Higher Education Funding in Indiana

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					HIGHER EDUCATION    Trustees
FUNDING IN          Academy
INDIANA: THE ROLE
OF THE INDIANA
COMMISSION FOR
HIGHER EDUCATION
                    A u g us t 3 0 , 2 01 0
                    Indiana
                    Commission for
                    Higher Education
Contextual Information




                         2
      INDIANA’S PUBLIC
  HIGHER EDUCATION SYSTEM

5 four-year Public Postsecondary
 Institutions
2 two-year Public Institutions
31 Public Campuses and 12
 Instructional Sites
407,000 Students in 2008-09
1,500 buildings worth $12B
$2.3B in salary and compensation
                                    3
        Contextual Information

Total FY 10 estimated expenditures by all Indiana
         public postsecondary institutions

      $5,090,667,914
Total FY 10 General Fund estimated expenditures
 by all Indiana public postsecondary institutions

        $3,487,676,807
                                                4
              $-
                                                                                                       $1,000,000,000
                                                                                                                        $1,200,000,000
                                                                                                                                                $1,400,000,000




                   $200,000,000
                                                                         $600,000,000
                                                                                        $800,000,000




                                  $400,000,000
    1975-76
    1976-77
    1977-78
    1978-79
    1979-80
    1980-81
    1981-82
    1982-83
    1983-84
    1984-85
    1985-86
    1986-87
    1987-88
    1988-89
    1989-90
    1990-91
    1991-92
    1992-93
    1993-94
    1994-95
    1995-96
    1996-97
    1997-98
                                                                                                                                                                 state appropriations 1976 - 2011




    1998-99
    1999-00
    2000-01
    2001-02
    2002-03
    2003-04
    2004-05
    2005-06
                                                 Compound Annual Growth Rate: 4.7%




    2006-07
    2007-08
                                                                                                                                                                                                    STATE OPERATING APPROPRIATIONS TO
                                                                                                                                                                                                    PUBLIC POSTSECONDARY INSTITUTIONS




    2008-09
    2009-10
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                                                                                                                                         $1,228,799,413




    2010-11
    STATE GENERAL FUND EXPENDITURES BY FUNCTION
                      FY 2010



                               14%                                            Approximately $13 billion total

                   3%                                                                     K-12
                5%                                                                        Higher education
                                                                        48%               Medicaid
              5%                                                                          Teacher Pensions
                                                                                          Corrections
                                                                                          Child Welfare
                 13%
                                                                                          Other


                                    13%

Source: State Budget Agency (note: includes all Higher Educ. expenditures)                                  6
Indiana Commission for Higher Education
   Role in Developing the State Higher
            Education Budget




                                      7
OVERVIEW OF THE STATE BUDGET PROCESS

 CHE and State Budget Agency issue budget instructions
  to the public postsecondary institutions each biennium
 Institutions submit formal budget requests to the state
 CHE compiles and reports the institutional budget
  requests
 CHE issues budget recommendations to Governor and
  General Assembly
 Governor issues budget recommendations to General
  Assembly
 CHE staff works with legislative staff during legislative
  session to help craft the budget


                                                              8
         STATE APPROPRIATIONS TO HIGHER
             EDUCATION FY 2009-2011
                                 $ in millions

                                  FY 2009         FY 2010 FY 2011 %Δ FY 09-11
Campus Operating                       $1,280 $1,232 $1,229                   -4%
Debt Service (fee replacement)           $177        $168    $194             10%
Line Items                                  $88       $70     $70            -21%
R&R                                         $31        $0      $0            -100%
SSACI                                    $249        $262    $269              8%
TOTALS                                 $1,826 $1,731 $1,761                   -4%

Note: not all appropriations were released; some state appropriations were
replaced with federal stimulus funds

                                                                                 9
CUMULATIVE CHANGE IN STATE APPROPRIATIONS
         BY FUNCTION FY00 – FY 11


                                                 159%
 150%


 125%


 100%


  75%                   69%

  50%

           20%                        23%
  25%


   0%

         operating   debt service   line items    SSACI    R&R
  -25%


  -50%


  -75%


 -100%                                                    -100%
                                                                  10
    CHE FUNDING RECOMMENDATIONS

 Informed by Reaching Higher: Strategic Directions for Higher
  Education in Indiana
 Recognizes that by law independent boards of trustees for
  each public institution with responsibility for the soundness
  of that institution
 Indiana needs a comprehensive, integrated and
  complimentary system of higher education
 Focus areas of reaching Higher include:
    College Preparation
    Affordability
    College Completion
    Economic Development


