More Funding for Higher Ed Sought in FL, OH, PA and TX Tied to Performance

Upbeat revenue forecasts and shared economic principles have Republican governors in four states requesting more funds for higher education tied to performance metrics or workforce outcomes. Recent budget proposals introduced in Florida, Ohio, Pennsylvania and Texas focus on competing for talent and jobs through efforts to encourage STEM learning and teaching and incentivizing outcomes such as graduating more students in high-demand fields, conducting research and more. College affordability is addressed through measures that would freeze tuition or cap increases.

Highlights from the governors' budget proposals as they relate to higher education and economic development for the upcoming year or biennium are outlined below:

Florida
The FY14 budget introduced this week by Gov. Rick Scott would maintain last year's level of funding for higher education and restore some of the $300 million previously cut from colleges and universities. The increased funds are tied to performance metrics, including a goal to help the University of Florida (UF) achieve a national ranking in the top 10 research universities. With a $393.3 million increase over last year, the State University System would dedicate $167 million for performance funding and $15 million for UF to pursue the top 10 status. If approved by the legislature, the funding would be used to hire new faculty, said UF President Bernie Machen in a Star-Banner article. The university also would have to submit a five-year benchmark plan to be approved by the Board of Governors.

For the Florida College System (FCS), the governor recommends an increase of $74.4 million over last year with $14 million for performance funding and $13 million for competitive workforce programs to prepare students for careers in high-skill, high-wage or in-demand occupations. Gov. Scott recently announced that all four-year FCS schools have accepted his challenge to create four-year degree programs that cost under $10,000. The budget plan also proposes no tuition increases and recommends establishing a fixed rate of tuition and fees for undergraduates who are enrolled continuously in the State University System during four consecutive academic years.

The budget for economic development boosts spending by $256 million with increased funding for Enterprise Florida, a public-private partnership serving as the state's primary organization devoted to economic development, and Space Florida.

Ohio
Gov. John Kasich's budget recommendations for higher education in the 2014-15 biennium closely align with the proposals submitted earlier this year by his task force charged with redesigning the State Share of Instruction (SSI) funding formula in a more strategic manner (see the Dec. 5, 2013 issue of the Digest). The executive budget contains the necessary language to implement significant performance-based policy reforms, such as:

• Allocating 50 percent of the total university funding within the SSI for degree completions; and,
• Rewarding community and technical college completion by allocating 25 percent of the SSI funding available based on the number of students who complete courses.

Higher education is funded at $2.3 billion in FY14 (0.6 percent above FY13 spending levels) and $2.4 billion in FY15 (2.3 percent above FY14 proposed spending). Budget language also establishes a 2 percent cap on tuition based on what the institution charged the previous academic year or 2 percent of the statewide average cost by sector.

Earlier this month, it was announced that JobsOhio, the state's private, nonprofit economic development group established by Gov. Kasich in 2011, would begin to receive payments from the transfer of the state's liquor enterprise. The transfer means that JobsOhio can begin tapping about $100 million in annual liquor profits for its job-creating efforts, reports Columbus Business First.

Pennsylvania
By selling the Pennsylvania Liquor Control Board's state stores system, Gov. Tom Corbett hopes to generate $1 billion in proceeds, which he plans to distribute to school districts in the form of a Block Grant allowing schools to choose funding for programs including STEM initiatives in grades 6-12. Under the plan, the state would auction 1,200 licenses by county for retail sales of wine and spirits. The governor estimates a total $200 million would be available for the 2014-15 school year. The grant for STEM initiatives would provide funding to public schools to enrich programs that support STEM, including career exploration activities, opportunities for technical skill alignment and partnerships with postsecondary education and training programs.

Gov. Corbett's FY14 budget also calls for business tax reforms, consolidating financing programs, launching new initiatives for small business, and level funding for current TBED activities. The tax reform proposal includes a multi-year proposal that would increase the Net Operating Loss Cap from $3 million to $5 million. Aimed at attracting technology, bioscience, researchers and large manufacturers, this program allows companies to transfer large losses they incur from current to future tax years.

The governor also wants to launch a Small Business Champion Network, a team of business experts within the Department of Community and Economic Development to help employers navigate permitting processes, identify public and private resources, and connect with the vast small business support network through the state, according to the governor's press release.

Another attempt to consolidate the state's revolving loan programs into one large pool of assets is outlined in the budget documents. The Pennsylvania Business Development Authority would create a single point of contact for job creators seeking capital with a total $1.1 billion from eight existing programs. The governor floated a similar proposal over the last two years that failed to garner enough legislative support (see the July 13, 2011 issue of the Digest).

Most TBED programs are level-funded in the budget. This includes $14.5 million for the Ben Franklin Technology Partnership program, which provides through its four regional networks access to capital and entrepreneurial support services to promising tech-based companies throughout the state; $12 million for Partnerships for Regional Economic Performance grants; $10 million for the Discovered in PA, Developed in PA initiative; and, $3 million for Life Sciences Greenhouses. A $10 million increase is requested for the PA First program — a funding tool that helps the state attract new industries and incentivize existing industries to expand.

Texas
A four-year tuition freeze, tying a minimum of 10 percent of a school's state funding to the number of students it graduates, and providing $10,000 degree options are among the legislative priorities outlined last month by Gov. Rick Perry.

The governor's 2014-15 biennial budget documents describe his plan to implement outcomes-based funding for higher education without spending more money. Instead, the governor would redistribute a portion of the $935.8 million colleges and universities receive for special items funding, which originally was intended to kick-start new academic programs and then be phased out. Because the funding was not phased out, the governor proposes to reduce the special items funding by $431.5 million and add that amount to the outcomes-based formula. Budget documents note the new funding formula should be tied to the number of certificates and degrees awarded and to other measures of success, with bonuses for degrees awarded in critical workforce shortage areas.

Under increased scrutiny regarding the effectiveness of two economic development funds, the governor stood firm on his commitment to support the Emerging Technology Fund (ETF). With a recommendation of $132 million in order to keep ETF activities at the current level, Gov. Perry called the continued funding for the program essential to supporting the state's innovative economic development efforts. The proposal may be a tough sell in the upcoming session, however, as lawmakers already have proposed giving no new money for economic development incentives over the next two years, and instead allowing the EFT and the Enterprise Fund to draw down their unexpended balances, reports The Dallas Morning News.