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Higher Education Department and NCHEMS begin adequacy study to recalculate New Mexico base funding
Summary
The New Mexico Higher Education Department told the Legislative Education Study Committee it contracted NCHEMS to model institution‑specific base funding adequacy and review research and public service project (RPSP) practices; department staff plan data validation in February and a final report to the legislature in April.
At the same Legislative Education Study Committee hearing, Stephanie Rodriguez, cabinet secretary of the New Mexico Higher Education Department, and contractor staff from the National Center for Higher Education Management Systems (NCHEMS) described a statewide “higher education sustainability” study. The study aims to calculate adequacy — the minimum base funding each public higher education institution would need to operate, serve students and meet state performance objectives — and to review Research and Public Service Projects (RPSPs) funding processes.
NCHEMS senior staff described the methodology as a peer‑informed, “base plus” analytic approach that estimates fixed institutional costs, variable costs tied to student enrollment and program mix, capacity and mission‑related funding needs, and performance‑linked elements. NCHEMS said only two other states (Illinois and Missouri) have used a comparable methodology and called the project “potentially consequential” for institutions and policymakers.
Why it matters: the department is shifting from an allocation approach (dividing the appropriation across institutions using last‑year baselines) to an adequacy approach that starts with an estimate of what institutions minimally need and then uses that estimate to inform allocation choices. Department staff told the committee this could change how recurring base funding is defined and could affect long‑term budgeting for higher education.
Study scope and timeline described to the committee: - Two principal components: a review of RPSP funding and processes (including guidance for converting some RPSP items into recurring base funding where appropriate) and an institution‑level adequacy model for instructional/general (base) funding. - Peer‑group analysis to compare institutions with similar missions, enrollments and geographies; assessment of fixed and variable costs; and development of performance metrics to tie funding to outcomes. - Stakeholder engagement: the department has convened a funding formula technical committee, engaged CFOs and campus leaders, and collected institution comments (37 stakeholder responses; 15 were incorporated into the conceptual model so far). - Current stage: data validation with institutions (department staff said data validation was scheduled for February), model calibration, performance metric finalization in March and a planned final report publish date in April for review by the legislature.
NCHEMS described key model components in accessible terms: fixed institutional costs (baseline administration, facilities and technology), variable costs per student (program and student characteristic adjustments), capacity‑building funds (for new programs or mission expansions) and a performance component intended to align funding with completion, retention and workforce outcomes. NCHEMS staff emphasized that the study seeks to avoid a “cookie‑cutter” formula and to tailor peer groups and cost assumptions to New Mexico’s institutional mix.
Secretary Rodriguez and department staff said the study will not include institutional endowments; the statutory language that authorized the study (HB2 language cited by staff) specified the two study components (instructional base and RPSPs). Department staff also said the work group intends to engage institutions throughout February and March so that institutions see and validate the inputs before the report is finalized.
Committee members asked how findings might translate into appropriation requests and what levers policymakers would have; department staff said the adequacy outputs are intended to provide a clearer picture of minimum funding needs and that the model will include adjustable levers to help policymakers consider different scenarios and tradeoffs. NCHEMS staff also reiterated that the model’s purpose is to inform policy decisions, not to prescribe a single funding path.
What's next: department staff plan data validation with institutions in February, finalize performance metrics in March and publish a full report for legislative review in April. The department said it will continue stakeholder briefings before any legislative proposals are filed.
