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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
Creator:
Harrell, George Wesley
Copyright Date:
1992
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English

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Subjects / Keywords:
Colleges ( jstor )
Community colleges ( jstor )
Equity ( jstor )
Fees ( jstor )
Funding ( jstor )
Gini coefficient ( jstor )
Higher education ( jstor )
Horizontal equity ( jstor )
Linear regression ( jstor )
Total revenue ( jstor )
City of Tallahassee ( local )

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University of Florida
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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 GIF OM1A[MIS






































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


iii vii


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 . . . . . . . . . .









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

FOUR ANALYSIS OF DATA o . . . . . . o . . . . . .


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 . . .


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


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









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 perstudent revenues and per-student revenue by source. This study was focused on the extension of the concept of perstudent 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 "14.8%,"1 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 significantlyy 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 interdistrictt 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 perstudent 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 K12 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 multiinstitution 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, perstudent 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 FTE11 (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 K12 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-1.

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 1140% 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 unequal" 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). Carol (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 unequal" (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 perpupil 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 (perpupil 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%11 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 Paretoll 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 197411 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-ofactivity 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 Funidingr 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 2year public institutions had increased only "14.8%," 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 perstudent 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 K12 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 198990.

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 10year 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 perstudent 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 X, - 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 = X 95th - X 5th

where X 95th was the 95th percentile student's

corresponding per-student revenue or expense

and

X 5th 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 = X 95th - X 5th / X5th where X5hwas the 95th percentile student's

corresponding per-student revenues or

expenses and

X 5th 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:



where Z. 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:
EiMv PiXi/1;i,MvPiA

where MV equaled the mean student's corresponding

institution, per-student revenues or expense,

Zimv 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:
(Eizj PiPj I Xi-Xj 1 )/2 (FiPi) 2,g where ZiFj was the summation of all institutions

(i),(j) from i=1 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











Xwas 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: Eguity 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 = bo + bit

where y was the equity measurements of interest,

bo was the y intercept,

bi 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 perstudent 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-1).

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 perstudent 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 10year 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-1), 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 Ecniity

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 198687 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 Ci

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 z~t- i r~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


Per-Student Total Revenues


rnaffir-i=nt- nf VA-riAt-inn fn-r











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 46). 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 110.2511 (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






















Federal Rance Ratio for Per-Student Total Revenues


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


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


FISCAL YEAR


FEDERAL RANGE
RATIO


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


0.4302 0.4689 0.2826 0.2388 0.4379 0.4772 0.3085 0.3729
0.3534 0.3041


The per-student revenues of the institution


corresponding to the 95th and 5th percentile student when









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 perstudent 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.








0.6

0.4 0. 3




0.2
0.1

03 DA 0.2 0.3 0.4 0.5 0.6 0.7 0.2 0.9 1 1.1
B Cumulative Percentage Students -s-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


















0.8 0.7 0. B 0.5

0.4 0.3

0.2



0.1 0.2 0.3 0.4 0.5 0.6 0.7 OA 0.9
E3 Cumulative Percentage Students --*-Cumulative 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









0.9 0.8





0.3 0.2 0.1

0
0 0.1 0.2 0.2 0.4 0.5 0.6 0.7 0.9 0.9 1 1.
E3 Cumulative Percentage Students .-oCumulative Percentage Revenues



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



Total Revenue Eq~uity Summary

The trend in horizontal equity based on total perstudent 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 Eqruity Time Series Linear Regression Slope and Standard Error of the Estimate of the Slope by Eciuitv 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 Eqruity Trend by Eauity Measure for the 10-Year period 1980-81 Througrh 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 summnary 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 Eguity Trend

The second research question--was there a trend in perstudent 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 Recgression 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 Regrression 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









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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 Regiress ion 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 Regiression 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 Regress ion 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 a
X Coefficient(s) -0.05832045771
Std Err of Coef. 0.014749355647











Table 4-30

Federal Rangie Ratio Regrress ion 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 Ecruity 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 perstudent 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 Reqression Slope and Standard Error of the Estimate of the Slope by Eauity Measure for the 10-Year period 198081 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 Faulty Trend by Earuitv 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, 416, and 4-17).

In relationship to the total revenue equity, CCPF was more equitable than total revenue during 5 years of the 10year period and less equitable during 5 years (see Tables 41 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 10year period and less equitable during 9 years (see Tables 43 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




Full Text

PAGE 1

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 nom:JA u:mrmrs

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FOR ANDREA

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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. Davids. 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

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TABLE OF CONTENTS ACKNOWLEDGMENTS ABSTRACT CHAPTERS ONE TWO THREE BACKGROUND OF THE STUDY Introduction ..... Statement of the Problem Purpose of the Study ... Overview of the Methodology. Limitations and Delimitations the Study ...... Definition of Terms .... Significance of the study .. Overview of the Study .... Organization of the study. REVIEW OF RELATED LITERATURE. of Introduction . . ... Equity . . . Measurement of Equity. .. Community College Funding Methodologies. Formula Budgeting. . . ... Sources of Revenue ............ Florida Funding Methodology. .. Summary 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 . . . .. iv iii vii 1 1 5 7 8 11 12 15 16 16 18 18 19 27 31 32 34 40 42 44 44 47 49 50 51 51 52 53 54

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FOUR FIVE APPENDICES A B C D Lorenz Curve . . . . . 55 Methodology: Equity Trend. . . . 55 Research Design: Total Revenue Equity Trend. 57 Research Design: Revenue Source Equity Trend . . . . . . . . 59 Summary . . . . . . . . 61 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 . . . . . 62 62 63 63 65 66 68 69 71 72 75 77 78 80 82 85 87 89 90 90 91 92 94 95 OBSERVATIONS AND CONCLUSIONS . 96 Introduction . . . . . . 96 Total Revenue Equity Trend . 97 Revenue Sources Equity Trend . . 100 Conclusions and Implications of the Study 104 Recommendations . . . 106 Recommendations for Further Study. . 107 RAW DATA COMMUNITY COLLEGES USED IN THE STUDY COMMUNITY COLLEGE PROGRAM FUND EXPENSE/REVENUE RELATIONSHIP . V 109 134 137 141

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REFERENCES . . . . . . . . . . . BIOGRAPHICAL SKETCH vi 150 158

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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: Davids. 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

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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

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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

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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 11 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). 2

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3 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

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4 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

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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

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6 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

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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:

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8 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 K12 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.

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The research methodology employed in this study was nonexperimental. This study utilized population data. 9 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 .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,

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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. 10 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).

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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.

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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

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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

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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.

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15 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

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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 K12 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,

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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.

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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 .3031 (1989) and are listed in Appendix B, Table B-1. The importance of community colleges to the higher education process and system has been stated previously 18

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19 (Taylor, 1985). Taylor (1985) emphasized the scale of the community college systems and that 11 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).

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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

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21 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,

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22 "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.

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23 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

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24 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,"

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25 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

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26 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).

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27 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 11 through legislation that required that the U.S. Commissioner of Education issue

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28 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

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29 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.,

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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;

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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 31 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

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32 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).

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33 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 2year public institutions had increased only "4.8%," in constant dollars, in the period 1970-71 to 1984-85

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34 (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)

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35 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

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36 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).

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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

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38 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

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39 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

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40 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

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41 Program Fund and was promulgated in the Florida statutes .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 .35 (1990), titled student Fees. The legislation stated that the "State Board of Community Colleges shall establish the matriculation and tuition fees" (Florida Statutes .35, 1990, p. 566). The basis for variability in per-student revenues was found in the various sections of Florida Statutes .35 (1989). In Florida Statutes .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 .35 (6) (1989) an optional 10% activity and service fee was allowed and Florida Statutes .35 (7) (a) (1989) provided authority for collection by the community colleges an amount of up to 5% for financial aid

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42 purposes. Also contributing to the variability of fees was Florida Statutes .35 (8) (1989) that set conditions for waiving fees and Florida Statutes .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

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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 K12 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.

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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, 44

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45 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 198990. 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

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46 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

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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. 47 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 .3031, 1991). The number

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48 of institutions in the system remained constant over the 10year 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

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49 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

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50 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: where Range= Highest Xi Lowest X 1 X 1 was the per-student expenses or revenues for institution (i).

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51 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: where Restricted Range = X 95 th X 5 th X 95 th was the 95th percentile student's corresponding per-student revenue or expense and X 5 th 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 o.o, the more equitable the distribution of per-student

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52 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: where federal range ratio = X 95 th Xsth / Xsth X 95 th was the 95th percentile student's corresponding per-student revenues or expenses and Xsth 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: where { p::ipi (-Xi)2/I:iPi] .s/}*100 I:i was the summation of all institutions (i) from i=l to i=N,

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53 N equaled the number of institutions in the system, Pi was the student FTE for institution (i), 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: where from ~MV P.X./~MVP.. 1, 1 1 1, 1 MV equaled the mean student's corresponding institution, per-student revenues or expense, ~i,MV was the summation of all institutions ( i) i=l to i=MV, Pi was the student FTE for institution (i) through the mean value student for the system, was the population mean per-student expense or revenue value, and

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X; was the per-student expense or revenue for institution (i). 54 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: where (L;LjPiPjlxi-xjl )/2(LiPi) 2 LiLj 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, Pi was the student FTE for institution (i), P, was the student FTE for institution (j), was the population mean per-student expense or revenues value, Xi was the per-student expense or revenues for institution (i), and

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Xi was the per-student expense or revenues for institution (j). Lorenz Curve 55 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

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56 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

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measurement) to determine "the best fitting line" (Mendenhall, 1971, p. 265). The model for the evaluation was as follows: where y = b 0 + b 1 t y was the equity measurements of interest, b 0 was they intercept, b 1 was the slope of the line, and twas the period that corresponded to the measurement (Mcclave & Benson, 1985). The algebraic sign of b 1 the slope of the linear relationship of the time series, was used to analyze 57 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

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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 58 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

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index, and Gini coefficient. The Lorenz curve was also produced. 59 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

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60 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-1). 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.

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61 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 10year 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.

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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-1), 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 62

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63 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,

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64 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 198687 at 0.0406 (see Table 4-1). Table 4-1 Gini Coefficient 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 GINI COEFFICIENT 0.0902 0.0723 0.0614 0.0510 0.0464 0.0547 0.0406 0.0463 0.0534 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).

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65 Table 4-2 Gini Coefficient Regression Output for Per-Student Total Revenues Regression Output: Constant Std Err of Y Est R Squared No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. Coefficient of Variation 0.075445231968 0.011150584837 0.479536910435 10 8 -0.00333297241 0.001227638987 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 o.o, 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).

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66 Table 4-3 Coefficient of Variation 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 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 Std Err of Y Est R Squared No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. McLoone Index 0.138682919298 0.013794418168 0.596455683298 10 8 -0.00522233683 0.001518715456 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

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67 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 1980-1981 1981-1982 1982-1983 1983-1984 1984-1985 1985-1986 1986-1987 1987-1988 1988-1989 1989-1990 MCLOONE INDEX 0.8782 0.8976 0.9268 0.9418 0.9395 0.9221 0.9396 0.9258 0.9182 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 46). This indicates that the improvement could be small.

