The relationship between institutional expenditures and student retention at baccalaureate degree granting public and private institutions

Little research has taken place that attempts to determine how a resource allocation strategy could provide insight into improving student retention and graduation rates (Gansemer-Topf & Shuh, 2006; Ryan, 2004). The purpose of this study was to identify specific institutional expenditure allocations and patterns of institutional expenditure allocations in the categories of instruction, academic support, student services, and institutional support that correlated with first year student retention at four-year public and private colleges and universities.;Multiple regression analysis was performed on 2013 archival data from the IPEDS database and was controlled for the size of the institution, the control of the college, and the percentage of enrolled students classified as coming from a low socioeconomic background. Institutions with common patterns of expenditure allocations were identified and grouped through two-step clustering and discriminant function analysis was performed on the cluster groups to identify differences between the cluster groups and to develop a model of cluster group membership.;The study found a significant negative correlation between first-year student retention and student services and low socioeconomic status (SES), with low SES producing the largest correlation coefficient among all of the variables in the study. The study found a significant positive correlation with instruction, academic support, institutional size, and institutional control. The study also found that two of the nine cluster groups identified were significantly and positively correlated with first-year student retention, distinguishable from the other cluster groups by how they allocated resources in the expenditure categories of student services and instruction. The findings were inconclusive, however, in informing institutions on how they could use the findings to develop a resource allocation strategy that would improve first-year student retention at their respective institutions.;Suggestions for further research include: (a) studying resource allocation at an institutional core unit level, targeting institutions within the two correlating cluster groups with a mixed method research approach to identify practices that might be transferable to other institutions and to better understand the role that student services and instruction had on their retention rates, and (b) repeating this study using the IPEDS six-year cohort graduation as the dependent variable to build on prior studies in a way that may help institutions develop strategies that can begin to mitigate the effects of low SES on student outcomes.