How do Revenue Variations Affect Expenditures Within
U.S. Research Universities?
Larry L. Leslie
•
Sheila Slaughter
•
Barrett J. Taylor
•
Liang Zhang
Received: 9 March 2011 / Published online: 20 December 2011
Ó Springer Science+Business Media, LLC 2011
Abstract Using Integrated Postsecondary Education Data System (IPEDS) figures on the
96 Research Extensive Institution in academic year 2007–2008, we employ panel data
from academic year 1984–1985 to 2007–2008 to identify revenue-expenditure relation-
ships. Although we consider a wide range of functional expenditure categories, we focus
our analysis on instructional and research expenditures because these categories tie most
closely to the core missions of research universities. Results suggest tight relationships
between some revenue and expenditure categories for some institutions. For public uni-
versities, these relationships tend to follow expected paths. For example, a large proportion
of tuition revenues tend to be spent in the functional category of instruction. Private
universities evidence a somewhat different pattern, with revenues generally expended in
the pursuit of merit aid and research. This suggests that private universities strategically
deploy revenues from a wide variety of sources to secure particular students and to conduct
research activities. However, the ways in which universities and IPEDS classify faculty
work raises some questions about the transparency of various categories, and suggests that
some current conceptions of how revenues are expended on research and instruction
functions may be less than straightforward.
Keywords Finance Á Policy Á Research universities Á Revenues Á Expenditures
L. L. Leslie Á S. Slaughter (&) Á B. J. Taylor
Institute of Higher Education, The University of Georgia, Athens, GA, USA
e-mail: slaughtr@uga.edu
L. L. Leslie
e-mail: larryl@uga.edu
B. J. Taylor
e-mail: bjtaylor@uga.edu
L. Zhang
Center for the Study of Higher Education, The Pennsylvania State University,
University Park, PA, USA
e-mail: lxz19@psu.edu
123
Res High Educ (2012) 53:614–639
DOI 10.1007/s11162-011-9248-x
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