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AN ACT relating to postsecondary funding. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
ď˘Section 1. KRS 164.092 is amended to read as follows: 3
(1) For purposes of this section: 4
(a) "Category I and Category II square feet" means square footage that falls under 5
space categories as defined by the Postsecondary Education Facilities 6
Inventory and Classification Manual published by the United States 7
Department of Education; 8
(b) "Comprehensive university" has the same meaning as in KRS 164.001; 9
(c) "Council" means the Council on Postsecondary Education; 10
(d) ["Equilibrium" means a condition in which every institution has an 11
appropriately proportionate level of resources as determined by the 12
performance funding model established in this section given each institution's 13
level of productivity in achieving student success outcomes, course 14
completion outcomes, and other components included in the model; 15
(e) ]"Formula base amount" means an institution's enacted general fund 16
appropriation amount minus debt service on bonds and appropriations for 17
mandated programs; 18
(e)[(f)] "Hold-harmless provision" means a provision included in the funding 19
formulas as described in subsection (9) of this section that prevents a 20
reduction of a designated portion of funding for an institution through 21
operation of the funding formula; 22
(f)[(g)] "Institution" means a college in the Kentucky Community and Technical 23
College System or a public university; 24
(g)[(h)] "KCTCS" means the Kentucky Community and Technical College 25
System; 26
(h)[(i)] "KCTCS institution allocable resources" means the formula base 27 UNOFFICIAL COPY 25 RS BR 1197
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amount net of any equity adjustment as described in subsection (7)(b) of this 1
section, any amount protected by a hold-harmless provision, and any 2
applicable increase or decrease in general fund appropriations; 3
(i)[(j)] "Mandated program" means a research or public service activity that is 4
not integral to the instructional mission of the institution and is identified by 5
the General Assembly in the biennial budget; 6
(j)[(k)] "Nontraditional age students" means students between the ages of 7
twenty-five (25) and sixty-four (64); 8
(k)[(l)] "Performance fund" means the postsecondary education performance 9
fund established in subsection (13) of this section; 10
(l)[(m)] "Research universities" means the University of Kentucky and the 11
University of Louisville; 12
(m)[(n)] "Stop-loss provision" means a provision included in the funding 13
formulas as described in subsection (9) of this section to limit reduction of an 14
institution's funding amount to a predetermined percentage, notwithstanding 15
the amounts calculated by operation of the formula; and 16
(n)[(o)] "University allocable resources" means the formula base amount net of 17
any small school adjustment as described in subsection (5)(c) of this section, 18
any amount protected by a hold-harmless provision, and any applicable 19
increase or decrease in general fund appropriations. 20
(2) The General Assembly hereby finds that improving opportunity for the 21
Commonwealth's citizens and building a stronger economy can be achieved by its 22
public college and university system focusing its efforts and resources on the goals 23
of: 24
(a) Increasing the retention and progression of students toward timely credential 25
or degree completion; 26
(b) Increasing the number and types of credentials and degrees earned by all types 27 UNOFFICIAL COPY 25 RS BR 1197
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of students; 1
(c) Increasing the number of credentials and degrees that garner higher salaries 2
upon graduation, such as science, technology, engineering, math, and health, 3
and in areas of industry demand; 4
(d) Closing achievement gaps by increasing the number of credentials and 5
degrees earned by low-income students, underprepared students, 6
underrepresented students, and nontraditional age students; and 7
(e) Facilitating credit hour accumulation and transfer of students from KCTCS to 8
four (4) year postsecondary institutions. 9
(3) (a) The General Assembly hereby declares these goals can best be accomplished 10
by implementing a comprehensive funding model for the allocation of state 11
general fund appropriations for postsecondary institution operations that 12
aligns the Commonwealth's investments in postsecondary education with the 13
Commonwealth's postsecondary education policy goals and objectives. 14
(b) The General Assembly further recognizes that priority for state general fund 15
appropriations for postsecondary institutions should be given to each 16
institution's funding floor over appropriations to the performance fund. For 17
purposes of this section, "funding floor" means an institution's fiscal year 18
2020-2021 general fund appropriation included in 2020 Ky. Acts ch. 92, plus 19
any fiscal year 2020-2021 distribution from the performance fund, and minus 20
fiscal year 2020-2021 debt service on bonds and appropriations for mandated 21
programs. 22
(4) This section establishes a comprehensive funding model for the public 23
postsecondary education system to be implemented by the Council on 24
Postsecondary Education. The funding model shall include a public university 25
sector formula and a KCTCS sector formula, and shall not include any race-based 26
metrics or targets in the formulas. 27 UNOFFICIAL COPY 25 RS BR 1197
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(5) The funding formula for the public university sector shall: 1
