Impact of Lottery Scholarships on Budgets of Colleges and Universities

2. Lottery Scholarship Financing Higher Education Students, Parents, Scholarships, Loans, College Tuition Impact of Lottery Scholarships on Budgets of Colleges and Universities State and other funding sources 70% in 1980’s 1. State funding covers less than half of the cost. 2. If state support is reduced, the student’s burden is increased. 3. Lottery revenues change who pays the cost of college– it will not impact higher education budgets. 4. Increased student enrollment without increases in state financial support stresses the ability of colleges to meet student demand. Arkansas needs more graduates, but as with most good things it comes at a price.

3. Pay Plan Implementation

4. Several Institutions were financially unable to fully implement the Pay Plan because: • Half the pay plan was to be paid from A and the other half from B-1 • Legislature ultimately decided to take $11m from B-1 and replaced it with Stimulus money • Stimulus funds cannot be used for continuing obligation . . . such as pay raises. • Pay plan addressed only classified staff • In the final analysis there was no new money for Higher Education in FY10 • No B-1 • Only 95.64% of A • Stimulus money that could not be used for pay raises.

5. Faculty, the heart of an institution, did not receive any pay increases at schools that only implemented half of the pay plan 33% 18% 12% Source: SREB State Data Exchange January 2010

6. Source: SREB State Data Exchange January 2010

7. Source: SREB State Data Exchange January 2010

8. Funding Available and Pay Plan Costs

9. Includes $9,350,000 in Tobacco Tax Funds for Trauma Centers Without Trauma Center Funds the loss would be (-$23,758,740)

10. Cost of Pay Plan Implementation • Pay Plan Implementation Cost did not take into consideration employees not paid through E&G. Did not include the auxiliary staff costs. Did not include Faculty and non- classified staff. • By law, the auxiliary classified staff have to be paid using the classified pay plan. • Most institutions attempted to hold tuition increases to a minimum while implementing as much of the pay plan as possible given the state support per student.

12. The FY2010 RSA includes “One-Time” Allotment Reserve Funds of $61,049,112 • Since there is no assurance that the Allotment Reserve Funds will continue to be available, these funds cannot be used for continuing obligations - pay raises. • For Higher Education: $17 Million

13. Stimulus Funds • ARRA Stimulus Restoration Funds are “One-Time” Funds and cannot be used for pay increases

14. Prudent management demands that continuing obligations not be made with “one-time” funds • Some institutions had local revenues and/or other funds which enabled them to fully implement the pay plan

15. The Dilemma of Higher Education Institutions

16. Significant Enrollment increases while . . . State support declines

17. State Funds Per Student FTE declining

18. ACHEB Operating Recommendations Fiscal 2011

19. Recommendations include: • The state’s portion of a 2.3% COLA • - Total COLA Cost $27 Million • - State’s Share $12 Million • $7.6 Million for initiatives that have been funded from grants and/or General Improvement Funds and are not covered by the funding formula • $0.5 Million to match Federal Land Grant Funds increase • Total Request for new funds of $20,148,122

20. Non-Formula Additional Funds • Arkansas Delta Training and Education Consortium (ADTEC)/Arkansas Delta Workforce Innovations for Regional Economic Development (ADWIRED) and the Crossroads Coalition ($3.2 million) • ASU Arkansas Delta Heritage Centers ($2.1 million) • UALR Nano-Technology Center ($2.3 million) • UAPB Federal Land Grant Matching Funds ($0.5 million)

22. The Funding Formula Determined Need in Perspective

23. The formula is realistic, however, it does not include the cuts that Higher Education (and all state agencies) are experiencing).

24. Personal Services Recommendations For Non-Classified Personnel2010-11 Fiscal Year

25. 2010-11 Personal Services • These recommendations, effective July 1, 2010, recognize the varying structures and classification of institutions, while maintaining reasonable consistency among positions at similar institutions. • During the 2009-11 Personal Service Request process, institutions of Higher Education requested positions for a two year term, and were approved for everything they requested. • Due to approval of the institutions’ requests in 2009, requests were expected to be minimal. • Additional recommendations were only made in critical situations that could not be addressed using the growth pools. • ADHE staff reviewed all position requests and made preliminary recommendations.

26. Recommendations • Recommended 52 additional positions. • Increase of 0.19% for a total of 27,398 non-classified positions • Recommended Line-Item Maximum • All positions, unless new positions, would be increased by 2.3%

27. Initial University Recommendations

28. Initial Two-Year Recommendation

29. Revised Line-Item Recommendation to Comply with AHECB Resolution

30. AHECB University Recommendation $319,600

31. Lottery Scholarship Related Request by the Institutions • At the Presidents Executive Council meeting the institutions have indicated a need for additional financial aid positions above those in the “B” Book recommendations because of the onslaught of financial aid requests resulting from the Lottery Scholarships