The Joplin Globe, Joplin, MO

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January 5, 2013

Change in funding calculation proposed for Missouri colleges, universities

JOPLIN, Mo. — Officials with Missouri Southern State University and Crowder College are assessing a plan presented last month to state lawmakers that would make a portion of funding for Missouri’s colleges and universities dependent on whether they meet performance goals.

The proposal is part of an initiative — required by state law — to develop a funding formula for higher education institutions similar to what exists for public K-12 education.

Missouri’s current approach allots money based largely on how much those institutions received in the past and how much the state has available for the current year.

But under the proposal outlined in December by the legislature’s Joint Committee on Education, Missouri would fund 35 percent of an institution’s operating costs. Residence hall, bookstore and similar operations are not included in the formula.

Ninety percent of the state’s share would be automatically awarded. The remaining 10 percent would depend on whether the college or university meets specific performance goals, such as retaining students from their freshmen to sophomore years, graduating students within a certain number of years and achieving success for students on licensure exams or in job placements. Some institutions would also have a specific performance goal related to their state-mandated mission, which for MSSU is international and global education.

Performance-based funding for higher education was introduced to Missouri 20 years ago, but the initiative was soon abandoned because of a lack of revenue.

The proposed model is not intended to make state funding the sole source of revenue for colleges and universities. It also isn’t designed to benefit any particular university or category of institutions, nor would it tell institutions how to spend their state money, said Stacey Preis, the committee’s executive director.

Committee members held three hearings last fall to gather input on the role of higher education in Missouri. MSSU President Bruce Speck spoke at the third hearing, in November, alongside the presidents of the University of Missouri system, Missouri State University and several smaller universities.

Speck said this week that it became apparent during the hearing that creating a formula that would serve institutions fairly despite their diverse missions and student populations could be difficult.

“One of the things that I think was a concern for everyone was (whether) the process would ultimately be equitable,” he said. Under the proposed model, “you’re getting this much based on your mission and what you’re supposed to do, and that’s very different for Mizzou than for us.”

No rhyme or reason

State appropriations for MSSU have declined in recent years. The university received $22.6 million from the state for the current fiscal year, about $86,000 more than in 2012. That amount is down from the university’s appropriation of $24.3 million in 2011 and $26.7 million in 2010, according to the state higher education department.

Speck said it’s unclear how that amount was established as adequate for MSSU, which perhaps is one reason why legislators are working to develop a formal funding method.

“When you look at how we’ve been funded up to this point, there’s not been a lot of rhyme or reason,” he said. “The problem is when you start going further back and start asking how did you establish baselines, nobody seems to know.”

Darren Fullerton, vice president for student affairs and enrollment management, said the university presents a budget request to the state each year that is based largely on historical allocations. Even if MSSU requests additional funding, “there’s not a lot of additional funding” available, he said.

Speck said he hopes legislators will find a formula that is equitable for colleges and universities.

Yet even that presents challenges, he said. For example, he questioned how graduation rates would be used as a fair indicator of performance when student populations are so diverse. He also questioned whether a funding formula would take into account the effect that natural disasters can have on enrollment. MSSU officials have said the May 2011 tornado contributed to a 3.6 percent decline in enrollment that hasn’t fully recovered.

“A funding model would certainly have to take into consideration, I think, some historical inequities,” Speck said. “It’s complicated, but we’ve got to do something.”

‘Big disparities’

Crowder College President Alan Marble said he couldn’t comment on the proposed model because he hadn’t yet studied it closely, but he said he thinks the current funding system could be improved.

Marble said a block of money is moved each year to the state’s 12 community colleges, where it is distributed according to a separate formula within that system. That amount for the current fiscal year was $129.5 million, of which Crowder College received $4.4 million, according to the state higher education department.

“Any kind of funding system needs to be reviewed from time to time,” Marble said. “There are big disparities among some institutions on how much state support they receive, and this should help in narrowing that gap, I hope.”

Marble said he thinks a fair formula would avoid financially penalizing one college or university to help bridge a funding gap for another. He also said a good formula would be phased in over time to prevent “radical shock on the system.”

“I just hope they come up with a fair system — something that’s justifiable and logical and reasonable,” he said.

State Rep. Tom Flanigan, R-Carthage, a member of the state House Budget Committee, said allocating funds is a “very complex process” to balance the demands of departments requiring funding, including education, health care and social services.

“Part of the challenge that we on the Budget Committee have is that ... we have to be able to pay for stuff,” he said. “If we add another formula in to higher education ... I don’t know where it’s going to go. We have all these things on our plate.”

Flanigan said that even with a formula, funding for higher education would be dependent on whether revenue is available.

Sen. David Pearce, R-Warrensburg, the Budget Committee chairman, last month described the proposed funding model as a “starting point” for continued discussions.

The committee asked higher education officials and others to submit comments on the proposed model by the end of 2012. Preis said Wednesday that she had received feedback from several colleges, universities, state organizations and the Missouri Department of Higher Education.

Matt Michelson, a staff member in Pearce’s office, said the committee will review the submissions before determining how to proceed. The committee is mandated by law to develop a funding formula by Dec. 31, with the intent to make the model effective by fiscal year 2015.

A year ago, the state Coordinating Board for Higher Education — which oversees the higher education department — recommended that Missouri award performance-based funding in the 2014 fiscal year. But that would be on top of an institution’s base funding and would not exceed 2 or 3 percent of an institution’s total state funding in any given year.

Gov. Jay Nixon is likely to recommend that performance criteria be used for a funding increase — perhaps around 1 or 2 percent — to higher education institutions in the 2014 budget, said Paul Wagner, deputy higher education commissioner.

The proposal for a comprehensive funding formula could run into political trouble if the performance criteria are used to help determine a university’s base budget, as opposed to serving as a bonus. That’s because lawmakers often vote for or against education funding measures based on whether the schools they represent stand to gain or lose money.

“The bottom line is: Are institutions going to be able to lose money?” Wagner said about the proposed higher education funding formula. “If not, then I think it’s a lot of unnecessary complications, and I think we should just focus on funding institutions that are doing well.”

The Associated Press contributed to this report.

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