Fiscal Environment - PowerPoint PPT Presentation

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Fiscal Environment

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  1. Fiscal Environment

  2. 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)

  3. Projected State and Local Budget Surplus (Gap) as a Percent of Revenues, 2016 Source: NCHEMS; Don Boyd (Rockefeller Institute of Government), 2009

  4. 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

  5. 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

  6. Finance: Alignment with Strategic Planning

  7. The Management Cycle in a Public University System System Planning Institution System System Resource Allocation Assessment Institution Institution

  8. Federal Government 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

  9. Finance Policy

  10. The Two Purposes of State Funding Policy • Build Core Capacity—General Purpose Funding • Promote Capacity Utilization Around State Priorities—Special Purpose Funding

  11. Criteria for Effective Higher Education Finance Policy • 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

  12. Institution Focused 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

  13. Basic Questions at State Level • How Much to Allocate • To Which Recipients—Students or Institutions • Using Which Mechanisms

  14. A Key Distinction • Investment Funds • Capacity Building • A Priori • Incentive Funds • Capacity Utilization • Post Facto

  15. Remember—All Funding Mechanisms Provide Incentives for Behavior Central Question:Are the Behaviors Elicitedthe Ones You Want?

  16. 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

  17. Unit Total Total Revenues 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

  18. Illustrations of Peer Comparisons from University of Maine System