Iowa State University Capstones, Theses and Graduate Theses and Dissertations Dissertations 2012 Utilizing the Composite Financial Index as Strategic Financial Analysis for Measuring Financial Health and Student Success Rates among Iowa Community Colleges Dawn Ann Humburg Iowa State University Follow this and additional works at: https://lib.dr.iastate.edu/etd Part of the Community College Leadership Commons, Educational Administration and Supervision Commons, and the Finance and Financial Management Commons Recommended Citation Humburg, Dawn Ann, "Utilizing the Composite Financial Index as Strategic Financial Analysis for Measuring Financial Health and Student Success Rates among Iowa Community Colleges" (2012). Graduate Theses and Dissertations. 12897. https://lib.dr.iastate.edu/etd/12897 This Dissertation is brought to you for free and open access by the Iowa State University Capstones, Theses and Dissertations at Iowa State University Digital Repository. It has been accepted for inclusion in Graduate Theses and Dissertations by an authorized administrator of Iowa State University Digital Repository. For more information, please contact [email protected]. Utilizing the composite financial index as strategic financial analysis for measuring financial health and student success rates among Iowa community colleges by Dawn Ann Humburg A dissertation submitted to the graduate faculty in partial fulfillment of the requirements of the degree of DOCTOR OF PHILOSOPHY Major: Education (Educational Leadership) Program of Study Committee: Larry Ebbers, Co-Major Professor Soko Starobin, Co-Major Professor Cynthia Jeffrey Frankie Santos Laanan Dan Robinson Iowa State University Ames, Iowa 2012 Copyright © Dawn Ann Humburg, 2012. All rights reserved. ii This dissertation is dedicated to my children, Dustin, Keslie, and Dylan: Modeling scholarly behavior is one of the best gifts I could ever give them. They have been with me in spirit throughout this journey and well know the sacrifice their mother has made to achieve this dream. I thank them for understanding that mom had to study so she couldn’t visit as often as she would have liked—perhaps that was much more difficult on mom than on them. I hope this inspires each of them to always reach higher and to be satisfied with their lives but not stagnant in their thoughts or their actions. To my husband and avid supporter, Keith: Although I have been the one who strived for the goal of achieving a PhD, you were the foundation and support that I knew would always be there. Regardless of the peaks and valleys along the way, you helped to stay me on task and to meet deadlines. God bless you for your patience, for giving up vacations and for being my sounding board. iii A special thank you to each of the following individuals: Dr. Mack Shelley: Your expertise and your willingness to give of your free time to assist me with this project will never be forgotten. You are a truly dedicated educator. Dr. Cynthia Jeffrey and Dr. Jon Perkins: Your willingness to share your expertise on panel data analysis has been one of the most commendable actions. It has been absolutely wonderful working with other accounting professors—I look forward to hopefully working on more projects with you in the future. Thank you for the generous donation of your time. Dr. Soko Starobin and Dr. Larry Ebbers: As my co-major professors, you have inspired and motivated me to believe in myself and given me hope for a future career change. Thank you for being a huge part of me achieving this goal. Program of Study Committee: Thank you for your major role in my life and my career. Mr. Kent Farver: I truly appreciate your guidance with interpreting the 150 annual financial reports as well as your support along the way. Thank you for the bean-counter conversations as well. Dr. Larry Ebbers: Both my master’s degree and doctor of philosophy degree are all your fault. From participating in CLIC to achieving a PhD, you truly are to blame. Hoping that you are taking the humor as intended, I wanted to thank you for saying, “yes, you can”. You have always lent an ear and welcomed conversation—a tribute to your caring and professional nature. Thank you from the bottom of my heart for allowing me to be a part of your legacy. iv TABLE OF CONTENTS LIST OF TABLES ........................................................................................................................... vii LIST OF FIGURES .......................................................................................................................... ix ABSTRACT ....................................................................................................................................... x CHAPTER ONE INTRODUCTION ...................................................................................... 1 Background and Overview ......................................................................................... 1 Purpose of the Study ................................................................................................. 2 Statement of the Problem ........................................................................................... 2 Research Questions ................................................................................................... 4 Conceptual Framework .............................................................................................. 5 Significance of the Study ........................................................................................... 7 Definition of Terms ................................................................................................... 7 Limitations ............................................................................................................. 12 Delimitations .......................................................................................................... 13 Summary ............................................................................................................... 13 CHAPTER TWO LITERATURE REVIEW ......................................................................... 14 Overview ............................................................................................................... 14 Strategic Financial Analysis Utilizing the Composite Financial Index .......................... 14 Institutional Efficiencies .......................................................................................... 16 Success rates ....................................................................................................... 16 Graduation rates .................................................................................................. 17 Transfer rates ...................................................................................................... 17 Student loan rates ................................................................................................ 19 Community college funding ................................................................................. 25 Institutional Effectiveness ........................................................................................ 29 Accountability .................................................................................................... 29 Benchmarking ..................................................................................................... 31 Strategic Planning ............................................................................................... 32 Summary ............................................................................................................... 33 CHAPTER THREE METHODOLOGY OF THE STUDY ..................................................... 36 Overview ............................................................................................................... 36 Research Questions ................................................................................................. 36 Research Design ..................................................................................................... 38 Population and Sample ............................................................................................ 38 v Data Collection Procedures ...................................................................................... 38 Data Analysis ......................................................................................................... 40 CFI framework, FTEE, enrollment, fiscal-year credit hours ..................................... 40 Graduation, transfer and success rates.................................................................... 40 Composite financial index .................................................................................... 41 Predicting the success rate .................................................................................... 45 Econometric method ............................................................................................ 68 Summary ............................................................................................................... 69 CHAPTER FOUR RESULTS .............................................................................................. 70 Overview ............................................................................................................... 70 Descriptive Statistics ............................................................................................... 71 Descriptive statistics for the