2009-11 Higher Education Budget Recommendations

Presented to:House Ways and Means Committee

February 3, 2009

FTE Enrollment in Indiana Postsecondary Institutions

2Source: Annual Editions of Report of Enrollment in Indiana Colleges and Universities, prepared for the Indiana Association of Collegiate Registrars and Admissions Officers. Independent Colleges of Indiana. Commission for Higher Education Student Information System.

Peer Comparisons

Hoosier Enrollment (FTE) Trends 1994-2007

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4

Commission Budget Responsibilities and Priorities

• Debt Service• College Completion Incentives:

– Number of Degrees– On-Time Degrees– Low Income Degrees

• Enrollment/Student Course Success Incentive• Research Funding Incentive• R&R• Economic Development • Two-Year Transfer Incentive• SSACI

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FY 2010: 1.0% FY 2011: 2.0%

Marginal appropriation increases:FY 2010: $16M FY 2011: $32M

• Includes:– Operating– Debt Service (fee replacement)– R&R– Line Items (plus IEDC $20M appropriation)

• Excludes:– SSACI

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Operating Budget

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Operating Budget

• Campus Operating appropriations are based on the following formulae:– Number of Degrees Incentive– On-Time Degrees Incentive– Degrees to Low Income Students Incentive – Enrollment/Successfully completed credit hours

Incentive– Research Funding Incentive– Two Year-Transfer Incentive

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The Education Pipeline

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Source: National Center for Higher Education Management Systems, www.higheredinfo.org; Data from 2004. On-Time Completion and College Completion utilize NCES, IPEDS 2007 Graduation Rate File; gr2007 Early Release Data File*This represents a 6-year graduation rate of 57.84% at 4-year institutions, and a 24.8% three-year graduation rate at 2-year institutions. .

For every 100 Indiana 9th graders:

High School Graduation: 70 students graduate with a high school diploma on time

College Entry: 41 students enter college the fall following high school

College Persistence: 30 students are still enrolled sophomore year

College Completion: 24 students graduate from college within six years*

On-Time College Completion: 16 students graduate from a 4-year college on time

Top 5 States86 students

graduate with a high school

diploma on time

Top 5 States38 students are still enrolled sophomore

year

Top 5 States23 students

graduate from a 4-year college on time

Top 5 States33 students

graduate from college within 6

years

Top 5 States55 students enter

college the fall following high

school

College-Going Rate of Recent High School Graduates

Indiana’s rate grew by 9.6% over the last 10 years,

while the national rate grew by 5.2%. 10

College CompletionGraduation Rates (4,5, and 6 years) of First-time, Full-

time Bachelor's Degree-Seeking Students by Race at Indiana's Public and Independent Colleges and

Universities (1999 Cohort)

57%

38%

50%58%

37%33%

19%

36%

54%46%

33%

52%

0%

20%

40%

60%

80%

All Students AfricanAmerican

Hispanic Caucasian

4 Year Rate 5 Year Rate 6 Year Rate

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College Completion: Public 4-Year Universities

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Percent of First-Time, Full-Time, Degree-Seeking Students Earning a Bachelor’s Degree, 2007

4-Year Grad Rate 6-Year Grad Rate

Indiana University – Bloomington 50% 72%

Purdue University – West Lafayette 36% 69%

Ball State University 30% 58%

Indiana State University 20% 41%

University of Southern Indiana 13% 31%

Indiana University – Northwest 11% 32%

Indiana University – Kokomo 12% 27%

Indiana University – Southeast 8% 29%

IUPUI 9% 32%

Indiana University – East 10% 18%

Indiana University – South Bend 6% 27%

Purdue University – Calumet 4% 20%

IPFW 5% 23%

Purdue University – North Central 2% 13%

Source: US DOE National Center for Educational Statistics (NCES) through Peer Analysis System (PAS), IPEDS 2007 Graduation Survey

College Completion: Public 2-Year Colleges

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Percent of First-Time, Full-Time, Degree-Seeking Students Earning an Associate’s Degree

