An Examination of the Influence of Decreases in State Appropriations on Online Enrollment at Public Universities

State support for public higher education has been a primary concern for decades. Online education has been identified previously as an alternative revenue source that can offer financial relief to colleges and universities. This study uses IPEDS data and a fixed effects regression approach to examine whether public universities increase their reliance on online education in response to decreases in state appropriations. Consistent with resource dependence theory, we found a negative relationship between state appropriations and online enrollment at public 4-year institutions. Our findings indicate that public universities, particularly public doctoral institutions, appear to be responding to declines in state appropriations by engaging in revenue diversification and increasing their commitment to online education.