How can you tell if a faculty or group is on decline? Am I being used? I am currently deciding graduate school between several different groups in my school's engineering department. A few faculty in electronics, signal processing and control system has expressed interest in working with me.

When I talk to some of the current graduate students, I get a wide variety of opinions. What bothers me is that some graduate students tells me that a certain group is on "decline". They rarely clarify what this means, but to me it can mean several things.


the output from the group is inconsistent
funding is lacking
output is not applicable to come up with a product
(follows from 3) work too theoretical and deviates from engineering goal 


If a group is on decline, then regardless of the reason, under normal circumstances I will not even consider joining. What surprises me is that this group which has been rumored to be on the decline is very keen on recruiting new graduates. In particular, I have experienced more of a "pull" from that particular group than any other group which has expressed interest. There are early admissions, talk about funding, offer of teaching assistance-ship. I am starting to wonder if they need me so to acquire more funding for their own research or if there are some other ulterior motives.

Can someone who works within academia clarify on what it could mean for a group to be on decline, so much that it is apparent to people who are outside of that group.

Also what interest me personally is what ulterior motive could a graduate unit have in recruiting new graduates aside from the expressed interest in publishing more beautiful papers.

Thanks
In the final year of my PhD, I made a tour of several places in the USA to try to establish contacts in the hope of finding hidden postdoc opportunities.  I knew of those places because I frequently saw their papers.  In some places, I have seen signs of decline:


In one place, the main senior scientist had moved away some years ago.  Since then, one by one, others had left.  It appears nobody was replacing them.  The people who were still there appeared to be the ones who were less successful at getting grants and writing papers, than the ones who had left.
In another place, I didn't see any PhD students in a group, and only a handful of postdocs.  Most people were above 50, with the head of the group being well above 70.  Although certainly a great name to have as a support, I wouldn't recommend anyone starting a PhD project with someone who will turn 80 before the candidate is expected to get their PhD.  
I also overheard conversations from which it was clear that people were not very ambitious.  I almost literally heard someone say, that they now had a permanent position so they didn't need to write a lot of papers anymore.


Those are some signs that a place might be in decline: Have more than two senior scientists left the place in the past five years?  Is the median age above 60?  Are some people happier to stay on their desk than to attract great PhD students and postdocs to produce some great science?