Indiana higher education commission advances funding model amid some pushback

Indiana’s higher education officials on Thursday approved recommendations for a new approach to funding higher education that is based on school-specific goals, rather than blanket recommendations.

But some raised concerns about the prospective model, saying it still lacks clear goals for the state’s public colleges and universities. Others cautioned that it could unfairly shift the burden of improving some metrics—like Indiana’s dismal college-going rate—to institutions of higher education instead of K-12 schools.

The state’s largest public postsecondary institution is additionally pushing back, maintaining that recent progress made by the school won’t be rewarded, which could mean millions of dollars are no longer guaranteed.

The proposed funding model was crafted by the Indiana Commission for Higher Education, which the General Assembly tasked with researching a new formula to cover costs at Indiana’s state colleges and universities. Thursday was the commission’s monthly meeting.

Stakeholders have criticized the state’s current “legacy model” funding formula for not differentiating between two-year and four-year schools or research and non-research institutions. The state’s current model additionally does not allow for individualized goals at different schools.

At the heart of the current legacy model, Indiana’s public higher education institutions are rewarded for growth, all based on the same five metrics. The model also uses averages over the last few recent years for various factors—such as on-time degree completion—to calculate the state’s fiscal responsibility moving forward.

ICHE board members said the state seeks to move away from that type of funding approach, and the new model will instead provide flexibility for institutions to work towards more individualized growth targets.

“With the legacy model, it was time for an update,” said Josh Garrison, ICHE’s associate commissioner for public policy. “With where we’re at .. the legacy formula … it’s not something going forward that could continue without seriously harming some of our institutions.”

Ivy Tech could lose millions under new funding model

Ivy Tech Community College spoke out against the new outcomes-based funding model, however.

Mary Jane Michalak, Ivy Tech’s vice president of legal and public affairs, told the commission Thursday that the school has “serious concerns about the recommendations,” emphasizing that the state’s community college system stands to miss out on millions of previously expected dollars if the new model takes effect.

Under the current higher education funding model, Ivy Tech stood to gain $15 million to $17 million more annually, mostly because of “significant” increases in the number of certificates issued by the school system. She added that much of that progress has been made possible by Indiana’s Workforce Ready Grant.

According to the new funding model, Ivy Tech currently could gain up to $14.6 million a year in the 2024 fiscal year, but not all of that money is guaranteed. Michalak said that’s because the performance metrics for the prospective funding model still aren’t clear, leaving uncertainties about whether Ivy Tech’s recent progress will qualify for additional, deserved dollars.

“That is a significant hit to Ivy Tech at the time when we were anticipating growth in the performance funding,” Michalak said. “We have been doing what we’ve been asked to do by the General Assembly and by the commission under this (legacy) model.”

Making changes within the institution to accommodate new metrics goals will require “a little bit of lead time,” she continued.

If schools don’t know what those metrics are until May 1—after the conclusion of the 2023 General Assembly—that leaves just two months to prepare for the next academic year, Michalak said.

“It just makes it a little bit difficult for us to make changes for the prospective funding,” she said. “Our preference would be to continue with the legacy model for two years and work out those details for prospective going forward, making sure that we all understand what those metrics are.”

Funding recommendations move forward

Despite initial confusion and hesitation by several ICHE board members, the commission voted unanimously to advance the prospective funding model to the state budget committee, where it will be up for consideration on Dec. 7.

Representatives from Ball State University and Indiana University said they were supportive of the funding changes, calling it a “forward-looking approach.”

“The legacy model of the formula has been good to our regional campuses and to IUPUI,” said Zach Smith Howard, Indiana University’s assistant director state relations. “But the rate of growth that we’re able to win back money in the formula, there would become a point where we would not be doing as well. So, this change is very much being supported by our university leadership and our board.”

Indiana State University’s executive director of government relations, Greg Goode, said the Terre Haute school is also “in 100% support” of the new model.

“It provides much greater clarity. It really does, I think, better leverage the individual strengths such as the different populations we serve,” he said. “I truly believe that while we may not have specifically identified those institutionally based outcomes right now, we go into this with good faith that we’re gonna get there with our commission and our legislative partners.”

Still, getting the new model across the finish line will be a challenge, said ICHE board member Chris LaMothe. The board’s funding proposal can’t support requests from all of the state’s universities—especially when it comes to funding capital projects, which will be more limited until the 2025 biennium—but he said the commission will need everyone on board to ensure a green light from lawmakers.

“This really requires the universities and the commission for higher education to be in absolute lockstep as we go through the General Assembly session,” LaMothe said. “This is going to be a very challenging legislative session, partly because there is excess capital available, and partly because everybody is lined up at the trough wanting significant funding. It’s going to take a lot of work for us to move this through the House and Senate to get support for it, so it’s going to be critical that we work together through this budget-setting session.”

The Indiana Capital Chronicle is an independent, not-for-profit news organization that covers state government, policy and elections.

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