Funding formula presented

The executive director of the Joint Committee on Higher Education was unsuccessful at its attempts to create a formula for how to distribute state funds for higher education. Because of this, the director proposed a plan which could lead to Truman State losing funding.

The plan was created by Stacey Preis, Executive Director of the Joint Committee on Education. During May 2012, the Joint Committee was given the objective of creating a plan to fund higher education beginning during the 2015 fiscal year. The Committee failed to establish a plan by its last hearing during November, so Preis created and presented her model to the Joint Committee on Dec. 10.

Budget Director Dave Rector said if the proposed formula goes into effect, Truman could lose $4 to 5 million. He said the plan is not beneficial to Truman for two reasons.

Through this plan, the state subsidies for the University operating budget would decrease to 35 percent from the current 44 percent, Rector said.

Second, Rector said this plan is enrollment-based, while a plan beneficial to Truman would be performance-based because the University’s focus is providing a quality education as opposed to enrolling a large number of students.

“It should be based on your outcomes, what you do after you have the students,” Rector said. “Not how many students you recruit or how much you spend, but what happens while you’re here.”

With the proposed plan, 90 percent of the state funding would be based off factors such as number of credit hours collectively taken.

The remaining 10 percent of state funding would be based on factors including freshman-to-sophomore retention rates and factors specific to each university’s mission. Rector said Truman’s liberal arts mission-specific factor is critical thinking,  which is measured by the senior portfolios every student creates. If this plan is accepted, Rector said Truman will receive 8 percent of the full 10 percent of performance-based funds.

The proposal would limit University funding cuts to no more than 5 percent per year, Rector said. Potentially, the state could cut funding 5 percent every year until the University’s funding fits the formula, he said.

Because tuition increases are capped at 1.7 percent this year based off the Consumer Price Index, a number calculated by the state each year based on revenue, Rector said Truman will have to compensate for the loss of funds — should this plan go into effect — by cutting spending in other areas.

“If our funding gets cut drastically under the new formula, we’ll have to have bigger classes,” he said. “That’s what it boils down to.”

With larger classes, Rector said this formula has the potential to change the mission of Truman.

“If we’re supposed to be a public liberal arts and sciences institution, then implied in that is a different mode of instruction than a lecture with 1,500 people in it,” he said. “It would really change things. We don’t think this proposal is good for Truman.”

Rector said one element of this plan he finds unusual is that Preis based much of the plan off other states’ funding for higher education. The 10 states Preis based the plan off of were chosen because they have similar per capita income to Missouri. He said these states have different higher education systems, and for this reason, it is difficult to compare.

“It’s not comparing apples to apples,” Rector said.

University President Troy Paino said a performance-based funding plan was developed about a year ago by the Missouri Department of Higher Education. This plan was not put into effect, and the Joint Committee was given the task of creating a new plan.

Paino is working with the presidents of other four-year state universities to attempt to create another funding formula to present to the Joint Committee.

“[Truman] wants a funding formula that recognizes our distinctness,” Paino said. “The question is whether the Joint Committee will want to go in another direction. All we can do is present what we think is best.”

The Joint Committee also requested that Missouri colleges submit comments about the proposed funding formula. One of the comments Truman submitted is that a funding formula should only apply to new money, meaning that a university could not lose any of the state funds it currently receives. Truman also submitted comments that the proposed formula takes away from Truman and other universities’ missions.

Terry Olson, Faculty Senate Budget Committee member, said while he thinks it is a good idea to have a funding formula, he does not think the plan proposed will be put into effect without alteration.

“I think they have some good goals,” Olson said. “I’m not entirely sure they were consistent with those goals.”

Paino said they agree that is it uncertain what sort of funding formula will be put into place.

“Uncertainty is the hardest thing,” Paino said. “When you don’t know how you’re going to be funded, it’s hard to make decisions.”