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Primarily authored by: Scott Morgan, President, Spokane CC

State Operating Budget Allocation and Enrollment Rules March 27, 2014 BAR Meeting Presentation by MA Grobins. Primarily authored by: Scott Morgan, President, Spokane CC Nick Lutes, Operating Budget Director, SBCTC . How Does State Funding Get to the Colleges?.

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Primarily authored by: Scott Morgan, President, Spokane CC

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  1. State Operating Budget Allocation and Enrollment RulesMarch 27, 2014 BAR MeetingPresentation by MA Grobins Primarily authored by: Scott Morgan, President, Spokane CC Nick Lutes, Operating Budget Director, SBCTC

  2. How Does State Funding Get to the Colleges? Uses Base Plus method of development – The value of incremental dollar changes aren’t always driven by logic Policy changes with a budget impact often come with a legislative proviso. • Allocation of FTEs and the use of District Enrollment Targets are main indicator of accountability linked to state appropriations

  3. The relationship between Legislative and Allocation Methods

  4. The Allocation Formula – 1985 through 1999 • To understand today’s allocation model, need to understand it was developed as a response to issues with the previous allocation method. • From 1985 to 1999 SBCTC used a multi-stepped formula to divide funding among colleges. • Formula was provided input using each college’s expenditure activities ($ and FTE) in prior years. • And why should we care about this? • When initiated about 60% of the of the initial funding colleges received from BASE+ was established from the old formula.

  5. Previous Allocation Formula • Two Formulas • CCs complex formula • TCs simple allocation based on FTE • CC formula allocated all state funds every year – SBCTC reset all funding and re-allocated it annually. • Five components in CC formula: • Instruction • Libraries • Student Services • Administration • Plant • Formulas accounted for: • Economies of scale (small school adjustment) • Variable costs (only available after accounting for fixed costs)

  6. Formulas Determined… • For Instruction, Libraries, and Student Services • How many faculty/staff funded (state averages) • How much faculty/staff cost (college actuals) • Instruction • FT and PT mix (based on faculty entitlement compared to actuals) • Support costs by type of student (state average) • Libraries • Collection replacement allocation • Student Services • Minority Student Success allocation • Child Care Services allocation • Administration • How much staffing (fixed level plus 1 admin for each 8 staff positions generated) – Had economies of scale one less Admin FTE for each 600 enrollments • How much staffing costs (college actuals) • Plant • Staff generated based on size of work (i.e., grounds crew linked to acreage; janitorial/window washer and security linked to square footage maintained area) • Operating costs: fixed per staff member (e.g., janitorial) and per weighted acreage (e.g., grounds keeping) • Other formulas used for expenses fixed expenses like utilities and rent.

  7. Example: CC Instruction Formula Health Sci Mech & Eng Academic Health/PE Basic Skills Natural Sci Vocational Bus & Comm Humanities Data Proc Science Public Supp OccupSupp Math Developmental Bus Admin Social Sci ABE 0 10 20 30 40 1997 CC Average S/F ratios Instruction formula determined how many faculty to fund by grouping student course enrollments into 15 CIP Code “Clusters” Colleges were funded at system average regardless of their own student/faculty ratios

  8. Example: CC Instruction Formula (cont.) For mythical 2,500 FTE community college – the number of faculty that could be funded if college offered only one mission area OR OR How Many Faculty Funded – State Averages

  9. Example: CC Instruction Formula (cont.) Faculty MixFT%PT%Faculty Salary & Benefits Basic Skills 25% 75% Full-time $54,200 Academic 60% 40% Part-time $23,500 Vocational 70% 30% OR OR How Much Faculty Cost – College Actuals

  10. Changes to Previous Allocation Formula • Technical Colleges join system – 1991 • Maintained a simple K12 formula • Community College Tuition - 1994 • When CC formula was adopted in 1985, tuition was collected by colleges and sent to state. • Tuition was a “General Fund Revenue” • System received a single state appropriation • In 1994 the Legislature changed tuition policy – now retained by colleges. • Formula continued to run as built – except now contained an offset to allocation results equal to colleges tuition collections.

