presentation to appropriations and revenue...

Presentation to Appropriations and Revenue Committee

Budget Review Subcommittee on Postsecondary Education

Robert L. King, PresidentKentucky Council on Postsecondary EducationJanuary 18, 2018

CPE’s Role in Higher Education Finance

2

• Biennial Budget Recommendation• Tuition and Fee Setting• Performance Funding Model

Biennial Budget Recommendation

3

Biennial Budget Recommendation

4

• Directed in statute to make biennial budget request for postsecondary education 164.020(9)

• Request components:1) Institutional Operating Funds2) Trust Funds3) Capital Projects4) Agency Operating Funds

• Collaborative process: Council members and CPE staff Campus presidents and chief budget officers

2018-20 Budget Recommendation

5

Funding Component Fiscal 2018‐19 Fiscal 2019‐20

Operating Funds

Performance Funding $18,937,500 $36,512,200

Special Initiatives

KERS Increases $47,247,500 $47,247,500

Competitive Workforce Initiative $3,561,100 $5,935,100

KSU Land Grant Match 290,000 290,000

Funding Component StateBond Funds

AnnualDebt Service

Trust Funds

Bucks for Brains $90,000,000 $8,217,000

Capital Projects

Asset Preservation $600,000,000 $50,903,000

Decade of Funding Cuts

Kentucky Council on Postsecondary Education 6

$8,699$8,438

$7,796$7,251

$6,854$6,437

$6,191 $6,037 $5,940 $6,003 $5,848

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000(E) 2

007‐08

(R) 2

007‐08

2008

‐09

2009

‐10

2010

‐11

2011

‐12

2012

‐13

2013

‐14

2014

‐15

2015

‐16

2016

‐17

Kentucky Public Postsecondary SystemNet General Fund Appropriations per Full‐Time Equivalent Student

Fiscal Years 2007‐08 through 2016‐17Dollars

(per Student)Constant 2016 Dollars

(E) = Enacted; (R) = Revised.Sources: KentuckyBudget of the Commonwealth, multiple biennia; Commonfund Institute, HEPI; CPE, Comprehensive Database.

($2,851)‐32.8%

Equates to($428.7 M)

Focus on Other Priorities


21.1%29.9%

21.0%

4.4%

86.9%

‐14.8%

7.8%

‐20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

State Budget CriminalJustice System

Education HumanServices

Medicaid PostsecondaryEducation

All Other

Commonwealth of KentuckyChange in State General Fund Appropriations

Between Fiscal Years 2007‐08 and 2017‐18

Source: Kentucky Budgets of the Commonwealth, various years.

1 Criminal Justice includes the Unified Prosecutorial System, Justice and Public Safety Cabinet, and the Judicial Brach.2 Education includes the Department of Education, Teachers' Retirement System, School Facilities Construction Commission, and Education Professional Standards board.3 Human Services includes the Health and Family Services Cabinet (net of Medicaid).

1

2 3

Most States Reinvesting

44.6%

11.6%

‐4.2% ‐27.3%

MT

UT

MA CO SC OR CA ID WY SD HI

TX FL NE

MD RI IN NY

OH IA

USA MS

WA CT NM

MN

NH VA DE

MO

ME KS AL NC AK GA NJ

WI

TN AR NV MI

WV VT KY OK LA AZ

Source: “Grapevine” Report, Center for the Study of Education Policy and the Association of State Higher Education Executive Officers, 2016.


Change in State Support for Higher EducationBetween Fiscal Years 2010‐11 and 2015‐16

.


Shifting of Responsibility (Who Pays)

71% 70%67%

64% 63%61% 60%

56%55%

53%50%

49%

48% 46%44%

42%40%

38%35%

33%32%

29% 30%33%

36% 37%39% 41%

44%45% 47%

50%

51% 53% 54%56%

58%60%

63%65%

67%69%

20%

30%

40%

50%

60%

70%

80%

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

Net General Fund Share Net Tuition and Fee Revenue Share

Kentucky Public Postsecondary SystemChange in State and Student Shares of Total Public Funds

Fiscal Years 2001‐02 through 2021‐22

Sources: Kentucky Budget of the Commonwealth; CPE Comprehensive Database.

Projected

Tuition and Fee Setting

10

Tuition and Fee Setting

11

• Council has statutory authority to determine tuition KRS 164.020(8)

• Typically exercised annually in form of tuition ceilings• Collaborative process

Council members and CPE staff Campus presidents and chief budget officers Student groups

• Data driven– Sticker and net price comparisons– Trends in state appropriations– Student financial aid and average loan debt– State and student shares of total public funds– Fixed and unavoidable cost increases

Impact of Tuition Ceilings


9.8%

15.4%16.0%

12.8%

11.6%

8.7%8.0%

4.5%5.4%

6.1%5.2%

3.1%

4.5%3.6%

5.4%

3.7%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

2002

‐03

2003

‐04

2004

‐05

2005

‐06

2006

‐07

2007

‐08

2008

‐09

2009

‐10

2010

‐11

2011

‐12

2012

‐13

2013

‐14

2014

‐15

2015

‐16

2016

‐17

(P) 2

017‐18

Actual Percent Change from Prior Year Proposed Percent Change for AY 2017‐18

Source: Council on Postsecondary Education, Comprehensive Database.

