Stivers: Senate budget will base state money to universities on performance

The Kentucky Senate will vote Wednesday on its two-year spending plan for the state, which will provide money to state universities and community colleges based on performance, Senate President Robert Stivers said Monday night.

Stivers, R-Manchester, said the performance-based funding would begin in the second year of the budget, allowing time for its implementation. That would be July 1, 2017, to June 30, 2018.

“We are going to deal with the budget in what we feel is a very prudent way, a conservative way that gets our fiscal house in order and places parameters upon the universities and KCTCS (Kentucky Community & Technical College System) in the realm of performance-based funding,” Stivers said.

Pressed if it would mean more or less money for higher education, Stivers said repeatedly, “It is based on performance.”

The state House, controlled by Democrats, voted last week along partisan lines to approve a two-year, $21 billion state budget that rejected Republican Gov. Matt Bevin’s proposed spending cuts for education.

In January, Bevin called for $650 million in “cuts across the board,” with most of state government required to spend 4.5 percent less this fiscal year, which ends June 30, and then 9 percent less over the next two years. He planned to spend the savings on partly meeting the state’s recommended pension contributions and on building up two enormous reserve funds for future contingencies.

In its plan, the House exempted K-12 schools and state universities from Bevin’s cuts, as well as a handful of other state agencies and offices. It committed to making the state’s full recommended pension contributions to the Kentucky Retirement Systems for state workers and the Kentucky Teachers’ Retirement System, which together face a $36 billion shortfall.

Stivers said Monday that Bevin has always been talking about performance-based funding for higher education.

He said Senate President Pro Tem David Givens, R-Greensburg, and he have worked on a performance-based funding mechanism for higher education with several others. He said he hoped their recommendations would be finalized Tuesday.

The Senate Appropriations and Revenue Committee is to meet at 9 a.m. Tuesday, but Stivers said he did not think it would take up the budget bill until Wednesday because it would take time to draft the measure. The full Senate, controlled by Republicans, would vote later Wednesday, he added.

Once the Senate has approved its version of the budget, representatives of the House and Senate will meet in what is called a conference committee to try to iron out the differences.

Tuesday is the 53rd day of the 60-day legislative session, which cannot run longer than April 15.

Stivers provided few specifics about how the performance-based funding would work but said there would be “a measure of previous performance to determine and engage against future performance.”

He noted that about 30 states have performance-based funding for higher education. “Some states go up to 70 percent of their budget based on performance,” he said.

Asked what would keep a university from not meeting the performance standards and then deciding to raise tuition dramatically, Stivers said he would hope the Council on Postsecondary Education would not allow that. He also said the marketplace would keep that in check.

Stivers added that Bevin has been informed of the Senate’s plans for performance-based funding over the past two months. “We’ve been talking about it for a long time,” he said. “These discussions just didn’t start two days ago.”

Stivers was asked if the Senate budget would include a “permanent fund” to deal with the state’s pension problems, as Bevin recommended.

“We expect to create something similar to that that the governor created,” he said.

This story was originally published March 21, 2016 at 9:09 PM with the headline "Stivers: Senate budget will base state money to universities on performance."