November 25, 2014

Proposal says Missouri higher education underfunded by $388 million

A proposed plan for funding the state’s colleges and universities says those institutions aren’t getting enough money. The draft says Missouri’s colleges and universities are underfunded by the state, by about $388 million dollars.

Senator David Pearce (standing, left) opens the hearing of the Joint Education Committee.

Senator David Pearce (standing, left) opens the hearing of the Joint Education Committee.

Joint Education Committee Chairman Senator David Pearce (R-Warrensburg) says that’s a gap that can’t be closed overnight.

“Our funding for higher education has not happened overnight as far as decreases to higher education, nor will increases, and so this just shows to be fully funded that’s what this committee feels [is needed], an increase of $387 million.”

With the release of the spreadsheet, the Committee now wants the state’s 13 institutions and other interested parties to comment on the draft. Its next step will be to issue its final report. The Senate has set a deadline to file legislation by the end of this month.

The formula for funding K-12 education is underfunded by about $686 million dollars. Pearce says his committee thought it was important to show Higher Education is underfunded as well.

House Speaker Tim Jones (R-Eureka) ties consideration of how that $388 million gap might be closed to the subject of expanding Medicaid eligibility.

“The more money we choose long-term to dump into Medicaid, there will be less money for higher ed and K-12 because the Governor has said let’s just take all the free money in the federal program. He has not said what we’re going to do 3, 4, 5 years out when the federal government starts retreating from that. Once we agree to that entitlement we’re going to have to find the money in our budget, and the Governor has not suggested we raise taxes, so the revenue has to come from another line item in the budget. The next biggest buckets? Education … both higher ed and K-12, other social services.”

The committee must develop a formula by the end of 2013 that can be implemented in time for fiscal year 2015 appropriations.

 

Work continues toward formula for higher education funding

Two legislative committees have revisited a model of what could go into a higher education funding formula that would include performance-based funding. 

A presentation that was first offered to the Joint Committee on Education last month was given to the House Budget Committee on Education and the Senate Education Committee on Wednesday.  The model is based on public hearings of the Joint Committee held last year, what education policy makers had to say, study of other states’ practices and reports and recommendations from more than two decades of earlier work by task forces, committees and commissions.

The model would have the state provide 35 percent of an institution’s operating costs. 10 percent of that would be tied to performance in five criteria.

See the model proposal for higher education funding in Missouri (pdf).

Joint Committee Chairman Senator David Pearce (R-Warrensburg) says people are anxious.

“In early October I had people come to me and want a spreadsheet. They wanted to know exactly how does this affect my college, where are we, and we hadn’t even finished the hearing process. So what we’re trying to do is to get an objective view … what do you think should go into a formula on performance funding? Then when you get all those ideas … you put the spreadsheet out and see how it affects the institutions, and believe me then there will be a lot more discussion after that.”

Pearce says creation of that spreadsheet will begin next month.

Representative Genise Montecillo (D-St. Louis) says she understands wanting to reward good outcomes, but she is worried about what the formula will mean for some community colleges.

“Those institutions that are struggling in some areas … how are they going to be able to improve their performance when we’re decreasing their funds which are already at very, very low dollar amounts?”

Joint Committee Executive Director Stacy Preis says one of the recommendations is the inclusion of a stop-loss provision.

“That would avoid large, sudden shifts in funding. A stop-loss is different from what you may be familiar with as a hold harmless provision in the K-12 formula in that a stop-loss guarantees a certain percentage of current funding. Not the absolute amount of current funding but that could be 95 percent, 98 percent, something like that.”

See what institutions said in reply to the funding model presented in December.

Preis expects one of the debates in the creation of a formula will be whether that performance-based funding is a bonus on top of a base appropriation.

“Is it important to us or not, to emphasize performance. If it is, then it is and if it’s just a bonus that will be nice if we have money then it’s just a bonus that will be nice if we have the money, but nothing makes it go away faster than having it just be considered as an add-on.”

Chairman of the House Budget Committee on Education, Representative Mike Lair (R-Chillicothe) says he doesn’t know which way he’s leaning on that debate yet.

“We’ve taken mountains of testimony … it’s to the point where we need to start making those decisions and then feed in the numbers, feed in the institutions and see how it runs.”

Lair says to have the proposal ready to employ in 2015, the legislature has to be developing it now.

“Especially when you see the way that our higher institutions of learning are spread around the state, everybody becomes very parochial with them. If anything looks as if it’s going to hurt theirs, then of course it becomes a negative, and so it could take two years to get it through.”

Legislative panel considers higher education funding formula

The Joint Committee on Education has one meeting left to discuss what should go into a funding formula for higher education. The Committee’s second hearing featured discussion of how to measure performance of the state’s universities.