3-Year Rate (2001 Cohort) 3-Year Rate (2002 Cohort)ITCC – South Bend 11% 9%

ITCC – Indianapolis 9% 9%

ITCC – Columbus 16% 10%

ITCC – Muncie 9% 8%

ITCC – Kokomo 12% 12%

ITCC – Lafayette 15% 13%

ITCC – Ft. Wayne 18% 14%

ITCC – Sellersburg 7% 9%

ITCC – Evansville 11% 12%

ITCC – Terre Haute 9% 12%

ITCC – Richmond 20% 15%

ITCC – Gary 9% 10%

ITCC – Madison 14% 11%

ITCC – Bloomington 20% 8%

Vincennes University 21% 21%

Total 2-Year Rate 15% 14%

Source: IPEDS Graduation Rate Surveys.

College Completion Incentives

• Degree Change Incentive ($12M)– Provides a funding increase or decrease based on the

change in total degrees awarded to Hoosier students year over year

• $5,000 per Baccalaureate degree• $3,500 per Associate Degree

• On-Time Degree Change Incentive ($1.6M)– Provides funding increase or decrease based on change in

the on-time graduation rate of Hoosier students. Counts only first-time, full-time cohort.

• $5,000 per Baccalaureate degree• $3,500 per Associate degree

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College Completion Incentives

• Low Income Degree Completion Incentive– Baccalaureate Degree Attainment by Age of 24 by

Family Income Quartile (2005)

Bottom Quartile 12.3%Second Quartile 16.6%

Third Quartile 27.9%Top Quartile 72.6%

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College Completion Incentives

• Low Income Degree Change Incentive ($1.8M)– New formula in 2009-11– Provides funding increase in the number of degrees to

low-income students based on increase in degrees awarded to Pell recipients.

• $5,000 per Baccalaureate degree• $3,500 per Associate degree

– Using Pell recipients broadens the universe of eligible students to include, part-time, non-traditional and students who may have missed the March 10 SSACI deadline

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College Completion Incentives FY 2010Degree Change Time to Degree Low Income Degree

IUB $140,000 $473,402 $0 IUE $175,000 ($15,059) $0 IUK $180,000 ($45,892) $45,000 IUN $225,000 ($70,161) $0 IUSB $277,500 $24,416 $175,000 IUSE $32,500 $11,324 $0 IUPUI Health $0 $0 $0 IUPUI GA $2,027,500 $119,954 $500,000 PUWL ($1,612,500) $412,874 $0 PUC $77,500 $67,903 $0 PUNC $592,500 $131,493 $140,000 IPFW $755,000 $38,853 $195,000 ISU $347,500 ($258,063) $0 USI $607,500 $363,453 $0 BSU $2,542,500 $658,682 $140,000 VU $33,250 ($91,703) $42,000 ITCCI $5,488,000 ($239,344) $563,500

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College Completion Incentives FY 2011Degree Change Time to Degree Low Income Degree

IUB $140,000 $473,402 $0 IUE $175,000 ($15,059) $55,000 IUK $180,000 ($45,892) $25,000 IUN $225,000 ($70,161) $230,000 IUSB $277,500 $24,416 $0 IUSE $32,500 $11,324 $70,000 IUPUI Health $0 $0 $0 IUPUI GA $2,027,500 $119,954 $0 PUWL ($1,612,500) $412,874 $255,000 PUC $77,500 $67,903 $195,000 PUNC $592,500 $131,493 $0 IPFW $755,000 $38,853 $25,000 ISU $347,500 ($258,063) $5,000 USI $607,500 $363,453 $205,000 BSU $2,542,500 $658,682 $10,000 VU $33,250 ($91,703) $0 ITCCI $5,488,000 ($239,344) $381,500

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Credit Hours Completed Incentive

• Historically, CHE has counted enrollment (FTE) based on the number of credit hours students are enrolled in at the beginning of a semester (“attempted credit hours”)

• CHE is transitioning to counting enrollment (FTE) based on the number of credit hours completed by students at the end of the semester with a grade of at least D- (“successfully completed credit hours”)

• The number of successfully completed credit hours is equal to approximately 80% of attempted credit hours statewide

• Provides an incentive for institutions to assist students in completing courses, leading to higher graduation rates

