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AN ACT relating to the postsecondary education working group. 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
(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
(g) "Institution" means a college in the Kentucky Community and Technical 23
College System or a public university; 24
(h) "KCTCS" means the Kentucky Community and Technical College System; 25
(i) "KCTCS institution allocable resources" means the formula base amount net 26
of any equity adjustment as described in subsection (7)(b) of this section, any 27 UNOFFICIAL COPY 25 RS HB 276/GA
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amount protected by a hold-harmless provision, and any applicable increase 1
or decrease in general fund appropriations; 2
(j) "Mandated program" means a research or public service activity that is not 3
integral to the instructional mission of the institution and is identified by the 4
General Assembly in the biennial budget; 5
(k) "Nontraditional age students" means students between the ages of twenty-five 6
(25) and sixty-four (64); 7
(l) "Performance fund" means the postsecondary education performance fund 8
established in subsection (13) of this section; 9
(m) "Research universities" means the University of Kentucky and the University 10
of Louisville; 11
(n) "Stop-loss provision" means a provision included in the funding formulas as 12
described in subsection (9) of this section to limit reduction of an institution's 13
funding amount to a predetermined percentage, notwithstanding the amounts 14
calculated by operation of the formula; and 15
(o) "University allocable resources" means the formula base amount net of any 16
small school adjustment as described in subsection (5)(c) of this section, any 17
amount protected by a hold-harmless provision, and any applicable increase 18
or decrease in general fund appropriations. 19
(2) The General Assembly hereby finds that improving opportunity for the 20
Commonwealth's citizens and building a stronger economy can be achieved by its 21
public college and university system focusing its efforts and resources on the goals 22
of: 23
(a) Increasing the retention and progression of students toward timely credential 24
or degree completion; 25
(b) Increasing the number and types of credentials and degrees earned by all types 26
of students; 27 UNOFFICIAL COPY 25 RS HB 276/GA
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(c) Increasing the number of credentials and degrees that garner higher salaries 1
upon graduation, such as science, technology, engineering, math, and health, 2
and in areas of industry demand; 3
(d) Closing achievement gaps by increasing the number of credentials and 4
degrees earned by low-income students, underprepared students, 5
underrepresented students, and nontraditional age students; and 6
(e) Facilitating credit hour accumulation and transfer of students from KCTCS to 7
four (4) year postsecondary institutions. 8
(3) (a) The General Assembly hereby declares these goals can best be accomplished 9
by implementing a comprehensive funding model for the allocation of state 10
general fund appropriations for postsecondary institution operations that 11
aligns the Commonwealth's investments in postsecondary education with the 12
Commonwealth's postsecondary education policy goals and objectives. 13
(b) The General Assembly further recognizes that priority for state general fund 14
appropriations for postsecondary institutions should be given to each 15
institution's funding floor over appropriations to the performance fund. For 16
purposes of this section, "funding floor" means an institution's fiscal year 17
2020-2021 general fund appropriation included in 2020 Ky. Acts ch. 92, plus 18
any fiscal year 2020-2021 distribution from the performance fund, and minus 19
fiscal year 2020-2021 debt service on bonds and appropriations for mandated 20
programs. 21
(4) This section establishes a comprehensive funding model for the public 22
postsecondary education system to be implemented by the Council on 23
Postsecondary Education. The funding model shall include a public university 24
sector formula and a KCTCS sector formula, and shall not include any race-based 25
metrics or targets in the formulas. 26
(5) The funding formula for the public university sector shall: 27 UNOFFICIAL COPY 25 RS HB 276/GA
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(a) Recognize differences in missions and cost structures between research 1
universities and comprehensive universities to ensure that neither are 2
advantaged or disadvantaged during the first full year of implementation; 3
(b) Distribute one hundred percent (100%) of the university allocable resources 4
for all universities in the sector, based on rational criteria, including student 5
success, course completion, and operational support components, regardless 6
of whether state funding for postsecondary institution operations increases, 7
decreases, or remains stable; 8
(c) Include an adjustment to minimize impact on smaller campuses as determined 9
by the council; and 10
(d) Be constructed to achieve equilibrium, at which point the funding formula 11
rewards rates of improvement above the sector average rate. 12
(6) Funding for the public university sector shall be distributed as follows: 13
(a) Forty percent (40%) of total university allocable resources shall be distributed 14