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68 Table 4-6 McLoone Index Regression Output for Per-student Total Revenues Constant Std Err of Y Est R Squared Regression Output: No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. Federal Range Ratio 0.905707503817 0.019410192598 0.163378026618 10 8 0.002671037919 0.002136991872 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 o.o 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

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69 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 Range Ratio for Per-Student Total Revenues Table 4-8 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 Federal Range Ratio Regression Output for Per-Student Total Revenues Regression Output: Constant Std Err of Y Est R Squared No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. Restricted Range 0.40889596974 0.08516546476 0.074679571322 10 8 -0.00753418661 0.009376409074 The per-student revenues of the institution corresponding to the 95th and 5th percentile student when

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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 1980-1981 1981-1982 1982-1983 1983-1984 1984-1985 1985-1986 1986-1987 1987-1988 1988-1989 1989-1990 RESTRICTED RANGE 938.4 1135.5 697.1 685.8 1284.7 1313.8 973.l 1185.1 1234.8 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).

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71 Table 4-10 Restricted Range Regression Output for Per-Student Total Revenues Regression Output: Constant Std Err of Y Est R Squared No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. Range 866.9810913151 213.9565385643 0.21265787452 10 8 34.62601977132 23.55583962711 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 1980-1981 1981-1982 1982-1983 1983-1984 1984-1985 1985-1986 1986-1987 1987-1988 1988-1989 1989-1990 RANGE 2289.3 2634.9 1767.2 2243.l 2485.8 2923.2 3030.9 2970.0 3466.5 2408.0 As the range increased, the equity decreased; however, the range was not considered to have been the best indicator

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72 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 Std Err of Y Est R Squared No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. Lorenz Curve 2098.399542665 417.4925419167 0.34894271057 10 8 95.17748028414 45.96441608608 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

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73 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 1 0.9 O.B 0.7 0.6 o.~ 0.4 0.3 0.2 0.1 C D 0.1 D.2 0.3 0.4 O.~ 0.6 0.7 O.B -a-Cumulative Percentage Students ~Cumulatlve Percentage Revenues D.9 1 1.1 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

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74 1.1 1 0 9 o.e 0. 7 o e 0 5 0 3 0.2 0.1 a a 0 1 C 2 0 3 C 4 C 5 0 6 C 7 C 9 1 1 --er-Cumulative Percentage Students -.+-Cumulative 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.

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75 1.1 1 0.9 o.e 0.7 0.6 o.~ o.~ 0.3 0.2 0.1 a 0.1 0.3 0.6 O.B 1.1 -a-Cumulatlve 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.

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Table 4-13 Summarv 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 Table 4-14 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 76 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

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77 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.

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78 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

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79 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 Std Err of Y Est R Squared No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. Table 4-16 0.062888765353 0.006602924917 0.380390462849 10 8 -0.00161105416 0.000726958108 Gini Coefficient Regression Output for Student Fees Revenue Source Regression Output: Constant Std Err of Y Est R Squared No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. Table 4-17 0.153767269342 0.008751812189 0.616613034002 10 8 -0.00345623837 0.00096354281 Gini Coefficient Regression Output for Other Revenue Source Regression output: Constant Std Err of Y Est R Squared No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. 0.266367163564 0.052471183554 0.407547593671 10 8 -0.01355193507 0.005776887181

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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

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

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82 Table 4-21 Coefficient of Variation Regression Output for Student Fees Revenue Source Constant Std Err of Y Est R Squared Regression output: No. of Observations Degrees of Freedom Coefficient(s) Std Err of coef. Table 4-22 0.289253507731 0.016496674136 0.711920020853 10 8 -0.00807557546 0.001816224047 Coefficient of Variation Regression Output for Other Revenue Source Regression Output: Constant Std Err of Y Est R Squared No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. McLoone Index 0.437115964956 0.104086718622 0.204280014127 10 8 -0.01642275988 0.011459570563 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.

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83 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).

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84 Table 4-24 McLoone Index Regression output for CCPF Revenue Source Regression Output: Constant Std Err of Y Est R Squared No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. Table 4-25 0.953928270035 0.017109043197 0.206735866723 10 8 -0.00271983618 0.001883643662 McLoone Index Regression output for student Fees Revenue Source Regression Output: Constant Std Err of Y Est R Squared No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. Table 4-26 0.685989668305 0.016820323062 0.701836071343 10 8 0.008036050249 0.001851856621 McLoone Index Regression Output for Other Revenue Source Regression Output: Constant Std Err of Y Est R Squared No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. 0.818595979506 0.037313577426 0.274524744376 10 8 0.007147667704 0.004108089669

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85 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 o.o 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

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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 Std Err of Y Est R Squared No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. Table 4-29 0.411714366253 0.114147342584 0.095470744649 10 8 -0.01154802381 0.012567208807 Federal Range Ratio Regression Output for Student Fees Revenue Source Regression Output: Constant Std Err of Y Est R Squared No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. 1. 4 70081242732 0.133967675541 0.661517833769 10 8 -0.05832045771 0.014749355647

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87 Table 4-30 Federal Range Ratio Regression Output for Other Revenue Source Regression Output: Constant Std Err of Y Est R Squared No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. 2.561622094789 0.559781070522 0.436083715135 10 8 -0.15329000692 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

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88 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 198081 Through 1989-90 EQUITY MEASURE REVENUE SOURCE Gini coefficient Coefficient of variation McLoone index Federal range ratio CCPF Fees Other CCPF Fees Other CCPF Fees Other CCPF Fees Other SLOPE -0.00161 -0.00345 -0.01355 -0.00539 -0.00807 -0.01642 -0.00271 0.00803 0.00714 -0.01154 -0.05832 -0.15329 STANDARD ERROR OF THE ESTIMATE 0.00072 0.00096 0.00577 0.00116 0.00181 0.01145 0.00188 0.00185 0.00410 0.01256 0.01474 0.06162

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89 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 Gini coefficient Coefficient of variation McLoone index Federal range ratio EQUITY SOURCE CCPF Fees Other CCPF Fees Other CCPF Fees Other CCPF Fees Other EQUITY TREND Increasing Equity Increasing Equity Increasing Equity Increasing Equity Increasing Equity Increasing Equity Decreasing Equity Increasing Equity Increasing Equity Inconclusive Increasing Equity 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

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90 contribution of the three revenue components to the resulting per-student expenditure equity for each of the four equity measurement indicators. They 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, 416, and 4-17). In relationship to the total revenue equity, CCPF was more equitable than total revenue during 5 years of the 10year period and less equitable during 5 years (see Tables 41 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

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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 10year period and less equitable during 9 years (see Tables 43 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

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92 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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93 Table 4-33 Summary of the Revenue Sources Relative Equity. Comparison of Relative Annual Equity of Revenue Sources and Total Revenue. and Source Equity Trend Comparison by Equity Measure EQUITY MEASURE REVENUE SOURCES (REIATIVE EQUITY ORDER) REVENUE SOURCE COMPARED TO TOTAL REVENUE EQUITY NBR. YRS. NBR. YRS. Gini coefficient Coefficient of variation McLoone index (1) CCPF (2) Fees (3) Other (1) CCPF (2) Fees (3) Other (1) CCPF (2) Other (3) Fees Federal range ratio (1) CCPF (2) Fees (3) Other BETTER WORSE 5 0 0 1 0 0 7 0 0 6 0 0 5 10 10 9 10 10 3 10 10 4 10 10 REVENUE SOURCE REIATIVE EQUITY TREND COMPARISON BY EQUITY MEASURE Least Increasing Increasing Most Increasing Least Increasing Increasing Most Increasing Decreasing Least Increasing Most Increasing Inconclusive Least Increasing Most Increasing

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94 than total revenue for all years of this study. The results are summarized in Table 4-33 along with the results from the other equity measures. Revenue Sources Relative Equity Trend Summary The relationships of the revenue sources were found to be varied based on the equity measure. Table 4-33 is a summary of three aspects of the horizontal equity relationship of the sources of revenue, relative equity order, relative equity annual performance, and the equity trend of the three revenue sources. The CCPF ranked highest based on the four equity measures. Fees ranked second in all except the McLoone index that is sensitive to the lower half of the distribution. Other revenue ranked lowest based on all measures except the McLoone index where it ranked in the middle. The comparison of the annual equity measures for total revenues with the revenue sources yielded the following results. The only revenue source to have higher equity than the total revenue was the CCPF. The CCPF was higher during 5 years for the Gini coefficient, 1 year for the coefficient of variation, 7 years for the McLoone index and 6 years for the federal range ratio (see Table 4-33). The CCPF was the revenue source with the lowest rate of change in equity during the study period based on the slope of the time series linear regression analyses. The CCPF had the least increasing slope based on the Gini coefficient, a

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95 decreasing slope based on the McLoone index, and a statistically inconclusive slope direction based on the federal range ratio horizontal equity measure. The CCPF had the least increasing slope in two cases, a decreasing slope in one case, and a statistically inconclusive slope in one case. The remaining two revenue sources, student fees and other, had slopes that indicated increasing horizontal equity at varying relative rates for all four Wood et al. (1984) criterion. Summary This chapter reviews the total per-student revenues, based on the six horizontal equity measures, and the per student revenue sources, based on the four Wood et al. (1984) criterion for horizontal fiscal equity. The trend in the equity based on the measures was determined based on the slope of the time series linear regression analyses. Chapter Five contains the observations and conclusions based on these analyses.

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CHAPTER FIVE OBSERVATIONS AND CONCLUSIONS 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-1), 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). 96

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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). 97 The purpose of this chapter is to present the observations and conclusions of this study based on the examination and analysis of the data. There were two research questions and the results are presented for each question under the headings total revenue equity trend for the first research question and revenue source equity trend for the second research question. 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--is discussed first. The graph in Figure 5-1 depicts the per-student total revenue horizontal fiscal equity trend based on the slope of the time series linear regression analyses of the four Wood et al. (1984) horizontal fiscal equity measures: Gini coefficient, coefficient of variation, McLoone index, and

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federal range ratio. The four equity measures have trends that indicate increasing equity over the 10-year period; however, the federal range ratio was statistically inconclusive. 1 A ts ts A A ts ts ,i!I 0.9 .... ti. A 0. 8 ,._ 0. 7 'D. B ,._ 0.5 -~ D. 3 ,._ D. 2 '. A A 0.1 ".: [3 B B B B B B B B a 0 I I I I I I I I I I 1980-81 1981-82 1982-83 1985-86 1986-87 1987-88 1988-89 1989-90 -e-Glnl Coefficient -+Coe ff i c I ent of Variation -&-Mcloone Index -Feder-a I Range Ratio Figure 5-1. Graph of the Gini coefficient, coefficient of variation, McLoone index, and federal range ratio for total per-student revenues for the period 1980-81 through 1989-90. 98 The graph in Figure 5-2 depicts the per-student total revenue horizontal fiscal equity trend based on the slope of the time series linear regression analyses of the range and restricted range horizontal fiscal equity measures. The two equity measures, range and restricted range, have trends that indicate decreasing equity over the 10-year period.

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99 19BC-B1 1981-8:2 19B2-B3 19BS86 19B6-B7 19B7-BB 1988-89 1989-90 -e-Range ~Restricted range Figure 5-2. Graph of the range and restricted range for per-student total revenues for the period 1980-81 through 1989-90. The three equity measures, Gini coefficient, coefficient of variation, and McLoone index, have trends that indicate improving equity for the distribution as a whole, the center of the distribution, and the lower half of the distribution respectively (see Figure 5-1). The three range measures, federal range ratio, range, and restricted range have equity trends that are decreasing (see Figures 51 and 5-2); however, the equity trend of the federal range ratio is statistically inconclusive.

