1. Trustees Academy August 30, 2010 Indiana Commission for Higher Education HIGHER EDUCATION FUNDING IN INDIANA: THE ROLE OF THE INDIANA COMMISSION FOR HIGHER EDUCATION

2. Contextual Information 2

3.  5 four-year Public Postsecondary Institutions  2 two-year Public Institutions  31 Public Campuses and 12 Instructional Sites  407,000 Students in 2008-09  1,500 buildings worth $12B  $2.3B in salary and compensation 3 INDIANA’S PUBLIC HIGHER EDUCATION SYSTEM

4. Total FY 10 estimated expenditures by all Indiana public postsecondary institutions $5,090,667,914 Total FY 10 General Fund estimated expenditures by all Indiana public postsecondary institutions $3,487,676,807 Contextual Information 4

5. STATE OPERATING APPROPRIATIONS TO PUBLIC POSTSECONDARY INSTITUTIONS Compound Annual Growth Rate: 4.7% 5

6. STATE GENERAL FUND EXPENDITURES BY FUNCTION FY 2010 Source: State Budget Agency (note: includes all Higher Educ. expenditures) 6

7. Indiana Commission for Higher Education Role in Developing the State Higher Education Budget 7

8.  CHE and State Budget Agency issue budget instructions to the public postsecondary institutions each biennium  Institutions submit formal budget requests to the state  CHE compiles and reports the institutional budget requests  CHE issues budget recommendations to Governor and General Assembly  Governor issues budget recommendations to General Assembly  CHE staff works with legislative staff during legislative session to help craft the budget OVERVIEW OF THE STATE BUDGET PROCESS 8

9. FY 2009FY 2010FY 2011%Δ FY 09-11 Campus Operating$1,280$1,232$1,229-4% Debt Service (fee replacement)$177$168$19410% Line Items$88$70 -21% R&R$31$0 -100% SSACI$249$262$2698% TOTALS$1,826$1,731$1,761-4% STATE APPROPRIATIONS TO HIGHER EDUCATION FY 2009-2011 Note: not all appropriations were released; some state appropriations were replaced with federal stimulus funds 9 $ in millions

10. 10 CUMULATIVE CHANGE IN STATE APPROPRIATIONS BY FUNCTION FY00 – FY 11 159 %

11.  Informed by Reaching Higher: Strategic Directions for Higher Education in Indiana  Recognizes that by law independent boards of trustees for each public institution with responsibility for the soundness of that institution  Indiana needs a comprehensive, integrated and complimentary system of higher education  Focus areas of reaching Higher include:  College Preparation  Affordability  College Completion  Economic Development CHE FUNDING RECOMMENDATIONS 11

12.  Make recommendations for state appropriations to higher education  Institutional appropriations  Capital projects and R&R  State Student Financial Aid  Non-Binding tuition targets  Post budget responsibilities  Review certain expenditures  Review certain capital projects  Make recommendations on budget reductions (when necessary) CHE RESPONSIBILITIES RELATED TO HIGHER EDUCATION BUDGET 12

13.  Fungible dollars appropriated to the institutions  Appropriations are made to individual regional campuses; one appropriation to ITCCI  Generated through (an evolving) collection of formulae  Performance funding policies CHE RECOMMENDATIONS FOR CAMPUS OPERATING APPROPRIATIONS 13

14. 20012003200520072009 Enrollment Change (credit hours enrolled) Enrollment Change (successfully completed credit hours) Inflation Adjustments Equity Adjustment Plant Expansion/leases Program Adjustment Research Support Incentive Change in number of degrees Change in On-Time graduation Rate Two Year Transfer Incentive Low Income Degree Completion Incentive Workforce Development Incentive (funding non- credit coursework) EVOLUTION OF CHE FUNDING RECOMMENDATIONS 14

15.  Requested by institutions with no restrictions  Only exception is a formula to generate R&R appropriations  CHE makes capital project recommendations  Capital projects may be:  State funded, requires General Assembly authorization  Non-state funded, sometimes requires General Assembly authorization  Cash funded  Authorized to issue debt – debt may or may not be repaid by the state  Includes projects:  New construction  Repair or renovation  Infrastructure 15 CAPITAL PROJECTS

16. HISTORICAL CAP PROJECTS REQUESTS, CHE RECOMMENDATIONS AND AS PASSED Note: GA approvals have exceeded CHE recommendations by $930M 16

17.  Certain capital projects require state review and approval  CHE REVIEWS and makes recommendations on capital projects that have been requested by the institutions  Statutory review depends on many things, including:  Type of project  Total cost of the project  Source of project funding  After CHE recommendation, projects move to State Budget Committee, State Budget Agency, Indiana Finance Authority and Governor 17 CHE REVIEW OF CAPITAL PROJECTS

18.  A very complex, but important issue to affordability  Financial aid comes from many sources, but chiefly:  Federal government  State appropriations (SSACI)  Institutional aid  Private foundations/owners/employers  Financial Aid study jointly undertaken by CHE and SSACI to be presented in September to State Budget Committee  Aligning financial aid policy with state higher policy: particularly college completion  Recognizing the “new normal” student – majority of financial aid applicants are “non-traditional students with different types of needs and require a new approach to financial aid policy 18 STUDENT FINANCIAL AID

19.  CHE makes recommendations  The Trustees by statute have virtually all of the decision making power and responsibility for institutional budgets and administration  The General Assembly is always free to accept, modify or reject the CHE recommendations  CHE must work with institutional staff, the legislature, other parts of state government and other stakeholders  CHE recommendations are almost never adopted to the dollar, but the General Assembly has always passed higher education budgets based on Commission recommended policies 19 THE GENERAL ASSEMBLY MAKES FINAL DETERMINATION