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New rules for how the state will fund its public colleges and universities advanced Friday despite some resistance.

The rules are a result of Act 148 of 2017, which changed funding for Arkansas' public higher-education institutions from one based largely on enrollment to one based on students' progress through and completion of certificate and degree programs.

The law laid out three overall goals of effectiveness, affordability and efficiency and left the Arkansas Department of Higher Education to create policies detailing the measures on which the schools will be scored.

Those metrics will determine whether an institution improved from one year to the next and whether it would get less, more or the same amount of state funding.

On Friday, the Arkansas Legislative Council gave the go-ahead for the new rules -- one with metrics for the state's 22 public community colleges, a second for the 11 public universities and a third on how the funds will be allocated to the schools. The policies have one last stop next week when the Arkansas Higher Education Coordinating Board meets in Mountain Home before the state uses the new funding mechanism for the next fiscal session.

From there, campuses will prepare budget books, and the department will make its funding recommendations for each school for the Legislature's upcoming fiscal session, said Maria Markham, director of the Higher Education Department.

The policies align the funding mechanisms with the state's goal set out in a higher-education master plan to raise the percentage of Arkansans who hold technical certificates and higher degrees from its current 39.5 percent to 60 percent by 2025. The idea is to produce a larger number of people who are ready to fill future workforce demand.

Earlier this week, a handful of legislators grilled department leaders and public commenters about the policies before they were passed. Sen. Larry Teague, D-Nashville, publicly opposed them.

"I think that you understand in the final analysis this is not good for one of my schools and that I think that's my job, to try to stand up for my schools...," Teague had said. "The final analysis will cost my school 10 [percent] to 11 percent or something to that effect. In a little-bitty school, that's a big chunk of money, and those dollars would go to UA-Fayetteville or ASU or ASU-Newport or somebody. When it's all said and done, I can't make that make sense."

Teague was referring to the Mena-based University of Arkansas Community College at Rich Mountain, the smallest public two-year school in Arkansas. His figures were based on preliminary funding recommendations, which have since changed with some tweaking to the policies.

The changes -- a result of public comments -- include counting high school students who enroll in college-level courses for credit in one of the measures for the community colleges, adding noncredit workforce training to the two-year schools' metrics and putting in a post-completion success metric. The latter two additions will come in other iterations of the funding recommendations.

The Higher Education Department has installed a "hold harmless" year for the first round of the funding recommendations under the new method, meaning no schools will lose money in the first year. But, they can earn more.

From there, schools could stand to lose up to 1 percent of their state funds in the 2019-20 fiscal year, lose up to 1.5 percent in the 2020-21 fiscal year and lose up to 2 percent the year after that. The 2 percent is the threshold amount which a school loses in subsequent years.

Schools can gain 1 percent into their base funding for the 2018-19 fiscal year, 1.5 percent for the 2019-20 fiscal year, and 2 percent for 2020-21, and any percentage above that will be one-time incentive funds.

As an example, the department is set to recommend a 2.62 percent funding increase -- or $407,652 from a base of $15,584,976 -- for Southern Arkansas University for the upcoming fiscal year as a result of gains in productivity, according to state data. One percent of that original $15.6 million base -- or about $155,850 -- will make up the Magnolia university's new base funding, which will be used for calculations in the subsequent year. The remaining 1.62 percent is from one-time funds.

Should an institution lose more than 5 percent of its funding from its 2018-19 levels, the department will evaluate the policies, taking a holistic approach to see what in the funding mechanism is causing the decline, Markham said. The department will look at the institution if officials find no flaws in the funding method, she said.

On Friday, legislators had moved the report from the rules and regulations subcommittee, which included the new higher-education funding policies, from the top of the to-do list to the bottom.

When that report came around again, Sen. Bill Sample, R-Hot Springs, had tried to separate the higher-education funding rules from the rest of the items stemming from the subcommittee's report. But, a motion to do so failed.

"There are a lot of members in [the Legislative Council] that are not on the rules committee, and I had heard concerns from them," he said. "I was going to separate it out so they could ask their questions."

Sample had asked in the subcommittee meeting how he could look students in the eye and say that his vote on the policies caused their tuition to rise. On Friday, he said the schools will have to find a way to restore any lost money and it could very well fall on the students.

"If we could start out on even financial footing for all schools, man, I would have been beside myself," he said. "I love the idea of incentives. I don't like the idea of rewarding someone for past performances."

Had his motion passed Friday, Sample said he would not have voted against the policies.

"I try to work things out and build," he said. "I do not try to destroy."

A Section on 10/21/2017

Print Headline: College-funding rules advance; Legislative Council OKs changes; higher-ed board up next

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