based on each university's share of total student success outcomes produced, 15
including but not limited to: 16
1. Bachelor's degree production; 17
2. Numbers of students progressing beyond thirty (30), sixty (60), and 18
ninety (90) credit hour thresholds; 19
3. Science, technology, engineering, math, and health bachelor's degree 20
production; and 21
4. Bachelor's degrees earned by low-income students and underrepresented 22
students; 23
(b) Thirty percent (30%) of total university allocable resources shall be 24
distributed based on each university's share of sector total student credit hours 25
earned, excluding dual credit enrollment, weighted to account for cost 26
differences by academic discipline and course level, such as lower and upper 27 UNOFFICIAL COPY 25 RS HB 276/GA
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division baccalaureate, master's, doctoral research, doctoral professional, and 1
nontraditional age students; and 2
(c) Thirty percent (30%) of total university allocable resources shall be 3
distributed in support of vital campus operations as follows: 4
1. Ten percent (10%) shall be distributed based on each university's share 5
of Category I and Category II square feet, net of research, nonclass 6
laboratory, and open laboratory space, to support maintenance and 7
operation of campus facilities and may include a space utilization factor 8
as determined by the council in collaboration with the working group 9
established in subsection (11) of this section; 10
2. Ten percent (10%) shall be distributed based on each university's share 11
of total instruction and student services spending, net of maintenance 12
and operation, to support campus administrative functions; and 13
3. Ten percent (10%) shall be distributed based on each university's share 14
of total full-time equivalent student enrollment to support academic 15
support services such as libraries and academic computing. 16
(7) The funding formula for the KCTCS sector: 17
(a) Shall distribute one hundred percent (100%) of KCTCS institution allocable 18
resources for all KCTCS colleges based on rational criteria, including student 19
success, course completion, and operational support components, regardless 20
of whether state funding for postsecondary institution operations increases, 21
decreases, or remains stable; 22
(b) May include an adjustment to account for community economic disadvantage 23
in some regions of the Commonwealth as determined by the council; and 24
(c) Shall be constructed to achieve equilibrium, at which point the funding 25
formula rewards rates of improvement above the sector average rate. 26
(8) Funding for the KCTCS sector shall be distributed as follows: 27 UNOFFICIAL COPY 25 RS HB 276/GA
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(a) Thirty-five percent (35%) of total KCTCS institution allocable resources shall 1
be distributed based on each college's share of total student success outcomes 2
produced, including but not limited to: 3
1. Certificate, diploma, and associate degree production, weighted to 4
provide a premium for credentials that are aligned with the economic 5
needs of the state; 6
2. Numbers of students progressing beyond fifteen (15), thirty (30), and 7
forty-five (45) credit hour thresholds; 8
3. Credentials earned by low-income students, underprepared students, 9
underrepresented students, and nontraditional age students; and 10
4. Transfers to four (4) year institutions; 11
(b) Thirty-five percent (35%) of total KCTCS institution allocable resources shall 12
be distributed based on each college's share of total student credit hours 13
earned, weighted to account for cost differences by academic discipline; and 14
(c) Thirty percent (30%) of total KCTCS institution allocable resources shall be 15
distributed in support of vital campus operations as follows: 16
1. Ten percent (10%) shall be distributed based on each college's share of 17
Category I and Category II square feet, net of research, nonclass 18
laboratory, and open laboratory space, to support maintenance and 19
operation of campus facilities and may include a space utilization factor 20
as determined by the council in collaboration with the postsecondary 21
education working group established in subsection (11) of this section; 22
2. Ten percent (10%) shall be distributed based on each college's share of 23
total instruction and student services spending, net of maintenance and 24
operation, to support campus administrative functions; and 25
3. Ten percent (10%) shall be distributed based on each college's share of 26
total full-time equivalent student enrollment to support academic 27 UNOFFICIAL COPY 25 RS HB 276/GA
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support services such as libraries and academic computing. 1
(9) (a) The funding formula for both sectors shall include: 2
1. A hold-harmless provision for fiscal year 2018-2019 preventing a 3
reduction in an institution's funding amount based solely on the formula 4
calculation, and allowing a hold-harmless amount determined by the 5
formula in fiscal year 2018-2019 to be deducted from an institution's 6
formula base amount in whole or in part in fiscal years 2019-2020 and 7
2020-2021, as determined by the council; 8
2. A hold-harmless provision for fiscal year 2021-2022, and every fiscal 9
year thereafter, preventing a reduction in an institution's funding amount 10
