, as in social redistribution. The latter

aspect was of interest in education finance.

McMahon (1982) defined equity as "involving a

redistribution of resources (or of costs) designed to

achieve a community's philosophical and ethical standard of

fairness" (p. 16). McMahon (1982) described three types of

equity (horizontal, intergenerational, and vertical) that

encompassed child equity, and further discussed staff equity

and tax equity in the education context.

A hierarchy of equity was proposed by Alexander (1982),

and consisted of Commutative Equity, Equal Distribution,

Restitution, and Positivism. Commutative has been










previously discussed; Restitution included a condition or

requirement of compensation for past inequity, and

Positivism dealt with vertical equity in that the unequal

needs should be "fully financed" (p. 212). The Equal

Distribution dealt with districts having "access to the same

amount of money per pupil" (Alexander, 1982. p. 213).

McMahon (1982) described a hierarchy similar to that of

Alexander (1982) that consisted of Commutative Equity,

Fiscal Neutrality, Proportionality, and Positivism.

Concerning the legal basis of equity in education finance,

Alexander (1982) stated that

the concepts of equity in education in the United
States today sprang from the common weal and good
conscience interpretations of the courts in
reference to constitutions and statutes of the
various states and the federal government. (p.
199)

Based on an analysis of the legal opinions beginning with

Serrano (1971), Alexander (1982) proposed a "School Finance

Equity Model" that stated that "a basic formula adjustment

which will fully fiscally equalize" was the "most important

single element in the determination of equity" (p. 205).

Guthrie, Garms, and Pierce (1988) stated that "one can

think of equity as composed of horizontal equity and

vertical equity" (p. 302). In the context of educational

equity, horizontal equity has been defined as "equal

treatment of equals" by Jones (1985, p. 56). Horizontal

equity or horizontal fiscal equity is the theory used in

this study. The other aspect of equity, vertical equity,











"unequal treatment of unequals" was not considered in this

study (Jones, 1985, p. 56). "Educational equity" was one of

the three goals which have been adopted by American higher

education (Wattenbarger, 1991, p. 114).

As previously noted in this study, the current trend in

funding community colleges has been toward formula funding;

however, the question of equity, defined as "equal treatment

of equals under equal circumstances," has been raised

relative to the results of the formula budgeting processes

in effect in many state postsecondary education systems

(McKeown, 1986, p. 63). The "equal treatment of equals"

concept was referred to as "horizontal equity" by Berne and

Stiefel (1984, p. 13), Jones (1985, p. 56), Jordan and

McKeown (1980, p. 102), and Wood et al. (1984, p. 4).

Alexander (1991) reported eight principles for treating

"like cases alike and unlike cases differently" (p. 291).

McKeown (1986) stated that the purpose of using formulas was

to accomplish the "equitable distribution of available state

funds" (p. 65). Wattenbarger and Mercer (1988) and Jones

and Brinkman (1990) indicated that equity was one of the

principles sought by states in developing procedures for

funding community colleges. Educational equity was listed

by Wattenbarger (1991) as one of the three goals of higher

education and that community colleges have been attentive to

the goals.










The inequality of funding had been recognized by

others. Clark Kerr (1980) indicated the need to raise

"significantly the comparative level of financing of the

least well financed institutions" (p. xii). The equity

question has many facets in higher education. It was not

endorsed in its entirety by all. Woodbury (1983) was a

proponent of the cost-effectiveness approach to allocating

resources between sectors of higher education, and Camp,

Thompson and Crain (1990) indicated that "society has

wavered between demands for equity and excellence" but that

the "positive influence of resources on opportunity has not

wavered" (p. 289). Wattenbarger (1985) reported the

"rivalry between community colleges and other elements of

society needing public funds" (p. 252), and the "trends in

public finance which influence the support pattern for

community junior college education" (Wattenbarger, 1966, p.

92). Vader (1985) reported that "changes in sources of

revenues at community colleges were usually a result of

changes in state funding or fiscal restraints imposed by the

state legislature" (p. 111).

Alexander (1990) wrote of "two conflicting motives" in

the "driving need for equality" and the "compelling desire

for freedom" (p. 299). Friedman and Wiseman (1980) also

indicated that equity concepts were "not all consistent" (p.

36). McMahon (1982) stated that "inefficiency and inequity










currently permeate much of primary, secondary, and higher

education" (p. 2).

Breneman and Nelson (1981) in discussing community

college financing indicated that "equitable distribution of

educational opportunities" was better served by student

equity than taxpayer equity (p. 122), and further proposed

that states should "reduce the disparity in local resources

available per (community college) student" (p. 125). Garms

(1977) listed interdistrict equity as one of the criteria

for community college funding methodologies. Nelson (1982)

in the chapter titled Equity and Higher Education Finance:

The Case of Community Colleges said that community colleges

were the "sector of higher education with the closest

kinship to elementary-secondary schooling" (p. 215).

"Revenues per student" and "interdistrict equity at the

community college level" was stated to be "quite similar" to

the "school finance reform movement" as it relates to

"educational opportunity" (Breneman & Nelson, 1981, p. 121).

The use of the equity measuring techniques, prevalent in

evaluating secondary education per-pupil fiscal equity, was

based on the similarities of the K-12 and community college

systems and the need to measure the distribution disparity

of per-student funding for the purpose of examining the

resulting temporal trend in horizontal equity.

In higher education, the question of horizontal equity,

the "equal treatment of equals under equal circumstances,"










has been raised relative to the budgeting process for

postsecondary education in effect in many states (McKeown,

1986, p. 63). McKeown (1986) stated that

federal courts have been involved in the debate
over the use of funding formulas in the equitable
distribution of state resources to institutions of
higher education. (p. 63)

Wood and Honeyman (1990) indicated that in public school

finance, the recent focus has been "on the states'

responsibility to provide an appropriate financial mechanism

to guarantee the delivery of equitable education programs"

(p. 8). Carrol (1982) indicated that 22 states had changed

their education finance model but that "no standard model of

reform" had emerged (p. 237). Odden (1982) stated that

"equity issues have been the targets of most recent school

finance reforms passed by states" (p. 312).

Jones (1985) indicated that education finance has

focused on two equity concepts, "horizontal equity" and

"vertical equity" (p. 56). Jones (1985) defined horizontal

equity as "equal treatment of equals" and vertical equity as

"unequal treatment of unequals" (p. 56). Wood et al. (1984)

stated that "in most state assessments of educational

finance programs, horizontal equity analysis is desired as

opposed to vertical analysis" (p. 4). Horizontal equity was

the basic theory used in this study.

McMahon (1982) stated that "the most practical measure

of horizontal equity is the real current expenditure per

child" (p. 16). McMahon (1982) further indicated that










current expenditures should exclude "the more erratic

capital outlays" (p. 17). In the context of a state's

school districts, "fiscal equity would require equal per-

pupil revenues." This study used current general fund

revenues and revenue sources but excluded revenues for

capital expenditures.

Not all writers agreed on the topic of equity. Cohn

(1982) claimed too much emphasis was placed on inputs (per-

pupil expenditures) and that more emphasis should be placed

on optimization of resources usage that combined

"efficiency, equity, and 'need'" (p. 290).

Wood et al. (1984) defined the "essence of fiscal

equity" by stating that "a student's access to educational

revenues should not differ substantially from locality to

locality" (p. 5). Most community colleges served local

clientele as a large portion of the student enrollment. The

Florida master plan called for providing "post-high-school

education within commuting distance of more than 99%" of the

population of the State of Florida (State of Florida Bureau

of Information Systems, 1991, p. 1). Student attendance was

not restricted by locality; however, the economic penalty of

attending alternative locations could act as an economic

constraint due to the additional expenses associated with

commuting or residency. Wood et al. (1984) further

indicated that fiscal equity can be divided into "Per-Pupil

Revenue Disparity" and "Fiscal Effort Neutrality" (p. 5).










The first category per-pupil or per-student revenue

disparity, in the community college context, was the focus

of this research study.

In summary, equity was found to be a broad and complex

theory. Even within education finance the concept was

multifaceted and subject to more than one, sometimes

conflicting, objective. Horizontal equity was

differentiated from equality as not being equivalent terms.

Horizontal equity was contrasted in the literature with

vertical equity. There was general consensus in the

literature concerning the definition of the concept of

horizontal equity and the applicability of the concept of

horizontal equity to per-student expenditures.

Measurement of Equity

Gurwitz (1982) said that "to determine whether

expenditures have or will become more equal and by how much,

we need measures of equity" (p. 179). "The measurement of

inequality was first conceptually formulated by Pareto" and

the basic formula was called Pareto's Law (Jordan & McKeown,

1980, p. 94). It was reported by Jordan and McKeown (1980)

that Pareto's Law was extensively used to measure

inequalities in wealth distribution.

Alexander (1982) indicated that the "development of

quantitative measures of school finance equity was

stimulated by Congress in 1974" through legislation that

required that the U.S. Commissioner of Education issue










regulations establishing tests for determining if

expenditures were equalized (p. 209). A result of the

regulations was "an expenditure disparity test" (Alexander,

1982, p. 209). The value, known as the federal range ratio,

should not exceed 0.25, the "disparity standard," after cost

differential adjustments (Federal Register, 1976, p. 26320).

Tibi (1988) indicated that if resources were

distributed in an equitable way for the same type and level

of education then "total expenditures will be well explained

by a small number of indicators expressing the needs of the

institution" (p. 94). Friedman and Wiseman (1980) indicated

that three tasks were involved in empirical work on equity.

These were identification of inequity, measurement, and

prediction (Friedman & Wiseman, 1980).

Historically, equity has been measured using several

different indicators or measurements, but the basic concept

is to compare distributions. Guthrie et al. (1988)

indicated that the measurement of horizontal equity was

easier because it is easier to measure equality than

inequality. Guthrie et al. (1988) further reported that the

reason was that it was more difficult to determine "whether

an unequal distribution [was] equitable" (p. 302).