Kentucky Public Postsecondary SystemAnnual Change in Resident Undergraduate Tuition and Fees

Academic Years 2002‐03 through 2017‐18 (Proposed)

Impact of CPE Tuition and Fee Ceilings

AAGR = Average Annual Growth Rate

4.6% AAGR11.7% AAGR

P = Proposed

Budgetary Shortfall (Cumulative)

13

$899

$175

$620

$1,151

$181 $495

$2,455

Fixed Cost Increases andState Budget Reductions

Gross Tuition and FeeRevenue

Budget Challenges for Postsecondary InstitutionsFiscal Years 2007‐08 through 2014‐15

(Dollars in Millions)

$3,521Growth in Campus Funded

Student Financial Aid

Other Fixed Cost Increases 1

1 Includes utilities, mandated tuition waivers, and contractual obligation cost increases.

KERS/KTRS Cost Increases

General Fund Budget Reductions @ 16%

Source: Council on Postsecondary Education, Comprehensive Database.

$1,066ShortfallCost Shift (M&O)

Health Insurance Increases

$3,521

Sticker Price Comparison (Four-Year)

14

$7,488

$8,632

$9,201

$9,518

$9,953

$10,266

$12,323

$13,278

$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000

West Virginia

Missouri

Indiana

Tennessee

Kentucky

Ohio

Virginia

Illinois

PublicFour‐Year Universities in Kentucky and Surrounding StatesResident Undergraduate Tuition and Fees

Academic Year 2016‐17

Source: College Board, Trends in College Pricing 2016.

Sticker Price Comparison (Two-Year)

15

$3,246

$3,890

$3,948

$4,282

$4,407

$4,535

$4,913

$4,948

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000

Missouri

Illinois

West Virginia

Tennessee

Indiana

Ohio

Kentucky

Virginia

Public Two‐Year Colleges in Kentucky and Surrounding StatesResident In‐District Tuition and Fees


Source: College Board, Trends in College Pricing 2016.

Kentucky is “High Aid” State

16

$0 $2

6 $4

8 $5

2 $6

4 $7

4 $116

$1

21

$125

$1

30

$133

$1

95

$236

$2

48

$268

$2

83

$286

$2

95

$355

$3

67

$405

$4

12

$437

$4

57

$457

$5

20

$520

$5

55

$581

$6

05

$629

$6

96

$701

$7

08

$776

$7

79

$792

$8

44 $962

$9

75

$1,016

$1

,062

$1

,090

$1

,110

$1

,133

$1

,141

$1,324

$1

,368

$1

,513

$1

,545

$1

,668

$1

,962

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

$2,200

$2,400

NH AL UT

AZ ID HI RI KS MT SD PR NE

MS

MI

OH

ME

MA CT OR IA ND

MO NV CO MD VT WI

FL DE OK

WY AK IL DC TX NC

MN PA VA IN AR CA WV

NM NY KY NJ

WA TN LA GA SC

Source: National Association of State Student Grant and Aid Programs (NASSGAP), 46th Annual Survey Report on State‐Sponsored Student Financial Aid.

State Funded Student Financial Aid Programs in the United StatesTotal Undergraduate Grant Dollars per Undergraduate Student Enrollment


Low Aid States High Aid States

Dollars(per Student)

Growth in Campus-Based Aid

17

$1,031 $997 $956 $966 $1,029$1,124

$1,719$1,941

$1,766

$1,504 $1,438

$778 $781 $829 $821 $762 $757

$993$885

$677$781 $739

$1,693$1,800

$1,952$2,083

$2,224$2,326

$2,078$2,184

$2,579

$2,786$2,932

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2003‐04 2004‐05 2005‐06 2006‐07 2007‐08 2008‐09 2009‐10 2010‐11 2011‐12 2012‐13 2013‐14

Pell and Other Federal Grants State Grants Campus Funded Grants and Scholarships

Kentucky Public Postsecondary SystemStudent Financial Aid per FTE Student by Source

Fiscal Years 2003‐04 through 2013‐14

Source: Integrated Postsecondary Education Data System (IPEDS); Commonfund Institute, Higher Education Price Index (HEPI).

Constant 2014 Dollars

Dollars(per Student)

Net Price Comparison (Comprehensive)

18

$8,761

$10,484

$11,802

$11,871

$12,066

$15,506

$16,032

$16,818

$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000

West Virginia

Kentucky

Missouri

Indiana

Tennessee

Ohio

Virginia

Illinois

ComprehensiveUniversities in Kentucky and Surrounding StatesAverage Net Price of First‐Time Full‐TimeResident Undergraduate Students


Source: Integrated Postsecondary Education Data System (IPEDS).

