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A study to test a model for predicting fiscal health for institutions of public higher education: A case study

Janet D Wanczyk, University of Massachusetts Amherst


As the financial health of institutions of higher education become uncertain, a need exists to assess an institution's short and long-term viability. The purpose of this study is to determine whether a model developed by Leslie and Fretwell (1996) could have predicted the fiscal health for a public institution of higher education. The model includes factors that should be used in determining fiscal health. They include the following: (1) the effects of economic, demographic, and political trends; (2) trends in the institution's financial condition; (3) stability, openness, and courage in management; (4) vitality of education programs; and (5) the interaction of all of these factors. This case study focused on two 5-year periods at the flagship campus of a northeast public university system. The audited financial statements of the campus were used to determine the accuracy of the model. This college was selected because it had experienced both a financial decline and revival within a 10-year period. Through a review of related documents, a questionnaire, and interviews, the model was constructed and analyzed. A total of 18 independent variables were constructed to represent the four factors. The analytical framework was based upon causal path analysis. Even though this study was admittedly exploratory, the findings revealed that the Leslie and Fretwell (1996) model is a useful management tool and could provide meaningful information for administrators and trustees in planning and decision-making. Conclusions drawn from the research suggest that 7 of the 18 variables could assist in predicting the fiscal health of the campus in this study regardless of whether the fiscal condition declined or improved. The variables were divided into three types: (1) leading, (2) coincident, and (3) lagging. The leading indicators that could be useful in predicting fiscal health are (1) share of state appropriation, (2) SAT scores, (3) enrollment, (4) applicant yield and (5) senior staff turnover rate. The single coincident indicator was the state appropriation. Finally, the only lagging indicator that could have predicted fiscal health for the campus in this study was deferred maintenance. The limitations and implications of this study as well as recommendations for further research have also been provided.

Subject Area

Higher education|School administration|School finance

Recommended Citation

Wanczyk, Janet D, "A study to test a model for predicting fiscal health for institutions of public higher education: A case study" (2001). Doctoral Dissertations Available from Proquest. AAI3027268.