based solely on the formula calculation; 11
3. A stop-loss provision for fiscal year 2019-2020 limiting the reduction in 12
funding to any institution to one percent (1%) of that institution's 13
formula base amount; 14
4. A stop-loss provision for fiscal year 2020-2021 limiting the reduction in 15
funding to any institution to two percent (2%) of that institution's 16
formula base amount; and 17
5. A stop-loss provision for fiscal year 2021-2022, and every fiscal year 18
thereafter, limiting the reduction in funding to any institution to zero 19
percent (0%) of that institution's formula base amount. 20
(b) Paragraph (a) of this subsection shall not be construed to limit the level of a 21
budget reduction that may be enacted by the General Assembly or 22
implemented by the Governor. 23
(10) (a) By May 1 each year, the council shall certify to the Office of the State Budget 24
Director the amount to be distributed to each of the public universities and 25
KCTCS as determined by the comprehensive funding model created in this 26
section, not to exceed the available balance in the performance fund. 27 UNOFFICIAL COPY 25 RS HB 276/GA
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(b) The Office of the State Budget Director shall distribute the appropriations in 1
the performance fund for that fiscal year to the institutions in the amounts the 2
council has certified. The adjusted appropriations to each institution shall be 3
allotted as provided in KRS 48.600, 48.605, 48.610, 48.620, and 48.630. 4
(c) 1. The certified amounts distributed from the performance fund to the 5
institutions are nonrecurring funds that shall not be included in the 6
institutions' base budget amounts submitted in their biennial budget 7
requests. 8
2. The certified amounts distributed from the performance fund in the 9
previous fiscal year shall be included in the performance fund's base 10
budget amount submitted by the council in the biennial budget request. 11
(d) For fiscal year 2017-2018, the Office of the State Budget Director shall 12
distribute to the public postsecondary education institutions, except for 13
Kentucky State University, those funds appropriated to the performance fund 14
by the General Assembly in 2016 Ky. Acts ch. 149, Part I, K., 12., in 15
accordance with the comprehensive funding model created in this section. 16
(11) (a) The Council on Postsecondary Education is hereby directed to establish a 17
postsecondary education working group composed of the following: 18
1. Nonvoting members: 19
a. The president of the council who shall serve as chairperson of the 20
group; and 21
b. Nine (9) members who shall be the president or the president's 22
designee of each of the public universities and the Kentucky 23
Community and Technical College System; and 24
2. Voting members: 25
a. Three (3) members of the Senate appointed by the President of 26
the Senate; 27 UNOFFICIAL COPY 25 RS HB 276/GA
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b. Three (3) members of the House of Representatives appointed by 1
the Speaker of the House; 2
c. The state budget director or designee; and 3
d. The Governor or designee 4
[The president or designee of each public postsecondary institution, 5
including the president of KCTCS; 6
3. The Governor or designee; 7
4. The Speaker of the House or designee; and 8
5. The President of the Senate or designee]. 9
(b) Beginning in calendar[fiscal] year 2025[2020-2021] and each odd-numbered 10
year[every three (3) fiscal years] thereafter, the postsecondary education 11
working group shall convene to determine if the comprehensive funding 12
model is functioning as expected, identify any unintended consequences of 13
the model, and recommend any adjustments to the model. The council may 14
call the working group to convene in even-numbered years if necessary[prior 15
to the start of the required fiscal year to allow sufficient time for the group to 16
complete its work]. 17
(c) The results of the review and recommendations of the working group shall be 18
reported by the council to the Governor, the Interim Joint Committee on 19
Appropriations and Revenue, and the Interim Joint Committee on Education 20
by December 1 of each[ fiscal] year the working group convenes. 21
(12) The council shall promulgate administrative regulations under KRS Chapter 13A to 22
implement the provisions of this section. 23
(13) (a) The postsecondary education performance fund is hereby established as an 24
appropriation unit to support improvement in the operations of the public 25
postsecondary institutions and achievement of the Commonwealth's education 26
policy goals and workforce development priorities. General fund moneys may 27 UNOFFICIAL COPY 25 RS HB 276/GA
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be appropriated by the General Assembly to this fund for distribution to the 1
public postsecondary institutions in amounts determined through the 2
comprehensive funding model created in this section. 3
(b) Any balance in the performance fund at the close of any fiscal year shall not 4
lapse but shall be carried forward to the next fiscal year and be continuously 5
appropriated for the purposes specified in this section. A general statement 6
that all continuing appropriations are repealed, discontinued, or suspended 7
shall not operate to repeal, discontinue, or suspend this fund or to repeal this 8
action. 9