Earlier First Friday reports have described efforts to recognize inequities in the amount of money appropriated to ASU as compared to other universities on the basis of full time student (FTE) comparisons.  ASU was woefully behind in these comparisons, but we realized that FTE measurements did not give a complete picture of the complexities of activities within Arkansas State University.  For example, the costs of providing an introductory government class are very different than the costs of providing a doctoral-level seminar, but a good funding mechanism has to properly consider both activities.

Also, the previous reports addressed the development of a funding formula that recognized these complexities.  ASU was able to give support to the funding formula when all of our students, in all of our instructional programs, in all of our locations were properly recognized in the formula.  With our full support, the formula and its proposed distribution of money based upon the recognition of need were approved by the Department of Higher Education, the Arkansas Higher Education Coordinating Board, and were included in the executive budget recommendation promulgated by the governor.

Governor Mike Huckabee advanced the higher education budget at the highest level of funding to be put forward in more than 20 years, and at one of the highest percentage increases compared to the previous biennium.  Fortunately, the executive recommendation has been presented at a moment when state revenues are running ahead of projections.  In this favorable state budget environment, the governor’s executive recommendation for higher education for the next biennium was approved December 1 by the Joint Legislative Higher Education Subcommittee (popularly known as the Bookout Committee), and now will go to the Arkansas Legislative Council Joint Budget Committee for consideration later this month.  If the recommendation is approved, it will be the first time in many years that the executive recommendation for higher education, based upon a rational funding formula that ASU supports, will be accepted and recommended by the Joint Budget Committee.

This acceptance does not necessarily produce funding, but it is the first step in the creation of bills that will be put before the General Assembly for consideration in January 2005.  As such, this is the best starting point ASU and Higher Education has had in some time, and may finally lead to success in appropriations at the end of the session.

Where are we now, and where will the recommendation take us?  Please recall that a rational determination of ASU’s existing funding need, based upon current levels of activity, would indicate that we are under funded by some $12 million per year.  So it is important to narrow the gap between where we are funded and where we need to be funded.  The executive recommendation, included as an attachment here, shows how that process will begin to occur, and how it will include ASU campuses in funding recommendations for the next two years, and to anticipate full formula funding in four years.

At the lower corner of the attached charts appears a set of selection options for Table 1A, 1B, 1C, or 1D.  Please click on Table A to see funding data for higher education.  For interpretation, RSA means money that is in the funding base as the result of the Revenue Stabilization Act.  EETF means money from the Educational Excellence Trust Fund.  The ASU-Jonesboro campus receives money from both sources.  WF 2000 means Workforce 2000 funding derived from corporate income tax collections.  The two-year ASU campuses and the technical centers receive some funding from this source, along with some non-formula entities.

The most important aspect of Table 1A is the depiction of percentages of growth among the various recipient groups.  Note that the percentage of funding recommendations for two-year institutions (8.7%), and non-formula entity percentage funding recommendations (8.9%), are both greater than the percentage of funding increases (8.1%) recommended for the four-year institutions in 2005-06, while all the percentages even out at 7.1% increase in 2006-07.  The disparity in year one of the biennium is because of efforts to adjust inequities in the two-year institutions, as we will see in Table 1B, and to recognize new formula entities, as shown on Table 1D.  What is dramatic to see is a recommended growth in total higher education funding of more than $100 million over the next biennium.  That is a huge increase that could have the result of producing more participation in higher education opportunities.  If we have a robust state economy, it could produce a state-supported higher education budget of $1 billion annually by 2010.

Please see the two-year distribution recommendations on Table 1B in order to note the numbers for the ASU campuses at Beebe, Mountain Home, and Newport.  The Beebe campus is recommended to receive $350,000 annually for the operation of a new campus at Heber Springs, and will receive equity funding for salary needs as the result of the acquisition of ASU Searcy.  The Mountain Home campus is recommended for two years of good percentage increases as is the Newport campus, which is to receive a $3 million base threshold in 2006.  Percentages of increase for both campuses are projected to exceed the average of all increases for both years of the biennium for the two-year campus group.  This is good news for the ASU two-year campuses, and is recognition for their success and importance to the state.

Please see Table 1C for the depiction of recommended distributions for four-year institutions.  We can see that ASU-Jonesboro is slated to receive more than $3 million new dollars in each year of the biennium, to increase the total base funding figure by more than $6 million by 2007.  Similar growth is to be anticipated in the following biennium.  What is notable is the large percentage recommendation (25%) for Arkansas Tech University, based on their enrollment growth in recent years.  A lesson here is that the formula is designed to respond to changes in enrollments, and that ASU’s budget can grow as its enrollment grows.  The previous First Friday addressed enrollment management issues because there is a linear relationship between formula funding and student enrollment -- the figures will rise together or will decline together.

Also note that if recommended funding is, in fact, appropriated in year two of the biennium, the four-year universities as a group still will be under funded by some $65 million based upon demonstrated need.  It will take awhile, and probably a new revenue stream, to equalize need and funding.

Table 1D depicts non-formula entities including, for the first time, a separate ASU System office budget, which was buried previously in the ASU-Jonesboro base.  The list of recognized non-formula units has grown, as has the amount of money needed to fund these operations.

This overview provides a series of recommendations based upon a “snapshot” of enrollment data from 2003-04.  The data will be recomputed based upon 2004-05 enrollments and budget recommendations will change. Despite a slight headcount enrollment decline at ASU-Jonesboro, because of the mixture of types of registrations, our overall numbers in the formula may not change too drastically, and we may not be hurt by changes resulting from recalculations.  Some schools will see declines in money recommended because of changes from last year to this year, but ASU may fare well in some of these comparisons.

Also, numbers may be changed due to shortfalls in state revenue generation.  It also is a probability that actions of the General Assembly will change these numbers prior to sine die next spring.  Those actions will be reported in news sources, and implications of them will be addressed in the April 2005 First Friday report.

I will be pleased to answer questions about this material or any other aspect of Arkansas State University.  I can be reached at leswyatt@astate.edu.  Thank you for reading First Friday.