House Subcommittees Approve FY 2014 Budgets for Higher Education, Community Colleges

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The House Appropriations Subcommittee on Higher Education has approved its version of the Fiscal Year 2014 budget for Michigan’s universities. The Subcommittee’s budget includes the same level of overall funding for university operations proposed by the governor, but revises the criteria for performance funding, and penalizes universities that enter into long-term collective bargaining agreements before the end of March when the right-to-work law took effect.

UNIVERSITY OPERATIONS

Governor: The governor’s Fiscal Year 2014 budget would increase funding for Michigan’s 15 public universities by 2% ($24.9 million), with new funds allocated as performance funding. In the current fiscal year, the governor increased funding for higher education by 3%, making new funding contingent on performance on several metrics. The governor’s budget for Fiscal Year 2014 included $1.24 billion for university operations, including $24.9 million in new funding, which would be allocated based on the metrics from the current year budget, including: (1) undergraduate completions in critical skills (science, technology, engineering, mathematics and health); (2) research expenditures; (3) six-year graduation rates; (4) total completions; (5) administrative costs as a percentage of core expenditures.; and (6) tuition restraints.

House Subcommittee:

  • Total funding: The Subcommittee appropriated the same level of overall funding for university operations as the governor.
  • Performance funding: The Subcommittee concurred with the governor and included $24.9 million for performance funding. However, the Subcommittee removed the tuition restraint metric, and allocated performance funding as follows:

o $5.5 million based on undergraduate completions in critical skills areas, including STEM and health care (up from $4.1 million in Executive budget);

o $2.8 million based on research and development expenditures (up from $2.1 million in the Executive budget);

o $16.6 million based on six-year graduation rates compared to national peers (up from $12.4 million in Executive budget);

o $16.6 million based on total degree completions compared to national peers (up from $12.4 million in Executive budget); and

o $16.6 million based on administrative costs as a percentage of university operations compared to national peers (up from $12.4 million in Executive budget).

  • Tuition restraint: The House Subcommittee lowered the tuition restraint benchmark from 4% to 3%, and made tuition restraint a condition for receiving performance funding. Under the Subcommittee’s budget, universities that increase tuition by more than 3% could not receive performance funding.
  • Collective bargaining agreements: The Subcommittee budget stipulates that universities that entered into long-term collective bargaining agreements before March 28, 2013 (when the right-to-work law tookeffect) would lose 15% of their base appropriation if they do not achieve a 10% savings or if they require paying dues to a union as a condition of employment.

FINANCIAL AID

Governor:

  • Michigan Tuition Grant: The governor included continuation funding for Michigan Tuition grants at $31.7 million in federal TANF funds. The grants are needs-based, and are available to low-, middle-, and higher- income students attending private colleges, with eligibility and grant levels based on tuition costs, minus “estimated family contribution.” The governor added budget language requiring private colleges with students receiving grants to participate in the state’s P-20 longitudinal data system, and report on the number of Tuition and Pell Grant students graduating, as well as the number taking remedial education classes.
  • Michigan Competitive Scholarship: The governor provides continuation funding for Michigan Competitive Scholarship grants at $18.4 million in federal TANF. Scholarships are merit-based with eligibility based on ACT scores.
  • Tuition Incentive Program: The governor’s budget increases funding for the Tuition Incentive Program by $3.2 million in General Funds, bringing total funding to $47 million. The program is currently funded by $43.8 million in federal TANF funds. The Tuition Incentive Program is a needs-based grant for students who are Medicaid-eligible. The governor added boilerplate language limiting reimbursements to public universities to 300% of the average community college tuition rate.

House Subcommittee:

  • P-20 data systems for private colleges: The Subcommittee concurred with the governor on the appropriations amounts, but struck the governor’s Michigan Tuition Grant language requiring P-20 data system participation for private colleges.
  • Tuition Incentive Program: The Subcommittee concurred with the governor’s proposed policy changes regarding the Tuition Incentive Program.

COMMUNITY COLLEGES

 The House Appropriations Subcommittee on Community Colleges has approved its version of the Fiscal Year 2014 budget. The Subcommittee’s budget includes the same level of overall funding for community college operations that is in the governor’s budget, but does not adopt the revised performance funding criteria proposed by the governor. The Subcommittee also penalizes institutions that entered into long-term collective bargaining agreements before March 28, when the right-to-work law took effect.

COMMUNITY COLLEGE OPERATIONS

Governor: The governor’s Fiscal Year 2014 budget would increase funding for Michigan’s 28 community colleges by 2% ($5.8 million), with new funds allocated as performance funding, for a total of $298.2 million for community college operations. In the current fiscal year, the governor increased funding for community colleges by 3%, making new funding contingent on performance on several metrics. The governor’s proposed performance funding metrics are similar to the current year budget, except that it makes attainment of local strategic value goals (related to community colleges’ connection and interaction with their surrounding communities) a prerequisite for all performance funding, and replaces the local strategic value metric with a new metric for job placement in the skilled trades. The performance metrics in the governor’s budget are as follows: 50% for across-the-board distribution; 17.5% based on weighted degree completions; 15% based on job placement of students who completed skilled trades programs; 10% based on student contact hours; and 7.5% based on administrative costs as a portion of total operations spending.

House Subcommittee:

  • Total funding: The Subcommittee appropriated the same level of overall funding for community college operations as the governor.
  • Performance funding: The Subcommittee concurred with the governor on the $5.8 million increase for performance funding, but kept the current local strategic value metric in place and did not add a metric for job placement in the skilled trades.
  • Collective bargaining agreements: The Subcommittee budget stipulates that community colleges that entered into long-term collective bargaining agreements before March 28, 2013 (when the right-to-work law took effect) would not receive any performance funding if they do not achieve a specified savings or if they require paying dues to a union as a condition of employment.