Garms, Guthrie, and Pierce (1978) had indicated that

the techniques used to measure equity had advantages and

disadvantages; one advantage was the understandability of

the results by the lay person. Garms et al. (1978) stated










that the need was to have a recognizable method of

evaluating "movement in the direction of equality" and not

to "strive for perfect expenditure equality" (p. 179).

In community colleges, as in public schools, the advice

that Harrison (1976) gave concerning equity was applicable;

he stated that "reliable policy advice requires empirical

knowledge of certain key dimensions" (p. 44). Perfect

expenditure equality was not recognized as a goal of

community colleges. There was a need for a "per-unit-of-

activity basis" in examining equity as in examining

efficiency (Brinkman & Jones, 1991a, p. 4).

The Per-Pupil Revenue Disparity Criterion used the

coefficient of variation, the McLoone index, the federal

range ratio, and the Gini index and Lorenz curve per Wood et

al. (1984). Additional per-student fiscal equity measures

for horizontal equity were described by Berne and Stiefel

(1984), Garms et al. (1978), Gurwitz (1982), Guthrie et al.

(1988), Harrison (1976), and Jordan and McKeown (1980).

Berne and Stiefel (1984) included eleven measures of

horizontal equity on a list that did not claim to be

"exhaustive," but did claim to be "rather complete" (p. 19).

The selection of the horizontal equity measures was

based on the criteria of having a broad range of measures

and to select the most utilized or recognized measures. The

Per-Pupil Revenue Disparity Criterion for evaluating

secondary education funding horizontal equity (Wood et al.,









30

1984) was used to evaluate the community college per-student

funding equity. The four measures represented the general

consensus of all sources cited.

The Wood et al. (1984) measures were the coefficient of

variation, McLoone index, federal range ratio, Gini

coefficient, and the accompanying Lorenz curve. In

addition, the range and restricted range were used (Berne &

Stiefel, 1984; Gurwitz, 1982; Jordan & McKeown, 1980).

Berne and Stiefel (1984) stated that the six horizontal

equity measures--range, restricted range, federal range

ratio, McLoone index, coefficient of variation, and the Gini

coefficient--"reasonably represent the diversity of value

judgements that are incorporated in horizontal-equity

measures" (p. 64). The six selected measures were reported

by Berne and Stiefel (1984) in their analysis of 32 studies

involving horizontal equity measurement to have been the

most frequently used horizontal equity measures employed by

researchers in the studies that involved equity measurement.

The rationale for using the K-12 education statistical

indicators for per-student expenditure equity evaluation was

the consistency of mission of the community colleges, the

close "kinship" of community colleges and K-12 education

(Nelson, 1982, p. 215), the open door approach to enrollment

(Breneman & Nelson, 1981), and the "equal treatment of

equals" concept of horizontal equity (Berne & Stiefel, 1984,

p. 13; Jones, 1985, p. 56; Jordan & McKeown, 1980, p. 102;










Wood et al., 1984, p. 4). Effectively, a state tax

supported multiple institution community college system

parallelled a multiple school taxing district. Equity

within a district and equity within the state community

college system were similar.

Community College Funding Methodologies

States have sought the optimal funding method but no

generally accepted best method was found in the literature.

Criteria for judging methods have been proposed by several

researchers including Martorana and Wattenbarger (1978) and

Garms (1977). State funding for public community colleges

has been categorized into six subcategories of three funding

methodologies (Wattenbarger & Starnes, 1986). Wattenbarger

and Mercer (1988) categorized three major funding

methodologies for community colleges based on the

Wattenbarger and Starnes criteria (Starnes, 1975) as

follows:

1. Minimum Foundation Funding was described as funding

at a variable rate depending on local tax availability, in

order to provide a guaranteed minimum level of per-student

support.

2. Negotiated Budget Funding was described as state

funding that is annually or biannually negotiated with a

state legislature or board; no local share. The three

negotiation methods currently reported used were (a) cost-











to-continue-plus, (b) formula-plus, and (c) dual system

appropriation/allocation.

3. Formula Funding was described as funding based on

formulas that specify a stated number of dollars per unit

measure. The unit of measure was reported to vary in the

individual cases. The three subcategories included (a) unit

rate formula funding, (b) formula grant plus funding, and

(c) formula cost-based funding.

Formula Budgeting

Budget formulas have been employed by numerous state

governments to fund the needs of the state's postsecondary

education and to allocate the state's available resources

(Honeyman, Williamson, & Wattenbarger, 1991). McKeown

(1986) indicated that some form of formula budgeting was

used by the majority of states (30 states in 1980) and that

the formulas that were used had been based on least-squares

regression analysis or a standard cost approach.

According to McKeown (1986), the trend has been for

more states to use more complex formulas with better cost

data. Brinkman (1984) reported that "roughly half of the

states" use a formula for "part of the funding process" (p.

333). Several states used a single formula, but Oregon used

the most formulas (twenty-seven). In the period 1988 to

1990 "eight states reported that they have changed to a

formula-based allocation scheme" for the state's public

community college system (Honeyman et al., 1991, p. 5).










Formula budgeting is the "prevalent approach to allocating

state resources to colleges and universities" (Ahumada,

1990, p. 467). McKeown (1986) indicated that a majority of

states used funding formulas for higher education resource

allocation. For community college funding, Wattenbarger and

Mercer (1988) indicated that FTE based formula budgeting has

been "popular" (p. 2). From an international perspective,

Levacic (1989) reported that in England the 1988 Education

Reform Act required the use of formulas for budgeting both

schools and colleges.

As previously stated, there was significant concern

expressed in the literature for the financial crisis that

was facing community colleges. The problem was not new;

however, Lombardi (1971) expressed concern for sufficiency

of funding for community colleges and Kintzer (1980) was

concerned with the effect of Proposition 13 on community

colleges. Martorana and Wattenbarger (1978) indicated that

community colleges have "experienced increasing financial

uncertainty" due to the "pressures on public support to

postsecondary education" (p. 386), and Lombardi (1979)

indicated that the "lean years" were facing the community

colleges in the "post-proposition 13 era." El-Khawas,

Carter, and Ottinger (1988) reported that current-fund

expenditures per full-time equivalent student (FTE) for 2-

year public institutions had increased only "4.8%," in

constant dollars, in the period 1970-71 to 1984-85











(p. 34). Augenblick (1978a) reported that community

colleges "tend to receive less support per student than

other public institutions" (p. 316), and that state

appropriations had not "risen as rapidly as the increase in

current operating expenditures" (Augenblick, 1978b, p. 1).

Leslie and Ramey (1986) reported enrollment elasticity of

about 1.5% (appropriations increased 1.5% for a 1.0%

enrollment increase).

Gold (1990) indicated that higher education was the

"second largest component of state budgets" and as "such a

major component of state spending," the "general state

fiscal conditions are the most important determinant of

state support" (p. 21). Because higher education has been a

state funded function, the economic downturns in the United

States had impaired the ability of many states to finance

postsecondary education.

Sources of Revenue

The sources of revenue for public 2-year colleges were

categorized as state and local government; tuition and fees;

auxiliary enterprises; federal government; sales; gifts,

grants, and contracts; and endowments (Erekson, 1986). The

preceding list was in descending order of the magnitude of

the contribution, with state and local revenue making the

largest contribution, 65.5%, and with endowments

contributing less than 0.1% of the total revenue (Erekson,

1986). It was reported by Wattenbarger and Mercer (1988)










that state and local revenue was the largest revenue

component for community colleges in fiscal year 1985-86.

Honeyman et al. (1991) indicated that for 1988 an average of

58.16% of revenues for community colleges came from the

state and an average of 12.93% came from local sources.

They further indicated that student fees were the next most

significant source of revenue at 21.67%.

The trend in relative contribution of the various

components of revenue, for public colleges and universities

over the past 50 years, had remained basically constant

until the federal government component of revenues began to

decrease in the late seventies (Erekson, 1986). The

decrease in federal government contribution to revenue has

been offset by large increases in state and local government

revenue (Erekson, 1986) along with sizable increases in

tuition and fees (Wattenbarger & Mercer, 1988).

The relationship of revenues to cost (or expenditures)

was summarized in the Revenue Theory of Cost (Bowen, 1980).

Bowen (1980) stated that "an institution's educational cost

per student unit is determined by the revenues available for

educational purposes;" and therefore, "given the enrollment,

cost per student unit is directly proportional to these

revenues" (p. 17). Bowen (1980) said "there is virtually no

limit to the amount of money an institution could spend for

seemingly fruitful educational ends" or in pursuit of its

goals and that an institution "spends all (the money) it











raises" (p. 20). Bowen (1980) also indicated that

expenditures generally equal resources, and that the

differences between the two were generally attributable to

gains or losses in reserve funds (retained fund balance).

The retained fund balance in a given year was the difference

between the beginning and ending fund balance and included

adjustments to fund balance. Brinkman and Jones (1991b)

reported that increases in fund balance or no change in fund

balance with transfers to other funds was considered a

"healthy picture" for institutions (p. 53). Minter and

Bowen (1980) reported that the "trend of both educational

and general expenditures and total expenditures followed

closely the trend of revenues indicating that collectively

the institutions approximately balanced their budgets" (p.

54).

Erekson (1986) reported that state and local government

appropriations were the largest revenue source for public

colleges and universities. State appropriations came via

legislative action and through local government taxing

authority. He further indicated there had been an increased

reliance on state appropriations and fees as the principal

sources of revenue as the federal government's revenue share

had decreased. Fischer (1990) reported "there was great

diversity across the states in policies toward financing

higher education" (p. 44).









