INDICATORS OF FINANCIAL HEALTH AS IDENTIFIED BY BUSINESS OFFICERS OF SMALL LIBERAL ARTS COLLEGES

BARBARA ELLEN BLACK, Pace University

Abstract

The purpose of this study is to determine those financial and nonfinancial measures used by small, independent, four year liberal arts colleges to assess their financial condition and the importance placed on these specific indicators. Through review of the body of literature which addresses financial health indices and attendance at seminars and meetings demonstrating how to define and determine financial stress, a listing of frequently identified indicators was developed. The final design of the survey instrument was edited after consultation with experienced colleagues and other informed sources. This questionnaire elicits the maintenance and perceived importance of selected admissions, student enrollment, faculty, and institutional and departmental operating and performance data. The chief business officers of the sample population (193 colleges) were mailed the questionnaire. Seventy-six usable returns were the basis for the study's descriptive and evaluative discussion of institutional application of the statistics. Analysis of the responses indicates that institutional performance measures are retained most frequently on the transactional level and their use diminishes with the need for integration of additional data, calculation of interdepartmental statistics or increased levels of aggregation. Availability and value may be ranked in the following hierarchical order: ADMISSIONS (recruitment flow process and yield rates), BASIC REGISTRATION (headcount by level and major, FTE's by level, retention, and student credit hour consumption), FACULTY (headcount, FTE's credit hours generated by discipline, and percent tenured), STUDENT TO FACULTY RATIOS, and ELEMENTARY FINANCIAL INFORMATION (expenditure distribution, comparisons of operating revenues to expenses and total assets to total liabilities). The use of standard enrollment units, such as FTE's or per student credit hour, is rated low. Discipline information (faculty compensation, tenure, work load, and instructional cost) is significantly less available than institutional information. Only student credit hours appear to be maintained consistently on both discipline and institutional level. The least available statistics are those relating to the analysis of the college's financial structure: instructional costs, fixed costs, and ratios among income and expenditure components. The more important determinants of costs (average number of students per course section, faculty load, and compensation by discipline) have a low perceived value as a health indicator. This study reveals that the need still exists to incorporate valid and credible measures of quantitative as well as qualitative outcomes of institutional activities to determine the real cost of the achievement of both academic and societal goals and mission fulfillment.

Subject Area

Higher education

Recommended Citation

BLACK, BARBARA ELLEN, "INDICATORS OF FINANCIAL HEALTH AS IDENTIFIED BY BUSINESS OFFICERS OF SMALL LIBERAL ARTS COLLEGES" (1982). ETD Collection for Pace University. AAI8219530.
https://digitalcommons.pace.edu/dissertations/AAI8219530

COinS