IHL and LBO brief committee on funding-formula history, institutional finances and enrollment challenges
Summary
Legislative Budget Office and the IHL commissioner presented funding-formula history, recent allocations and university financial health. Members questioned why a prior NCHIMS formula was frozen and asked how to shield institutions serving high-need students while responding to an enrollment cliff.
Leaders from the Legislative Budget Office and the Board of Trustees of State Institutions of Higher Learning (IHL) briefed the Joint Universities and Colleges Committee Dec. 12 on the history of IHL's funding approaches and the current fiscal and enrollment picture across the eight public universities.
Leanne Robinson of the Legislative Budget Office traced formula changes from 1980s enrollment-based FTE models to later base-plus approaches and a 2014'15 NCHIMS (National Center for Higher Education Management Systems) proposal that included performance and hold-harmless components. Robinson gave historical totals and described why the more ambitious formula was never fully implemented, citing large distributional shifts the board and legislature sought to avoid at the time.
Robinson and committee members discussed the decline in the share of state support for higher education (from about 35% to the mid-20s in recent years) and the modeling that showed significant changes in allocations under alternate formulas. She said the board had contracted with NCHIMS again to evaluate options including base-plus, per-FTE and performance-weighted models that could incorporate strategic priorities and enrollment mix.
Dr. Daniel Rankin, the IHL commissioner, gave system-level data: the system manages an approximately $5.8 billion operating budget and reported a 2.7% increase in fall headcount this year (~2,144 additional students), but he warned that regional universities have experienced longer-term declines and that the state faces an enrollment cliff in coming years.
Rankin reviewed net tuition contributions (resident and nonresident), program productivity thresholds (e.g., baccalaureate programs below 18 graduates trigger review), and financial-health indicators used by the board (debt-service coverage, days of cash on hand, debt-to-equity). He noted that nonresident tuition revenue sustains operating budgets at some institutions and cautioned that differential tuition mixes complicate simple per-FTE comparisons.
Committee members demanded clarity about the frozen NCHIMS model and how a new allocation would protect institutions that serve high-need students or small but critical academic programs. Rankin acknowledged the trade-offs and said IHL and LBO are working with NCHIMS/MCIMS on refined allocation proposals and additional data analyses to present before the Legislature considers statutory changes.
No legislative decision was made at the hearing. The committee requested more granular data, including institutional-by-institution breakdowns of net nonresident tuition, the average net price paid by nonresident students, and modeling of winners and losers under proposed allocation scenarios.