37

Tuition and fees constituted the second largest revenue

component of public 2-year higher education institutions

(Erekson, 1986). The appropriate level of contribution by

tuition and fees to the cost of higher education and the

effect on attendance has been the subject of considerable

research (Berne, 1980). The economic studies of the 1960's

led to the realization that the traditional production

components, labor and capital, left variances that were due

to the quality of labor (Leslie & Brinkman, 1988). In

separating human capital from labor, one of the

differentiating elements is the lack of transferability of

education. Schultz's (1982) concept was that people invest

in education due to their expectation of a favorable return

on investment.

The human capital concept led to studies aimed at

quantifying the return on investment associated with

education. The studies have looked at both the return on

private investment and the return on public investment to

determine the appropriate contribution of fees to total

revenues (Leslie & Brinkman, 1988). The results obtained by

Cohen and Greske using 1979 census data yielded values of

$60,000 and $329,000 for males using discount rates of 5%

and 0% respectively for the pecuniary personal benefit of

education. The meta-analysis approach used by Leslie and

Brinkman (1988) indicated that the internal rate of return

associated with an undergraduate degree was in the 11.8-










13.4% range. The economic research on social rates of

return indicated that the investment of public funds has a

positive investment return in the 11-12% range (Leslie &

Brinkman, 1988).

Tuition and fees continued to rise, Wattenbarger and

Mercer (1988) indicated that "each year the amount is

increasing and apparently will continue to increase" (p. 2).

Honeyman et al. (1991) indicated that fees in 1988 averaged

21.67% of all revenues for public community colleges.

The setting or pricing of tuition and fees has gained

in importance due to the substantial contribution fees made

to total revenues (Honeyman et al., 1991). Research

indicated that tuition impacted students. The meta-analysis

of Leslie and Brinkman (1988) indicated that the price

sensitivity of 18-24 year age group to a $100 increase in

the cost of education was a 0.7% drop in the enrollment rate

for first time students in 1982-1983. Erekson (1986)

reported that the percentage contribution to revenues of

tuition and fees in public 2-year institutions had increased

from 10.7% in 1959-60 to 17.2% in 1981-82.

The federal government, as with public K-12 education,

has no constitutional mandate in the area of funding higher

education including community colleges. Federal activities

and programs have been a result of broad interpretation of

areas of the Constitution that are not specifically

concerned with education. Historically, the Morrill Acts of










1862 and 1890, the Serviceman's Readjustment Act of 1944,

NDEA in 1958, and the Higher Education Act of 1965 have been

significant federal legislation aimed directly at higher

education. The current thrust of federal higher education

involvement was set in motion by the Education Amendments of

1972.

Student needs and equal opportunity have been the two

main areas of federal involvement as a result of the

legislation and have been the basis for considerable

litigation (Camp, Thompson, & Crain, 1990; Vacca, 1975; van

Geel, 1991). The "New Federalism" approach has resulted in

significant reductions in the federal government's revenue

contribution to colleges and universities. The federal

contribution has decreased from its historical 15% level to

the 7% level of recent years. Based on 1988 data, the

federal contribution to community colleges averaged only

2.7% (Honeyman et al., 1991).

The State of Florida Community College Division divided

revenues into two fund categories. The categories were

Education and General Current Fund Revenues and Education

and General Restricted Fund Revenues (State of Florida

Bureau of Information Systems, 1991). For the 1989-90

fiscal year, the total General Current Fund revenues were

reported as $742,529,748 and the Restricted Current Fund

revenues were reported as $56,075,486 (State of Florida

Bureau of Information Systems, 1991). The Current General











Fund revenues were further categorized as State Community

College Program Funding (CCPF), State Other, Local Student

Fees, Local Other, and Federal Government (State of Florida

Bureau of Information Systems, 1991). State CCPF was the

largest category and constituted 64.3% of total current fund

revenues. Student fees was the second largest category at

21.8% of total current fund revenues. All other categories

constituted 13.9% of the total current fund revenues (State

of Florida Bureau of Information Systems, 1991, p. 47).

It was found that the sum of the other categories had

remained relatively consistent in the 4.3% to 8.0% range

from 1980-81 through 1987-88 and then increased to 9.7% in

1988-89 and 13.9% in 1989-90 (State of Florida Department of

Education Division of Community Colleges, 1982, 1983, 1984,

1985, 1986, 1987; State of Florida Bureau of Information

Systems, 1988, 1989, 1990, 1991). The education enhancement

revenues from the Florida Lottery were included in the state

other category beginning in the 1987-88 fiscal year per a

report titled "Florida System of Community Colleges, 1991

Legislative Session, Significant Actions Affecting Policy."

The Current Fund Educational and General expenditures came

from the Educational and General Current Fund revenue

sources.

The Florida Funding Methodology

The basic foundation funding source for the State of

Florida community colleges was the State Community College










Program Fund and was promulgated in the Florida Statutes

240.347 (1989) as follows:

(1) There is established a State Community College
Program Fund. This fund shall compromise all
appropriations made by the legislature for the
support of the current operating program and shall
be apportioned and distributed to the community
college districts of the state on the basis of
procedures established by law and regulations of
the State Board of Education and the State Board
of Community Colleges. (p. 1797)

The second major source of revenues available to the

community colleges was student fees. The current basis for

establishing student fees was in the Florida Statutes

240.35 (1990), titled Student Fees. The legislation stated

that the "State Board of Community Colleges shall establish

the matriculation and tuition fees" (Florida Statutes

340.35, 1990, p. 566).

The basis for variability in per-student revenues was

found in the various sections of Florida Statutes 240.35

(1989). In Florida Statutes 240.35 (5) (1989) the

legislation established that community college boards of

trustees could establish fees that varied as much as 10%

from the applicable State Board of Community Colleges

average fees, and that out-of-state student fees must have

been at least twice the amount of state resident fees. In

Florida Statutes 240.35 (6) (1989) an optional 10% activity

and service fee was allowed and Florida Statutes 240.35

(7)(a) (1989) provided authority for collection by the

community colleges an amount of up to 5% for financial aid








42

purposes. Also contributing to the variability of fees was

Florida Statutes 240.35 (8) (1989) that set conditions for

waiving fees and Florida Statutes 240.35 (11) (1989) that

allowed collection of a fee not to exceed $1.00 for capital

improvements.

The Florida Community College Program Fund (CCPF) is

described in Appendix C. Briefly, the funding process

consisted of determining base year expenditures and applying

incremental changes. Increases or decreases in funding for

FTE changes were constrained by a 5% corridor above or below

the current year FTE funding level. The funding corridor

approach required a change of more than 5% in the funded FTE

level in order to obtain budget modification. Facility

increases were budgeted on a square footage basis. The CCPF

was the largest component of revenue for the community

colleges and constituted approximately 65% of total revenues

(State of Florida Bureau of Information Systems, 1991).

Summary

There was substantial reference in the literature, both

directly and indirectly, to the concept of equity in

education finance. Numerous contributors to education

finance literature had addressed the issue. The concept of

horizontal equity was viewed more consistently in the

literature than any other aspect of equity. There was found

in the literature a well established consensus concerning

the appropriate measurement techniques and indicators of








43

horizontal equity. The various equity indicators were more

sensitive to detecting certain aspects of horizontal equity

than other aspects of horizontal equity. The six measures

most widely supported in the literature represented a broad

indication of the various aspects of horizontal equity. The

six measures: range, restricted range, federal range ratio,

coefficient of variation, McLoone index, and Gini

coefficient were supported as appropriate by the majority of

sources and by the research of Berne and Stiefel (1984) as

having been the most widely used measures of horizontal

equity in the education finance context.

The goal of equity in community college financing was

widely supported; however, studies pertaining to the

measurement or evaluation of equity in community colleges

were not prevalent in the literature. The use of per-

student current revenues for community colleges for

measuring horizontal equity was based on extending the use

of per-pupil current revenue horizontal equity measurement

techniques found in the K-12 environment. The use of the K-

12 horizontal equity measurement techniques for multiple

institution public community college system could also be

established due to the similarities of the systems and the

equity goals of community colleges.














CHAPTER THREE

RESEARCH METHODOLOGY

Introduction

The purpose of this study was to extend the discussion

of horizontal fiscal equity as it relates to public K-12

education to the multiple institution public community

college system by analyzing selected horizontal equity

measures and examining the temporal trend of the horizontal

equity over a 10-year period. This study was focused on

per-student total revenues that resulted from the

distribution of the major current general fund revenue

sources (state foundation funding formula, student fees, and

other revenue) in the multiple institution public community

college system of the State of Florida.

In this study were employed the measurement methods

that were normally used in public K-12 horizontal equity

evaluation. The methodology was applied to public community

college per-student revenues and revenue sources for the

purpose of evaluating the temporal trend in horizontal

equity for the multiple institution public community college

system over a 10-year period.

The study included the application of the six most

frequently used horizontal equity measures (Berne & Stiefel,










1984) and evaluation criteria that would permit community

college per-student horizontal equity to be examined and

analyzed. In addition, this research study included

examining the trends in the horizontal equity measures over

the 10-year period utilized by this study and analyzing the

contribution the various revenue components had on the

horizontal equity of the demonstration community college

system. The research methodology was nonexperimental in

design and utilized population data for the demonstration

state for the 10 fiscal year periods from 1980-81 to 1989-

90.

The objective of this study was to provide an

examination of the selected state community college system

per-student fiscal equity, as measured by the horizontal

equity measurement criteria used for K-12 public education

per-pupil equity, and an analyses of the trend of the equity

during the 10-year period utilized in this study. This

research was focused on a state that had a consistent

mission for the institutions within the state community

college system and no stated objective of differentiating

institutions by funding level. Florida was selected as the

demonstration state. Florida was selected because it was a

large representative state community college system that

consisted of 28 institutions with a common mission statement

(State of Florida Bureau of Information Systems, 1991). In










addition, these data for the population of this study were

consistent for the 10-year period of the study.