Net Price

Trend in Net Price (Comprehensive)

19

$15,921 $16,911 $16,846

$17,274 $17,928

$18,441

$9,790 $10,484 $10,377 $10,251 $10,484 $10,298

$6,714 $7,113 $7,473 $7,706 $8,031 $8,304

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

$22,000

2010‐11 2011‐12 2012‐13 2013‐14 2014‐15 2015‐16

Total Cost of Attendance Net Price Tuition and Fees

Kentucky Public Comprehensive UniversityCost of Attendance, Net Price, and Tuition and Fees of Resident Undergraduates

Academic Years 2010‐11 through 2015‐16

Source: Council on Postsecondary Education, Kentucky Postsecondary Education Data System (KPEDS).

Net Price % of Income (Four-Year)

20

20% 20% 20%

23% 23% 24% 24% 24% 25%

29% 29% 30% 31% 32% 33%

36%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

FL WV OK TN KY NC AR LA TX MS GA MD AL VA SC DE

Source: Penn Graduate School of Education, Institute for Research on Higher Education, 2016 College Affordability Diagnosis.

Public Four‐Year Colleges in SREB Member StatesAverage Net Price as a Percent of Median Family Income


More Affordable Less Affordable

Net Price % of Income (Two-Year)

21

13%14%

16% 16% 16%17% 17% 17% 17% 17%

18% 18% 18% 18%19%

21%

0%

3%

6%

9%

12%

15%

18%

21%

24%

27%

MS GA TX AL KY WV DE OK TN VA FL AR SC MD NC LA

Source: Penn Graduate School of Education, Institute for Research on Higher Education, 2016 College Affordability Diagnosis.

Public Two‐Year Colleges in SREB Member StatesAverage Net Price as a Percent of Median Family Income


Less AffordableMore Affordable

Performance Funding Model

22

Performance Funding Model

23

• The 2016 budget bill (HB 303) directed the Council to establish a working group composed of:

− The Governor (or representative)− President of Senate (or representative)− Speaker of the House (or representative)− President of each public university and KCTCS− Council president

• Charged with developing a comprehensive model for allocating state appropriations that incorporates:

− Campus performance− Mission− Enrollment

24

• Outcomes-based funding model that distributes 100% of allocable General Fund appropriations for institutional operations using rational criteria:

70% distributed based on performance– student success outcomes– course completion

30% in support of vital campus operations– operation and maintenance of facilities– institutional support– academic support

Funding Model Features

25

• All public four-year institutions included in a common performance pool

• Safeguards ensure research and comprehensive sectors on equal footing at initial implementation

• KCTCS institutions in a separate performance pool

• Both models include adjustment to minimize impact on smaller universities and two-year colleges

• Employs hold harmless and stop loss provisions in early years of implementation

Funding Model Features (Cont’d)

Funding Model Components

26

Student Success35%

Course Completion35%

Academic Support10%Institutional

Support10%

Maintenance and Operations

10%

Kentucky's Outcomes‐Based Funding ModelDistribution of Allocable Resources

Share of sector total:• Degrees and credentials awarded• Degrees per 100 FTE students• STEM+H degrees and credentials• URM degrees and credentials• Low Income degrees and credentials• Credentials earned by underprepared• Student progression (@ 30, 60, & 90)

Share of sector total square feet dedicated to student learning

Share of sector total spending on instructionand student services

Share of sector total FTE student enrollment

Share of sector total:• Credit hours earned (weighted to account for cost differences by course level and academic discipline)

Funding Model Goals

27

• Increase retention and progression of students toward timely completion

• Increase numbers of credentials, associate degrees, and bachelor’s degrees earned by all student types

• Grow numbers of credentials and degrees that garner higher wages upon completion:

− STEM+H fields− high demand fields and targeted industries

• Close achievement gaps by increasing credentials and degrees earned by underrepresented minority, low income, and underprepared students

Funding Model Comparison

28

3%

35%

61%

98%

90%

1%

2%

3%

4%

8%

8%

10%

67%

35%

14%

10%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Missouri

Maine

Indiana

New Mexico

Pennsylvania

Arkansas

Florida

Tennessee

Kentucky

Oregon

North Dakota

Nevada

Course Completion Progression and Degree Completion Other

Outcomes‐Based Funding in Four‐Year Sectoras Percentage of Overall State Support

December 6, 2016

Source: Snyder and Fox (2016), HCM Strategists, Driving Better Outcomes: Fiscal Year 2016 State Status & Typology Update.

Presentation to Appropriations and Revenue Committee

Budget Review Subcommittee on Postsecondary Education

Robert L. King, PresidentKentucky Council on Postsecondary EducationJanuary 18, 2018

presentation to appropriations and revenue...

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