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100 Revenue Sources Equity Trend The second research question--was there a trend in per student horizontal fiscal equity of 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 examining and analyzing the revenues by major source (Community College Program Fund (CCPF), student fees, and other). state other revenue, local other revenue, and federal revenue were combined into the "other revenue" category for the purpose of this analysis. The graphs in Figures 5-3, 5-4, 5-5, and 5-6 depict the equity trend for the four Wood et al. (1984) measures: Gini coefficient, coefficient of variation, McLoone index, and federal range ratio. The graphs include the total per student revenue trend line and the per-student revenue source trend lines for each of the four horizontal fiscal equity measures. The graph in Figure 5-3 depicts the horizontal fiscal equity trend of the per-student sources of revenues and the per-student total revenues based on the Gini coefficient. The relative level of horizontal fiscal equity and the relative rate of change of the equity trend can be observed. The least equitable revenue source, other revenue, had the highest rate of improving equity trend based on the Gini

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101 coefficient. This contributed to the total revenue trend line crossing the trend line of the most equitable revenue source, the CCPF. Note that the trend lines cross in the FY 1986-87 time frame (see Figure 5-3). 0 3 ~--------------------------~ 0 25 0 2 0.15 0.1 : ij lel ij 0.05 9 Iii ti a~--~------~--~---'---~--~--....._ __ ...__. 1980-81 1991-92 1982-83 19831985-86 1986-87 1987-88 1988-89 1989-90 -eTota I l=levenue CCPF --6Student Fees ~Other Figure 5-3. Graph of the Gini coefficient for per-student total revenues, CCPF revenues, student fees, and other revenues for the period 1980-81 through 1989-90. The graph in Figure 5-4 depicts the horizontal fiscal equity trend of the per-student sources of revenues and the per-student total revenues based on the coefficient of variation. The relative level of horizontal fiscal equity and the relative rate of change of the equity trend can be observed. As also indicated by the Gini coefficient, the

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102 least equitable revenue source, other revenue, had the highest rate of improving equity trend based on the coefficient of variation. This contributed to the total revenue trend exceeding all of the revenue sources. Note that the trend line for total revenues is below the revenue sources trend lines (see Figure 5-4). 0.35 0.3 0.25 0.2 0.15 8 0.1 0.05 ~--~--~--~--~--~--~--------1980-81 19B1-B2 1982-83 1985--86 1986-87 1987-88 1988-89 1989-90 -ir Tota I Revenue -4--CCPF -Student Fees ~Other Figure 5-4. Graph of the coefficient of variation for per student total revenues, CCPF revenues, student fees, and other revenues for the period 1980-81 through 1989-90. The graph in Figure 5-5 depicts the horizontal fiscal equity trend of the per-student sources of revenues and the per-student total revenues based on the McLoone index. The relative level of horizontal fiscal equity and the relative

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103 rate of change of the equity trend can be observed. The least equitable revenue source is student fees and the trend of CCPF is decreasing and crosses the total revenue trend line (see Figure 5-5). 1 0 95 : : : : : : @ B 4 0.9 o 95 0 9 0 75 0.7 o. 65 .____. __ __._ __ _.._ __ ~--~--~--~--~--~--~ 1980-81 1991-92 198283 199596 199687 1987-88 199&99 1989-90 -aTota I Revenue CCPF student Fees ~Other Figure 5-5. Graph of the McLoone index for per-student total revenues, CCPF revenues, student fees, and other revenues for the period 1980-81 through 1989-90. The graph in Figure 5-6 depicts the horizontal fiscal equity trend of the per-student sources of revenues and the per-student total revenues based on the federal range ratio. The relative level of horizontal fiscal equity and the relative rate of change of the equity trend can be observed. As also indicated by the Gini coefficient and the

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104 coefficient of variation, the least equitable revenue source, other revenue, had the highest rate of improving equity trend based on the federal range ratio (see Figure 56). The trend of the CCPF was statistically inconclusive. 3~-----------------------------, 2 5 2 1 5 1 0 5 D .__. __ __._ __ __._ __ __._ __ __._ __ __._ __ __._ __ ___._ __ _,_ __ .....____, 1980-81 1981-82 1982-83 1985--86 1986-87 1987-88 1988-89 1989-90 -aTota I Revenue CCPF -6Student Fees -other Figure 5-6. Graph of the federal range ratio for per student total revenues, CCPF revenues, student fees, and other revenues for the period 1980-81 through 1989-90. Conclusions and Implications of the Study There is a statistically conclusive trend in the per student total revenue horizontal fiscal equity for the state of Florida community college system. The trend was conclusive for 5 of the 6 horizontal fiscal equity measures utilized in this study. For per-student total revenues, the

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105 horizontal fiscal equity trend was toward increasing equity except for range related horizontal fiscal equity. The range related horizontal equity measures are sensitive to the difference between the community colleges receiving the highest levels of per-student revenues and the community colleges receiving the lowest levels of per-student revenues. The difference is increasing both numerically and as a ratio with the low per-student revenue levels as the denominator. This effect is mathematically inherent in a cost-plus budget approach as is utilized by the State of Florida to fund community colleges. For revenue source relative horizontal equity and equity trend, the CCPF provided high levels of horizontal equity and an increasing equity trend with the exception of the range problem. The other two major revenue sources, student fees, and other revenue, adversely affected the total revenue level and partially offset the high level of equity of the CCPF. This is because the other two revenue sources have considerably lower levels of horizontal equity. The relatively lower percentage of revenue contributed by the two revenue sources, a certain amount of intermeshing of the various revenue components, and higher rates of change toward increased equity of the two revenue sources contributed to the resulting total equity. Analyses of the results of this study indicate that the CCPF generally exhibits high levels of horizontal per

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106 student revenue equity with a trend toward even higher levels of equity. The CCPF should be continued but modified to improve the range related horizontal fiscal equity. student fees and other current general fund revenues were found to decrease the overall high level of equity provided by the CCPF. Special allocations and education enhancement funds are major components of the other revenue category. The other revenue category was the least equitable revenue source, and efforts should be made to either control or at least recognize the effect of this category on the total per-student horizontal fiscal equity. Recommendations The funding methodology used by the State of Florida has resulted in a temporal trend toward increased equity in the distribution of revenues to the institutions in the system over the 10-year period with the exception of range related horizontal fiscal equity. The foundation funding methodology (approximately 65% of total revenues) used by the State of Florida is predominantly a cost-plus approach. The cost-plus approach to budget allocation inherently produces a broadening range, as was observed in this study by the results of the range sensitive horizontal fiscal equity measures. Increasing both extremes of a range by the same percentage, mathematically increases the range by an amount equal to the difference in the extremes times the same percent increase. Unless offset by some other funding

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107 action, range related horizontal equity will decrease using the cost-plus approach for annual funding. The recommendations are: 1. It is recommended that horizontal fiscal equity goals be adopted by the State of Florida for the community college system. 2. In concert with the adopted goals, it is recommended that priority be given to rectifying the range related equity problem and that the State of Florida adopt, as a minimum, the federal guideline of 0.25 for the federal range ratio. 3. It is recommended that all sources of revenue be recognized and accounted for in the funding methodology not just "student fees and state appropriations" as recommended in the Florida Community College Finance: Update (Postsecondary Education Planning Commission, 1991, p. 19). 4. It is recommended that special allocations be limited and evaluated prior to implementations for equity impact. 5. It is recommended that the base funding levels be evaluated and adjusted as a method of correcting the range related equity problem. Recommendations for Further Study The following are recommendations for further study that were recognized during this study:

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108 1. It is recommended that the issue of lottery funded education enhancement for the community college system be evaluated for equity impact. 2. Due to the methodology change in the CCPF for FY 1990-91, it is recommended that the horizontal fiscal equity for FY 1990-91 be evaluated and compared to the results of this study when the data are available. 3. It is recommended that the effect of the corridor funding approach utilized by the State of Florida be evaluated for horizontal equity impact. 4. It is recommended that the horizontal fiscal equity of other state community college systems be evaluated in order to broaden the base and determine the norms for horizontal equity on a national scale.

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APPENDIX A RAW DATA Table A-1 State of Florida Community Colleges Full-Time Equivalent Students for Fiscal Years 1980-81 Through 1989-90 INSTITUTION 1989/90 1988/89 1987/88 BREVARD 8452.4 7809.9 7491.6 BROWARD 11341.4 10330.0 9700.9 CENTRAL FLORIDA 2852.2 2443.0 2406.4 CHIPOLA 1424.0 1348.5 1135.6 DAYTONA BEACH 7714.6 6917.7 6708.6 EDISON 3746.1 3251.2 3104.1 FLA CC AT JAX 16192.4 14349.6 12304.8 FLORIDA KEYS 850.0 729.2 760.3 GULF COAST 2667.6 2616.7 2423.8 HILLSBOROUGH 8301.4 7450.3 6562.3 INDIAN RIVER 6061.7 5419.4 4958.8 LAKE CITY 2015.4 1830.2 1707.9 LAKE-SUMTER 1018.2 918.3 888.4 MANATEE 4170.4 3918.8 3632.3 MIAMI-DADE 29504.0 27496.3 26126.2 NORTH FLORIDA 917.3 870.4 859.5 OKALOOSA-WALTON 3103.0 2597.8 2246.3 PALM BEACH 7613.9 6653.4 6306.2 PASCO-HERNANDO 2458.3 2108.4 1832.9 PENSACOLA 7137.4 7669.8 7260.0 POLK 2975.1 2739.7 2442.3 ST. JOHNS RIVER 1615.0 1336.4 1109.9 ST. PETERSBURG 9723.0 9096.7 8543.6 SANTA FE 6738.7 6323.4 5731.0 SEMINOLE 6185.2 6240.0 5870.6 SOUTH FLORIDA 2320.3 2273.9 1926.1 TALLAHASSEE 4596.0 4070.9 3533.1 VALENCIA 8761.2 8030.6 7292.6 TOTAL 170456.2 156840.5 144866.1 109

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Table A-1 (cont.) INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE 1986/87 7270.3 9575.3 2250.5 1067.7 6732.5 2893.9 12206.7 678.0 2269.6 6267.7 4661. 0 1919.1 853.9 3215.5 25085.4 784.1 2077.7 6000.4 1649.9 7092.1 2283.4 944.7 8303.9 5416.9 5286.5 1649.6 3074.3 6631.2 138141.8 1983/84 7865.9 9962.8 2409.4 927.4 6710.6 2749.1 13557.1 755.5 2132.5 6100.7 4465.3 1381.2 818.9 3223.0 1985/86 6691.0 9290.4 2096.6 1041.0 6688.1 2658.6 12134.3 692.8 2095.3 5763.8 4715.0 1548.9 811. 0 3050.5 23995.4 702.7 2087.6 5694.1 1609.7 7087.0 2220.6 745.8 8188.9 5140.9 5220.4 1612.1 2754.9 6270.0 132607.4 1982/83 7308.1 9791.9 2473.8 924.8 6305.0 2646.2 14372.5 779.5 2032.1 5940.7 4612.0 1547.0 833.1 3143.6 1984/85 6996.3 9534.6 1979.2 963.7 6188.1 2678.6 11682.6 753.0 2091.3 5696.4 4629.0 1578.5 746.6 3020.0 23682.0 641.9 2172.3 5532.2 1495.0 7049.0 2366.2 695.6 8427.5 4903.8 4917.0 1165.5 2560.2 5891. 7 130037.8 1981/82 6389.7 9111. 7 2045.6 962.0 6242.7 2461.2 15021.8 803.0 2016.6 5919.0 4825.0 1349.6 693.4 2810.8 110

