KCTCS PUBLIC FUNDS ALLOCATION MODEL
The Council on Postsecondary Education (CPE) has established benchmark funding goals for each postsecondary education institution. A set of benchmark institutions was established for each Kentucky institution. Goals were established to provide equitable funding of Kentucky’s institutions in relationship to its benchmark institutions. When available, CPE designates new funds for benchmark funding adjustments. KCTCS must allocate these new funds among the colleges and for system wide operations. KCTCS should have in place a method to distribute new benchmark funding allocation in an equitable manner. This funding model generates a KCTCS total systemwide funding level approximately the same as the CPE benchmark funding objective for KCTCS. The allocation model is based on a set of principles, developed by the Financial Resources Tactical Advisory Group and adopted by the President’s Leadership Team, that guided the development of the funding allocation model. The principles strive to ensure equity, adequacy, and help move KCTCS toward the goals set forth in HB1 and the Strategic Priorities of KCTCS. A set of data elements that may be measured objectively has been identified to drive the model. The data elements identified are associated with a base funding need for providing necessary postsecondary education services. Data entered and maintained in the KCTCS administrative software system (PeopleSoft) is used in the model. A set of objective rates based on comparisons with benchmark states, benchmark funding goals, and standard higher education reporting are identified. These rates shall be reviewed annually and adjusted as indicated.
STATEMENT OF PRINCIPLES The KCTCS Public Funds Allocation Model specifies the use of a model as the measure of adequacy and equity of funding for KCTCS colleges and System Office. As such, model calculations will serve as the starting point for the recurring budget request development. The KCTCS Public Funds Allocation Model includes components to address all House Bill 1 mandates for KCTCS. The KCTCS Public Funds Allocation Model is designed to calculate the public funds base allocation for each college (at the district level) and the system operations and support. The model is not intended to be used as an internal college budget development tool; setting college priorities and allocating funds to achieve KCTCS priorities is the responsibility of the college president. The KCTCS Public Funds Allocation Model addresses only recurring budget allocations. Nonrecurring allocations such as debt service and mandated tuition scholarship funds will be allocated each year based on need and availability of funds. The Model does not allocate funds to cover all activities conducted by the colleges (e.g. bookstores, customized training, etc.) nor does it account for all sources of funds available to the colleges (e.g. auxiliary revenue, non-credit tuition, grants, contracts, and gifts). The KCTCS Public Funds Allocation Model is intended to apportion only a base level of public funding. The KCTCS Public Funds Allocation Model uses both internal and external measures to assure equity and adequacy. The average salary of the KCTCS benchmark states is used as the benchmark salary. Other average expenditures of the KCTCS benchmark states are also used in each funding component, where possible. Data for the Public Funds Allocation Model will be derived from the records of the official KCTCS Student, HR, and Financial systems. Semester Credit Hours (SCH) and Student Full-Time Equivalent (FTE) are derived from delivering college data. All SCH for which tuition is assessed will be included in the SCH production count. Headcount enrollment (HC) is derived from home college data. A comprehensive study will be conducted each year to determine the operating costs by Instructional Group. The distribution of expenditures by Program Classification System (PCS) group of the KCTCS benchmark states will be examined annually. The KCTCS System Operations and Support funding will be a component of the KCTCS Public Funds Allocation Model. The factor for determining the total system operations and support recurring budget will be a percentage of college allocations, based on KCTCS benchmark states.
