Higher Education Funding in Indiana: The Role of the Indiana Commission for Higher Education

1. Higher Education Funding in Indiana: The Role of the Indiana Commission for Higher Education Trustees Academy August 30, 2010 Indiana Commission for Higher Education

2. Contextual Information

3. Indiana’s Public Higher Education System • 5 four-year Public Postsecondary Institutions • 2 two-year Public Institutions • 31 Public Campuses and 12 Instructional Sites • 407,000 Students in 2008-09 • 1,500 buildings worth $12B • $2.3B in salary and compensation

4. Contextual Information Total FY 10 estimated expenditures by all Indiana public postsecondary institutions $5,090,667,914 Total FY 10 General Fund estimated expenditures by all Indiana public postsecondary institutions $3,487,676,807

5. State Operating Appropriations to Public postsecondary institutions Compound Annual Growth Rate: 4.7%

6. State General Fund Expenditures by FunctionFY 2010 Source: State Budget Agency (note: includes all Higher Educ. expenditures)

7. Indiana Commission for Higher Education Role in Developing the State Higher Education Budget

8. Overview of the State Budget Process • CHE and State Budget Agency issue budget instructions to the public postsecondary institutions each biennium • Institutions submit formal budget requests to the state • CHE compiles and reports the institutional budget requests • CHE issues budget recommendations to Governor and General Assembly • Governor issues budget recommendations to General Assembly • CHE staff works with legislative staff during legislative session to help craft the budget

9. State Appropriations to Higher Education FY 2009-2011 $ in millions Note: not all appropriations were released; some state appropriations were replaced with federal stimulus funds

10. Cumulative Change in State Appropriations by Function FY00 – FY 11 159%

11. CHE Funding Recommendations • Informed by Reaching Higher: Strategic Directions for Higher Education in Indiana • Recognizes that by law independent boards of trustees for each public institution with responsibility for the soundness of that institution • Indiana needs a comprehensive, integrated and complimentary system of higher education • Focus areas of reaching Higher include: • College Preparation • Affordability • College Completion • Economic Development

12. CHE Responsibilities Related to Higher Education Budget • Make recommendations for state appropriations to higher education • Institutional appropriations • Capital projects and R&R • State Student Financial Aid • Non-Binding tuition targets • Post budget responsibilities • Review certain expenditures • Review certain capital projects • Make recommendations on budget reductions (when necessary)

13. CHE Recommendations for Campus Operating Appropriations • Fungible dollars appropriated to the institutions • Appropriations are made to individual regional campuses; one appropriation to ITCCI • Generated through (an evolving) collection of formulae • Performance funding policies

14. Evolution of CHE Funding Recommendations

15. Capital Projects • Requested by institutions with no restrictions • Only exception is a formula to generate R&R appropriations • CHE makes capital project recommendations • Capital projects may be: • State funded, requires General Assembly authorization • Non-state funded, sometimes requires General Assembly authorization • Cash funded • Authorized to issue debt – debt may or may not be repaid by the state • Includes projects: • New construction • Repair or renovation • Infrastructure

16. Historical Cap Projects requests, CHE recommendations and ASPassed Note: GA approvals have exceeded CHE recommendations by $930M

17. CHE Review of Capital projects • Certain capital projects require state review and approval • CHE REVIEWS and makes recommendations on capital projects that have been requested by the institutions • Statutory review depends on many things, including: • Type of project • Total cost of the project • Source of project funding • After CHE recommendation, projects move to State Budget Committee, State Budget Agency, Indiana Finance Authority and Governor

18. Student financial aid • A very complex, but important issue to affordability • Financial aid comes from many sources, but chiefly: • Federal government • State appropriations (SSACI) • Institutional aid • Private foundations/owners/employers • Financial Aid study jointly undertaken by CHE and SSACI to be presented in September to State Budget Committee • Aligning financial aid policy with state higher policy: particularly college completion • Recognizing the “new normal” student – majority of financial aid applicants are “non-traditional students with different types of needs and require a new approach to financial aid policy

19. The General Assembly makes final determination • CHE makes recommendations • The Trustees by statute have virtually all of the decision making power and responsibility for institutional budgets and administration • The General Assembly is always free to accept, modify or reject the CHE recommendations • CHE must work with institutional staff, the legislature, other parts of state government and other stakeholders • CHE recommendations are almost never adopted to the dollar, but the General Assembly has always passed higher education budgets based on Commission recommended policies