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Credit Hours Completed Incentive

• Measures Enrolled Credit Hours and Successfully Completed Credit Hours Incentive ($24M)

• Phasing in Successfully Completed Credit Hours Incentive:

• 90%/10% in FY2010• 75%/25% in 2011• Goal to Phase in 100% by 2013

• Initial phasing is intended to be revenue neutral

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Enrollment Change/Successfully Completed Credit Hours

FY 2010 FY 2011

IUB $0 $0 IUE ($83,126) ($97,566)IUK ($44,930) ($80,824)IUN ($28,267) ($70,668)IUSB ($254,646) ($263,864)IUSE $279,252 $284,879 IUPUI Health $1,215,264 $1,263,660 IUPUI GA ($725,353) ($742,383)PUWL $0 $0 PUC $272,881 $268,204 PUNC $106,259 $114,898 IPFW $625,507 $638,268 ISU ($1,572,844) $532,014 USI $0 $0 BSU $0 $0 VU $821,047 $842,493 ITCCI $14,245,428 $14,246,070

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Two Year Transfer Incentive

• Last Biennium, rewarded 2-year schools for transferred credits

• This year, formula rewards 4-year schools that accept transfer hours ($3.2M)– Funds ¼ FTE ($875) in FY10 and FY11. Will convert

to growth only in next biennium.

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Two-Year Transfer IncentiveFY 2010 FY 2011

IUB $310,013 $310,333 IUE $67,638 $60,113 IUK $170,683 $160,533 IUN $46,667 $53,667 IUSB $67,608 $151,200 IUSE $98,438 $113,925 IUPUI Health $0 $0 IUPUI GA $778,079 $991,725 PUWL $310,508 $333,054 PUC $126,204 $125,533 PUNC $98,875 $16,654 IPFW $150,150 $163,275 ISU $509,950 $482,213 USI $426,183 $482,213 BSU $335,446 $407,808

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Research Funding Incentive

• Matches University Expenditures on Research Expenditure Growth $.75 per $1

• Matches Federal, Competitively Awarded Private Foundation Research Grants

• Includes IUB, PUWL & IUPUI Health

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Research Support Incentive

• Funds a 75% match for sponsored research from Federal Government ($25M)

• Funds only the Major Research Universities (IUB, IUPUI, and PUWL), consistent with Reaching Higher

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FY 2010 FY 2011IUB $3,431,029 $3,431,029IUPUI $12,069,215 $12,069,215PUWL $9,496,809 $9,496,809

Economic Development Incentive

• Rewards Non-Credit Workforce Development Activity($500,000)

• Working with ITCCI and VU to understand the details of the activity.

• Working with DWD to coordinate funding activities. • Incentive is considered within the context of all the

operating formulae.• CHE intent is to focus on Non-Credit Instruction

Leading to Third-Party Certifications in Areas Such As:– Computers & IT– Manufacturing & Industrial– Medical & Health

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Formula Results

FY 2010 FY 2011Number of Degrees Incentive $12M $12MOn-Time Degrees Incentive $1.6M $1.6MLow Income Degrees Incentive $1.8M $1.5MEnrollment/SCCH Incentive $14.9M $16.9MResearch Support Incentive $25M $25MTwo-Year Transfer Incentive $3.5M $3.9MWorkforce Training Incentive $0.5M $0.5Mtotal $59.1M $61.2M

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Across the Board (ATB) Reductions and Formula Driven Add-back

• FY 2010 – Reduce all campus operating appropriations by 1.2%– Recognize 50% of the formulae results– Add-back the formula results to campus operating

• FY 2011– Reduce all campus operating appropriations by 3.5%– Recognize 100% of the formula results– Add-back the formula results to campus operating

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Across the Board (ATB) Reductions and Formula Driven Add-back

FY 2010 FY 2011

Base ATB Reduction % 1.2% 3.5%

Base ATB Reduction $ $14.7M $45.9M

Add-Back $29.6M $61.2M

Net Operating Increase % 1.2% 1.2%

Net Operating Increase $ $14.8M $15.3M

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Economic Development

• Indiana Innovation Alliance– Joint Request by IU and PU– Request is 3 pronged:

• Expand Core Research Capabilities through matching grant funds and high cost equipment sharing ($25M)

• Expand Regional Medical Centers to 4-Yr Programs ($5M)

• Expand PU Technical Assistance Program (TAP) in health related areas ($5M)

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Economic Development

• $20M FY 2009 Appropriation to IEDC “to provide grants of $15,000,000 to Indiana University School of Medicine and grants of $5,000,000 to Purdue University to support the recruitment and retention of world class scientists specializing in the life sciences.”

