The purpose of this research effort is to determine: (1) why formulas are used in the budgetary process of public higher education; (2) what organizations play an active role in the development of the formulas; (3) what strategies and counterstrategies are adopted by the participants in the formula budgeting process for public higher education; (4) what consequences derive from the organizational strategies; and (5) what functions are performed and what dysfunctions result through the application of budgetary formulas. Focus in this study is both on the historical development of budgetary formulas used in or closely related to the instructional function in California, Illinois, and Texas and on current practices. In particular, the emphasis is on the interorganizational relationships between executive and legislative budget agencies, coordinating agencies, and institutions. (Author/LBH)