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Rebalancing State Appropriations April 16, 2008 Regular Board Meeting April 16, 2008 Appropriations per FTE excluding Ayers 1995 to 2008 Regular Board Meeting April 16, 2008 How we got here? Mid 1990s Board of Trustees adopted an allocation methodology of constant percentage funding.

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slide1

Rebalancing State Appropriations

April 16, 2008

Regular Board Meeting

April 16, 2008

appropriations per fte excluding ayers 1995 to 2008
Appropriations per FTE excluding Ayers1995 to 2008

Regular Board Meeting

April 16, 2008

how we got here
How we got here?

Mid 1990s

Board of Trustees adopted an allocation methodology of constant percentage funding.

  • Allocations were distributed using a constant percentage for each university except for Legislatively-designated line items and Ayers funding.
  • Method assumed no changes in enrollments or productivity.
  • Funds were distributed to universities without regard to mission or productivity.

Resulted in the need to rebalance funds among universities.

Regular Board Meeting

April 16, 2008

past equity adjustments
Past Equity Adjustments

Actions by Board of Trustees to address the problem began in FY 2006.

  • FY 2006 - $ 457,440 (MVSU)
  • FY 2007 - $1,000,000 (MVSU & UM)
  • FY 2008 - $1,000,000 (UM)

Regular Board Meeting

April 16, 2008

current allocation fy 2008
Current Allocation FY 2008

Regular Board Meeting

April 16, 2008

slide6
Current Allocation without Legislatively-Designated Line Items, Board Initiatives & Ayers FundingFY 2008

Regular Board Meeting

April 16, 2008

solution
Solution

A formula was adopted November 2003 incorporating both university missions and productivity in the allocation of available funding.

Formula is rational and objective.

Regular Board Meeting

April 16, 2008

slide8
Mississippi State Institutions of Higher Learning

Funding Formula

Adopted November, 2003

Regular Board Meeting

April 16, 2008

formula components
Formula Components

Facilities Operations

(Infrastructure)

Instruction & Administration (I&A)

Based on weighted student credit hours

+

Small School

Supplement

$750,000 to institutions with 5,000 or fewer students and less than 110% of SREB Peer APP/FTE

Capital

Renewal

Percent of Facilities Replacement Cost

Regular Board Meeting

April 16, 2008

slide10

Instruction and Administration

Student Credit Hours are weighted by a grouping of 16

disciplines and by level of course

Regular Board Meeting

April 16, 2008

slide12

Example of Student Credit Hour Weighting

Regular Board Meeting

April 16, 2008

student credit hours

3-Year Average

Student Credit Hours Conversion to Weighted Student Credit Hours

CY 2005, 2006, & 2007

Student Credit Hours

Regular Board Meeting

April 16, 2008

slide14
Relative Cost of Programs at Institutions1 SCH on Average Equals WSCH (Average for the System is 2.44)FY 2009

The formula weights student credit hours based on various costs of disciplines. The chart reflects the value of one student credit hour after conversion to

a weighted student credit hour based on the formula. The numbers, reflected in the chart below labeled SCH = WSCH, represents the average value of one

student credit hour at the institution based on mission and productivity. APP/FTE should not be equal at all institutions.

87.0%

of

Highest

Cost

86.7%

of

Highest

Cost

88.6%

of

Highest

Cost

100.0%

of

Highest

Cost

91.6%

of

Highest

Cost

79.5%

of

Highest

Cost

90.5%

of

Highest

Cost

96.2%

of

Highest

Cost

Regular Board Meeting

April 16, 2008

relationship of funding needs based on formula funding relationship of funding per fte fy 2009

The chart represents total formula (instruction & administration, facilities operations, capital renewal, and small school supplement) divided by FTE. The chart represents the relationships of APP/FTE among institutions. For example, MUW would be 79.7% of MSU.