Senator David Pearce (Courtesy, Missouri Senate)

Chairman, Senator David Pearce, says the Coordinating Board for Higher Education recommends institutions not be rewarded for performance with existing funds. “So, we’re not going to be taking money away from existing institutions. Rather, it would be new funding that we would have for higher education. Now, that’s (the Coordinating Board’s) recommendation. I’m not saying that will be the recommendation of the Committee.”

Pearce says about 12 states are now basing higher education funding on performance. “Some, it’s just a very, very small percentage of their budget. In the state of Tennessee it’s nearly 100 percent of the budgets for the universities are based on performance.

“In these times of tough budgets and very tight dollars, we’ve got to make sure that our dollars are spent wisely and that those universities that are doing a good job are rewarded … and to show those universities that might not be doing well that they need to improve.”

Pearce says the formula will have to weigh the differences between institutions, which he says is challenging. “For example, you have some schools … there’s three universities … that are open enrollment. So, that means they take everyone that comes through their doors. Yet then you have some universities that are moderately selective and then those that are highly selective like the University of Missouri or Truman State.

“So, how do you compare all of those together? The answer is, you probably don’t. You have to come up with some standards to compare against themselves, or maybe find like institution in different states and compare them that way. Our community colleges, for example, are open enrollment. They might have to do a lot of remediation, but on the other hand they’re serving a very, very good public interest.”

The Committee must submit a recommendation by the end of next year, but Pearce says it is being proactive. “My thought is we will have an initial recommendation hopefully by the first of the year … that there might be some things that we can put in the legislature next session, but then we have to have it done a year from this December.”

The Committee meets one more time, November 14 at the Haverner Center at Missouri University of Science and Technology in Rolla.

House committee considers foundation formula challenges

The Chairman of the House Education Committee says this morning’s will be the last dawn hearing on the foundation formula. It is sure not be the last hearing on the topic, however.

Representative Mike Lair’s (R-Chillicothe) committee heard a presentation from a the Executive Director of the staff for the Joint Committee on Education, Stacy Preis. She outlined the formula that is in place now, how it replaced its predecessor, and what some issues are that lawmakers should note when considering changing it.

The House Education Committee hears testimony from Representative Mike Thomson (R-Maryville).

She explained the current formula is based on adequately funding schools, with an “adequacy target” based on the spending practices of successful schools. That target has held steady since the new formula phase-in began in 2006, but it could change next year. “There is language in the statute right now that says if funding is insufficient to fully fund the formula, that adequacy target…may be adjusted to accommodate appropriations.”

She says that provision was not intended to accommodate multi-million dollar shortfalls. It was meant to make minor adjustments for differences between projection and actual revenues.

It presents an issue if the formula is not fully funded next year. “If the hold harmless calculation shows you’re funded as hold harmless, that adequacy target has no impact on you at all. You’re funded under your old money,” Preis said. This would mean hold harmless districts would receive their entire payment amount, while those that are funded through the formula might see a cut.

Joint Education Committee Chairman Mike Thomson (R-Maryville) says that means some hold harmless districts are less inclined to see a change in the formula. “I think they’re saying ‘hey, we’ve been taking a hit. Let’s let that thing go over the cliff…let’s get what we can.’ I don’t mean that critically…but everybody’s looking for the best dollar that they can get.”

Thomson says uncertainty over the adequacy target means that formula districts and hold harmless districts have reason to fear the outcome.

He outlined for the House Committee his bill that would not change the formula, but would lay out how money would be distributed if it is not fully funded. “There’s nothing in the statutes…that says if we do not fully fund the formula, how do we distribute the money?”

His bill would take effect next year, when the formula would be fully implemented. “This is the last of the seven-year phase-in period. Right now our schools are being funded 86 percent on a new formula, 14 percent on the old formula, and next year it will be 100 percent new formula.”

The same bill died in the Senate last year, Thomson says because other issues were attached to it, such as the Turner fix. This year he wants to see it go through the process unbridled, contrary to the wishes of others in his caucus including House Speaker Steven Tilley who has said he wants to bundle education issues together.

See our earlier story on the Speaker’s wishes for education issues.

Thomson says, “We think that it’s even more essential this year that this bill passes because now we have even a bigger difference between where we are and where we should be on the fully funded formula. That means…some of our schools are even taking a bigger hit that they shouldn’t be taking.”

The House Committee is scheduled to meet again Tuesday, January 17 at 1 p.m. and Wednesday, January 18 at 2 p.m.  Public testimony will be taken at those hearings.

Representative Thomson will present his bill before the House Elementary and Secondary Education Committee Wednesday, January 18 at 8 a.m.