SB 437 Creates a model for funding the state's public institutions of higher education
Sponsor: Pearce
LR Number: 1808S.10P Fiscal Note available
Committee: Education
Last Action: 5/17/2013 - Referred H Higher Education Committee Journal Page: H3327
Title: SS SCS SB 437 Calendar Position:
Effective Date: August 28, 2013

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Current Bill Summary

SS/SCS/SB 437 - This act modifies provisions relating to higher education.

HIGHER EDUCATION FUNDING MODEL: This act modifies the way the state funds public institutions of higher education by creating a new model for calculating institutions' state funding.

The higher education funding model provides that institutions will be funded based on both costs and outcomes. The model calculates institutions' core operational expenditures, which are divided into six categories: academic support, institutional support, instruction, public service, research, and student services. The calculations for these components are described in the act.

The model uses a grouping of ten peer states when calculating institutions' funding - the five states next higher than Missouri and the five states next lower than Missouri based on a rank-ordering of all states according to the Bureau of Economic Analysis using the 2011 midyear population estimates of the census data, as described in the act. For institutions in the statewide liberal arts and sciences institution sector, the model will use a group of thirty peer states, the fifteen states next higher and next lower than Missouri, or an equal number of states above and below Missouri to obtain a minimum of ten institutions in the sector peer comparison group of similar missions, similar degrees, and a similar level of selectivity in admissions requirements.

Missouri institutions are classified in different sectors using, in part, the Carnegie Classification system: associate's sector; statewide technical education institution sector; baccalaureate sector; master's sector; statewide liberal arts and sciences institution sector; and research sector.

For institutions in all sectors, the state share of the operating budget estimate will be the sum of the institution's totals for academic support and institutional support and instruction and public service and research and student services multiplied by the sector-specific modifier.

All courses that are completed at an institution will be weighted based on their discipline and level and divided into clusters. Weights are assigned in the act. The Coordinating Board for Higher Education must review the disciplines, clusters, and weights every five years and make recommendations to the General Assembly on their revision.

All calculations will use a three year rolling average of final data from the Integrated Postsecondary Education Data System (IPEDS), except for fiscal year 2015. Fiscal year 2015 will use an average of the final data for fiscal years 2010 and 2011. (Sections 173.1500, 173.1505, 173.1510, 173.1515, 173.1530)

COMMUNITY COLLEGES: Currently, community colleges receive one appropriation for the entire sector that is divided amongst them by a community college resource allocation model. This act removes this resource allocation model and requires that each community college's state funding be calculated separately by the new funding model. (Section 163.191)

PERFORMANCE FUNDING: Ten percent of each public institution of higher education's state appropriation must be designated and set aside as performance funding. This amount of money will be placed into the Higher Education Performance Fund.

The Coordinating Board for Higher Education must adopt institutional performance measures specific to the funding model in collaboration with the institutions by July 1, 2014. These performance measures must be updated every five years beginning in academic year 2019-2020.

An institution will receive performance funding if it satisfies the performance measures. If an institution satisfies all of its institutional performance measures, it will receive all of its performance funding. If it meets at least one, but not all, of its institutional performance measures, it will receive a prorated amount of its performance funding. The Coordinating Board will then authorize the release of the appropriate amount of performance funds to the institution. (Section 173.1520)

CAREER PLACEMENT INCENTIVE FUNDING: Ten percent of each institution's funding will be earmarked and designated as career placement incentive funding. An institution will only receive the career placement incentive funding if it satisfies the career placement rates established by the Department of Higher Education.

By July 1, 2014, the Department of Higher Education must develop and adopt a methodology and system that the public institutions must use for tracking and verifying the career placement rates for their graduates. The methodology must also allow the tracking and verification of acceptance rates at graduate and professional schools, or for two-year institutions, acceptance rates at four-year institutions. These acceptance rates must not negatively impact an institution's career placement rate. (Section 173.1532)

STOP-LOSS PROVISION: If an institution's funding as calculated by the model is less than what the institution receives under the current method of state funding, the institution will receive ninety-eight percent of the previous year's funding until such time as the institution is on the model. (Section 173.1525)

DISTRIBUTION OF FUNDS: If the amount of funds appropriated to the public institutions is insufficient to fully fund the institutions as calculated under the model, an institution will receive the amount it received the prior year plus a proportionate share of the new revenue, as described in the act.

(Section 173.1527)

If the total amount of funds appropriated to the public institutions is less than the total amount appropriated in the prior fiscal year, an institution will receive a percentage of the available funds equal to the percentage of the total amount of funds received during the prior fiscal year. (Section 173.1529)

JOINT COMMITTEE ON EDUCATION REVIEW OF THE MODEL: The Joint Committee on Education must review the functionality of the higher education funding model every five years beginning in academic year 2018-2019. The Joint Committee must consult with the Coordinating Board for Higher Education, the Department of Higher Education, at least two academic researchers, the Midwest Higher Education Compact, and the Education Commission of the States. The Joint Committee must submit a written report. (Section 173.1535)

STATE RECOGNITION OF CERTAIN HIGHER EDUCATION INSTITUTIONS: Currently, any school, training program, or course of instruction that is exempt from proprietary school regulation may apply for approval from the Coordinating Board for Higher Education. This act allows any such exempt school, training program, or course of instruction to receive approval for a five year period, instead of the current two year period.

This provision is identical to SB 392 (2013). (Section 173.616)