A 1991 draft recommendation by the Florida Division of

Community Colleges listed "equalization of the base" as one

of the objectives of a proposed funding method change for

the 1991-92 fiscal year. Other funding concerns expressed

in the 1991 draft by the Florida Division of Community

Colleges included district cost differentials and "small

college adjustments."

The Per-Pupil Revenue Disparity Criterion for

evaluating secondary education funding horizontal equity

(Wood et al., 1984) were used to analyze the community

college per-student funding equity. The Wood et al. (1984)

measures were the coefficient of variation, McLoone index,

federal range ratio, Gini coefficient, and the accompanying

Lorenz curve. In addition, the range and restricted range

were used in the analysis of the total revenues (Berne &

Stiefel, 1984; Gurwitz, 1982; Jordan & McKeown, 1980).

Berne and Stiefel (1984) stated that the six horizontal

equity measures--range, restricted range, federal range

ratio, McLoone index, coefficient of variation, and the Gini

coefficient--"reasonably represent the diversity of value

judgements that are incorporated in horizontal-equity

measures" (p. 64). The rationale for using the secondary

education statistical indicators for per-student expenditure

equity evaluation was the consistency of mission of the










community colleges, similarities of the K-12 and community

college systems, the open door approach to enrollment, and

the concept of horizontal equity (Jones, 1985). Based on

the concept of horizontal equity, the funding provided by

the state and the other revenues that were available for

funding the education of the students of the community

college system should not be dependent on the institution

attended by the students.

The purpose of this chapter is to describe the research

methodology that was used to examine the temporal trend in

per-student revenues and sources of revenues for the

multiple institution public community college system of the

State of Florida.

Population of the Study

The population of this study consisted of all

institutions of a state that reported to have a consistent

mission objective and consistent funding objective for the

institutions within the state system of community colleges.

The State of Florida Community College System was selected

because it met the criteria and because these data were

consistent for the 10-year period utilized by this

investigation.

The State of Florida Community College system consisted

of 28 institutions with a common mission and method of

funding the institutions throughout the 10-year period of

this study (Florida Statutes 240.3031, 1991). The number









48

of institutions in the system remained constant over the 10-

year period of this study and had remained constant since

1972 (State of Florida Bureau of Information Systems, 1991).

Enrollment (FTE), expenditure, revenue, and revenues by

source data were taken from the Report for Florida Community

Colleges (State of Florida Department of Education Division

of Community Colleges, 1979, 1980, 1981, 1982, 1983, 1984),

Report for Florida Community Colleges. Part 1 (State of

Florida Department of Education Division of Community

Colleges, 1985), Report for Florida Community Colleges. The

Fact Book (State of Florida Department of Education Division

of Community Colleges, 1985, 1986, 1987) and the Report for

Florida Community Colleges. The Fact Book (State of Florida

Bureau of Information Systems, 1988, 1989, 1990, 1991). The

raw data for FTE, expenditures, and revenues by source are

listed in Appendix A.

There was an assumption made in this study by the

researcher based on the observation by Bowen (1980) that

educational institutions have spent all funding that was

available in pursuit of the educational mission. The

assumption was that revenues closely approximated

expenditures on an institutional level. The assumption was

substantiated for the State of Florida Community Colleges by

comparing revenues, expenditures, beginning fund balance,

and ending fund balance for the period covered by this study

(see Appendix D). In addition, the resulting horizontal











equity values for per-student total expenditures and per-

student total revenues were compared (see Appendix D).

Based on this assumption, the effect of revenue and

revenue sources on per-student expenditure horizontal equity

could be interpreted based on the resulting per-student

revenue horizontal equity. Revenue horizontal equity and

expenditure horizontal equity were considered synonymous and

due to the fungible nature of the revenue sources the

components of revenues were considered to have been

components of expenditures. Student and full time

equivalent (FTE) student annualized are used interchangeably

in this study; therefore, per-student and per-FTE were

treated as equivalent terms for the purpose of this study.

Methodology: Horizontal Fiscal Equity Measurement

This part of the study design was used to determine if

the community college per-student revenues for the selected

population were equitable based on the per-pupil funding

disparity criteria for horizontal equity as described by

Wood et al. (1984), and additional measures of horizontal

per-student equity as indicated by Berne and Stiefel (1984),

Gurwitz (1982), and Jordan and McKeown (1980).

The following statistical measurement indexes for

equity were used in this study: range, restricted range,

federal range ratio, coefficient of variation, McLoone

index, Gini coefficient and Lorenz curve. The equity

measures were calculated for each institution for each year











of this study. The six selected measures were reported by

Berne and Stiefel (1984) in their analysis of 32 studies

involving horizontal equity measurement to have been the

most frequently used horizontal equity measures employed by

researchers in the studies that involved equity measurement.

A discussion of each horizontal equity measurement indicator

follows by subheading.

Range

The range was the mathematical difference between the

highest and lowest observation, in this study the

observation was the institution's per-student revenue (Berne

& Stiefel, 1984; Gurwitz, 1982). The range was determined

by ranking the per-student revenues of each institution and

subtracting the highest value from the lowest value. As the

range decreases, the equity increases. The range was a

"complete measure in that the equality of any two

distributions can be compared" (Gurwitz, 1982, p. 182);

however, the range was not considered to have been the best

indicator of equity because it considered only the extremes

of the distribution. The range was calculated for each year

of this study. The formula used was as follows:

Range = Highest Xi Lowest Xi

where Xi was the per-student expenses or revenues for

institution (i).











Restricted Range

The restricted range was the difference between the

95th and 5th percentile values (Berne & Stiefel, 1984). For

the 28 institutions in the Florida Community College System,

the per-student revenues of the institution for the

corresponding 95th and 5th percentile student when ranked in

per-student revenue order was selected. The restricted

range was considered a better indicator of horizontal equity

because of the exclusion of the extremes of the

distribution. The formula used for the restricted range was

as follows:

Restricted Range = X95th X5th

where X95th was the 95th percentile student's

corresponding per-student revenue or expense

and

X5th was the 5th percentile students's

corresponding per-student revenue or

expense.

Federal Range Ratio

The federal range ratio was the 95th percentile range

value minus the 5th percentile range value divided by the

5th percentile range value (Berne & Stiefel, 1984). The

federal range ratio is restricted range, as previously

described, divided by the 5th percentile student's

corresponding per-student revenue. The closer the ratio is

to 0.0, the more equitable the distribution of per-student










revenues. A federal range ratio not exceeding 0.25 was

considered an equitable distribution (Federal Register,

1976). The formula used for the federal range ratio was as

follows:

federal range ratio = X95th X5th / X5th

where X5th was the 95th percentile student's

corresponding per-student revenues or

expenses and

X5th was the 5th percentile student's

corresponding per-student revenues or

expenses.

Coefficient of Variation

The coefficient of variation was the "square root of

the variance divided by the mean" (Berne & Stiefel, 1984, p.

56). A decreasing coefficient of variation indicates

increased equity. In the horizontal equity context, the

coefficient of variation was the standard deviation of the

per-student revenues of the institutions divided by the mean

and expressed as a percentage. On a per-pupil basis, "as

the coefficient of variation approaches zero, equity becomes

greater" (Wood et al., 1984, p. 6). The formula used for

the coefficient of variation was as follows:

({[ziP,(-Xi)2/iP, ] 5/ )*100

where Zi was the summation of all institutions (i) from

i=l to i=N,











N equaled the number of institutions in the

system,

Pi was the student FTE for institution (i),

A was the population mean per-student expense or

revenue value, and

Xi was the per-student expense or revenue for

institution (i).

McLoone Index

The McLoone index was the ratio of the sum of all

students' corresponding revenues below the mean to the

equivalent mean student revenues summed for all students

below the mean (Berne & Stiefel, 1984). The McLoone index

was an indicator of the disparity in the lower half of the

distribution. The "closer a McLoone Index is to 1, the

greater the equity for the bottom half of the distribution"

(Wood et al., 1984, p. 7). The formula used for the McLoone

index was as follows:

Ei,MV PiXi/1i,MvPyi
where MV equaled the mean student's corresponding

institution, per-student revenues or expense,

Zi,.M was the summation of all institutions (i)

from i=l to i=MV,

Pi was the student FTE for institution (i) through

the mean value student for the system,

A was the population mean per-student expense or

revenue value, and










Xi was the per-student expense or revenue for

institution (i).

Gini Coefficient

The Gini coefficient was the measure of the portion of

resources available to the corresponding portion of the

population (Berne & Stiefel, 1984). The smaller the value

was, the greater the equity. The Gini coefficient was

"sensitive to transfers affecting the middle of the

distribution" (Jordan & McKeown, 1980, p. 96). A Gini

coefficient of zero would indicate perfect equity. The Gini

coefficient "indicates how far the distribution of revenues

is from providing each proportion of students with equal

proportions of revenues." Equity increased as the index

approached zero (Wood et al., 1984). The formula used for

the Gini coefficient was as follows:

(zi.PiPj I Xi-Xj )/2 (X iPi)2,

where Zi j was the summation of all institutions

(i),(j) from i=l to i=N and from j=l to j=N,

N equaled the number of institutions in the

system,

P. was the student FTE for institution (i),

Pi was the student FTE for institution (j),

A was the population mean per-student expense or

revenues value,

Xi was the per-student expense or revenues for

institution (i), and











Xj was the per-student expense or revenues for

institution (j).

Lorenz Curve

The Lorenz curve was used to provide a graphical

representation of the Gini coefficient. The 45 degree line

represented perfect equity. The perfect equity line

depicted the percentage of students equal to the percentage

of revenues at any point on the line. The curves plotted

along with the equity line represented the actual

distribution of resources for a given percentage of

students. The Gini coefficient was the area between the two

curves divided by the area under both of the curves (Berne &

Stiefel, 1984). The less area between the two curves or the

closer the two curves were to being collinear; the greater

the equity. Effectively, if the two curves were collinear

the area between the two lines would become zero and

represent "perfect equity" (Gurwitz, 1982, p. 186).