APPLICATION OF PRINCIPLES A brief description of each component/subcomponent of the KCTCS Public Funds Allocation Model and its method of calculation is listed below. Component/Sample Activities Data/Calculation Why this calculation? Instruction Associate and Technical Degrees, Diploma and Certificate Programs, and Pre-Baccalaureate Associate Degrees. Instruction group SCH rate X Annual SCH production 1 (All SCH for which tuition is assessed will be included in the SCH production) This component calculation is based on SCH by delivering college. The instructional group approach recognizes and supports the varying cost of delivering instruction. This approach also responds to changes in enrollment among the programs at each college. Park, Recreational, Leisure & Fitness Studies Philosophy and Religion Physical Sciences Precision Prod Trades Protective Services Psychology Public Admin & Services Science Technologies Social Science & History Trans & Material Movers Workers Visual & Performing Arts Vocational Home Economics
Instructional CIP Groups Agriculture Architecture and Environmental Area Ethnic & Cultural Std Biological/ Life Sciences Business Communications Computer & Info Sciences Conservation & Renew Natural Resources Construction Trades Consumer & Personal Services Developmental Education Engineer & Related Tech Academic Computing Support Academic Computing Labs Academic Support Curriculum Development Credit Transfer Agreements Dual Enrollment Agreements Libraries Engineering English Lang & Lit Foreign Languages & Literature General Agriculture Health Prof & Related Sciences Home Economics Leisure and Recreational Lib Arts Science Gen Studies & Humanities Library & Archival Science Mathematics Mechanics and Repairers Multi/Interdisciplinary Studies
SCH X $ rate 4 (All SCH for which tuition is assessed will be included in the SCH production) Instruction component X % 1
Recognizes the need to continually update information technology equipment and infrastructure for student academic computing. Recognizes varying cost of academic programs at each college. This component calculation is based on SCH by delivering college. Recognizes need for library services at each college.
Base amount + ($ rate X annual SCH production)
(All SCH for which tuition is assessed will be included in the SCH production)
Component/Sample Activities Remedial/Preparatory Education Remedial Education Adult Basic Education not funded by a grant Economic and Workforce Development, Community Education, and Public Outreach Administration and support of: Continuing Education, Customized Business and Industry Training, and Lifelong Learning. Student Services Early admission Advanced placement Dual Enrollment Agreements Credit Transfer Agreements Branch Campus Administrative Services Student Services Academic Administration Institutional Administration Student Financial Aid Provide greater accessibility for students to KCTCS programs Operation and Maintenance (O&M) of Plant Maintenance supplies, equipment and contracts for college building and grounds Utilities Lease of facilities Institutional Support Business Office Affairs Institutional Effectiveness and Research Human Resources Institutional Advancement College President
Data/Calculation $ rate X unduplicated HC of students enrolled in remedial education classes 1 Instructional component X %1
Why this calculation? Recognizes and responds to changes in enrollment of remedial students. This component calculation is based on enrollment by delivering college. Recognizes the role of KCTCS in providing Economic and Workforce Development, Community Education, and supports the administrative activities associated with the delivery of Community Education.
Base amount + ($ rate X actual HC Enrollment) 1 (The Home College Headcount Enrollment is a cumulative annual count of all students for each term. ) Amount X number of eligible Branch Campuses
Recognizes the need for a base level of student services at each college plus additional need based on home campus HC.
Federally required matches 2 + (tuition revenue 7 X %). (Square footage X $ rate) 3 + utilities 8 + (acres X $ rate) + KCTCS approved leased space X rate 2.
Recognizes the need for permanent additional administrative services for branch campuses that serve more than 300 FTE (annualized) and are greater than 24 miles from the main campus. Provides funds to match federal programs, to fund state mandated waivers, and to fund some campus-based tuition scholarships or waivers. Recognizes and supports custodial, general maintenance, utility expense, and landscaping of grounds for all college educational and general (E&G) space.
Total of above model components X %1
Recognizes administrative and support service requirement as a function of size of college based on the total value of all other components.
Component/Sample Activities Information Technology Computer hardware and software maintenance and replacement Professional Development Professional development activities for all employees System Level Support Financial Administration Human Resources/Internal Affairs Information Technology Institutional Advancement Legal Affairs Chancellor’s Office KCTCS President’s Office
Data/Calculation Total of all above components, excluding Credit Instruction X %5 Total of all components X %6
Why this calculation? Recognizes the need to continually update information technology equipment and infrastructure for both student academic computing and administrative computing. Recognizes the need to provide professional development opportunities for faculty and staff. Recognizes administrative and support service requirement as a function of size of college based on the total value of all other components.