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Table A-1 (cont.) INSTITUTION MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA 1983/84 24180.0 676.0 2295.7 5487.1 1585.5 7777.1 2538.4 719.0 8600.4 5024.8 4830.1 1100.9 2598.6 6025.6 136498.6 1980/81 5407.1 8573.8 2272.5 991.5 5381.5 2214.5 14976.1 718.5 2061.3 6423.3 3625.2 1277.0 741.4 2585.5 22173.8 564.5 2247.2 4964.9 1546.3 8677.8 2455.3 716.8 7912.6 4789.2 5019.2 1014.2 1982/83 24745.9 683.1 2180.5 5598.6 1750.4 8876.9 2733.2 798.3 8587.7 5244.3 5400.4 1165.8 2716.0 5842.2 139033.6 1981/82 25835.0 564.1 2151.6 5163.9 1599.3 8252.8 2578.1 705.9 8118.0 5105.2 5313.4 1075.9 2449.5 5882.4 135447.2 111

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Table A-1 (cont.) INSTITUTION TALLAHASSEE VALENCIA TOTAL 1980/81 2046.9 5458.3 126836.2 112

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113 Table A-2 State of Florida Community Colleges General Current Fund Total Expenditures for Fiscal Years 1980-81 through 1989-90 INSTITUTION 1989/90 BREVARD BROWARD $35,642,223 51,963,851 FLORIDA 13,336,300 CENTRAL CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH 7,286,986 31,999,021 15,869,945 61,228,306 5,004,431 12,292,748 31,834,446 22,431,587 10,593,518 5,842,065 16,909,552 138,681,614 4,983,608 11,762,087 33,526,747 8,943,809 32,554,628 12,928,284 6,465,275 46,496,138 30,785,710 23,231,553 8,577,954 19,626,494 37,921,435 $738,720,314 1986/87 $26,419,641 37,197,210 8,938,868 4,753,138 22,461,556 10,321,447 47,596,201 4,093,757 8,578,066 24,295,476 1988/89 $31,134,458 46,543,718 11,662,971 6,011,371 29,361,866 13,072,668 52,952,887 5,106,159 10,663,905 29,346,044 20,007,631 9,014,224 5,385,245 15,267,494 125,363,257 4,174,980 9,989,258 28,395,809 8,040,145 30,357,831 11,996,283 5,611,308 37,671,925 27,372,883 22,169,299 7,402,546 15,488,876 31,037,793 $650,602,834 1985/86 $24,344,239 34,000,407 9,199,937 4,254,756 20,675,867 9,331,265 42,809,606 3,832,802 7,722,225 21,839,269 1987/88 $28,634,109 43,494,597 10,460,295 4,986,840 26,119,663 11,689,283 50,219,240 4,425,321 9,448,212 27,249,564 18,051,119 8,470,713 4,528,446 13,676,854 113,139,161 3,405,341 8,585,947 26,061,734 6,635,573 28,507,485 10,682,919 4,514,750 34,166,601 24,877,499 18,081,010 5,768,280 12,533,087 27,207,754 $585,621,397 1984/85 $24,205,129 33,630,976 8,141,998 4,116,255 20,560,276 8,856,351 43,726,011 3,647,457 7,587,604 21,381,781

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Table A-2 (cont.) INSTITUTION 1986/87 INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE 15,894,918 7,554,958 4,377,125 12,273,983 101,040,199 3,258,983 7,913,358 22,526,589 5,776,723 25,447,375 10,062,378 4,042,501 33,115,212 21,722,807 15,436,257 5,157,717 11,089,303 24,048,844 $525,394,590 1983/84 $21,714,771 32,174,186 7,849,205 3,826,196 19,524,122 8,540,844 40,119,328 3,573,023 6,788,410 19,302,519 12,936,167 6,695,651 3,672,592 10,150,648 84,604,625 2,470,157 6,599,170 18,840,095 4,967,172 23,517,840 8,506,315 3,278,632 27,900,335 18,016,856 1985/86 14,593,283 8,037,480 3,911,211 10,613,548 94,325,822 3,016,901 7,590,058 19,322,762 5,768,010 25,318,479 8,925,581 3,596,563 30,310,651 19,984,175 14,418,624 4,270,484 8,697,941 21,581,565 $482,293,510 1982/83 $19,915,147 32,448,333 7,339,237 3,674,191 18,265,955 6,968,445 37,639,142 3,132,467 6,084,398 17,444,765 11,302,776 6,453,066 3,453,456 8,910,298 79,099,314 2,559,546 6,159,677 17,467,896 4,635,226 22,450,123 8,148,426 3,098,268 24,759,518 16,204,490 1984/85 13,822,188 7,475,809 4,053,758 10,347,592 88,774,139 2,752,068 6,869,806 19,510,102 5,271,192 23,522,332 8,142,506 3,467,989 28,249,822 18,793,123 14,512,052 4,331,802 8,061,934 20,168,877 $463,980,929 1981/82 $17,947,141 28,195,693 7,414,439 3,405,819 17,856,072 6,536,794 35,719,249 3,148,225 5,762,064 16,240,045 11,923,917 6,108,130 3,236,249 8,029,366 77,227,034 2,572,437 6,031,077 14,244,816 4,694,915 20,559,491 7,431,141 2,918,399 23,972,613 16,269,450 114

PAGE 123

Table A-2 (cont.) INSTITUTION 1983/84 SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL 14,431,034 3,691,414 8,105,877 18,837,453 $440,634,637 1980/81 $16,648,626 23,245,678 6,466,726 2,869,693 15,525,096 5,566,010 32,354,374 2,919,282 5,525,791 15,413,072 9,846,714 5,589,157 2,855,466 7,022,910 69,234,644 2,135,001 5,343,657 12,617,783 4,116,821 18,077,028 6,848,561 2,694,650 21,551,353 14,304,835 10,246,758 2,263,026 4,926,612 14,119,325 $340,328,649 1982/83 13,091,061 2,868,087 6,655,448 17,845,722 $408,074,476 1981/82 11,801,968 3,431,991 6,202,245 16,780,067 $385,669,848 115

PAGE 124

116 Table A-3 State of Florida Community Colleges General Current Fund Total Revenues for Fiscal Years 1980-81 through 1989-90 INSTITUTION BREVARD BROWARD 1989/90 CENTRAL FLORIDA CHIPOLA $35,849,427 52,212,446 13,436,046 7,087,683 31,658,565 15,550,994 59,943,127 DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH 5,155,513 12,529,145 33,849,710 23,199,511 10,606,808 5,824,397 17,188,900 142,439,016 5,012,785 11,348,782 33,347,426 9,262,363 33,176,323 13,201,550 6,655,319 43,364,309 30,588,332 24,626,030 8,865,214 18,951,645 37,598,382 $742,529,748 1986/87 $26,320,444 38,221,004 8,827,343 4,715,202 23,388,646 10,569,008 45,622,404 4,123,710 8,431,426 24,111,944 1988/89 $32,395,988 48,851,902 11,518,076 6,384,397 29,370,015 13,655,503 54,496,873 4,881,182 10,873,896 29,241,306 20,112,582 9,653,164 5,528,579 15,465,308 125,757,709 4,138,720 10,210,668 28,970,278 7,738,638 31,126,630 12,199,284 5,689,703 39,292,420 27,125,769 21,804,519 7,338,715 15,548,264 33,082,507 $662,452,595 1985/86 $23,953,041 35,390,300 8,500,510 4,348,836 20,373,449 9,229,646 42,391,602 3,855,319 7,724,261 21,769,973 1987/88 $28,351,410 42,279,951 9,957,149 5,307,885 25,949,246 11,890,535 50,252,871 4,541,362 9,531,423 26,732,619 17,533,853 8,299,083 4,768,696 13,443,951 113,985,495 3,686,094 8,637,877 26,179,739 6,642,255 28,647,108 10,684,806 4,563,957 35,309,835 24,933,738 18,655,485 5,784,360 12,940,552 28,132,440 $587,623,775 1984/85 $23,654,487 33,457,150 8,349,114 4,131,754 19,977,602 8,677,200 42,755,514 3,694,547 7,359,356 20,729,450

PAGE 125

Table A-3 (cont.) INSTITUTION 1986/87 INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE 15,989,036 7,595,032 4,426,234 12,152,897 102,007,354 3,255,918 7,924,759 22,930,763 5,924,168 25,976,566 9,631,520 4,218,997 32,337,464 22,356,578 16,673,886 5,033,417 10,932,120 24,056,665 $527,754,495 1983/84 $22,590,209 33,023,207 7,901,507 3,944,516 19,445,235 8,332,763 41,188,431 3,484,707 7,120,834 20,012,958 12,933,214 7,019,959 3,697,659 9,864,257 83,024,759 2,664,700 6,838,434 18,309,248 5,124,042 23,856,096 8,581,216 3,216,763 27,469,968 17,876,669 1985/86 14,198,029 7,720,094 4,035,790 10,730,903 92,532,232 2,977,760 7,539,876 20,082,044 5,399,164 25,005,811 9,031,105 3,686,160 29,898,729 20,189,227 14,372,556 4,258,516 8,890,464 21,506,288 $479,591,685 1982/83 $20,157,091 30,400,427 7,112,729 3,567,122 18,036,360 7,385,223 37,520,118 3,236,350 6,274,012 17,504,181 11,598,501 6,299,940 3,473,217 8,845,172 77,623,005 2,468,992 6,111,466 17,201,575 4,945,502 21,898,973 7,677,292 2,978,035 24,713,999 16,593,523 1984/85 13,580,230 7,296,024 3,969,814 10,060,094 87,004,032 2,758,278 7,027,010 18,733,598 5,183,597 24,351,406 8,479,729 3,495,959 28,529,361 18,731,173 13,921,986 4,096,574 8,351,840 20,145,968 $458,502,847 1981/82 $17,876,221 28,216,709 7,276,101 3,517,055 17,664,644 6,610,816 36,374,621 3,117,152 5,905,207 16,553,153 12,089,177 6,263,508 3,370,209 8,493,133 76,652,076 2,381,963 5,839,154 15,019,689 4,719,473 21,435,531 7,577,986 2,917,260 24,399,824 16,161,218 117

PAGE 126

Table A-3 (cont.) INSTITUTION 1983/84 SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PAIM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL 13,714,763 3,585,179 7,885,736 19,006,396 $441,713,425 1980/81 $15,816,470 23,757,760 6,392,595 3,077,858 15,925,280 5,554,611 32,749,925 2,761,927 5,467,788 15,035,636 9,965,969 5,510,172 2,845,999 7,220,655 69,177,863 2,142,094 5,254,420 12,468,534 4,052,375 18,929,728 6,948,553 2,615,080 21,226,320 13,998,558 10,167,075 2,639,266 5,072,521 13,861,580 $340,636,612 1982/83 12,970,939 3,234,011 6,892,718 17,610,365 $404,330,838 1981/82 11,825,235 3,224,342 6,053,489 16,298,990 $387,833,936 118