Methodology: Equity Trend

This part of the study design was concerned with

measuring trends in the horizontal equity for the 10-year

period for the population. "Trend analyses in

nonexperimental designs are always possible whenever an X

variable represents a quantitative dimension of some sort"

(Keppel & Zedeck, 1989, p. 515). A "time series can be

viewed as the representation of the outcomes of a random

variable of concern over a fixed period of time, usually










taken at equally spaced intervals" (Hiller & Lieberman,

1986, p. 680). McClave and Benson (1985) stated that index

values were often used as time series data. The equity

measurements obtained from part one of this study

constituted a quantitative dimension (e.g., McLoone index)

over a period of time (1978-79 through 1988-89) and,

therefore, met the criteria for time series analysis (Keppel

& Zedeck, 1989; McClave & Benson, 1985).

Time series data could be subjected to both descriptive

and inferential analyses (McClave & Benson, 1985). Time

series analysis required the introduction of a "simple index

number" that was based on a change over time (McClave &

Benson, 1985, p. 593). In this study, the change over time

was the fiscal year reporting periods of the community

college system. The quantitative independent variables were

considered to be evenly spaced even though slight variations

in school year, fiscal year, and calendar year corrections

were present during the 10-year period of this study. There

were also an equal number of observations in all cases. The

number of community colleges remained constant at 28

institutions for the 10-year period of the study, and

indexes were calculated for each year.

The equity measurements were evaluated using regression

techniques, where the dependent variable y (equity

measurement of interest) was used with the independent

variable t (the fiscal year period corresponding to the










measurement) to determine "the best fitting line"

(Mendenhall, 1971, p. 265). The model for the evaluation

was as follows:

y = b0 + bt

where y was the equity measurements of interest,

bo was the y intercept,

bl was the slope of the line, and

t was the period that corresponded to the

measurement (Mcclave & Benson, 1985).

The algebraic sign of bl, the slope of the linear

relationship of the time series, was used to analyze

the direction of the trend in equity over the 10-year period

of this study. For equity measures where smaller is more

equitable, the case for all six equity measures utilized in

the study except the McLoone index, a negative sign

indicated an improved equity trend and a positive sign

indicated decreased equity trend. The opposite sign

convention was employed for the McLoone index.

Research Design: Total Revenue Equity Trend

The first research question: was there a trend in per-

student horizontal fiscal equity, based on per-student total

revenues, for the state's public community college system

for the fiscal year periods 1980-81 through 1989-90 based on

the K-12 public education per-pupil fiscal equity

measurement criteria for horizontal equity, required

calculation of the per-student revenues for each of the 28











institutions for each fiscal year of the 10-year period

utilized in this study. Per-student inputs were based on

annual full-time equivalent students or FTE that was

determined by dividing credit hours by 40. These FTE data

were taken from the Report for Florida Community Colleges

(State of Florida Department of Education Division of

Community Colleges, 1979, 1980, 1981, 1982, 1983, 1984),

Report for Florida Community Colleges. Part 1 (State of

Florida Department of Education Division of Community

Colleges, 1985), Report for Florida Community Colleges. The

Fact Book (State of Florida Department of Education Division

of Community Colleges, 1985, 1986, 1987) and the Report for

Florida Community Colleges, The Fact Book (State of Florida

Bureau of Information Systems, 1988, 1989, 1990, 1991).

These raw data for FTE are listed in Appendix A, Table A-1.

The revenues were based on the General Current Fund

Revenues for each institution for each year as reported in

the same sources used for FTE data. These sources are

listed previously for the FTE data. These raw data for

total revenues are listed in Appendix A, Table A-3.

These data were used to calculate per-student (per-FTE)

revenues by institution by year. The per-student revenues

that were calculated were used in the calculation of the six

horizontal equity measures: range, restricted range,

federal range ratio, coefficient of variation, McLoone











index, and Gini coefficient. The Lorenz curve was also

produced.

The resulting equity measures for the 10-year period

were subjected to time series analysis using linear

regression. The slope of the linear relationship was used

to evaluate the trend. The results were interpreted and the

discussion of that analysis is contained in Chapter Four.

Research Design: Revenue Sources Equity Trend

The second research question: was there a trend in

per-student horizontal fiscal equity for the three major

components of revenues, (i.e., the foundation funding

provided by the state; student fees; and other sources) for

the 10 fiscal year period based on the K-12 public education

horizontal fiscal equity measurement criteria, required

calculating the per-student (per-FTE) revenues by major

source (CCPF, student fees, and other) for each institution

for each year of this study. These revenue source data were

taken from the Report for Florida Community Colleges (State

of Florida Department of Education Division of Community

Colleges, 1979, 1980, 1981, 1982, 1983, 1984), Report for

Florida Community Colleges. Part 1 (State of Florida

Department of Education Division of Community Colleges,

1985), Report for Florida Community Colleges. The Fact Book

(State of Florida Department of Education Division of

Community Colleges, 1985, 1986, 1987) and the Report for

Florida Community Colleges, The Fact Book (State of Florida











Bureau of Information Systems, 1988, 1989, 1990, 1991).

These raw data are listed in Appendix A, Table A-4 for CCPF,

Table A-5 for student fees, Table A-6 for state other

revenues, Table A-7 for local other revenues, and Table A-8

for federal revenues.

The General Current Fund Revenues for each institution

for each year were used. These revenue data came from the

same sources that were used for total revenues and FTE data.

The state other revenue, local other revenue, and federal

revenue were combined into one category called other revenue

for this study because the contribution of each of these

revenue components to the total revenue was relatively small

compared to the two primary sources, CCPF and student fees

(see Table C-l).

These data were used to calculate per-student (per-FTE)

revenues for each of the three major revenue sources, (CCPF,

student fees, and other), by institution by year. The per-

student revenues were used to calculate the four horizontal

equity measures: federal range ratio, coefficient of

variation, McLoone index, and Gini coefficient.

Linear regression was used to examine and analyze the

linear relationship of the revenue source equity indicators

over the 10-year period of this study. The slope of the

linear relationship was used to evaluate the trend of the

equity measures.











The second part of question two: what was the

contribution of the three major components of revenue to the

total per-student horizontal fiscal equity, used time series

linear regression analysis to examine and analyze the

relative contribution of the three revenue components to the

resulting per-student revenue equity for each of the four

equity measurement indicators. The slope of the linear

regression lines of the major sources of revenues and the

relationship of the regression lines to the total revenues

regression line was used to evaluate the relative

contribution of the sources. The algebraic sign of the

slope of the linear relationship of the time series was used

to analyze the trend in the equity measures during the 10-

year period of this study. The results were interpreted and

the discussion of that analysis is contained in Chapter

Four.

Summary

Chapter Three contains the description of the equity

measures, statistical techniques, and the study design

methodology used to investigate the two research questions.

The six horizontal equity measures that were used in this

study, were described along with the basis for interpreting

the horizontal fiscal equity represented by the measures.

The methodology used to examine the temporal trend of the

equity measures, time series linear regression, was

described along with the basis for interpreting the results.












CHAPTER FOUR

ANALYSIS OF DATA

Introduction

The purpose of this study was to extend the discussion

of horizontal fiscal equity as it relates to public K-12

education to the multiple institution public community

college system by examining selected horizontal equity

measures and analyzing the temporal trend of the horizontal

equity over a 10-year period. The horizontal fiscal equity

was based on per-student revenues, that resulted from the

distribution of the major sources of revenues (state funding

formula, student fees, and other revenue). The horizontal

equity measurement methodology used in public K-12

horizontal equity studies was applied to public community

college per-student revenues and revenue sources. The

research methodology was nonexperimental, used population

data for the 28 community colleges of the State of Florida

(see Table B-l), and utilized the 10 fiscal year period from

1980-81 to 1989-90. The Per-Pupil Revenue Disparity

Criterion for evaluating secondary education funding

horizontal equity (Wood et al., 1984) were used with the

addition of the range and restricted range (Berne & Stiefel,

1984; Gurwitz, 1982; Jordan & McKeown, 1980). The six

horizontal equity measures (range, restricted range, federal










range ratio, McLoone index, coefficient of variation, and

the Gini coefficient) were used because the six measures

"reasonably represent the diversity of value judgements that

are incorporated in horizontal-equity measures" (Berne &

Stiefel, 1984, p. 64).

The purpose of this chapter is to present the results

of the study based on the analysis of these data. There

were two research questions and the results are presented

for each question under the headings total revenue equity

for question one and revenue source equity for question two.

Total Revenue Equity

The findings of the first research question--was there

a trend in per-student horizontal fiscal equity, based on

per-student total revenues, for the state's public community

college system for the fiscal year periods 1980-81 through

1989-90 based on the K-12 public education per-pupil fiscal

equity measurement criteria for horizontal equity--are

presented by horizontal equity measure. The raw data for

FTE and total revenues are listed in Appendix A, Tables A-1

and A-3. The results are presented by equity measure.

Gini Coefficient

The Gini coefficient was the measure of the portion of

revenues available to the corresponding portion of the

students. The smaller the value was, the greater the

equity. The Gini coefficient was "sensitive to transfers

affecting the middle of the distribution" (Jordan & McKeown,











1980, p. 96). A Gini coefficient of zero would indicate

perfect equity. The Gini coefficient "indicates how far the

distribution of revenues is from providing each proportion

of students with equal proportions of revenues." The least

equity was found in fiscal year 1980-1981 (FY 1980-81) at

0.0902 and the highest level of equity was found in FY 1986-

87 at 0.0406 (see Table 4-1).


