Arkansas Administrative Code › Agency 008 - Department of Higher Education › Division 03 - Coordination & Planning for Colleges & Universities, State Supported › Rule 008.03.17-003 - Productivity Funding Distribution Policy

Current through Register Vol. 49, No. 6, June, 2024
Background
Act 148 of 2017 repealed the needs-based and outcome-centered
				funding formulas as prescribed in Arkansas Code §
								6-61-210, Arkansas
				Code §
								6-61-224, Arkansas
				Code §
								6-61-228, Arkansas
				Code §
								6-61-229, Arkansas
				Code §
								6-61-230, and Arkansas
				Code § 6-61 -233, and amended Arkansas Code § 6-61 -234. The Act
				directs the Arkansas Higher Education Coordinating Board (AHECB) to adopt
				polices developed by the Department of Higher Education (ADHE) necessary to
				implement a productivity-based funding model for state-supported institutions
				of higher education.
Productivity-based funding is a mechanism to align
				institutional funding with statewide priorities for higher education by
				incentivizing progress toward statewide goals. At the same time, such models
				encourage accountability to students and policymakers by focusing on the
				success of students through the achievement of their educational goals. The new
				funding model is built around a set of shared principles developed by
				institutions and aligned with goals and objectives for post-secondary
				attainment in our state.
The AHECB shall use the productivity-based funding model as the
				mechanism for recommending funding for applicable state-supported institutions
				of higher education. The Board shall recommend funding for the state-supported
				institutions of higher education as a whole and the allocation of funding to
				each state-supported institution of higher education. The AHECB shall make
				separate recommendations for the two-year institutions and four-year
				institutions. The framework for those recommendations is described in this
				policy.
Funding Distribution Framework
A productivity index for each institution will be calculated
				based on the Productivity Funding Model policies for four- and two-year
				institutions. Each institution's current productivity index will be compared to
				its previous year's index to determine productivity changes. One productivity
				index will be calculated to represent productivity changes for institutions of
				higher education as a whole and will be used to determine how much new state
				funding is recommended. The AHECB will limit the funding recommendation
				generated by the productivity-based funding model to no more than a 2% growth
				over the prior year's Revenue Stabilization Act (RSA) general revenue funding
				amount for four- and two-year institutions.
When new state funding is recommended, the proportion of new
				monies to be distributed among four- and two-year institutions will be divided
				into two separate funding pools based upon the percentage of existing RSA
				general revenue. If any RSA general revenue funds remain unallocated to
				state-supported institutions of higher education due to productivity declines,
				ADHE shall utilize the funds to address statewide needs in higher education.
New RSA general revenue allocated to four- and two-year
				institutions will be distributed among the institutions with productivity index
				increases. The percentage of new RSA general revenue funding recommended for
				institutions with productive index increases will be calculated as a percentage
				of the contribution to the overall four- or two-year institutions productivity
				index increases.
Within each four- and two-year institution group, RSA general
				revenue funding will be recommended for reallocation from institutions with
				productivity index declines to institutions with productivity index increases.
				Reallocation of RSA general revenue funding to institutions with productivity
				increases will be calculated as a percentage of the contribution to the overall
				four- or two-year institution productivity index increases. Reallocation for
				institutions with productivity index declines will be based on their percentage
				of productivity index decline. Recommended reallocation will be introduced on a
				graduated scale starting with 1% of an institution's RSA general revenue
				funding being reallocated in 2019-2020; up to 1. 5% in 2020-2021; and up to 2%
				in 2021-2022 and thereafter.
The total RSA general revenue recommendation for each four- and
				two-year institution will include any new state funding recommendation and
				reallocated funding recommendation. If an institution's funding recommendation
				is greater than a 1 % increase in 2018-2019;
1.5% increase in 2019-20; 2% increase thereafter over its
				existing RSA general revenue funding, the Board will recommend that the amount
				of funding recommendation up to 2% based on the graduated scale would be added
				to an institutions existing RSA general revenue and any funding recommendation
				in excess would be one-time incentive funding for that institution. The AHECB
				will recommend redistribution of one-time incentive funding in the following
				year based on productivity index changes.
In the event that an institution of higher education's RSA
				general revenue funding declines by more than 5% of the 2018-2019 fiscal year
				level due to productivity declines, ADHE shall not further recommend reductions
				in funding for that institution, but shall assist the institution in developing
				a plan for improvement and progression.
In any fiscal year for which the aggregate general revenue
				funding forecast to be available for state-supported institutions of higher
				education is greater than 2% less than the amount provided for the immediate
				fiscal year, the ADHE shall not further implement the productivity-based
				funding model until the following fiscal year.
This policy will be reviewed every three (3) years to ensure
				that productivity funding distribution continues to respond to the needs and
				priorities of the state. However, if it is determined that the funding
				distribution framework created unintended consequences, this policy will be
				reviewed immediately.