PAGE 127

119 Table A-4 State of Florida Community College Program Fund Revenues for Fiscal Years 1980-81 through 1989-90 INSTITUTION BREVARD BROWARD 1989/90 CENTRAL FLORIDA CHIPOLA $23,971,101 30,157,157 8,668,037 4,978,958 21,387,013 9,457,152 41,181,367 3,486,576 8,147,900 21,257,148 DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH 15,533,761 7,666,237 4,050,830 11,201,760 87,581,273 3,394,750 7,349,745 20,321,495 5,708,590 23,709,715 8,211,124 4,695,684 27,461,032 20,023,496 16,923,516 6,175,360 11,562,264 23,035,574 $477,298,615 1986/87 $19,399,679 25,666,123 6,947,705 3,822,909 17,502,761 7,140,949 35,842,686 3,142,367 6,172,253 17,144,317 1988/89 $22,755,032 29,615,427 8,006,575 4,716,120 21,070,196 8,873,110 40,948,604 3,460,560 7,563,097 19,768,406 13,747,917 7,614,159 4,025,334 10,410,636 83,113,350 3,268,744 7,181,287 19,084,801 5,092,343 23,529,958 8,058,566 4,203,763 26,817,423 18,955,783 15,929,936 5,739,977 10,265,139 21,346,300 $455,162,543 1985/86 $18,243,999 23,588,913 6,631,081 3,535,407 15,743,739 6,325,088 34,468,347 2,940,367 5,637,658 15,561,681 1987/88 $20,920,147 27,794,044 7,469,077 4,317,144 19,226,300 7,869,719 38,603,966 3,277,316 6,681,789 18,566,697 13,201,794 6,555,500 3,709,740 9,364,438 78,084,015 2,916,709 6,510,756 16,870,578 4,776,864 22,186,116 7,522,103 3,568,352 25,108,884 17,327,851 14,162,594 4,695,475 8,823,775 18,907,125 $419,018,868 1984/85 $17,516,997 21,241,955 6,262,202 3,232,695 14,961,188 5,688,152 32,433,211 2,692,371 5,115,777 14,230,329

PAGE 128

Table A-4 (cont.) INSTITUTION 1986/87 INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE 12,201,179 6,131,485 3,466,876 8,564,418 71,739,889 2,617,682 6,031,426 15,559,877 4,368,628 20,598,302 6,811,277 3,132,399 23,158,892 16,117,643 13,127,581 4,025,728 7,531,242 16,914,390 $384,880,663 1983/84 $16,155,948 20,052,540 5,960,831 3,034,411 13,936,790 5,094,264 30,781,516 2,552,607 4,844,550 13,178,956 9,658,981 5,136,543 2,715,999 6,148,328 55,622,911 2,132,068 4,905,575 11,733,256 3,680,739 17,943,507 5,685,263 2,469,824 18,016,595 12,413,006 1985/86 10,854,982 5,621,701 3,113,784 7,482,399 65,450,451 2,434,895 5,558,391 13,686,791 3,995,346 20,204,048 6,379,768 2,777,686 20,892,248 14,755,938 11,488,363 3,351,188 6,088,810 15,270,329 $352,083,398 1982/83 $14,910,125 18,220,190 5,556,647 2,841,710 12,982,626 4,728,287 28,812,822 2,379,558 4,380,723 12,223,221 8,691,224 4,824,264 2,528,259 5,698,449 51,480,544 2,000,686 4,567,140 10,857,472 3,417,659 16,786,575 5,280,730 2,307,528 16,667,061 11,534,441 1984/85 10,237,617 5,155,206 2,852,753 6,785,836 59,503,452 2,234,010 5,133,867 12,784,750 3,738,545 18,872,744 5,900,255 2,529,356 19,039,657 13,387,756 10,492,459 3,108,039 5,665,707 13,621,176 $324,418,062 1981/82 $12,849,011 17,651,217 5,459,302 2,795,896 12,753,209 4,446,263 28,191,893 2,292,408 4,182,917 11,964,212 8,536,583 4,747,850 2,488,172 5,576,066 50,424,228 1,970,212 4,269,723 10,055,486 3,343,373 16,358,533 5,167,616 2,232,570 16,305,399 11,328,882 120

PAGE 129

Table A-4 (cont.) INSTITUTION 1983/84 SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL 10,416,776 2,881,707 5,396,019 12,888,259 $305,437,769 1980/81 $11,434,454 15,154,188 4,992,506 2,417,385 11,444,115 3,853,259 25,781,355 1,973,858 3,825,258 10,857,635 7,806,665 4,219,952 2,152,637 4,688,189 46,112,724 1,801,750 3,875,391 8,418,995 2,793,528 14,959,802 4,725,761 1,988,721 14,165,411 10,040,270 7,689,225 2,142,327 3,369,306 9,232,787 $241,917,454 1982/83 9,741,818 2,709,515 4,887,365 12,014,389 $283,031,028 1981/82 8,994,766 2,665,423 3,921,760 10,771,374 $271,744,344 121

PAGE 130

122 Table A-5 State of Florida Community Colleges Student Fee Revenues for Fiscal Years 1980-81 through 1989-90 INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA 1989/90 $6,855,704 12,694,041 2,953,798 1,003,934 6,142,888 3,722,187 10,308,441 941,292 2,364,358 8,386,022 3,804,626 1,534,168 1,046,302 4,171,531 35,851,547 537,874 2,321,863 8,459,461 2,305,028 5,217,360 3,286,347 1,224,360 10,389,770 6,638,470 4,284,700 1,122,909 4,457,245 9,775,057 TOTAL $161,801,283 INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH 1986/87 $5,083,955 9,894,544 1,568,787 704,813 5,043,784 2,557,315 6,647,519 666,687 1,769,203 6,055,734 1988/89 $6,200,963 11,376,804 2,470,874 916,295 5,623,350 3,199,320 8,754,706 815,426 2,194,408 7,185,031 3,723,920 1,297,446 922,220 3,923,107 31,804,932 464,947 2,054,727 7,254,239 1,861,388 5,004,229 2,890,922 996,357 9,436,442 5,779,115 3,609,125 908,219 3,746,707 8,780,632 $143,195,851 1985/86 $4,460,147 9,584,386 1,435,409 667,931 3,928,621 2,254,466 5,720,446 602,167 1,682,300 5,380,393 1987/88 $5,409,418 10,080,883 1,995,306 752,108 5,345,196 2,923,128 7,791,978 735,402 2,086,222 6,418,922 3,424,034 1,233,765 832,353 3,413,153 29,288,412 451,623 1,620,257 6,713,559 1,544,992 4,801,814 2,390,794 811,990 8,661,918 5,628,461 3,227,106 834,200 3,256,596 7,297,834 $128,971,424 1984/85 $4,477,735 9,223,830 1,351,712 624,495 3,793,666 2,198,379 5,858,404 617,163 1,604,578 4,988,866

PAGE 131

Table A-5 (cont.) INSTITUTION 1986/87 INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE 3,368,079 1,223,202 737,146 3,066,882 27,017,938 431,152 1,419,444 6,155,321 1,329,246 4,596,174 2,017,632 714,767 8,011,306 4,916,831 2,963,884 775,848 2,689,800 6,127,041 $117,554,034 1983/84 $4,686,472 9,318,056 1,500,667 594,949 4,067,927 2,242,064 6,073,628 632,976 1,570,629 5,296,448 2,482,580 1,077,564 675,355 2,941,493 22,160,846 260,246 1,412,091 4,906,430 1,125,954 4,073,927 2,156,882 570,411 7,418,224 4,162,448 1985/86 2,949,995 991,076 720,406 2,812,494 24,477,814 369,577 1,404,089 5,666,811 1,220,555 3,917,208 1,985,576 607,283 7,946,652 4,593,616 2,380,772 611,118 2,200,248 5,588,343 $106,159,899 1982/83 $4,484,153 8,930,806 1,389,515 553,760 4,095,236 2,068,013 6,078,030 676,743 1,545,672 4,616,763 2,534,979 1,337,140 799,009 2,699,070 23,539,666 278,372 1,412,727 4,656,357 1,334,563 4,109,944 2,101,984 573,419 7,317,053 4,434,346 1984/85 2,892,197 1,156,417 630,893 2,697,916 23,591,099 358,462 1,355,504 5,014,011 1,096,840 3,961,233 1,976,266 548,771 7,761,279 4,175,443 2,468,223 618,242 2,072,913 5,190,181 $102,304,718 1981/82 $4,234,806 7,822,671 1,504,845 545,968 3,757,210 1,857,184 5,658,161 651,448 1,423,642 3,980,700 2,148,438 1,308,440 719,372 2,352,131 22,619,717 276,847 1,341,761 3,931,603 1,241,462 3,772,990 1,963,951 537,782 6,873,354 4,200,382 123

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Table A-5 (cont.) INSTITUTION 1983/84 SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL 2,357,093 396,034 1,875,932 4,959,142 $100,996,468 1980/81 $3,858,507 6,932,885 1,164,650 513,764 3,447,207 1,488,458 5,299,385 613,761 1,353,686 3,832,386 1,808,948 1,241,128 606,741 2,237,219 20,636,152 250,532 1,239,757 3,454,394 1,125,641 3,313,254 1,815,272 511,393 6,352,997 3,471,999 2,084,208 328,439 1,161,817 4,127,509 $84,272,089 1982/83 2,369,326 354,279 1,711,410 5,024,083 $101,026,418 1981/82 2,176,733 357,024 1,553,241 4,792,508 $93,604,371 124

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125 Table A-6 State of Florida Community Colleges state Other Revenues for Fiscal Years 1980-81 through 1989-90 INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH 1989/90 $4,098,582 7,022,556 1,230,279 799,380 3,246,434 1,387,171 7,157,345 454,162 1,562,344 3,616,552 3,199,405 1,220,362 550,516 1,551,636 15,159,045 909,423 1,517,671 3,477,113 1,054,854 3,411,226 1,265,511 616,427 4,407,591 3,339,559 2,757,976 1,039,007 2,242,646 3,675,280 $81,970,053 1986/87 $814,088 812,921 114,703 86,559 320,760 87,962 1,069,998 127,143 259,015 546,844 1988/89 $2,451,236 5,734,230 599,143 350,030 1,885,904 693,077 3,533,002 346,687 780,464 1,792,775 2,227,460 590,777 426,446 835,711 6,904,326 267,750 803,918 1,617,141 623,657 1,891,515 778,773 378,568 2,075,040 1,853,236 1,703,786 529,606 955,647 1,894,836 $44,524,741 1985/86 $341,177 390,578 204,875 47,297 191,917 43,837 644,042 98,436 226,257 400,398 1987/88 $1,052,463 2,484,176 232,514 122,882 784,439 313,415 1,851,149 306,464 569,915 1,315,436 610,103 428,150 113,607 471,421 3,852,982 223,196 369,907 1,790,071 217,453 1,051,691 340,712 108,453 967,032 1,492,165 794,714 162,288 420,451 1,206,570 $23,653,819 1984/85 $385,077 1,207,591 233,755 123,725 606,057 170,948 2,609,904 171,653 348,691 992,581

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Table A-6 (cont.) INSTITUTION INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA 1986/87 203,115 141,757 118,192 332,453 1,390,033 122,518 354,825 508,117 149,629 323,771 413,440 269,772 627,633 490,615 254,816 147,625 442,758 485,686 TOTAL $11,016,748 INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE 1983/84 $823,367 1,580,273 291,234 133,264 739,432 274,927 2,678,558 131,685 487,517 1,128,984 454,667 660,241 193,226 516,247 3,421,500 90,342 443,957 946,873 229,917 1,120,215 445,076 133,628 1,348,793 832,010 1985/86 121,851 990,423 102,467 201,774 741,224 106,580 431,123 215,424 116,453 356,195 158,641 231,881 486,087 301,613 115,501 95,221 246,368 237,856 $7,845,496 1982/83 $135,955 967,311 31,881 10,895 134,662 94,273 935,927 16,833 84,257 320,191 55,249 9,605 26,034 154,353 627,017 7,386 61,265 1,003,600 42,532 227,896 46,358 21,723 165,170 217,659 1984/85 129,461 613,893 378,471 327,497 2,059,986 87,295 395,869 263,159 253,072 792,638 220,099 314,831 1,071,953 669,719 566,954 191,659 361,971 890,303 $16,438,812 1981/82 $209,813 371,038 132,081 34,885 261,896 95,500 588,910 33,727 132,223 271,116 1,104,051 53,393 26,505 220,149 1,142,067 19,579 108,645 330,922 59,658 378,232 90,731 34,690 340,671 168,217 126

