Influencing Graduation Rates Through Resource Allocation: A Correlation Analysis of Institutional Expenditures and Six-Year Graduation Rates at Private Colleges and Universities in New England

The challenges facing higher education are great given the current economic environment, the shift of enrollment from private to public institutions, changing student demographics, globalization of institutions, and technology (Goldstein, 2006; Jansen & Bielak, 2008; Newman, Couturier, & Scurry, 2004a). Society\u27s expectations that institutions increase access to postsecondary education and degree attainment, while improving learning outcomes, are formidable as institutional revenues and funding diminish (Wellman, 2010). The distribution of resources, whether for instruction, student services, academic support, or otherwise, may directly or indirectly influence student retention and degree attainment. Skyrocketing tuition costs have earned inclusion on the national agenda, challenging institutions to contain costs (Obama, 2012). Institutions must make difficult decisions concerning the hiring of additional personnel to achieve reduced class size and to provide better service, or to allocate resources to non-personnel functions such as technology and equipment in order to improve student retention and graduation rates (Burke, 2005; Goldstein, 2005). This study, based on IPEDS enrollment, finance, and graduation rate data, examined the influence of institutional expenditures on six-year graduation rates at 113 private, not-for-profit, four-year and above, primarily baccalaureate degree-granting institutions in New England. The quantitative, causal-comparative research design utilized multiple regression as the statistical technique to explore the relationship. The research questions examined the relationship between expenditures and graduation rate as a percentage of total expenditures and as expenditures per FTE student. Findings indicate the existence of significant positive relationships between expenditures per student for both instruction (non-personnel) and student services (personnel) variables and graduation rates. The existence of significant inverse relationships were indicated for expenditures per student for student services (non-personnel), and the percentage of expenditures for institutional support (non-personnel), instruction (personnel) and student services (personnel) variables and graduation rates. The study findings may be useful for educational practice by assisting in the development of a framework for an expenditure model addressing resource allocation and the fine-tuning of expenditures toward personnel or non-personnel related costs as a means for improving the graduation rate. Graduation rates are important to consumers and provide institutional leaders with an overarching direction and motivation for continuous improvement