Table 4-1

Gini Coefficient for Per-Student Total Revenues


FISCAL YEAR GINI
COEFFICIENT


1980-1981 0.0902
1981-1982 0.0723
1982-1983 0.0614
1983-1984 0.0510
1984-1985 0.0464
1985-1986 0.0547
1986-1987 0.0406
1987-1988 0.0463
1988-1989 0.0534
1989-1990 0.0547



The slope of the time series using the Gini

coefficients for the 10-year period was negative, -0.00333,

and the standard error of the coefficient was 0.00122 (see

Table 4-2). The negative slope indicated a trend toward

increased equity during the 10-year period because the Gini

coefficient was approaching zero. Equity increases as the

index approaches zero (Wood et al., 1984).











Table 4-2

Gini Coefficient Regression Output for Per-Student Total
Revenues


Regression Output:
Constant 0.075445231968
Std Err of Y Est 0.011150584837
R Squared 0.479536910435
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) -0.00333297241
Std Err of Coef. 0.001227638987



Coefficient of Variation

The coefficient of variation was the standard deviation

of the per-student revenues of the institutions divided by

the mean and expressed as a percentage. A decreasing

coefficient of variation indicates increasing equity. As

the coefficient of variation approaches 0.0, the equity

increases. The largest coefficient of variation (lowest

equity), 0.1545, occurred in FY 80-81 and the least (highest

level of equity), 0.0937, occurred in FY 1987-88 (see Table

4-3).

The slope of the time series linear regression of the

coefficient of variation for the 10-year period was negative

indicating an increasing equity trend. The slope of the

time series linear regression was -0.00522 and the standard

error of the coefficient was 0.00151 (see Table 4-4).











Table 4-3


V~ri zt-i rn r fnr


Per-Student Total Revenues


FISCAL YEAR


1980-1981
1981-1982
1982-1983
1983-1984
1984-1985
1985-1986
1986-1987
1987-1988
1988-1989
1989-1990


COEFFICIENT
OF VARIATION


0.1545
0.1345
0.1109
0.1055
0.1001
0.1142
0.0855
0.0937
0.1026
0.0981


Note: The coefficient of variation is listed in the table
as the decimal equivalent of the percentage.


Table 4-4

Coefficient of Variation Regression Output for Per-Student
Total Revenues


Regression Output:
Constant 0.138682919298
Std Err of Y Est 0.013794418168
R Squared 0.596455683298
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) -0.00522233683
Std Err of Coef. 0.001518715456



McLoone Index

The McLoone index was the ratio of the sum of the

actual revenues for students below the mean to the

equivalent mean value summed for all students below the

mean. In evaluating the McLoone index, the closer the index


Pe-SudntToalReene


Ynaffir-i nt nf VA-ri IYin fn-


r~pffi~i~nf ~f











was to 1.0, the greater the equity. The McLoone index was

an indicator of the disparity in the lower half of the

distribution. The highest level of equity was found in FY

1983-84 at 0.942, which was only 0.002 more than the FY

1986-87 McLoone index of 0.940 (see Table 4-5). The lowest

level of equity was found in FY 1980-81 with an index of

0.878.


Table 4-5

McLoone Index for Per-Student Total Revenues


FISCAL YEAR MCLOONE INDEX


1980-1981 0.8782
1981-1982 0.8976
1982-1983 0.9268
1983-1984 0.9418
1984-1985 0.9395
1985-1986 0.9221
1986-1987 0.9396
1987-1988 0.9258
1988-1989 0.9182
1989-1990 0.9144



The slope of the time series linear regression was

positive, 0.00267. Based on the intercept value and the

positive slope, the McLoone index trend line is approaching

the 1.0 index value. The McLoone index approaching 1.0

would indicate increasing equity; however, it should be

noted that the standard error of the coefficient, 0.00213

was almost as large as the slope coefficient (see Table 4-

6). This indicates that the improvement could be small.











Table 4-6

McLoone Index Regression Output for Per-Student Total
Revenues


Regression Output:
Constant 0.905707503817
Std Err of Y Est 0.019410192598
R Squared 0.163378026618
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) 0.002671037919
Std Err of Coef. 0.002136991872



Federal Range Ratio

The federal range ratio was the 95th percentile range

value minus the 5th percentile range value divided by the

5th percentile range value (Berne & Stiefel, 1984). The

closer the ratio was to 0.0 the greater was the equity. The

federal range ratio guideline for K-12 equity is a maximum

of "0.25" (Federal Register, 1976, p. 26320). The federal

range ratios are listed in Table 4-7.

The maximum value, 0.477, indicating the least equity,

occurred in FY 1985-86, and the minimum value, 0.239,

indicating the highest equity during the 10 years occurred

in FY 1983-84. Only the FY 1983-84 federal range ratio,

0.239, was within the federal minimum guideline of 0.250 for

horizontal equity.

The slope of the time series linear regression was

negative, -0.00753, indicating increasing equity; however,

the standard error of the coefficient exceeded the magnitude

of the slope indicating that both neutral and positive











slopes were within the confidence interval of the estimate

of the slope (see Table 4-8). The equity trend was,

therefore, inconclusive.


Table 4-7


Federal Ranae


Ratio for Per-Student Total Revenues


FISCAL YEAR


1980-1981
1981-1982
1982-1983
1983-1984
1984-1985
1985-1986
1986-1987
1987-1988
1988-1989
1989-1990


FEDERAL RANGE
RATIO


0.4302
0.4689
0.2826
0.2388
0.4379
0.4772
0.3085
0.3729
0.3534
0.3041


Table 4-8

Federal Range Ratio Regression Output for Per-Student Total
Revenues


Regression Output:
Constant 0.40889596974
Std Err of Y Est 0.08516546476
R Squared 0.074679571322
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) -0.00753418661
Std Err of Coef. 0.009376409074


Restricted Range


The per-student revenues of the institution


corresponding to the 95th and 5th percentile student when


Federal Rance Ratio for Per-Student Total Revenues









70

ranked in per-student revenue order were selected. The 5th

percentile per-student revenue was subtracted from the 95th

percentile per-student revenue. The results of the

calculation is in Table 4-9. The restricted range had a


Table 4-9

Restricted Range for Per-Student Total Revenues


FISCAL YEAR RESTRICTED
RANGE


1980-1981 938.4
1981-1982 1135.5
1982-1983 697.1
1983-1984 685.8
1984-1985 1284.7
1985-1986 1313.8
1986-1987 973.1
1987-1988 1185.1
1988-1989 1234.8
1989-1990 1125.9



minimum value of $685.8 in FY 1983-84 and a maximum value of

$1313.8 in FY 1985-86. The restricted range values were

considerably less than the corresponding minimum and maximum

range values. The restricted range values were 38.8% and

37.9% of the respective range values. The slope of the

restricted range time series linear regression was 34.62.

The slope was positive and was indicative of a decreasing

horizontal equity trend (see Table 4-10).











Table 4-10

Restricted Range Regression Output for Per-Student Total
Revenues


Regression Output:
Constant 866.9810913151
Std Err of Y Est 213.9565385643
R Squared 0.21265787452
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) 34.62601977132
Std Err of Coef. 23.55583962711



Range

The range was the mathematical difference between the

highest and lowest per-student revenues in the system. The

per-student revenue range for each of the 10 years is listed

in Table 4-11.


Table 4-11

Range for Per-Student Total Revenues


FISCAL YEAR RANGE


1980-1981 2289.3
1981-1982 2634.9
1982-1983 1767.2
1983-1984 2243.1
1984-1985 2485.8
1985-1986 2923.2
1986-1987 3030.9
1987-1988 2970.0
1988-1989 3466.5
1989-1990 2408.0



As the range increased, the equity decreased; however,

the range was not considered to have been the best indicator











of equity because the range considers only the extremes of

the distribution. The range can be affected by the overall

increases in total funding. A pronounced increase (62.5%)

was found in the funding per student over the 10-year

period. The funding increased from an average of $2685 per

student in 1981-82 to $4356 in 1989-90. The minimum per-

student revenue range, $1767.2, occurred in FY 82-83 and the

maximum range, $3466.5, occurred in FY 1988-89. The slope

of the time series linear regression for the range was

positive, 95.17, indicating a decreasing equity trend (see

Table 4-12).


Table 4-12

Range Regression Output for Per-Student Total Revenues



Regression Output:
Constant 2098.399542665
Std Err of Y Est 417.4925419167
R Squared 0.34894271057
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) 95.17748028414
Std Err of Coef. 45.96441608608



Lorenz Curve

The Lorenz curves were used to provide a graphical

representation of the Gini coefficient. The 45 degree

(actually the diagonal) line represents perfect equity. The

perfect equity line depicts the percentage of students equal

to the percentage of revenues at any point on the line. The













Lorenz curves for the highest equity, FY 1986-87, lowest

equity, FY 1980-81, and the last year in the study period,

FY 1989-90 are plotted in Figures 4-1, 4-2, and 4-3

respectively. The curves represent the actual distribution

of resources for a given percentage of students. The Gini

coefficient was the area between the two curves divided by

the area under both curves (Berne & Stiefel, 1984). The

less area between the two curves or the closer the two

curves were to being collinear; the greater the equity.



1.1





0.8

0.7 -

0.6



0.4

0.3

0.2

0.1


0 D 0.2 0.3 0.4 0.5 0.6 0.7 0.2 0.9 1 1.1

B-Cumulative Percentage Students
-e-Cumulative Percentage Revenues


Figure 4-1. Lorenz curve for total per-student revenues for
fiscal year 1986-1987.