                                                              11
CHE RESPONSIBILITIES RELATED TO HIGHER
         EDUCATION BUDGET

 Make recommendations for state appropriations to
  higher education
   Institutional appropriations
   Capital projects and R&R
   State Student Financial Aid
   Non-Binding tuition targets
 Post budget responsibilities
   Review certain expenditures
   Review certain capital projects
   Make recommendations on budget reductions (when
    necessary)
                                                  12
  CHE RECOMMENDATIONS FOR CAMPUS
      OPERATING APPROPRIATIONS

Fungible dollars appropriated to the
 institutions
Appropriations are made to individual
 regional campuses; one appropriation to
 ITCCI
Generated through (an evolving) collection of
 formulae
Performance funding policies


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                    EVOLUTION OF CHE FUNDING
                       RECOMMENDATIONS

          2001                      2003                      2005                      2007                       2009
                                                                                                        Enrollment Change
Enrollment Change (credit Enrollment Change (credit Enrollment Change (credit Enrollment Change (credit (successfully completed
hours enrolled)           hours enrolled)           hours enrolled)           hours enrolled)           credit hours)

Inflation Adjustments    Inflation Adjustments     Inflation Adjustments     Inflation Adjustments

Equity Adjustment        Equity Adjustment         Equity Adjustment         Equity Adjustment

Plant Expansion/leases   Plant Expansion/leases

Program Adjustment
                         Research Support          Research Support          Research Support          Research Support
                         Incentive                 Incentive                 Incentive                 Incentive
                                                                             Change in number of       Change in number of
                                                                             degrees                   degrees
                                                                             Change in On-Time         Change in On-Time
                                                                             graduation Rate           graduation Rate
                                                                             Two Year Transfer         Two Year Transfer
                                                                             Incentive                 Incentive
                                                                                                       Low Income Degree
                                                                                                       Completion Incentive
                                                                                                       Workforce Development
                                                                                                       Incentive (funding non-
                                                                                                       credit coursework)

                                                                                                                             14
                    CAPITAL PROJECTS

   Requested by institutions with no restrictions
   Only exception is a formula to generate R&R appropriations
   CHE makes capital project recommendations
   Capital projects may be:
     State funded, requires General Assembly authorization
     Non-state funded, sometimes requires General Assembly
      authorization
     Cash funded
     Authorized to issue debt – debt may or may not be repaid by the
      state
 Includes projects:
     New construction
     Repair or renovation
     Infrastructure

                                                                        15
            HISTORICAL CAP PROJECTS REQUESTS, CHE
               RECOMMENDATIONS AND AS PASSED

     $700,000,000


     $600,000,000


     $500,000,000


     $400,000,000


     $300,000,000


     $200,000,000


     $100,000,000


              $-
                    1995      1997      1999      2001      2003      2005      2007   2009


             H.E. Requested            CHE Recommended                       GA Approved
16
          Note: GA approvals have exceeded CHE recommendations by $930M
    CHE REVIEW OF CAPITAL PROJECTS

 Certain capital projects require state review and approval
 CHE REVIEWS and makes recommendations on capital
  projects that have been requested by the institutions
 Statutory review depends on many things, including:
    Type of project
    Total cost of the project
    Source of project funding
 After CHE recommendation, projects move to State
  Budget Committee, State Budget Agency, Indiana
  Finance Authority and Governor


                                                          17
               STUDENT FINANCIAL AID

 A very complex, but important issue to af fordability
 Financial aid comes from many sources, but chiefly:
     Federal government
     State appropriations (SSACI)
     Institutional aid
     Private foundations/owners/employers
 Financial Aid study jointly undertaken by CHE and SSACI to be
  presented in September to State Budget Committee
   Aligning financial aid policy with state higher policy: particularly
    college completion
   Recognizing the “new normal” student – majority of financial aid
    applicants are “non-traditional students with different types of needs
    and require a new approach to financial aid policy


                                                                        18
 THE GENERAL ASSEMBLY MAKES FINAL
          DETERMINATION

 CHE makes recommendations
 The Trustees by statute have virtually all of the decision
  making power and responsibility for institutional budgets and
  administration
 The General Assembly is always free to accept, modify or
  reject the CHE recommendations
 CHE must work with institutional staf f, the legislature, other
  parts of state government and other stakeholders
 CHE recommendations are almost never adopted to the dollar,
  but the General Assembly has always passed higher education
  budgets based on Commission recommended policies


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