Postsecondary Funding - A Mixed Bag for Kentucky

Lawmakers in Frankfort concluded the 2016 Regular Session of the General Assembly in a flurry of activity during the waning hours of Friday April 15.  Putting aside the on-going legal dispute over current year cuts to postsecondary institutions and any potential vetoes the Governor might still make, the impacts of the enacted FY 2016-2018 budget on postsecondary education were a mixed bag.

On the one hand, most campuses received a 4.5% reduction, one-half of the 9% originally proposed by both the Governor and the Senate.  This amounts to a total reduction of $59.1 million over the biennium and represents an 18.2% decline in yearly funding since FY 2008, or $197 million.  Kentucky State University, in recognition of significant challenges facing the campus, was exempted from the funding reductions and received long-sought additional funds to fully match the federal requirement for land-grant programs.  Additionally, Western Kentucky University and Northern Kentucky University received additional appropriations in FY 2018 to help bring their state allocation per student to the average of the other regional campuses.  Overall, the enacted budget continues the pattern of state disinvestment in Kentucky’s postsecondary institutions that has persisted since 2008. A disinvestment whose costs are ultimately born by students and families.

On the other hand, student financial aid fared substantially better in the final compromise - increasing across all programs by $117.9 million over the biennium.  Need-based aid through the lottery-funded College Access Program (CAP) and Kentucky Tuition Grant (KTG) increased by $55 million – which could serve up to 30,000 more financially disadvantaged students.  This represents significant increases to the main need-based programs that have been flat funded for nearly 10 years. Two new programs were created to help increase college access and attainment.  The Work Ready Kentucky Scholarship received $25.3 million over the biennium and would provide essentially free tuition to recent high school graduates enrolled in associate’s degree programs at Kentucky community colleges, public universities and private colleges.  The Dual Credit Scholarship received $15 million over the biennium and will assist eligible high school students in paying for courses for which college and high school credit is awarded.

The budget also initiates the process by which postsecondary institutions will receive part of their funding based on performance against certain metrics.  Beginning in FY 2018, 5% of funding will be performance-based, rising to 15% in FY 2019 and 25% in FY 2020 and beyond.  A working group is established that will provide formula recommendations for the performance-based model to the Governor and General Assembly by December 1, 2016.  While in the early stages and not yet defined, this should be the first step in a process of recognizing that public investment will require accountability for progress toward well-defined system, institutional, and student outcomes and performance goals.

As the title of this post suggests – a mixed bag - perhaps one step backward and one step forward.  Issues of affordability and ensuring access to postsecondary opportunities for all Kentuckians’ make further reductions to institutional funding difficult to stomach.  A renewed commitment to state-funded financial aid programs, however, signals hope that perhaps progress is possible.

In the future, Kentucky needs to more effectively link decisions and policies on state appropriations, student aid and tuition to better define the expectations of institutions and students.  Lack of transparency in how postsecondary education is financed, and how the varying financial components interact, ultimately leads to less effective and efficient use of public resources and makes it more challenging for Kentuckians to reach their educational, economic, workforce, and civic potential.