Figure 4-1 depicts the best Gini coefficient of all

years in this study. The area between the two lines is the















1.1



0.9

0.8

0.7

0.B

0.5

0.4

0.3

0.2

0.1

0 I I
0.1 0.2 0.3 0.4 0.5 0 6 0.7 O. 0.9 1 1.1

--Cumulative Percentage Students
---Cumulatlve Percentage Revenues




Figure 4-2. Lorenz curve for total per-student revenues for
fiscal year 1980-1981.


minimum area of all cases in the study and represents the

highest horizontal equity. The Gini coefficient was 0.0406

for fiscal year 1986-87. The Lorenz curve in Figure 4-2

depicts the worst equity case for any year of this study

based on the Gini coefficient. The Lorenz curve for this

case has the largest area between the curves. The Gini

coefficient was 0.0902 for this case, FY 1980-81.

The Lorenz curve in Figure 4-3 is for the last year of

the study and represents a Gini coefficient of 0.0547. The

area between the curves is between the two extreme cases and

has the same basic shape as the two other Lorenz curves.











75




1.1



0.9

o.e8

0.7 -

0.6

.5 0.2 0.3

0. 4

0.3

0.2

0.1


0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 09 09 1 1.1

--Cumulative Percentage Students
--Cumulative Percentage Revenues




Figure 4-3. Lorenz curve for total per-student revenues for
fiscal year 1989-1990.




Total Revenue Equity Summary

The trend in horizontal equity based on total per-

student revenues for the 10-year period varied based on the

particular indicator and the aspect of horizontal equity

that the equity measure was sensitive to measuring. Table

4-13 lists the horizontal equity measure, the slope of the

time series linear regression, and the standard error of the

slope coefficient for each of the six horizontal equity

measures.











Table 4-13

Summary of Total Per-student Revenue Equity Time Series
Linear Regression Slope and Standard Error of the Estimate
of the Slope by Equity Measure for 1980-81 Through 1989-90


EQUITY MEASURE


Gini coefficient

Coefficient of var.

McLoone index

Federal range ratio

Restricted range

Range


SLOPE



-0.00333

-0.00522

0.00267

-0.00753

34.626

95.177


STD. ERROR
OF THE EST.


0.00122

0.00151

0.00213

0.00937

23.555

45.964


Table 4-14

Summary of Total Per-student Revenue Equity Trend by Equity
Measure for the 10-Year period 1980-81 Through 1989-90


EQUITY MEASURE


Gini coefficient

Coefficient of variation

McLoone index

Federal range ratio

Restricted range

Range


EQUITY TREND


Increasing equity

Increasing equity

Increasing equity

Inconclusive

Decreasing equity

Decreasing equity











Table 4-14 is a summary of the equity trends for the

six horizontal equity measures based on the time series

linear regression results. The three of the six measures

had increasing equity trends as did the fourth measure, the

federal range ratio, except that it was statistically

inconclusive. The other two range equity measures had

decreasing equity trends.

Revenue Sources Equity Trend

The second research question--was there a trend in per-

student horizontal fiscal equity for the three major

components of revenues, (i.e., the foundation funding

provided by the state; student fees; and other sources) for

the 10 fiscal year period based on the K-12 public education

horizontal fiscal equity measurement criteria--required

calculating the per-student (per FTE) revenues by major

source (Community College Program Fund (CCPF), student fees,

and other) for each institution for each year of the study.

These raw data are listed in Appendix A, Table A-1 for FTE,

Table A-4 for CCPF, Table A-5 for student fees, Table A-6

for state other revenues, Table A-7 for local other

revenues, and Table A-8 for federal revenues. State other

revenue, local other revenue, and federal revenue were

combined into the "other revenue" category for the purpose

of this analysis. The results are presented by equity

measure for each of the three sources of revenue used in

this study.











Gini Coefficient

The Gini coefficient was the measure of the portion of

revenues available to the corresponding portion of the

students. See Table 4-15 for the Gini coefficient by

revenue source for the 10-year period of this study.


Table 4-15

Gini Coefficient for Per-Student Revenues by Source


FISCAL YEAR CCPF FEES OTHER


1980-1981 0.0722 0.1612 0.2516
1981-1982 0.0574 0.1399 0.1926
1982-1983 0.0493 0.1490 0.2571
1983-1984 0.0520 0.1326 0.1338
1984-1985 0.0579 0.1259 0.2410
1985-1986 0.0575 0.1436 0.2552
1986-1987 0.0433 0.1231 0.2262
1987-1988 0.0502 0.1199 0.1582
1988-1989 0.0482 0.1279 0.1217
1989-1990 0.0523 0.1245 0.0809



The lowest level of equity for CCPF was found in FY

1980-81 at 0.0722 and the highest level of equity was found

in FY 1986-87 at 0.0433. The least level of equity for

student fees was found in FY 1980-81 at 0.1612 and the

highest level of equity was found in FY 1987-88 at 0.1199.

The least level of equity for other revenues was found in FY

1982-83 at 0.2571 and the highest level of equity was found

in FY 1989-90 at 0.0809.

The slope of the time series linear regression using

the Gini coefficients for the 10-year period was -0.00333











for the CCPF, -0.00345 for student fees, and -0.01355 for

other revenues (see Tables 4-15, 4-16, and 4-17).


Table 4-15

Gini Coefficient Regression Output for CCPF Revenue Source


Regression Output:
Constant 0.062888765353
Std Err of Y Est 0.006602924917
R Squared 0.380390462849
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) -0.00161105416
Std Err of Coef. 0.000726958108



Table 4-16

Gini Coefficient Regression Output for Student Fees Revenue
Source


Regression Output:
Constant 0.153767269342
Std Err of Y Est 0.008751812189
R Squared 0.616613034002
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) -0.00345623837
Std Err of Coef. 0.00096354281


Table 4-17

Gini Coefficient Regression Output for Other Revenue Source


Regression Output:
Constant 0.266367163564
Std Err of Y Est 0.052471183554
R Squared 0.407547593671
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) -0.01355193507
Std Err of Coef. 0.005776887181









80

The negative slope of the time series linear regression

for each of the three revenue sources indicated a trend

toward increased equity during the 10-year period. All

revenue sources had Gini coefficient trends that indicated

increased equity as did the total revenue Gini coefficient

(see Table 4-2). Equity increased as the index approached

zero (Wood et al., 1984).

Coefficient of Variation

The coefficient of variation was the standard deviation

of the per-student revenues of the institutions divided by

the mean and expressed as a percentage (see Table 4-19).


Table 4-19

Coefficient of Variation for Per-Student Revenues by Source


FISCAL YEAR CCPF FEES OTHER


1980-1981 0.1483 0.3024 0.3749
1981-1982 0.1461 0.2706 0.3206
1982-1983 0.1145 0.2662 0.4925
1983-1984 0.1237 0.2404 0.2537
1984-1985 0.1172 0.2265 0.3854
1985-1986 0.1161 0.2610 0.5255
1986-1987 0.0907 0.2202 0.3837
1987-1988 0.0989 0.2136 0.2997
1988-1989 0.1031 0.2273 0.2722
1989-1990 0.1027 0.2202 0.1597

Note: The coefficient of variation is listed in the table
as the decimal equivalent of the percentage.



A decreasing coefficient of variation indicated

increased equity. As the coefficient of variation

approaches 0.0%, the equity increases. The least level of











equity for CCPF was found in FY 1980-81 at 0.1483 and the

highest level of equity was found in FY 1986-87 at 0.0907.

The least level of equity for student fees was found in FY

1980-81 at 0.3024 and the highest level of equity was found

in FY 1987-88 at 0.2136. The least level of equity for

other revenues was found in FY 1985-86 at 0.5255 and the

highest level of equity was found in FY 1989-90 at 0.1597.

The slope of the time series linear regression for the

coefficient of variation for the 10-year period was -0.00539

for the CCPF, -0.00807 for student fees, and -0.01642 for

other revenues (see Tables 4-20, 4-21, and 4-22). The

negative slope of each of the three revenue sources time

series linear regression indicated a trend toward increased

equity during the 10-year period. All revenue sources had

coefficients of variation trends that indicated increased

equity as did the total revenue coefficient of variation

(see Table 4-4).


Table 4-20

Coefficient of Variation Regression Output for CCPF Revenue
Source


Regression Output:
Constant 0.145789811103
Std Err of Y Est 0.010548875797
R Squared 0.729418357143
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) -0.00539340928
Std Err of Coef. 0.001161393002











Table 4-21

Coefficient of Variation Regression Output for Student Fees
Revenue Source


Regression Output:
Constant 0.289253507731
Std Err of Y Est 0.016496674136
R Squared 0.711920020853
No. of Observations 10
Degrees of Freedom 8
Coefficient(s) -0.00807557546
Std Err of Coef. 0.001816224047



Table 4-22

Coefficient of Variation Regression Output for Other Revenue
Source


Regression Output:
Constant 0.437115964956
Std Err of Y Est 0.104086718622
R Squared 0.204280014127
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) -0.01642275988
Std Err of Coef. 0.011459570563



McLoone Index

The McLoone index was the ratio of the sum of the

actual revenues for students below the mean to the

equivalent per-student mean revenue value summed for all

students below the mean. In evaluating the McLoone index,

the closer the McLoone index is to 1.0, the greater the

horizontal equity (see Table 4-23). The McLoone index is

sensitive to the lower half of the distribution.











Table 4-23

McLoone Index for Per-Student Revenues by Source


FISCAL YEAR CCPF FEES OTHER


1980-1981 0.9533 0.6941 0.7849
1981-1982 0.9586 0.7008 0.8597
1982-1983 0.9498 0.7211 0.8774
1983-1984 0.9606 0.7129 0.8963
1984-1985 0.9185 0.7421 0.7915
1985-1986 0.9036 0.6951 0.8502
1986-1987 0.9375 0.7585 0.8656
1987-1988 0.9289 0.7446 0.8540
1988-1989 0.9397 0.7617 0.8924
1989-1990 0.9391 0.7710 0.9072



The least level of equity for CCPF was found in FY

1985-86 at 0.9036 and the highest level of equity was found

in FY 1983-84 at 0.9606. The least level of equity for

student fees was found in FY 1980-81 at 0.6941 and the

highest level of equity was found in FY 1989-90 at 0.7710.