• Recommend carry the $20M appropriation flat into FY 2010 and FY 2011 to fund joint “Core Research Capabilities” only

• Requires substantially diversified management committee to make decisions about expenditures

• Appropriation should be to either IUPUI or SBA

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Capital Budget

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Debt Service Appropriations 1976-2009

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CAGR = 8.8%

Higher Education Capital Issues

Change in State Appropriations FY01 – FY 09

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Higher Education Capital Issues

Capital Budget

• Debt Service (fee replacement) requirements without any new capital projects added by 2009 Indiana General Assembly (assumes all projects authorized in 2007 are funded)

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FY 2009 FY 2010 FY 2011

Appropriation $176.6M $179.1M $185.5M

Marginal increase $2.6M $6.4M

Capital Budget

• New Capital Projects Recommendations

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project project cost debt serviceITCCI Warsaw New Building $10.1M $0.9MITCCI Anderson New Building $20M $1.7MIU/PU Life Sciences Laboratory Renovations (1) $30M $2.5MIUN Tamarack Hall Replacement (2) ? ?totals $60.1M $5.0M

Notes: (1) IU/PU Life Sciences Laboratory Renovations is $30M bonding for Special R&R for laboratories only at IUB, IUPUI & PUWL. Distribution to be determined.(2) Tamarack Hall was damaged by flood, awaiting new information.

History of R&R 2000-2009

372007-09 shows biennium to date approvals

Capital Budget

• R&R Recommendation– Fund R&R at FY 09 level in 2010 and 50% of 07-09

formula in FY 2011

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FY 2009 FY 2010 FY 2011R&R Appropriation $31.0M $31.0M $36.3M

Summary FY 2010FY 09 Total Increase FY 10 Total %Δ

OPERATING    

Operating Appropriations 1,280,962,101 14,829,610 1,295,791,711 1.2%

University Line Items 45,322,458 (1,278,400) 44,044,058 -2.8%

Other Higher Educ Line Items 12,941,633 300,00 13,241,632 2.3%

IEDC/Ind. Innovation Alliance 20,000,000 0 20,000,000 0.0%

Leases 10,189,673 (556,575) 9,633,098 -5.5%

TOTAL OPERATING $1,369,415,865 $13,294,635 $1,382,710,499 1.0%

CAPITAL    

R&R 31,035,048 0 31,035,048 0.0%

Debt Service 176,580,698 2,560,439 179,141,137 1.5%

TOTAL CAPITAL $207,615,746 $2,560,439 $210,176,185 1.2%

GRAND TOTAL (without SSACI) $1,577,031,611 $15,855,073 $1,592,886,684 1.0%

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Summary FY 2011FY 10 Total Increase FY 11 Total %Δ

OPERATING    

Operating Appropriations 1,295,791,711 15,340,835 1,311,132,546 1.2%

University Line Items 44,044,058 (27,500) 44,016,558 -0.1%

Other Higher Educ Line Items 13,241,632 0 13,241,632 0.0%

IEDC/Ind. Innovation Alliance 20,000,000 0 20,000,000 0.0%

Leases 9,633,098 (52,468) 9,580,630 -0.5%

TOTAL OPERATING 1,382,710,499 15,260,867 1,397,971,366 1.1%

CAPITAL

R&R 31,035,048 5,244,380 36,279,428 16.9%

Debt Service 179,141,137 11,398,047 190,539,184 6.4%

TOTAL CAPITAL 210,176,185 16,642,426 226,818,612 7.9%

GRAND TOTAL (without SSACI) 1,592,886,684 31,903,293 1,624,789,977 2.0%

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State Student Assistance Commission of Indiana

(SSACI)

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SSACI Caps• SSACI Award demands have surpassed resources for several years,

including in 2009-11• As state appropriations to SSACI have not been able to keep pace with

rising enrollments and tuition, the maximum award on the O’Bannon Grants (HEA & FOC) have been capped.