  11. Issues that Spelled the End of the Old Formula Complexity of formula made it very difficult to understand. Changes in statewide tuition policy – funding was being shifted from high tuition collectors to low tuition collectors. Formula produced unpredictable funding for CCs from one year to the next. Colleges could, and did, affect their own and other college’s funding by altering local factors such as salaries, faculty full-time/part-time mix, course coding, etc. Over time, averaging and time lags were introduced to reduce volatility, but also had effect of slowing formula response to changing circumstances.

  12. WACTC adopted principles for new model 1999-2000 Development of New (Current) Allocation Model -- Principles • Colleges’ “base” budgets should be independent of other colleges’ actions and circumstances. • Colleges’ “base” budgets should be predictable from one year to the next. • There should be no re-distribution of base budgets among colleges. • No college lost or gained in the allocation shift.

  13. Development of New (Current) Allocation Model • Developed by presidents 1999-2000, adopted by State Board. • CCs and TCs share same method • Adjustments made to base budgets rather than starting from $0 each year. • Alignment with Legislative method • State funding only – Tuition not considered • College funding is more predictable from one year to the next. • Local decisions and actions do not impact other colleges’ funding. • Student Achievement has been an exception • Method is much easier to understand.

  14. Current Allocation Methodology • Starts with prior year funding and makes incremental changes mirroring legislative budget changes. • Removes impact of one-time changes (e.g., 3% salary reduction) • Allocates new funding on basis consistent with legislative purposes and an agreed upon ‘best fit.’ • Methods are discussed annually with presidents and approved by SBCTC. • Allocates funding reductions based on each district’s proportionate share of state funding. • Enrollment Plan -- General growth enrollments • Plan served as the tool for an informed distribution of new funding. • Plan used to distribute new enrollments to each college based various factors (e.g., population growth). • Enrollment plan has lost visibility during era of reductions resulting from the Great Recession.

  15. Equalizing Per Student Funding • When current allocation method was developed, there was agreement that per student funding should be equalized over time as new funds became available. • Diverted part of additional funding for growth enrollments to provided funding to “low-funded colleges.” • Low Funded Colleges • Straight calculation of per student funding doesn’t take into account economies of scale. • Instead, system has used a regression curve to identify low-funded colleges. • Regression line is the calculated average state dollar per student when accounting for size of college’s enrollment allocation. • Establishes economies of scale for bigger colleges.

  16. Accountability – Enrollment Rules • Legislature sets enrollment target for the system in the budget bill. • When new funds for enrollments are provided, Legislature increases the target. • CTC target has been about 140,000 since before the budget cuts began. • Allocations include enrollment targets for each college. • Started with a base target, add additional FTES (per enrollment plan) to target as new enrollment is funded.

  17. Enrollment Rules • Enrollment rules are adopted annually by the State Board and are included as an attachment in the initial allocation of funds. • Intended to insure that funding lines up with demand. • All State Enrollments • Two-year average enrollments must be at least 96% of the college target. • If this target not met, college is in “recovery year” – must make 96% of target in that year. • If not, in subsequent year college loses allocation funding and FTEs: difference between 96% of target and actual prior year enrollment. • Two-year average target attainment must be 100% to receive growth enrollments. • “Growth enrollments” are available only when explicitly funded by the Legislature or when a district loses funding because they haven’t made 96% of target.

  18. Enrollment Rules • Worker Retraining • A college that falls below 100% of WRT target for two years in a row will lose funding. • Earmarked Enrollments • Aerospace Apprenticeships, Health Employee Education and Training (HEET), University Center of North Puget Sound, University Contracts, Applied Baccalaureate Programs. • College under-enrolled in an earmarked program may be subject to reduction. • Other Monitored Enrollments • Adult Basic Education, Apprenticeships, I-BEST • Districts are expected to maintain strong commitment to these types of enrollments.

