2. March 2014 Regents, Trustees, Coordinating Board Institutions Instructions, $ $ $ $ Suggestions, recommendations Texas Legislature

3. Aug-Mar – Formula Advisory Committees meet and make recommendations to the Commissioner Feb-Mar – Staff works through the numbers, Commissioner decides on his recommendations, CAAP Committee Meets April 2014 – CB Adopts Formula Recommendations June 1 st – No later than, staff forwards formula recommendations to LBB/GOBP. Formula Base Period begins with summer semester Nov-Dec – LBB runs formulas using spring, summer, and fall 2014 numbers January 2015 – 84th Texas Legislature convenes March 2014

4. Early January – HB1/SB1 is filed, Formula dollars in bills reflect growth in enrollments only and usually includes change in matrix March 2015 – New formulas are run using certified base year numbers (summer and fall 2014 and spring 2015) Late March or Early April – Each chamber passes its bill, do not include new formula numbers Late April-Late May – Conferees negotiate final bill and decide how much money will flow through the formulas May 2015 – Legislature adjourns sine die June 2015 – No later than, Governor signs bill, no line item veto for higher education March 2014

5.  All formulas are allocations  Not budgeting tools, institutions have the freedom to spend the funding anyway  All include enrollment as a major driver  Not all appropriations are through the formulas March 2014

6.  Uses a different methodology to determine its formulas  Community College formula is 100% general revenue  What the formulas are intended to cover March 2014

9.  Instruction  Department operating expense  Academic Support (includes library)  Student services  Institutional support March 2014

10. 90% Enrollment Based Funding Contact hour funding using the cost based formula as in prior biennia $1 Million in Base Funding 10% Outcomes Based Funding Using the Student Success Points March 2014

11. Developmental Education Completion of development education in math, reading and writing (1 point each) Gateway Course Completion of first college level math or English course. (1 point) College Credit Attainment Completion of first 15 college credits and first 30 college credits. (1 point each) Credentials Awarded Completion of an associate degree, certificate, or bachelor’s degree (where offered.) (2 points each; 2.25 for STEM credentials) Transfer to a General Academic Institution Transfer to a general academic institution after having completed 15 hours of coursework. (2 point) March 2014

12.  For the 2014-15 biennium, total success points were determined based on 3-year average (FY10, 11, 12)  $172 million (10% of funds after removing the core) was divided by the total success points resulting in an estimate of $185 per success point  For 2016-17 biennium, student points would be funded at $185 per point.  Total points earned during FY 12, 13, & 14 will be compared against baseline (FY 10, 11, 12)  Increase in points will result in an increase in success point funding while a decrease in points will results in a decrease in success point funding March 2014

13.  Continue core funding of $1million ($50 million)  Fund Student Success Points at a rate of $185 ($172 million)  Fund Community Colleges Instruction and Administration Formula at a rate of $6.12 March 2014

14.  Fund State Colleges I&A Formula at a rate of $7.97  Fund State Colleges Infrastructure at a rate of $5.78 Increases 2014-15 rate by 2.2% Anticipates a 4% increase in predicted SF btw fall 2012 and 2014 Infrastructure rate split according to FY 2014 utility rates Small Institution Supplement – No change March 2014

15. Student attends TSTC – completes at least 9 SCH and THECB Captures ID and data Student leaves TSTC and enters Workforce – THECB captures earnings from TWC THECB compares earnings to minimum wage in Texas, surplus is “value-added” by TSTC Current-Value discounting is applied for each quarters’ wages to make dollars current Standard tax- rate and economic multiplier is applied to the “value-added” to determine return value to the state Continue the Return-Value Funding Model with a review in two years Texas State Technical Colleges

16. 2016-17 Biennium Recommendation Amount of Change Percentage Change Community Colleges $2,011.0243.113.8% State Colleges $44.55.213.2% TSTCs$108.93.23% TOTAL$2,164.4251.513.1% March 2014

17. All Funds Formula

18.  Faculty Salaries  Department Operating Expense  Library  Instructional Administration  Student Services  Institutional Support  Research Enhancement  Infrastructure Support March 2014

19.  Auxiliary enterprises ◦ student housing, parking facilities, food service, intercollegiate athletics  Certain fringe benefits  Special Items  New construction and major Repair and Renovation of facilities  Debt service on tuition revenue bonds March 2014

20. Two formulasTwo Supplements Instruction and Operations Teaching Experience Infrastructure Small Institution

21. March 2014

22. Recommendation:  Fund I&O Formula at a rate of $57.30 ($3.9B) Increases 2014-15 rate by 7.3% Anticipates a 4.4% increase in weighted SCH  Fund Infrastructure at a rate of $5.78 ($734M) Increases 2014-15 rate by 2.2% Anticipates a 4% increase in predicted SF Infrastructure rate split according to FY 2014 utility rates Small Institution Supplement – No change  Overall increase of 6.4% or $281M ($4.649B) March 2014

23. Competency-Based Education Funding Recommendation:  Fund 2016-2017 Biennium with current formulas  Conduct cost study on existing programs for next committee’s review March 2014

24. Outcomes Based Funding Recommendation:  Fund on outcomes outside the formula at a level equal to 10% of the undergraduate formula funding. ◦ Fully fund other formula recommendations first  Allocate funds ◦ 7 defined metrics ◦ 3-year rolling average ◦ Latest data available ◦ Scaled ◦ Weighted March 2014

25.  Total Undergraduate Degrees  Total Undergraduate Degrees – adjusted by 6-year graduation rate  Total Undergraduate Degrees - per 100 undergraduate FTSE  At-Risk (Pell, SAT/ACT, Part-time, GED, and First-Time UG 20 or over)  Retention – 30, 60, 90 hours March 2014

29.  Instruction & Operation (I & O) Formula  Infrastructure Formula  Research Enhancement Formula  Mission Specific  Graduate Medical Education March 2014

30.  All recommendations are based on getting back to the 2000-01 formula rates over the next 3 biennia starting with the 2014-15 biennium  GME increase based on the formula increases of the I&O, Infrastructure and Research  Overall increase of $481.7M (27.4%) including growth

31.  Commissioner recommends that the I & O formula be based on the same rate of increase as from 2012-13 to 2014-15 – 16.0%  Commissioner recommends that the Infrastructure and Research enhancement formulas be based on 2008-09 rates  Commissioner concurs with Committee recommendation for GME formula  Overall increase of $319.6 M (18.2%) including growth March 2014