A Study of the Discontinuance of Formula Funding of Institutions of Higher Education in the Commonwealth of Virginia
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The formula method of allocation was used in the Commonwealth of Virginia to fund institutions of higher education from 1968 until the recession of 1990. Prior to the early 1990s recession, operational funding for institutions of higher education in the Commonwealth was derived from a framework for staffing guidelines, faculty peer-group benchmarks, and a student tuition policy. Revenue shortfalls caused by the recession were insufficient to fund the resources demanded by the guidelines or funding formulas. This led to the discontinuance of the funding formulas that had guided Virginia's higher education funding for more than two decades (Report of the Joint Subcommittee on Higher Education Funding Policies, 1999).
The purpose of the study was to find out how and why the decision was made to discontinue formula funding of institutions of higher education. The decision-making process at the state level is often complex, uncertain, and difficult. The emphasis of the study was to examine the rationale for discontinuing formula funding for resource allocation to institutions of higher education.The study explored why the Commonwealth of Virginia made this important decision.
The subjects of the study are the state-level decision-makers responsible for funding institutions of higher education in the Commonwealth of Virginia. Information on how and why the Commonwealth of Virginia reached the decision to discontinue formula funding could only be obtained by in-depth interviewing of the participants in the decision-making process.
Data were analyzed using the four streams of Cohen and March's decision making model. Triangulation of the data served as a means of data validation. Conclusions and recommendations for future study and practice are included.
The major findings were that were many complaints regarding the former formula funding model. The model was a demand driven, rigid input based model that was not linked directly to state revenues. The model was not mandated by the Code of Virginia as was K-12 formula.
As required with time-sensitive matters, decisions have to be made to address the issues at hand. The funding formulas were simply discontinued in the face of adversity. Consensus was basically that the demand driven formulas were the wrong methodology given the recession and demands for attention in other areas.
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