(a) [Recognize differences in missions and cost structures between research 2
universities and comprehensive universities to ensure that neither are 3
advantaged or disadvantaged during the first full year of implementation; 4
(b) ]Distribute one hundred percent (100%) of the university allocable resources 5
for all universities in the sector, based on rational criteria, including student 6
success, course completion, and operational support components, regardless 7
of whether state funding for postsecondary institution operations increases, 8
decreases, or remains stable; and 9
(b)[(c)] Include an adjustment to minimize impact on smaller campuses as 10
determined by the council[; and 11
(d) Be constructed to achieve equilibrium, at which point the funding formula 12
rewards rates of improvement above the sector average rate]. 13
(6) Funding for the public university sector shall be distributed as follows: 14
(a) Forty percent (40%) of total university allocable resources shall be distributed 15
based on each university's proportionate, unweighted share of total student 16
success outcomes produced, including but not limited to: 17
1. Bachelor's degree production; 18
2. Numbers of students progressing beyond thirty (30), sixty (60), and 19
ninety (90) credit hour thresholds; 20
3. Science, technology, engineering, math, and health bachelor's degree 21
production; and 22
4. Bachelor's degrees earned by low-income students and underrepresented 23
students; 24
(b) Thirty percent (30%) of total university allocable resources shall be 25
distributed based on each university's proportionate, unweighted share of 26
sector total student credit hours earned, excluding dual credit enrollment[, 27 UNOFFICIAL COPY 25 RS BR 1197
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weighted to account for cost differences by academic discipline and course 1
level, such as lower and upper division baccalaureate, master's, doctoral 2
research, doctoral professional, and nontraditional age students]; and 3
(c) Thirty percent (30%) of total university allocable resources shall be 4
distributed in support of vital campus operations as follows: 5
1. Ten percent (10%) shall be distributed based on each university's share 6
of Category I and Category II square feet, net of research, nonclass 7
laboratory, and open laboratory space, to support maintenance and 8
operation of campus facilities[ and may include a space utilization factor 9
as determined by the council in collaboration with the working group 10
established in subsection (11) of this section]; 11
2. Ten percent (10%) shall be distributed based on each university's share 12
of total instruction and student services spending, net of maintenance 13
and operation, to support campus administrative functions; and 14
3. Ten percent (10%) shall be distributed based on each university's share 15
of total full-time equivalent student enrollment to support academic 16
support services such as libraries and academic computing. 17
(7) The funding formula for the KCTCS sector: 18
(a) Shall distribute one hundred percent (100%) of KCTCS institution allocable 19
resources for all KCTCS colleges based on rational criteria, including student 20
success, course completion, and operational support components, regardless 21
of whether state funding for postsecondary institution operations increases, 22
decreases, or remains stable; and 23
(b) May include an adjustment to account for the[community] economic 24
disadvantage of enrolled students[in some regions of the Commonwealth as 25
determined by the council; and 26
(c) Shall be constructed to achieve equilibrium, at which point the funding 27 UNOFFICIAL COPY 25 RS BR 1197
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formula rewards rates of improvement above the sector average rate]. 1
(8) Funding for the KCTCS sector shall be distributed as follows: 2
(a) Thirty-five percent (35%) of total KCTCS institution allocable resources shall 3
be distributed based on each college's share of total student success outcomes 4
produced, including but not limited to: 5
1. Certificate, diploma, and associate degree production,[ weighted] to 6
provide a premium for credentials that are aligned with the economic 7
needs of the state; 8
2. Numbers of students progressing beyond fifteen (15), thirty (30), and 9
forty-five (45) credit hour thresholds; 10
3. Credentials earned by low-income students, underprepared students, 11
underrepresented students, and nontraditional age students; and 12
4. Transfers to four (4) year institutions; 13
(b) Thirty-five percent (35%) of total KCTCS institution allocable resources shall 14
be distributed based on each college's share of total student credit hours 15
earned,[ weighted] to account for cost differences by academic discipline; and 16
(c) Thirty percent (30%) of total KCTCS institution allocable resources shall be 17
distributed in support of vital campus operations as follows: 18
1. Ten percent (10%) shall be distributed based on each college's share of 19
Category I and Category II square feet, net of research, nonclass 20
laboratory, and open laboratory space, to support maintenance and 21
operation of campus facilities and may include a space utilization factor 22
as determined by the council in collaboration with the postsecondary 23
education working group established in subsection (11) of this section; 24
2. Ten percent (10%) shall be distributed based on each college's share of 25
total instruction and student services spending, net of maintenance and 26
operation, to support campus administrative functions; and 27 UNOFFICIAL COPY 25 RS BR 1197
