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Fiscal Environment State Tax Capacity & Effort Indexed to U.S. Average 1.7 DE 1.6 1.5 1.4 CT NJ 1.3 MA AK 1.2 WY State Tax Capacity (Total Taxable Resources Per Capita) MD NY VA NH 1.1 MN CO IL NV WA CA RI 1.0 US PA NE WI NC GA KS HI MO SD IA OH FL IN VT

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State tax capacity effort indexed to u s average l.jpg
State Tax Capacity & EffortIndexed to U.S. Average

1.7

DE

1.6

1.5

1.4

CT

NJ

1.3

MA

AK

1.2

WY

State Tax Capacity (Total Taxable Resources Per Capita)

MD

NY

VA

NH

1.1

MN

CO

IL

NV

WA

CA

RI

1.0

US

PA

NE

WI

NC

GA

KS

HI

MO

SD

IA

OH

FL

IN

VT

TX

OR

0.9

TN

AZ

ND

ME

MI

UT

SC

KY

0.8

ID

NM

LA

AL

OK

WV

MT

AR

0.7

MS

0.6

0.6

0.8

1.0

1.2

1.4

State Tax Effort (Effective Tax Rate)

Source: State Higher Education Executive Officers (SHEEO)


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Projected State and Local Budget Surplus (Gap) as a Percent of Revenues, 2016

Source: NCHEMS; Don Boyd (Rockefeller Institute of Government), 2009


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After stimulus wanes, gaps could approximate 4% of spending, or $70 billion, even under the “Low-Gap” Scenario

Source: Don Boyd (Rockefeller Institute of Government), 2009


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After stimulus wanes, gaps could approach 7% of spending or $120 billion under the “High-Gap” scenario

Source: Don Boyd (Rockefeller Institute of Government), 2009


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Finance: Alignment with Strategic Planning $120 billion under the “High-Gap” scenario


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The Management Cycle in a Public University System $120 billion under the “High-Gap” scenario

System

Planning

Institution

System

System

Resource Allocation

Assessment

Institution

Institution


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Federal Government $120 billion under the “High-Gap” scenario

Economy

Available State and Local Govt. Funds

Higher Education

The Flow of Funds - State

Stimulus Funds

Tax Policy

  • K-12

  • Corrections

  • Health Care

  • Other Govt.

Student Aid

Appropriations/Grants

Tuition

Students

Institutions

Scholarships &Waivers


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Finance Policy $120 billion under the “High-Gap” scenario


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The Two Purposes of State Funding Policy $120 billion under the “High-Gap” scenario

  • Build Core Capacity—General Purpose Funding

  • Promote Capacity Utilization Around State Priorities—Special Purpose Funding


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Criteria for Effective Higher Education Finance Policy $120 billion under the “High-Gap” scenario

  • Create and Maintain Necessary Institutional Capacity

  • Reinforce Utilization of Capacity to Achieve State Goals

  • Contributions Required Are Affordable—To Both State and Students

  • Viewed as Being Fair

  • Transparent


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Institution Focused $120 billion under the “High-Gap” scenario

Student Focused

  • Base-Plus

  • Formulas

  • Investment Funds

Tuition and Aid Policy

Focused on

Revenue Generation

Core Capacity

Capacity Utilization/Public Agenda

Tuition and Aid Policy

Focused on

Attainment of

Specified Outcomes

Performance

Funding

Finance Policy—The Options


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Basic Questions at State Level $120 billion under the “High-Gap” scenario

  • How Much to Allocate

  • To Which Recipients—Students or Institutions

  • Using Which Mechanisms


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A Key Distinction $120 billion under the “High-Gap” scenario

  • Investment Funds

    • Capacity Building

    • A Priori

  • Incentive Funds

    • Capacity Utilization

    • Post Facto


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Remember—All Funding Mechanisms Provide Incentives for Behavior

Central Question:Are the Behaviors Elicitedthe Ones You Want?


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Components of a Higher Education Funding Model (the Institutional Piece)

  • Base Institutional Funding

    • The Largest Portion, by far

    • The Current Mississippi Funding Formula Fits in this Category

  • Special Purpose Funds—Resources Set Aside Explicitly to Provide Incentives for Certain Outcomes


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Unit Total Total Revenues Institutional Piece)

Quantity Characteristics Utilization Cost Cost $ Rev. $ Sources

Assets

Personnel

Facilities

Equipment

Collections

Students

Finances

Program

Consumables

Services

Supplies

Utilities

Contingency

New Initiatives

Tuition

Appropriations

Govt. Grants

Private Gifts

Endowment

Sales & Services

Other

Reserves

=

One Set of Trade-Offs



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