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2008-09 FOB Award Cap (publics) and Mandatory Tuition & Fee Charges

43

2008-09 FOB Caps: Public Cap: $6,096 Private Cap $10,992

SSACI– Recommend funding SSACI at a level that allows caps to

remain constant (no cut in awards or caps)

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FY 2009 FY 2010 FY 2011Appropriation $249.2M $286.3M $304.7MMarginal Increase $37.1M $18.4M% Increase 14.9% 6.4%

Summary FY 2010 and FY 2011

FY 09 Total FY 10 Total %Δ FY 11 Total %Δ

TOTAL w/out SSACI 1,577,031,611 1,592,886,684 1.0% 1,624,789,977 2.0%

   

SSACI 249,155,438 286,247,194 14.9% 304,682,374 6.4%

GRAND TOTAL w/ SSACI $1,826,187,049 $1,879,133,878 2.9% $1,929,472,351 2.7%

Tuition Targets for 2009-11

• CHE is required by statute to “recommend biennially non-binding tuition targets” after the 2009 General Assembly passes the biennial budget

• CHE will make “tuition targets” recommendations after the budget is passed

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Data Appendix

48

ATB Reductions and Formula Driven Add-backIU FY 09 base ATB cuts Formula

ResultsFY 2010 Approp.

MarginalIncrease

% Increase

IUB $202,202,196 ($2,325,325)

$2,177,222 $202,054,093 ($148,103) -0.1%

IUE 8,322,137 ($95,704)

$72,227 $8,298,659 ($23,478) -0.3%

IUK 10,817,455 ($124,400)

$152,431 $10,845,485 $28,030 0.3%

IUN 18,061,296 ($207,704)

$86,620 $17,940,211 ($121,085) -0.7%

IUSB 23,236,007 ($267,214)

$144,939 $23,113,732 ($122,275) -0.5%

IUS 20,848,802 ($239,761)

$210,757 $20,819,798 ($29,004) -0.1%

IUPUI Health 124,434,677 ($1,430,998)

$6,642,240 $129,645,918 $5,211,241 4.2%

IUPUI GA 83,311,562 ($958,083)

$1,350,090 $83,703,569 $392,007 0.5%

IU Total $491,234,132 ($5,649,193)

$10,836,524

496,421,463

5,187,331 1.1%

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ATB Reductions and Formula Driven Add-back

PU FY 09 base ATB cuts Formula Results

FY 2010 Approp.

MarginalIncrease

% Increase

PUWL $262,033,737 ($3,013,388) $4,303,846 $263,324,195 $1,290,458 0.5%

PUC $28,212,704 ($324,446) $272,244 $28,160,502 ($52,202) -0.2%

PUNC $11,969,824 ($137,653) $534,564 $12,366,735 $396,911 3.3%

IPFW $38,449,705 ($442,172) $882,255 $38,889,788 $440,083 1.1%

PU total $340,665,970 ($3,917,659) $5,992,908 $342,741,219 $2,075,249 0.6%

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ATB Reductions and Formula Driven Add-back

FY 09 base ATB cuts Formula Results

FY 2010 Approp.

MarginalIncrease

% Increase

ISU $76,911,131 ($884,478) ($486,729) $75,539,924 ($1,371,207) -1.8%

USI $40,387,429 ($464,455) $698,568 $40,621,542 $234,113 0.6%

BSU $130,381,244 ($1,499,384) $1,838,314 $130,720,174 $338,930 0.3%

VU $38,967,141 ($448,122) $402,297 $38,921,316 ($45,825) -0.1%

ITCCI $162,415,053 ($1,867,773) $10,278,792 $170,826,072 $8,411,019 5.2%

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ATB Reductions and Formula Driven Add-back

IU FY 10 base ATB cuts Formula Results

FY 2011 Approp.