The least level of equity for other revenues was found in FY

1980-81 at 0.7849 and the highest level of equity was found

in FY 1989-90 at 0.9072.

The slope of the time series linear regression for the

McLoone index for the 10-year period was -0.00271 for the

CCPF, 0.00803 for student fees, and 0.00714 for other

revenues (see Tables 4-24, 4-25, and 4-26).











Table 4-24

McLoone Index Regression Output for CCPF Revenue Source


Regression Output:
Constant 0.953928270035
Std Err of Y Est 0.017109043197
R Squared 0.206735866723
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) -0.00271983618
Std Err of Coef. 0.001883643662



Table 4-25

McLoone Index Regression Output for Student Fees Revenue
Source


Regression Output:
Constant 0.685989668305
Std Err of Y Est 0.016820323062
R Squared 0.701836071343
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) 0.008036050249
Std Err of Coef. 0.001851856621



Table 4-26

McLoone Index Regression Output for Other Revenue Source


Regression Output:
Constant 0.818595979506
Std Err of Y Est 0.037313577426
R Squared 0.274524744376
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) 0.007147667704
Std Err of Coef. 0.004108089669











Federal Range Ratio

The federal range ratio was the 95th percentile range

value minus the 5th percentile range value divided by the

5th percentile range value. The closer the ratio was to 0.0

the greater was the equity. The federal range ratio

guideline for K-12 equity is a maximum of 0.25 (Federal

Register, 1976). The federal range ratios for the 10 fiscal

years are listed in Table 4-27.


Table 4-27

Federal Range Ratio for Per-Student Revenues by Source


FISCAL YEAR CCPF FEES OTHER


1980-1981 0.3347 1.6300 2.6215
1981-1982 0.5765 1.3245 1.9293
1982-1983 0.2452 1.2494 3.1109
1983-1984 0.2489 1.0877 1.0076
1984-1985 0.4827 0.9865 1.3146
1985-1986 0.4372 1.2621 1.8681
1986-1987 0.2511 0.9777 1.5218
1987-1988 0.2869 1.0393 1.5207
1988-1989 0.2983 0.9999 1.4777
1989-1990 0.3205 0.9360 0.8130



The least level of equity for CCPF was found in FY

1981-82 at 0.5765 and the highest level of equity was found

in FY 1982-83 at 0.2452. The least level of equity for

student fees was found in FY 1980-81 at 1.6300 and the

highest level of equity was found in FY 1989-90 at 0.9360.

The least level of equity for other revenues was found in FY

1982-83 at 3.1109 and the highest level of equity was found









86

in FY 1989-90 at 0.8130. Only the FY 1982-83 and FY 1983-84

federal range ratio for CCPF, 0.2452 and 0.2489

respectively, were within the federal minimum guideline of

0.250 for horizontal equity. For all years, all indicators

for the three revenue sources exceeded the federal K-12

guideline.

The slope of the time series linear regression for the

federal range ratio for the 10-year period was -0.01154 for

the CCPF, -0.05832 for student fees, and -0.1532 for other

revenues (see Tables 4-28, 4-29, and 4-30).


Table 4-28

Federal Range Ratio Regression Output for CCPF Revenue
Source


Regression Output:
Constant 0.411714366253
Std Err of Y Est 0.114147342584
R Squared 0.095470744649
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) -0.01154802381
Std Err of Coef. 0.012567208807


Table 4-29

Federal Range Ratio Regression Output for Student Fees
Revenue Source


Regression Output:
Constant 1.470081242732
Std Err of Y Est 0.133967675541
R Squared 0.661517833769
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) -0.05832045771
Std Err of Coef. 0.014749355647











Table 4-30

Federal Range Ratio Regression Output for Other Revenue
Source


Regression Output:
Constant 2.561622094789
Std Err of Y Est 0.559781070522
R Squared 0.436083715135
No. of Observations 10
Degrees of Freedom 8
X Coefficient(s) -0.15329000692
Std Err of Coef. 0.061629867505



The standard error of the coefficient for CCPF revenues

exceeded the magnitude of the slope, indicating that

negative, neutral, and positive slopes were possible within

the confidence interval of the estimate of the slope. The

equity trend was inconclusive for the CCPF revenue source.

Revenue Sources Equity Trend Summary

Table 4-31 is the summary of revenue source per-student

equity time series linear regression slope and standard

error of the estimate of the slope by equity measure for the

10-year period 1980-81 through 1989-90. With the exception

of the federal range ratio slope for the CCPF, all slopes

were indicative of conclusive trends.

Table 4-32 is the summary of the revenue source per-

student equity trend by equity measure for the 10-year

period 1980-81 through 1989-90. The analysis of the slopes

indicated increasing equity for the three revenue sources

except for the CCPF. The CCPF equity trend was decreasing











based on the McLoone index, and the CCPF equity trend was

inconclusive based on the federal range ratio.


Table 4-31
Summary of Revenue Source Per-Student Equity Time Series
Linear Regression Slope and Standard Error of the Estimate
of the Slope by Equity Measure for the 10-Year period 1980-
81 Through 1989-90


EQUITY MEASURE REVENUE SOURCE SLOPE STANDARD ERROR
OF THE ESTIMATE


Gini coefficient

CCPF -0.00161 0.00072

Fees -0.00345 0.00096

Other -0.01355 0.00577

Coefficient of
variation

CCPF -0.00539 0.00116

Fees -0.00807 0.00181

Other -0.01642 0.01145

McLoone index

CCPF -0.00271 0.00188

Fees 0.00803 0.00185

Other 0.00714 0.00410

Federal range ratio

CCPF -0.01154 0.01256

Fees -0.05832 0.01474

Other -0.15329 0.06162











Table 4-32

Summary of Revenue Source Per-student Equity Trend by Equity
Measure for the 10-Year period 1980-81 Through 1989-90


EQUITY MEASURE EQUITY SOURCE EQUITY TREND


Gini coefficient

CCPF Increasing Equity

Fees Increasing Equity

Other Increasing Equity

Coefficient of
variation
CCPF Increasing Equity

Fees Increasing Equity

Other Increasing Equity

McLoone index

CCPF Decreasing Equity

Fees Increasing Equity

Other Increasing Equity

Federal range ratio

CCPF Inconclusive

Fees Increasing Equity

Other Increasing Equity



Revenue Sources Relative Horizontal Equity

For the second part of question two: what was the

contribution of the three major components of revenue to the

total per-student horizontal fiscal equity, time series

linear regression was used to analyze the relative











contribution of the three revenue components to the

resulting per-student expenditure equity for each of the

four equity measurement indicators. The y intercept and the

slope of the time series linear regression were used to

examine the relative contribution of the sources of revenue

to the total revenue equity. The results are presented by

equity indicator.

Gini Coefficient

In order by equity level, the CCPF was the most

equitable revenue source followed by student fees and other

based on the Gini coefficient. It should be noted that the

rate of change of the trend was in exactly the reverse order

with other revenue becoming more equitable at a faster rate

followed by student fees and the CCPF (see Tables 4-15, 4-

16, and 4-17).

In relationship to the total revenue equity, CCPF was

more equitable than total revenue during 5 years of the 10-

year period and less equitable during 5 years (see Tables 4-

1 and 4-14). Student fees and other revenue were less

equitable than total revenue in all 10 years of this study.

The results are summarized in Table 4-33 along with the

results from the other equity measures.

Coefficient of Variation

In order by equity level, the CCPF was the most

equitable revenue source followed by student fees and other

revenues based on the coefficient of variation. It should









91

be noted that the rate of change of the trend was in exactly

the reverse order with other revenue becoming more equitable

at a faster rate followed by student fees and the CCPF (see

Tables 4-18, 4-19, and 4-20). Both of these relationships

were the same as for the Gini coefficient.

In relationship to the total revenue equity, CCPF was

more equitable than total revenue during 1 year of the 10-

year period and less equitable during 9 years (see Tables 4-

3 and 4-19). Student fees and other revenue were less

equitable than total revenue in all 10 years of this study.

These results are summarized in Table 4-33 along with the

results from the other equity measures.

McLoone Index

In order by equity level, the CCPF was the most

equitable revenue source followed by other revenues and

student fees based on the McLoone index. Other revenues and

student fees reversed order from the order in both the Gini

coefficient and coefficient of variation. For the McLoone

index, the pattern of the rate of change of the trend was

different than in the first two measures. The CCPF revenue

source was becoming less equitable, the only case in this

study of an opposite trend for a revenue source from the

trend of the total revenue for the same equity measure.

Student fee revenues were becoming more equitable at a

faster rate than by other revenues (see Tables 4-24, 4-25,

and 4-26). These relationships were considerably different











than observed for either the Gini coefficient or the

coefficient of variation.

Relative to total revenue equity, CCPF was more

equitable than total revenue during 7 years of the 10-year

period and less equitable during 3 years (see Tables 4-5 and

4-23). Student fees and other revenue were less equitable

than total revenue all years of this study. The results are

summarized in Table 4-33 along with the results from the

other equity measures.

Federal Range Ratio

In order by equity level, the CCPF was the most

equitable revenue source followed by student fees and other

revenues, based on the federal range ratio. This matched

the order of both the Gini coefficient and coefficient of

variation equity order. For the federal range ratio, the

pattern of the rate of change of the trend was different

than was observed for the previously discussed three

measures. Other revenue had the best rate of equity

improvement followed by the CCPF and student fees (see

Tables 4-28, 4-29, and 4-30). These trend relationships

were considerably different than observed for the Gini

coefficient, McLoone index, or the coefficient of variation.

Relative to total revenue equity, CCPF was more

equitable than total revenue during 6 years of the 10-year

period and less equitable during 4 years (see Tables 4-7 and

4-27). Student fees and other revenue were less equitable




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