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Table A-6 (cont.) INSTITUTION 1983/84 551,878 144,391 358,245 777,679 SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL $20,938,126 INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOI.A DAYTONA BEACH EDISON FI.A CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER I.AKE CITY I.AKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOI.A POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL 1980/81 $5,266 11,923 53,495 22,144 205,635 62,685 21,048 16,197 81,048 4,940 84,387 1,901 3,890 85,906 288,402 13,501 12,882 3,863 31,850 46,726 53,685 748 7,771 11,399 0 51,882 317,420 14,637 $1,515,231 1982/83 482,315 41,401 113,641 197,394 $6,232,783 1981/82 180,733 65,627 274,233 190,890 $6,920,182 127

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128 Table A-7 State of Florida Community Colleges Local Other Revenues for Fiscal Years 1980-81 through 1989-90 INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH 1989/90 $884,777 2,318,808 583,932 177,776 844,927 975,719 1,114,410 264,123 438,885 569,498 635,697 178,427 170,765 248,696 3,437,130 170,738 152,971 1,084,072 186,193 769,423 433,422 115,205 1,069,093 507,482 638,250 527,938 678,517 990,519 $20,167,393 1986/87 $989,908 1,830,548 192,660 100,921 492,518 781,378 1,998,839 176,460 206,645 340,033 1988/89 $955,314 2,110,233 441,484 401,952 748,957 884,175 1,195,586 249,574 321,680 470,603 394,301 143,447 149,198 274,303 3,607,421 137,279 166,206 1,009,307 147,360 627,329 463,634 109,683 924,052 479,738 555,927 160,913 572,228 966,251 $18,668,135 1985/86 $837,534 1,811,981 226,865 98,201 464,151 605,242 1,481,556 205,579 164,029 402,635 1987/88 $822,423 1,911,272 259,329 115,751 547,985 783,273 1,920,323 215,616 180,427 409,585 282,131 59,905 106,759 171,930 2,444,008 94,566 134,209 801,771 102,946 507,982 427,513 74,044 543,780 422,920 454,337 92,204 430,218 686,137 $15,003,344 1984/85 $1,221,429 1,764,571 477,855 130,839 590,700 618,575 1,670,117 195,932 276,998 490,272

PAGE 137

Table A-7 (cont.) INSTITUTION 1986/87 INDIAN RIVER IAKE CITY IAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PAIM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HI LIS BOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE 205,909 87,072 102,733 146,445 1,524,731 84,566 116,649 704,028 76,665 440,542 380,516 100,713 511,708 737,052 308,357 77,320 260,674 474,566 $13,450,156 1983/84 $864,155 2,051,002 148,775 161,892 658,068 721,508 1,566,950 157,656 196,987 375,111 324,014 145,611 107,348 244,103 1,462,913 179,260 72,971 714,754 86,004 714,368 286,676 41,494 634,037 281,888 1985/86 260,341 93,371 93,681 187,471 1,426,982 66,708 143,415 509,218 63,328 515,643 497,443 68,007 522,330 368,069 345,573 89,186 261,660 394,725 $12,204,924 1982/83 $590,579 2,275,472 132,320 140,757 790,545 492,471 1,494,730 150,827 248,011 323,028 305,235 128,931 109,123 289,004 1,666,667 182,073 68,247 684,146 147,289 774,558 242,905 74,077 518,964 273,753 1984/85 310,284 363,227 93,379 225,194 1,563,458 78,511 140,273 667,658 95,140 716,196 378,893 101,694 609,237 321,847 373,060 104,945 244,677 356,362 $14,181,323 1981/82 $563,859 2,367,600 177,365 121,331 867,432 205,522 1,769,020 123,052 159,324 319,536 288,912 153,825 126,786 335,210 2,058,860 114,232 117,171 701,678 64,876 925,775 337,486 110,942 850,484 309,684 129

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Table A-7 (cont.) INSTITUTION 1983/84 SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOIA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER IAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL 364,972 136,011 246,388 317,711 $13,262,627 1980/81 $483,256 1,632,935 178,821 108,315 780,081 146,411 1,497,699 132,705 179,651 294,118 227,775 47,191 74,664 187,071 1,590,088 73,490 122,329 587,908 82,540 587,896 350,368 112,634 645,701 270,648 366,196 77,923 131,750 416,467 $11,386,631 1982/83 356,449 108,076 177,019 332,801 $13,078,057 1981/82 460,242 135,824 214,165 500,705 $14,480,898 130

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Table A-8 State of Florida Community Colleges Federal Revenues for Fiscal Years 1980-81 through 1989-90 INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH 1989/90 $39,263 19,884 0 127,635 37,303 8,765 181,564 9,360 15,658 20,490 26,022 7,614 5,984 15,277 410,021 0 6,532 5,285 7,698 68,599 5,146 3,643 36,823 79,325 21,588 0 10,973 121,952 $1,292,404 1986/87 $32,814 16,868 3,488 0 28,823 1,404 63,362 11,053 24,310 25,016 1988/89 $33,443 15,208 0 0 41,608 5,821 64,975 8,935 14,247 24,491 18,984 7,335 5,381 21,551 327,680 0 4,530 4,790 13,890 73,599 7,389 1,332 39,463 57,897 5,745 0 8,543 94,488 $901,325 1985/86 $70,184 14,442 2,280 0 45,021 1,013 77,211 8,770 14,017 24,866 1987/88 $146,959 9,576 923 0 45,326 1,000 85,455 6,564 13,070 21,979 15,791 21,763 6,237 23,009 316,078 0 2,748 3,760 0 99,505 3,684 1,118 28,221 62,341 16,734 193 9,512 34,774 $976,320 1984/85 $53,249 19,203 23,590 20,000 25,991 1,146 183,878 17,428 13,312 27,402 131

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Table A-8 (cont.) INSTITUTION INDIAN RIVER IAKE CITY IAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PAIM BEACH PASCO-HERNANDO PENSACOIA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALIAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOIA DAYTONA BEACH EDISON FIA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER IAKE CITY !AKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PAIM BEACH PASCO-HERNANDO PENSACOIA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE 1986/87 10,754 11,516 1,287 42,699 334,763 0 2,415 3,420 0 17,777 8,655 1,346 27,925 94,437 19,248 6,896 7,646 54,972 $852,894 1983/84 $60,267 21,336 0 20,000 43,018 0 87,779 9,783 21,151 33,459 12,972 0 5,731 14,086 356,589 2,784 3,840 7,935 1,428 4,079 7,319 1,406 52,319 187,317 1985/86 10,860 23,523 5,452 46,765 435,761 0 2,858 3,800 3,482 12,717 9,677 1,303 51,412 169,991 42,347 111,803 93,378 15,035 $1,297,968 1982/83 $36,279 6,648 2,366 20,000 33,291 2,179 198,609 12,389 15,349 20,978 11,814 0 10,792 4,296 309,111 475 2,087 0 3,459 0 5,315 1,288 45,751 133,324 1984/85 10,671 7,281 14,318 23,651 286,037 0 1,497 4,020 0 8,595 4,216 1,307 47,235 176,408 21,290 73,689 6,572 87,946 $1,159,932 1981/82 $18,732 4,183 2,508 18,975 24,897 6,347 166,637 16,517 7,101 17,589 11,193 0 9,374 9,577 407,204 1,093 1,854 0 10,104 1 18,202 1,276 29,916 154,053 132

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Table A-8 (cont.) INSTITUTION SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL INSTITUTION BREVARD BROWARD CENTRAL FLORIDA CHIPOLA DAYTONA BEACH EDISON FLA CC AT JAX FLORIDA KEYS GULF COAST HILLSBOROUGH INDIAN RIVER LAKE CITY LAKE-SUMTER MANATEE MIAMI-DADE NORTH FLORIDA OKALOOSA-WALTON PALM BEACH PASCO-HERNANDO PENSACOLA POLK ST. JOHNS RIVER ST. PETERSBURG SANTA FE SEMINOLE SOUTH FLORIDA TALLAHASSEE VALENCIA TOTAL 1983/84 24,044 27,036 9,152 63,605 $1,078,435 1980/81 $34,987 25,829 3,123 16,250 48,242 3,798 150,438 25,406 28,145 46,557 38,194 0 8,067 22,270 550,497 2,821 4,061 3,374 18,816 22,050 3,467 1,584 54,440 204,242 27,446 38,695 92,228 70,180 $1,545,207 1982/83 21,031 20,740 3,283 41,698 $962,552 1981/82 12,761 444 90,090 43,513 $1,084,141 133

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APPENDIX B COMMUNITY COLLEGES USED IN THE STUDY The following table lists the State of Florida community colleges and the counties served by each institution for the fiscal year periods 1980-81 through 1989-90. Table B-1 State of Florida Communitv Colleges and the Counties Served by Each Institution INSTITUTION Brevard Community College Broward Community College Central Florida Community College Chipola Junior College Daytona Beach Community College Edison Community College Florida Community College At Jacksonville Florida Keys Community College 134 COUNTIES IN DISTRICT Brevard County Broward County Marion County Citrus County Levy County Jackson County Calhoun County Holmes County Liberty County Washington County Volusia County Flagler County Lee County Charlotte County Collier County Glades County Hendry County Duval County Nassau County Monroe County

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TABLE B-1 (cont.) INSTITUTION Gulf Coast Community College Hillsborough Community College Indian River Community College Lake City Community College Lake-Sumter Community College Manatee Community College Miami-Dade Community College North Florida Junior College Okaloosa-Walton Community College Palm Beach Community College Pasco-Hernando Community College Pensacola Junior College Polk Community College 135 COUNTIES IN DISTRICT Bay County Franklin County Gulf County Hillsborough County st. Lucie county Indian River County Martin County Okeechobee County Columbia County Baker County Dixie County Gilchrist county Union County Lake County Sumter County Manatee County Sarasota County Dade County Madison County Hamilton County Jefferson County Lafayette county Suwannee County Taylor County Okaloosa County Walton County Palm Beach County Hernando County Pasco County Escambia County Santa Rosa County Polk County

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TABLE B-1 (cont.) INSTITUTION St. Johns River Community College st. Petersburg Junior College Santa Fe Community College Seminole Community College South Florida Community College Tallahassee Community College Valencia Community College 136 COUNTIES IN DISTRICT Putnam County Clay County st. Johns county Pinellas County Alachua County Bradford County Seminole county Highlands County De Soto County Hardee County Leon County Gadsden County Wakulla County Orange County Osceola County Source: Report For Community Colleges. The Fact Book 199091 (State of Florida Bureau of Information Systems, 1991).

