Analysis of Expenditure Patterns in Higher Education Institutions and Student Graduation and Retention Rates

Abstract

Within a challenging environment of financial hardships and budget cuts, higher education institutions have been struggling to maintain the balance between quality and productivity using the available resources while answering to calls for more accountability and proof of effective and efficient institutional performance. This study explored the relationship between institutional expenditures and graduation and retention rates as indicators of institutional performance. Stepwise multiple regression analyses were conducted to examine this relationship in twelve stratified samples of four-year-or above higher education institutions characterized by institutional control (public and private-not-for-profit) and Carnegie classification 2010 (doctorate, master’s, and baccalaureate granting institutions). Results of this study indicated that institutional expenditures significantly predicted graduation and retention rates in all stratified samples. Instruction and academic support contributed positively to graduation and retention rates in majority of the samples while research expenditures contributed positively mainly in doctorate granting institutions. Institutional support expenditures contributed negatively to graduation and retention rates in majority of the stratified samples while, and to a less extent, public services and other expenditures contributed negatively only in some samples. Student services expenditures showed weak and conflicted contribution to graduation and retention rates in few samples and no contribution in majority of the samples. Findings of this study have important implications for institutional leaders and decision makers in regard to adjusting resource allocation patterns and investing in areas that help improve graduation and retention rates.