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3. Ten percent (10%) shall be distributed based on each college's share of 1
total full-time equivalent student enrollment to support academic 2
support services such as libraries and academic computing. 3
(9) (a) The funding formula for both sectors shall include: 4
1. [A hold-harmless provision for fiscal year 2018-2019 preventing a 5
reduction in an institution's funding amount based solely on the formula 6
calculation, and allowing a hold-harmless amount determined by the 7
formula in fiscal year 2018-2019 to be deducted from an institution's 8
formula base amount in whole or in part in fiscal years 2019-2020 and 9
2020-2021, as determined by the council; 10
2. ]A hold-harmless provision[ for fiscal year 2021-2022, and every fiscal 11
year thereafter,] preventing a reduction in an institution's funding 12
amount based solely on the formula calculation; and 13
2.[3. A stop-loss provision for fiscal year 2019-2020 limiting the reduction in 14
funding to any institution to one percent (1%) of that institution's 15
formula base amount; 16
4. A stop-loss provision for fiscal year 2020-2021 limiting the reduction in 17
funding to any institution to two percent (2%) of that institution's 18
formula base amount; and 19
5.] A stop-loss provision[ for fiscal year 2021-2022, and every fiscal year 20
thereafter,] limiting the reduction in funding to any institution to zero 21
percent (0%) of that institution's formula base amount. 22
(b) Paragraph (a) of this subsection shall not be construed to limit the level of a 23
budget reduction that may be enacted by the General Assembly or 24
implemented by the Governor. 25
(10) (a) By May 1 each year, the council shall certify to the Office of the State Budget 26
Director the amount to be distributed to each of the public universities and 27 UNOFFICIAL COPY 25 RS BR 1197
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KCTCS as determined by the comprehensive funding model created in this 1
section, not to exceed the available balance in the performance fund. 2
(b) The Office of the State Budget Director shall distribute the appropriations in 3
the performance fund for that fiscal year to the institutions in the amounts the 4
council has certified. The adjusted appropriations to each institution shall be 5
allotted as provided in KRS 48.600, 48.605, 48.610, 48.620, and 48.630. 6
(c) 1. The certified amounts distributed from the performance fund to the 7
institutions are nonrecurring funds that shall not be included in the 8
institutions' base budget amounts submitted in their biennial budget 9
requests. 10
2. The certified amounts distributed from the performance fund in the 11
previous fiscal year shall be included in the performance fund's base 12
budget amount submitted by the council in the biennial budget request. 13
[(d) For fiscal year 2017-2018, the Office of the State Budget Director shall 14
distribute to the public postsecondary education institutions, except for 15
Kentucky State University, those funds appropriated to the performance fund 16
by the General Assembly in 2016 Ky. Acts ch. 149, Part I, K., 12., in 17
accordance with the comprehensive funding model created in this section.] 18
(11) (a) The Council on Postsecondary Education is hereby directed to establish a 19
postsecondary education working group composed of the following: 20
1. The president of the council; 21
2. The president or designee of each public postsecondary institution, 22
including the president of KCTCS; 23
3. The Governor or designee; 24
4. The Speaker of the House or designee; and 25
5. The President of the Senate or designee. 26
(b) Beginning with calendar year 2025[in fiscal year 2020-2021] and every odd 27 UNOFFICIAL COPY 25 RS BR 1197
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year[three (3) fiscal years] thereafter, the postsecondary education working 1
group shall convene to determine if the comprehensive funding model is 2
functioning as expected, identify any unintended consequences of the model, 3
and recommend any adjustments to the model.[ The council may call the 4
working group to convene prior to the start of the required fiscal year to allow 5
sufficient time for the group to complete its work.] 6
(c) The results of the review and recommendations of the working group shall be 7
reported by the council to the Governor, the Interim Joint Committee on 8
Appropriations and Revenue, and the appropriate Interim Joint Committee on 9
Education by December 1 of each [fiscal ]year the working group convenes. 10
(12) The council shall promulgate administrative regulations under KRS Chapter 13A to 11
implement the provisions of this section. 12
(13) (a) The postsecondary education performance fund is hereby established as an 13
appropriation unit to support improvement in the operations of the public 14
postsecondary institutions and achievement of the Commonwealth's education 15
policy goals and workforce development priorities. General fund moneys may 16
be appropriated by the General Assembly to this fund for distribution to the 17
public postsecondary institutions in amounts determined through the 18
comprehensive funding model created in this section. 19
(b) Any balance in the performance fund at the close of any fiscal year shall not 20
lapse but shall be carried forward to the next fiscal year and be continuously 21
appropriated for the purposes specified in this section. A general statement 22
that all continuing appropriations are repealed, discontinued, or suspended 23
shall not operate to repeal, discontinue, or suspend this fund or to repeal this 24
action. 25