Legislators probe two alternate higher‑education funding formulas: FTE base vs. progressive size/headcount model

The Higher Education Funding Committee spent the bulk of its hearing on two illustrative models for replacing or modifying North Dakota’s current funding formula.

Jamie Wilkie, director of finance for the North Dakota University System, presented a simplified FTE‑based model that calculates base funding by multiplying end‑of‑term full‑time‑equivalent (FTE) students by a per‑FTE base amount (an example used $7,500 per FTE). Wilkie’s sheet then annualizes to a biennium base and layers optional incentive factors (small‑institution or economic size factor, research factor) plus a credentials piece that pays institutions per credential awarded (illustrative figures: $500 per certificate, $2,750 per associate degree, $3,500 per bachelor, and $3,750 per master/doctoral credential). Wilkie emphasized the figures were placeholders intended to drive discussion.

An alternate proposal presented by Alex from the system office kept ZIP‑code weighting but introduced a progressive economic size factor (higher weights on the first tranche of credits for smaller campuses), excluded MD credits from that progressive calculation, and added an on‑campus face‑to‑face headcount incentive (weighting the first ~399 face‑to‑face headcount students more heavily and stepping down at higher bands). Alex showed an example base of $55 per weighted student credit hour and a separate plug for MD credits (about $80M in the sample).

Committee members pressed both presenters on methodology. Lawmakers expressed particular concern about a small‑institution factor that lacked an explicit calculation in the system‑office model and warned that arbitrary numeric placeholders would be politically vulnerable. Members also questioned whether a face‑to‑face headcount incentive could be gamed (for example, by proliferating one‑credit courses), noted hybrid/modality definitions complicate counting, and asked why the face‑to‑face weighting was exampled at twice the credential/completion incentive in Alex’s sample. Several members recommended elevating degree completion and retention goals relative to modality incentives.

Brent Sanford, the commissioner of higher education, framed the choice as a policy tradeoff: a simpler base can increase transparency but must be paired with clearly defined desired outcomes and measurable incentive metrics (completion, workforce alignment, research production). Sanford referenced other states that hold a portion of base funding to be earned by meeting outcomes and asked the committee to define what the legislature wants to incentivize.

No formal change was adopted. The chair directed staff to develop scenarios, to model hold‑harmless transition paths for institutions that would lose funding under new approaches, and to return with comparative spreadsheets before the next committee meeting.