Relationship of Funding Needs Based on Formula FundingRelationship of Funding per FTE FY 2009

Funding Relationship at Current Level of $384 million of Funding shown in Light Blue

100.0%

101.0%

79.7%

87.2%

112.6%

91.4%

103.4%

80.4%

$105

Per

WSCH

$100

Per

WSCH

$118

Per

WSCH

$122

Per

WSCH

$100

Per

WSCH

$105

Per

WSCH

$116

Per

WSCH

$113

Per

WSCH

Relationship of Institutions to Highest Funded

Regular Board Meeting

April 16, 2008

current allocation at 78 6 of formula based on projected fy 2009

Equity is not just an issue for those institutions receiving more than the formula calculates; but there is also inequity among the institutions receiving less than the formula. The percentages reflect the current percentage of the formula each institution receives.

Current Allocation at 78.6% of FormulaBased on Projected FY 2009

Current Need $104,817,547

Total Formula Need $490,223,792

Funding necessary to bring UM & MSU to JSU

Funding necessary to bring UM up to MSU

Regular Board Meeting

April 16, 2008

background
Background
  • The recommendation is based on the FY 2009 Appropriation Conference Report.
  • Ayers funding and Legislatively-designated line items have been excluded from calculations.
  • The formula was used as the guide for rebalancing funds.
  • Projections limited to one year since formula is dynamic with numerous variables affecting outcomes. Variables include:
    • student credit hours produced,
    • enrollment,
    • number of faculty,
    • number of majors,
    • E&G expenditures,
    • research expenditures,
    • law library holdings,
    • current appropriation level,
    • costs of construction,
    • consumer price index,
    • SREB appropriation per FTE,
    • HECA and
    • future state appropriations

Regular Board Meeting

April 16, 2008

slide19
FY 2009

State Appropriation Conference Report

Allocated using the Formula

Regular Board Meeting

April 16, 2008

slide20
FY 2009 Appropriation Conference ReportAllocated using Formula as compared to FY 2008 Actual Funding

Regular Board Meeting

April 16, 2008

slide21
Recommendation

Regular Board Meeting

April 16, 2008

premise
Premise
  • The FY 2009 Appropriation Conference Report was used to calculate the recommendation.
  • Formula was used to rebalance funds so that each institution’s allocation of appropriation is the same percentage of the formula.
  • Rebalancing would be phased over a five-year period in a way to lessen the initial impact to institutions to allow time for institutions to adjust variables.
  • Rebalancing should begin in FY 2009 and continue over the five-year period whether or not additional state appropriations are received.
  • Line items should be discouraged to prevent distortion of funding allocation.

Regular Board Meeting

April 16, 2008

scenarios

Recommendation for Rebalancing

Sum of the Years’ Digits in Reverse over 5 Years

Scenarios

Regular Board Meeting

April 16, 2008

recommendation for rebalancing sum of the years digit in reverse 5 years
Recommendation for RebalancingSum of the Years’ Digit in Reverse – 5 Years

EXAMPLE of first year of a 5-year phase out for institutions receiving more than formula pro-rated to the current funding level =

Formula:

Institution’s FY 2008 Actual Appropriations

subtract

Institution’s FY 2009 Formula Calculation

equals

Difference

times

1/15th

equals

Reduction Amount

Regular Board Meeting

April 16, 2008

slide25
FY 2009 Appropriation Conference ReportAllocated using Formula as compared to FY 2008 Actual Funding

Regular Board Meeting

April 16, 2008

examples of reduction methodology
Examples of Reduction Methodology

Hit of reduction in one year

Regular Board Meeting

April 16, 2008

staff recommendation
Staff Recommendation
  • Staff recommends approval of rebalancing over 5 years using the Sum of the Years’ Digits in Reverse methodology.

2. Staff recommends rebalancing to occur whether or not new funding is received.

Regular Board Meeting

April 16, 2008

sum of the years digits in reverse with year rolling calculation
Sum of the Years’ Digits in Reverse with ½ Year Rolling Calculation

Regular Board Meeting

April 16, 2008

slide31
Questions?

Regular Board Meeting

April 16, 2008

example of year rolling
Example of ½ Year Rolling

Regular Board Meeting

April 16, 2008

percent of formula after recommendation
Percent of Formula After Recommendation

Regular Board Meeting

April 16, 2008