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APPENDIX C COMMUNITY COLLEGE PROGRAM FUND The State of Florida community college foundation funding program was called the Community College Program Funding (CCPF) (Florida Statutes .347, 1991). The State of Florida Community College Program Fund and was promulgated in Florida Statutes .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) During the time period utilized in this study the statute had a change that affected the 1985-87 budget request. The change required the budget request to have certain categories and subcategories. The change did not affect the budget categories used in this study. The basis of this description of the funding process is personal communication with Ken Jarrett of the Division of Community Colleges and an unpublished document by Ken Jarrett titled Florida State Board of Community Colleges The community College Program Fund (CCPF) A Funding Process. The process was as follows: 137

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138 1. Base Year Cost Analyses. The first step was establishment of base year raw data. The purpose was to establish the historical expenditure levels of the 28 community colleges by program and type of expenditure. The data sources were specified as the "Cost Analysis Report (CA-2)" and the "Annual Financial Report." These data were categorized into 13 programs and six types of expenditures. 2. Base Year Cost Data. The next step was conversion of the base year raw data to a matrix of ratios by program and type of expenditure. Each institution's matrix was converted to ratios "by dividing the value of each cell [of the matrix] by the value of all cells." The matrix was then converted into a cost matrix "by multiplying each ratio by the sum of the of the current year general appropriation for the Community College Program Fund (CCPF) and student fee revenue." At this stage of the process some categories were expanded based on information in the Annual Financial Report. The result of this process was "a Base Year Data Matrix for each college that reflected its latest expenditure pattern by program and type of expenditure." 3. Cost to Continue. The values in the Base Year Data Matrix were adjusted based on the program emphasis provided by the State Board of Community Colleges to determine the cost to continue appropriation.

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139 4. Workload Adjustments. There were two principle areas covered in workload adjustments. The two areas were enrollment related workload and facilities related workload. The enrollment workload adjustment was based on the most recognized aspect of community college workload, the enrollment FTE. Florida used a corridor approach for adjusting budget for FTE changes. The average of the current year estimated FTE and the preceding two years actual FTE was compared to the current year "assigned or funded enrollment." If the difference exceeded 5% of the current year value, the college would have been allocated additional funding for the six basic enrollment related budget programs. If the difference was lower than the current year value, the funding was taken from the college over a 2-year period with 50% of the reduction being taken each year. The second area was new facility workload. New facilities have operation costs that required funding that would not exist in the base funding of the previous year. To accommodate this need a workload adjustment based on gross square footage was added to the current year funding. The adjustment was based on average prior year square foot cost, adjusted for inflation, and prorated for the portion of the year the building would be in service. During the 1989 legislative session one additional adjustment was recognized that would affect the CCPF base.

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140 Improved and new programs for the 1988-89 fiscal year were allocated through the CCPF and were to become part of the base.

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APPENDIX D EXPENSE/REVENUE RELATIONSHIP Assumption There was an assumption made in the study based on Bowen's (1980) observation that education spends all funding that is available in pursuit of the educational mission. The assumption was that revenues closely approximated expenditures and that revenue horizontal equity closely approximated expenditure horizontal equity for the community college system. The assumption was substantiated by examining total revenues, total expenditures, beginning fund balances, fund balance changes, revenue horizontal equity, and expenditure horizontal equity for the 10 fiscal year period covered by this study for the State of Florida community colleges. The comparison required calculating the per-student (per FTE) revenues and expenditures for each institution for each year of the study. These beginning fund balance, FTE, revenue, and expenditure 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 141

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142 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-1 for FTE, Table A-2 for expenditures, and Table A-3 for revenues. These data were for the General Current Fund budget category for each institution for each year. These data were used to calculate per-student (per-FTE) revenues and expenditures for each institution for each year utilized in the study. The per-student revenues and expenditures 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. Total Expenses Versus Total Revenues The comparison of the General Current Fund total expenditures and total revenues for the 10 fiscal year periods 1980-81 through 1989-90 is listed in Table D-1. The difference between expenditures and revenues, where expenditures are less than revenues, are indicated by a negative value. The differences between expenses and revenues varied from $5,478,072 in 1984-85 to -$11,849,761 in 1988-89. The percent difference in total expenses and

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143 revenues varied between 1.19% in 1984-85 to -1.80% in 198889. Seven of the 10 years varied less than or equal to plus or minus 0.56%. Figure D-1 depicts the relationship of the expenses and revenues during the 10-year period. Based 600 0) C i :soo 1960-81 1981-82 19B2-B3 1983-B'I 198'1-B5 19B5-86 19B6-B7 19B7-8B 1988-B9 19B9-90 -aTota I Revenues Tota I Expenses Figure D-1. Graph of total revenues and total expenses in millions of dollars for the State of Florida community colleges for the 10 fiscal years 1980-81 through 1989-90. on the small percentage differences, the close relationship of total General Current Fund expenditures and total General Current Fund revenues on an annual basis for the period utilized in the study was established.

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Table D-1 Total current General Fund Expenditures. Revenues. Difference. and Percent Difference FISCAL TOTAL TOTAL YEAR EXPENSES REVENUES DIFFERENCE 80-81 $340,328,649 $340,636,612 ($307,963) 81-82 385,669,848 378,833,936 (2,164,088) 82-83 408,074,476 404,330,838 3,743,638 83-84 440,634,637 441,713,425 (1,078,788) 84-85 463,980,929 458,502,847 5,478,082 85-86 482,293,510 479,591,685 2,701,825 86-87 525,394,590 527,754,495 (2,359,905) 87-88 585,621,397 587,623,775 {2,002,378) 88-89 650,602,834 662,452,595 (11,849,761) 89-90 $738,720,314 $742,529,748 ($3,809,434) 144 % DIFF. (0.09) (0.56) 0.92 (0.24) 1.19 0.56 (0.45) {0.34) (1.80) (0.51) The differences in expenditures and revenues were a major factor in the change of the beginning fund balance for the community college system each year. Table D-2 displays the beginning fund balances, the change in fund balance from the prior year, and the fund balance as a percent of total revenues for the 10 fiscal year periods. The beginning fund balance increased in the successive fiscal year over the previous fiscal year in all but 2 fiscal years during the 10-year period. The result of the changes was that the beginning fund balance grew from $26,961,103 in 1980-81 to $61,411,050 in 1989-90. As a percent of annual expenditures, the growth was a modest 0.4% from 7.9% in 1980-81 to 8.3% in 1989-90. The maximum fund balance as a

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145 percentage of revenues was 8.7% in 1982-83 and the minimum was 6.9% in 1988-89. Table D-2 Beginning Fund Balance. Change in Fund Balance from Prior Fiscal Year. and Fund Balance Expressed as a Percentage of Total Revenues FISCAL BEGINNING FUND CHANGE FROM BALANCE AS% YEAR BALANCE PRIOR YEAR OF REVENUES 80-81 $26,961,103 $9,128,887 7.9 81-82 33,132,927 6,171,824 8.5 82-83 35,359,019 2,226,092 8.7 83-84 35,656,261 297,242 8.1 84-85 39,198,156 3,541,895 8.5 85-86 37,023,699 (2,174,457) 7.7 86-87 36,709,694 (314,005) 7.0 87-88 41,173,026 4,463,332 7.0 88-89 46,022,795 4,849,769 6.9 89-90 $61,411,050 $15,388,255 8.3 The close relationship of total revenues and total expenses was supported by the linear regression results. Linear regression of the independent variable (y) total revenues yielded an (x) total expenses coefficient of 1.02989 with a standard error of the coefficient of 0.01112 and a large R Squared value of 0.99906 (see Table D-3).

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146 Table D-3 Regression Output Total Expenditures Versus Total Revenues Regression Output: Constant Std Err of Y Est R Squared No. of Observations Degrees of Freedom X Coefficient(s) Std Err of Coef. -14744567.4497 4157088.8153 0.9990681919 10 8 1.0298914252 0.0111201879 Revenue and Expense Horizontal Equity Comparison Per-student expenditures were calculated by dividing an institution's annual General Current Fund expenditures by the corresponding annual FTE for the institution. The per student expenditures that were calculated for the system for each year were used to determine the six horizontal equity measures: range, restricted range, federal range ratio, coefficient of variation, McLoone index, and Gini coefficient. The per-student expenditure range, restricted range, and federal range ratio for the community college system for each of the ten-years are listed in Table D-4. The per student expenditure McLoone index, coefficient of variation, and Gini coefficient are listed in Table D-5. The horizontal equity measures for total revenues are listed in Appendix E, Table E-1, E-2, E-3, E-4, E-5, and E6. The horizontal equity measures for both per-student

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147 Table D-4 Range. Restricted Range, and Federal Range Ratio by Year for Per-Student Expenditures FISCAL RANGE RESTRICTED FEDERAL YEAR RANGE RANGE RATIO 80-81 2335.3 1039.2 0.499 81-82 2446.0 1162.5 0.489 82-83 1747.3 863.3 0.352 83-84 2087.1 825.0 0.299 84-85 2478.2 1127.8 0.378 85-86 2883.3 1325.2 0.480 86-87 3118.1 901.2 0.288 87-88 2825.7 1403.6 0.456 88-89 3747.0 1006.5 0.283 89-90 2249.4 1081.5 0.292 Table D-5 McLoone Index. Coefficient of Variation, and Gini Coefficient by Year for Per-student Expenditures FISCAL MCLOONE COEFFICIENT OF GINI YEAR INDEX VARIATION COEFFICIENT 80-81 0.866 16.24 0.0931 81-82 0.905 13.84 0.0755 82-83 0.906 12.01 0.0657 83-84 0.944 10.75 0.0537 84-85 0.942 9.94 0.0476 85-86 0.921 11. 56 0.0559 86-87 0.919 9.17 0.0445 87-88 0.920 9.58 0.0479 88-89 0.922 10.29 0.0530 89-90 0.916 9.87 0.0545

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148 revenues and per-student expenses were compared using percent difference (see Table D-6). With the exception of the restricted range and the federal range ratio, all other measures for all years varied by no more than -7.71% to 8.66%. The range and restricted range were not used in the revenue component analysis. Neither the revenue nor the expense federal range ratios were within the 0.25 federal standard for K-12 equity studies. Table D-6 Equity Measurement Comparison for Expenses Versus Revenues EQUITY MEASURE MAXIMUM MAXIMUM NEGATIVE POSITIVE PERCENTAGE PERCENTAGE DIFFERENCE DIFFERENCE Range -7.71 7.48 Restricted range -22.68 19.25 Federal range ratio -24.73 20.09 McLoone index -2.29 0.81 Coefficient of variation -0.63 7.64 Gini Coefficient -8.73 8.66 Based on the analysis of the relationship of expenditures and revenues, revenues and revenue sources horizontal fiscal equity were interpreted as directly contributing to the resulting expenditure horizontal equity. Revenue horizontal equity and expenditure horizontal equity were considered synonymous and, therefore, allowed the

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components of revenues to be treated as components of expenditures. 149

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152 Erekson, o. H. (1986). Revenue sources in higher education trends and analysis. In M. P. McKeown & K. Alexander (Eds.), Values in conflict funding priorities for higher education (pp. 41-62). Cambridge, MA: Ballinger. Federal Register 41 (1976). pp. 26320-26321. Fischer, F. J. (1990, January/February). State financing of higher education. Change, pp. 43-56. Florida Statutes Vol. 1, .347-240.35. (1989). Florida Statutes Vol. 1, .3031. (1991). Florida Statutes Supplement Vol. 1, .35, pp. 553-554. (1990). Friedman, L. s., & Wiseman, M. (1980). Toward understanding the equity consequences of school finance reform. In c. s. Benson, M. Kirst, s. Abromowitz, w. Hartman, & L. Stoll (Eds.), Education finance and organization and the research perspectives for the future: Program on educational policy and organization (pp. 35-47). Washington, DC: U.S. Department of Health, Education, and Welfare National Institute of Education. Garms, W. I. {1977). Financing community colleges. New York: Teachers College Press. Garms, w. I., Guthrie, J. w., & Pierce, L. c. (1978). School finance: The economics and politics of public education. Englewood Cliffs, NJ: Prentice Hall. Gold, s. D. {1990). State support of higher education. Planning For Higher Education, 18(3), 21-33. Gurwitz, A. s. (1982). The economics of public school finance. Cambridge, MA: Ballinger. Guthrie, J. W., Garms, W. I., & Pierce, L. C. (1988). School finance and education policy: Enhancing =e=d=u=c=a::..::t=i=o=nc:..:a=l=-=e=f-=f-=i=c=i=-=e=n=c::..y"-'-. _e=g=u=a=l=i=--=t:.Jy'--'''----'a=n'-'-'d=--.:::::c.._.h""o'""i=c::.:e {3rd ed. ) Englewood Cliffs, NJ: Prentice Hall. Harrison, R. s. {1976). Equity in public school finance. Lexington, MA: D. c. Heath and Company. Hiller, F. s., & Lieberman, G. J. (1986). Introduction to operations research (4th ed.). Oakland, CA: Holden Day.