  19. The Recent Past – constant budget reductions • When the allocation method was developed, it was all about how to allocate growth funding – not reductions. • The system weathered five consecutive cycles of budget reductions. • Reductions spread to colleges based on proportionate share of state funding. • Differential impacts to colleges – state funding as share of total funding varies widely across the colleges.

  20. Wide Variation in Dependence on State Funding Across Colleges

  21. Current Allocation Taskforce Performance Funding:SAI Awards as an Allocation Methodology

  22. Achievement points are outputs that show a student’s status at the end of the year vs enrollments which are inputs counted at the start of each quarter. • Achievement points are calculated for awards in three areas • Total output as measured by • total points (45% of total award $), and • completions (10% of total award $). • Efficiency in producing those outputs or • (c) points per student (45% of total award $). • A college’s total award is the sum of its share in each of the 3 funding pools. To increase its award in any of the three pools, a college must perform better than the average in any of the three pools.

  23. By design, the pools that distribute funds based on outputs are in line with current allocations: larger colleges receive larger awards. • Also by design, the pool that distributes based on points per student (efficiency) is unrelated to college size. • As Task Force contemplates having a larger share of funding allocated based on SAI, implications of these awards on the distribution of state funding across the districts needs to be evaluated.

  24. Award Pools The award is based on a college’s relative share of performance in each of (1) total points (less completions) (2) total completions and (3) PPS.

  25. Impact of SAI Awards by College Size: New Funds *Awards under the new SAI points only. By design, part of award method aligns with college size, part does not: • 55% (completions and total points) will align with college size, although variations between colleges of the same size will be driven by performance (points per student). • The alignment with college size is similar to current total state funding by district: The larger the college, the more state funding it receives. • But 45% (points per student) will not align with college size. • Unlike our current state funding by district, small and large colleges can earn the same size rewards. • This is demonstrated in the following slide using actual 2014 SAI awards.*

  26. Total points and completions awards align with college size, points per student awards do not.

  27. Impact of SAI Awards by College Size Another way to show this: Compare larger and smaller college

  28. Total 2014 SAI Awards* Per FTE Student Total SAI awards per student: Strong relationship to college size, with smaller colleges receiving more per student than larger colleges. *Awards under the new SAI points only.

  29. SAI Awards with New Funds • Small colleges will receive more funds per student than large colleges (because of the points per student award). • This is consistent with the idea of economies of scale: • All colleges need about the same base funding to open the doors (approximately $3 to $3.5 million), then the same amount per student after that. • E.g., funding for new enrollments is allocated on the same per FTE student for all colleges. • Net effect is that smaller colleges need more per student than larger colleges.

  30. SAI Awards with New Funds • Does the underlying base funding address the small college factor adequately? • Would the effect of the points per student award, when funded with new money: • Provide a needed adjustment to the base college costs? • Undermine the relative fiscal health of larger colleges vis-à-vis smaller colleges in the long run?

  31. Impact of SAI Awards by College Size: Existing Funds • Assessments for the total point awards and completions awards will be based on college size (headcount). • Larger colleges will contribute more in dollars than smaller colleges, but on a per student basis the assessment will not disadvantage the larger colleges. • Larger colleges will earn more dollars than smaller colleges, but on a per student basis, the awards will not advantage the larger colleges. • Assessments for points per student award pool will be same amount for every college. • Smaller colleges will contribute bigger share of their state allocation compared to larger colleges. On a per student basis, smaller colleges will contribute more than larger colleges. • Award will be a bigger share of smaller colleges’ state allocations compared to larger colleges. On a per student basis, smaller colleges will be awarded more than larger colleges.

  32. Result: The smaller the college, the bigger share of total allocation is in SAI.

  33. QUESTIONS?

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