MarginalIncrease

% Increase

IUB $202,054,093 ($7,152,715) $4,354,764 $199,256,142 ($2,797,951) -1.4%

IUE $8,298,659 ($293,773) $177,488 $8,182,374 ($116,285) -1.4%

IUK $10,845,485 ($383,930) $238,817 $10,700,372 ($145,113) -1.3%

IUN $17,940,211 ($635,083) $367,838 $17,672,965 ($267,245) -1.5%

IUSB $23,113,732 ($818,226) $189,252 $22,484,758 ($628,974) -2.7%

IUS $20,819,798 ($737,021) $512,628 $20,595,405 ($224,393) -1.1%

IUPUI Health $129,645,918 ($4,589,465) $13,332,875 $138,389,327 $8,743,410 6.7%

IUPUI GA $83,703,569 ($2,963,106) $2,396,796 $83,137,259 ($566,310) -0.7%

IU Total $496,421,463 ($17,573,320

) $21,570,458 $500,418,602 $3,997,138 0.8%

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ATB Reductions and Formula Driven Add-back

PU FY 10 base ATB cuts Formula Results

FY 2011 Approp.

MarginalIncrease

% Increase

PUWL $263,324,195 ($9,321,676) $8,885,237 $262,887,755 ($436,439) -0.2%

PUC $28,160,502 ($996,882) $734,140 $27,897,760 ($262,742) -0.9%

PUNC $12,366,735 ($437,782) $855,545 $12,784,497 $417,763 3.4%

IPFW $38,889,788 ($1,376,699) $1,620,396 $39,133,486 $243,697 0.6%

PU Total $342,741,219 ($12,133,039) $12,095,318 $342,703,498 ($37,721) 0.0%

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ATB Reductions and Formula Driven Add-back

FY 10 base ATB cuts Formula Results

FY 2011 Approp.

MarginalIncrease

% Increase

ISU $75,539,924 ($2,674,113) $1,108,664 $73,974,475 ($1,565,449) -2.1%

USI $40,621,542 ($1,438,003) $1,658,166 $40,841,705 $220,163 0.5%

BSU $130,720,174 ($4,627,494) $3,618,990 $129,711,670 ($1,008,504) -0.8%

VU $38,921,316 ($1,377,815) $784,040 $38,327,541 ($593,775) -1.5%

ITCCI $170,826,072 ($6,047,243) $20,376,226 $185,155,055 $14,328,983 8.4%

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Operating Budget

• Leases for higher education related facilities• Includes:

– Animal Disease Diagnostic Laboratory– Columbus Learning Center– ITCCI Ft Wayne Public Safety Facility– BSL-3 facility

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FY 2009 FY 2010 FY 2011Appropriation $10.2M $9.6M $9.6MMarginal Increase ($0.6M) $0

Operating Budget

• University Line Items: State appropriations to public postsecondary institutions made for specific higher education related purposes

• $1.3M reduction to State Dept. of Toxicology FY 2010 • Propose flat-line at FY 09 levels for all other line items

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FY 2009 FY 2010 FY 2011Appropriation $45.3M $44.0M $44.0MMarginal Increase ($1.3M) $0

Operating Budget

• Other Higher Education Line Items: State appropriations made for specific higher education related purposes

• Learn More Indiana increase $0.3M FY 2010, $0 FY 2011• All other Line Items flat-lined at FY 09 levels

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FY 2009 FY 2010 FY 2011Appropriation $12.9M $13.2M $13.2MMarginal Increase $0.3M $0.3M

Higher Education Budget Cuts Nationwide (actual or proposed)

• Appropriation cuts Tuition Freeze• Massachusetts (-5.6%) Missouri• Pennsylvania (-4.25%) Texas• Virginia (- 5% to -7%) North Dakota• Utah (-4%) Ohio• Tennessee (-3.4%) Tennessee (CC only)• Maryland (-$40M) Maryland• New York (-7%) Michigan• Alabama (-11%) Oklahoma• Florida (-6%)• Nevada (-14%)

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Source: Chronicle of Higher Education, 10-14-2008