Total of above model components, excluding institutional support X %1
1. Initial rate source is the CHE funding model. (Dollar values have been adjusted for inflation.) Future rates will be based on expenditure analysis of KCTCS and KCTCS benchmark states. 2. Average of three years prior actual expenditures, adjusted for inflation. 3. Initial rate source is the CPE new facility funding request model, adjusted for inflation. 4. Based on the study for the former student technology charge, adjusted for inflation. 5. David Smallen and Karen Leach, Spending, Staffing, Service and Infrastructure Answering Four Questions about Information Technology Costs (2001 Educause Conference presentation) http://www.costsproject.org/track_slides_educause2001.ppt - Table 4 6. Thomas B. Corcoran, Helping Teachers Teach Well: Transforming Professional Development, (A Consortium for Policy Research in Education (CPRE) Policy Brief, June 1995) – The range for professional development expenditures in the large school districts reporting was 1.8 % to 2.8% of total budget. 7. Previous year actual tuition and charges X planned tuition rate increase 8. Average of three years prior actual expenditures (adjusted for Public Service Commission increases to most recent fiscal year) plus values of rate increase approved by the Public Service Commission.
KCTCS Public Funds Allocation Model Model Application Procedure (MAP)
The Model Application Procedure (MAP) is designed to distribute new public funds among the 17 KCTCS funding entities (colleges and systemwide operations programs), regardless of the amount of new public funds to be distributed. That is, this procedure may be used to distribute small or large amounts of new public funds based on the results of the KCTCS Public Funds Allocation Model calculations and a number of fiscal variables that will impact KCTCS in the near future. These fiscal variables include: The biennial state general fund appropriation to KCTCS by the General Assembly The total annual enrollment at each KCTCS college The analysis of costs and funding support for colleges and systemwide support programs in benchmark states compared to KCTCS The cost of implementing the Classification and Compensation Plan The funds available to open and maintain new facilities authorized for construction
MAP is based on the following principles: The recurring public funds base of one funding entity will not be reduced to increase the recurring public funds base of another funding entity. A “proportional increase” will be provided in that a portion (a dollar amount or a percentage) of the total new public funds to be distributed for implementation of the allocation model will be proportionately allocated among the 17 funding entities, based on the most current recurring public funds base for each funding entity. The amount of funds used for this purpose should not exceed 25 percent of the total new public funds to be distributed for implementation of the allocation model. An “equity increase” will be provided in that the remaining new public funds to be distributed for implementation of the allocation model will be distributed among the 17 funding entities proportional to each ones “percentage of model” funding level, after applying the increase described in the previous principle.
MAP will be implemented using the following equations: The “proportional increase” for each funding entity will be Pi = Ps * Ri / Rs where Pi is the “proportional increase” for funding entity “i” Ps is the total amount of the “proportional increase” for the entire system Ri is the current recurring public funds base for funding entity “i” Rs is the current recurring public funds base for the entire system “i” is each funding entity “s” is the systemwide total Ri / Rs is the measure of the size of funding entity “i” relative to the entire system. The “equity increase” for each funding entity will be Ei = Es * [Mi – (Ri + Pi)] / [Ms – (Rs + Ps)] where Ei is the “equity increase” for funding entity “i” Es is the total amount of the “equity increase” for the entire system Mi is the model calculation for funding entity “i” Ri is the current recurring public funds base for funding entity “i” Pi is the “proportional increase” for funding entity “i” Ms is the total model calculation for the entire system Rs is the current recurring public funds base for the entire system Ps is the total amount of the “proportional increase” for the entire system “i” is each funding entity “s” is the systemwide total [Mi – (Ri + Pi)] / [Ms – (Rs + Ps)] is the measure of the distance that funding entity “i” is from full funding, relative to the distance the entire system is from full funding.
MAP will be reviewed periodically (as will the Public Funds Allocation Model), but it should be used for 4-5 years to allow for necessary evaluation of the procedure. 7