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153 Honeyman, D., Williamson, M. L., & Wattenbarger, J. L. (1991). Community college financing 1990: Challenges for a new decade. Washington: American Association of Community Colleges National Center for Higher Education. Jones, D. P., & Brinkman, P. T. (1990). Report on funding of Florida community colleges. In Postsecondary Education Planning Commission, Florida community college finance: Update. response to specific appropriation 634b of the 1990 general appropriations act chapter 90-209 Laws of Florida (pp. Al-A20). Tallahassee, FL: PEPC. Jones, J. H. (1985). Introduction to school finance technique and social policy. New York: Macmillan. Jordan, K. F., & McKeown, M. P. (1980). Equity in financing public elementary and secondary schools. In J. W. Guthrie (Ed.), School finance practices and policies: The 1980's: A decade of conflict (pp. 79-129). Cambridge, MA: Ballinger. Keppel, G., & Zedeck, s. (1989). Data analysis for research designs. New York: Freeman & Co. Kerr, c. (1980). Foreword. In H. R. Bowen, The costs of hiaher education how much do colleges and universities spend and how much should they spend? (pp. xi-xii). San Francisco: Jossey-Bass. Kintzer, F. C. (1980). Proposition 13: Implications for community colleges. Los Angeles: University of California. Leslie, L. L., & Brinkman, P. T. (1988). The economic value of higher education. New York: Macmillan. Leslie, L. L., & Ramey, G. (1986). State appropriations and enrollments: Does enrollment growth still pay? In L. L. Leslie & R. E. Anderson (Eds.), ASHE reader on finance in higher education (pp. 352-365). Needham Heights, MA: Ginn Press. Levacic, R. (1989). Formula funding for schools and colleges. In R. Levacic (Ed.), Financial management in education (pp. 136-150). Bristol, PA: Open University Press. Lombardi, J. (1971). The financial crisis in the communitv college. Los Angeles: University of California.

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154 Lombardi, J. (1979, January). Community college financing in the post-Proposition 13 era. Junior College Resource Review, n.p. Maclaury, B. K. (1981). Foreword. In D. W. Breneman & S. C. Nelson (Eds.), Financing community colleges an economic perspective (pp. vii-ix). Washington, DC: The Brookings Institute. Martorana, s. v., & Wattenbarger, J. L. (1978). From principles and alternatives in state methods of financing community colleges and an approach to evaluation, with Pennsylvania a case state. In L. L. Leslie & R. E. Anderson (Eds.), ASHE reader on finance in higher education (pp. 385-405). Needham Heights, MA: Ginn Press. Mcclave, J. T., & Benson, P. G. (1985). business and economics (3rd ed.). Dellen. Statistics for San Francisco: McKeown, M. P. (1986). Funding formulas. In M. P. McKeown & K. Alexander (Eds.), Values in conflict: Fundina priorities for higher education (pp. 63-90). Washington, DC: Ballinger. McMahon, w. w. (1982). Efficiency and equity criteria for educational budgeting and finance. In W. w. McMahon & T. G. Geske (Eds.), Financing education: Overcoming inefficiency and inequity (pp. 1-35). Chicago: University of Illinois Press. Mendenhall, W. (1971). Introduction to probability and statistics third edition. Belmont, CA: Duxbury Press. Minter, W. J., & Bowen, H. R. (1980). Preserving America's investment in human capital. [Washington, DC]: American Association of Community Colleges, American Association of State Colleges and Universities, & National Association of State Universities and Land Grant Colleges. Nelson, S. C. (1982). Equity and higher education finance: The case of community colleges. In W.W. McMahon & T. G. Geske (Eds.), Financing education: Overcomina inefficiency and inequity (pp. 215-236). Chicago: University of Illinois Press. Odden, A. (1982). State and federal pressures for equity and efficiency in education financing. In w. w. McMahon & T. G. Geske (Eds.), Financing education:

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155 Overcoming inefficiency and inequity (pp. 312-346). Chicago: University of Illinois Press. Postsecondary Education Planning Commission (PEPC). (1991). Florida community college finance: Update. response to specific appropriation 634b of the 1990 general appropriations act chapter 90-209. Laws of Florida. Tallahassee, FL: PEPC. Schultz, T. W. (1982). Human capital approaches in organizing and paying for education. In w. w. McMahon & T. G. Geske (Eds.), Financing education: Overcoming inefficiency and inequity (pp. 36-51). Chicago: University of Illinois Press. Starnes, P. M. (1975). A conceptual model for full state support of community college current operating expenses (Doctoral dissertation, University of Florida, 1975). Dissertation Abstracts International, ll, 1281A. State of Florida Bureau of Information systems. (1988). Report for Florida community colleges. the fact book. Tallahassee, FL: Author. State of Florida Bureau of Information systems. (1989). Report for Florida community colleges. the fact book. Tallahassee, FL: Author. State of Florida Bureau of Information systems. (1990). Report for Florida community colleges. the fact book. Tallahassee, FL: Author. State of Florida Bureau of Information Systems. (1991). Report for Florida Community Colleges. The Fact book. Tallahassee, FL: Author. State of Florida Department of Education Division of Community Colleges. (1979). Report for Florida community colleges. Tallahassee, FL: Author. State of Florida Department of Education Division of Community Colleges. (1980). Report for Florida community colleges. Tallahassee, FL: Author. State of Florida Department of Education Division of Community Colleges. (1981). Report for Florida community colleges. Tallahassee, FL: Author. State of Florida Department of Education Division of Community Colleges. (1982). Report for Florida community colleges. Tallahassee, FL: Author.

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State of Florida Department of Education Division of Community Colleges. (1983). Report for Florida community colleges. Tallahassee, FL: Author. State of Florida Department of Education Division of Community Colleges. (1984). Report for Florida community colleges. Tallahassee, FL: Author. 156 State of Florida Department of Education Division of Community Colleges. (1985). Report for Florida community colleges. part 1. Tallahassee, FL: Author. State of Florida Department of Education Division of Community Colleges. (1986). Report for Florida community colleges. the fact book. Tallahassee, FL: Author. State of Florida Department of Education Division of Community Colleges. (1987). Report for Florida community colleges. The Fact book. Tallahassee, FL: Author. Taylor, T. (1985). The state role in financing community colleges: A model for improvement. Community College Review, 13(2), 43-50. Tibi, C. (1988). The internal allocation of resources for education: An international perspective. In D. H. Monk & J. Underwood (Eds.), Microlevel school finance: Issues and implications for policy (pp. 81-99). Cambridge, MA: Ballinger. Vacca, R. s. (1975). The courts and school finance: A reexaminization. In Jordan, K. F. & Alexander, K. (Eds.), Futures in school finance: Working toward a common goal (pp. 119-206). Bloomington, IA: Phi Delta Kappa. Vader, N. J. (1985). Strategies and adaptations for adjusting to changes in sources of revenues at selected community colleges (Doctoral dissertation, University of Florida, 1985). Dissertation Abstracts International, 86, 0lA. van Geel, T. (1991). Equal protection and school finance: Bargained incoherence. In D. A. Verstegen & J. G. Ward (Eds.), Spheres of justice in education (pp. 297-334). New York: Harper Business. Wattenbarger, J. L. (1966). Implications of new developments in economics and public finance for community college administration. Ins. V. Martorana

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157 and P. F. Hunter (Eds.), Conference proceedings on administering the community college in a changing world (Buffalo Studies, Vol. II, No. 1, pp. 91-100). Buffalo, NY: The University Council for Education Administration and The School of Education State University of New York at Buffalo. Wattenbarger, J. L. (1985). Dealing with new competition for public funds: Guidelines for financing community colleges. In W. L. Deegan, D. Tillery, & Associates (Eds.), Renewing the American community college (pp. 252-283). San Francisco: Jossey-Bass. Wattenbarger, J. L. (1991). Assessment and success. In D. Angel & M. Devault (Eds.), Conceptualizing 2000 proactive planning (pp. 113-121). Washington, DC: The Community College Press. Wattenbarger, J. L., & community colleges. Higher Education. Mercer, s. L. (1988). Financing Gainesville, FL: Institute of Wattenbarger, J. L., & Starnes, P. M. (1986). Financing community colleges. Gainesville, FL: Institute of Higher Education. Webster's new collegiate dictionary. (1981). Springfield, MA: G. & c. Merriam Company. Wood, R. c., & Honeyman, D. s. (1990). How public schools are financed. Reston, VA: Association of School Business Officials International. Wood, R. C., Jones, H. B., & Riley, L. R. (1984). The pursuit of equity in financing public education. In J. E. Clark & K. Hertz (Eds.), Major topics of business management in the mid 1980's (pp. 1-9). Reston, VA: Association of Business School Officials. Woodbury, K. B. (1983). Fair share of funding unmet goal for colleges. Community and Junior College Journal, 53 (6), 22-25.

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BIOGRAPHICAL SKETCH The author of this dissertation is George Wesley Harrell. His educational background includes a Bachelor of Science in Industrial Engineering (1972) and a Master of Business Administration in finance (1988). Both degrees were earned at the University of Florida in Gainesville, Florida. Mr. Harrell's work experience includes 11 years with Eastern Airlines in several positions including Manager Financial Control and Administration, Manager Ramp Service Support, and Manager Building Services. At the time of the completion of this dissertation, he was the Associate Director of Physical Plant for the University of Florida in Gainesville, Florida. He was awarded the degree of Doctor of Philosophy in higher education administration with emphasis on higher education finance in May, 1992. 158

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I certify that I have read this study and that in my opinion it conforms to acceptable standards of scholarly presentation and is fully adequate, in scope and quality, as a dissertation for the degree o Doctor of P osophy. I certify that opinion it conforms mes L. Wattenbarge, istinguished Service Professor of Educational Leadership that in my as eyman, Cochair sociate Professor of Educational Leadership I certify that I have read this study and that in my opinion it conforms to acceptable standards of scholarly presentation and is fully adequate, in scope and quality, as a dissertation for the degree of Doctor of Philosophy. c?r~~ R. Craig Wood Professor of Educational Leadership I certify that I have read this study and that in my opinion it conforms to acceptable standards of scholarly presentation and is fully adequate, in scope and quality, as a dissertation for the degree o Jam Associate Professor of Management This dissertation was submitted to the Graduate Faculty of the College of Education and to the Graduate School and was accepted as partial fulfillment of the requirements for the degree of Doctor of Philosophy. May, 1992 {:~ Dean, College ofEdun

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