Overhaul of university funding in Kentucky takes first step toward law

Kentucky legislators took the first step Tuesday in creating a new way of funding higher education that would funnel $1 billion to public universities and colleges based on their graduation rates and other performance measures.

The Senate Appropriations and Revenue Committee voted 12-1 to pass Senate Bill 153, which has been under construction for months by university presidents, the Council on Postsecondary Education and Sen. David Givens, R-Greensburg.

The only no vote was from Sen. Robin Webb, D-Grayson, who said she shares the concerns of Morehead State University President Wayne Andrews, who testified Tuesday that the bill’s emphasis on degrees produced could hurt smaller, rural schools.

“We’ve been five years getting here,” Givens said after the vote. “Everyone had to give a little ... but this is best for the commonwealth and best for the institutions long-term.”

In the past, Kentucky’s higher education funding has been based solely on what was provided the year before. That provided little leeway for schools where enrollment grew or shrank.

The formula would allocate 35 percent of funding based on student success, which would be measured by bachelor degree production, the number of students continuing to progress in credit hours attained, the number of STEM (Science, Technology, Engineering and Math) degrees awarded, and the number of degrees awarded to low-income and under-represented students.

Another 35 percent would be based on course completion, measured by each university’s share of total student credit hours earned in Kentucky. The number would be weighted to account for cost differences by degree level and academic discipline.

The last 30 percent of funding is for operations, or what the bill’s authors call “open the door” money, based on each institution’s share of three things: square footage dedicated to student learning, spending on instruction and full-time students.

The Kentucky Community and Technical College System would have a similar formula, but one that is separate from the research and comprehensive universities. It may include an adjustment to account for areas where enrollment is declining, but eventually, the formula would force individual community colleges to compete against each other.

At least 30 states have some kind of performance-based funding formula, but most of them use such formulas to allocate only a portion of overall state funding.

Kentucky’s overhaul would start next year by allocating 5 percent of total state funding using the new formula, then move to 100 percent the following year. There are provisions to make sure schools don’t lose money the first two years, but schools would have to compete against each other for funding in the third year.

Givens said it is important for education to be accessible to all people, but the formula may highlight areas where people are not that interested.

“Taxpayer dollars have to be invested as wisely as possible,” he said.

Andrews said he supports most of the bill’s provisions, but thinks it needs tweaks to help schools that charge lower tuition and serve in-state students. Morehead’s enrollment area, for example, “is in population decline due to the demise of the coal industry,” he said.

The funding formula will be administered by the Council on Postsecondary Education.

“Everybody had to compromise something,” said council President Robert King. “We think this is as fair a way to distribute the funds we have, recognizing the most important factors to achieve and improve the larger quality of life for the citizens of Kentucky.”

Linda Blackford: 859-231-1359, @lbblackford